LONDON, Sept 20 (Reuters) - The number of "abnormal" quotesfor setting the Euribor interest rate benchmark is down sharplyafter fines for two banks who rigged it led to tightersupervisory scrutiny, an EU regulator said on Friday.
Euribor and its UK counterpart, the London Interbank OfferedRate or Libor, are compiled from quotes submitted by panels ofbanks.
Banks were accused of "low balling" quotes at the height ofthe financial crisis to give the impression they were stable andstill able to borrow at cheap rates from their peers.
The European Securities and Markets Authority (ESMA) saidthe incidence of "obviously erroneous submissions" seems to havedeclined as banks follow guidelines from ESMA and the EuropeanBanking Authority to make submitting quotes more rigorous.
The guidelines were brought in after Barclays andUBS were fined for manipulating Euribor and Libor. RBS was fined for manipulating Libor.
"Patently erroneous submissions became rare in recentmonths," ESMA said in a study published on Friday. Abnormaldeviations for Euribor did not occur at all between September2012 and May 2013.
The continuity of key benchmarks in the EU remains a majorconcern as banks pull out of panels. The number of banks on oneEuribor panel has fallen from 42 to 32, ESMA said.
Global efforts are underway to base a reformed Libor andEuribor on recorded market transactions.
A draft EU law published on Wednesday would give regulatorspowers to force banks to participate on panels.