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LONDON (Reuters) - Most Libor interest rates should be scrapped by April to restore trust in what remains of the tarnished benchmark that was rigged by Barclays and other banks, a trade body said on Thursday.
The British Bankers Association (BBA) said only 30 of 150 variations of the London Interbank Offered Rate should remain under a proposal it published for consultation.
After Barclays paid a record 290 million pound fine for manipulating Libor in June, the government asked Financial Services Authority Managing Director Martin Wheatley to come up with changes to the benchmark which is used to price products like home loans and credit cards worth $300 trillion (187.7 trillion pounds).
Wheatley said thinly traded Libor rates should be scrapped, recommending a cut to just 15 but gave no fixed timetable.
The BBA said discussions with market participants showed that 30 rates should be kept.
The UK banking trade body proposed scrapping the sterling repo rate by the end of December, and ending several maturities in all 10 currencies used by the end of January.
Under the BBA plan, all remaining maturities based on the Australian dollar, New Zealand dollar, Canadian dollar, Danish crown and Swedish crown would be scrapped by the end of March.
From April only the overnight, one week, one month, three months, six months and 1 year maturities would remain in euro, Japanese yen, sterling, Swiss franc and U.S. dollar.
"I welcome the BBA's first steps towards implementing a key recommendation of the Wheatley review of Libor through its consultation ... which needs to be subject to an open process and market feedback to ensure that enough time is given to allow market users to adapt," Wheatley said in a statement.
The BBA will be stripped of its Libor oversight role sometime in 2013, another of Wheatley's recommendations.
"In the event that oversight of Libor is transferred away from the BBA prior to these proposals being fully implemented, any changes should be open to ongoing review by the new admininistrative body," the BBA said in a statement.
The role of running Libor will be put out to tender.
Royal Bank of Scotland is expected to be the next bank to be fined for trying to rig Libor as the authorities in Britain, the United States and elsewhere pursue several lenders.
Libor is currently set by banks submitting quotes for rates they believe they could borrow at from another bank but this is likely to change in future, with more input from actual market transactions into the process.
Reporting by Huw Jones; editing by Stephen Nisbet