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(Corrects in 11th paragraph to show U.S. dollar is only ISDAFixrate collected by ICAP)
STRASBOURG, France/LONDON, Sept 10 (Reuters) - Companiesfound guilty of rigging market benchmarks like Libor could befined the equivalent of 15 percent of their turnover under aEuropean Union law approved on Tuesday.
The EU law, approved by the European Parliament and due tocome into force within two years, revises market abuse rules tomake the rigging of benchmarks illegal.
The market abuse rules are also extended to cover electronictrading such as "high-frequency" trading, criticised by somelawmakers for creating volatility in markets.
Three banks - UBS, RBS and Barclays - have been fined for rigging the London InterbankOffered Rate or Libor, but only under existing conduct rules.
This prompted lawmakers to widen the scope of EU rules tobenchmarks, as well as to commodity derivatives affecting foodand energy prices, to underscore their determination to clampdown on malpractice.
Penalties have also been toughened up so that companiesconvicted of abuses could be fined up to 15 percent of theirannual turnover or 15 million euros ($19.9 million), withindividuals fined up to 5 million euros and banned from theindustry.
"The Libor scandal was market manipulation of the worstkind. We are seeing more alleged and potential manipulation ofbenchmarks in energy markets such as oil and gas and foreignexchange markets," said Arlene McCarthy, the British centre-leftlawmaker who negotiated the rules with member states.
A second leg to the revision of the EU rules, which willintroduce powers to jail market abusers, is expected to be alsoapproved in coming weeks.
MARKET RATES
Separately on Tuesday, Martin Wheatley, chief executive ofBritain's Financial Conduct Authority (FCA) watchdog, confirmedfor the first time he was studying ISDAfix, a benchmark widelyused to anchor market rates.
He said he was in touch with the Commodity Futures TradingCommission (CFTC), a regulator, on the matter after it said inApril it had subpoenaed the International Swaps and DerivativesAssociation (ISDA) over ISDAfix.
The fixings are based on a survey of a panel of banks forthe different currencies, according to the ISDA website.Brokerage ICAP collects contributions for the U.S.dollar rate and sends them on to Thomson Reuters Corp,which calculates the fixing.
"We have asked for records, the CFTC have asked for recordsand I think one or two others have as well," Wheatley told theUK parliament's Treasury Select Committee. "We are talkingmillions of records. We are at an early stage."
It was too early to say if inquiries will lead to formalinvestigations or how big possible fines could be, he said.
Asked if he was aware of attempts to manipulate otherbenchmarks such as in oil and gas, Wheatley said: "Yes. In ourenforcement process at any one time we have several hundredlines of inquiry. The answer is yes. We are very busy."
ICAP said in May it was co-operating with the CFTC in itsinquiries about ISDAfix but its internal investigations had concluded its brokers had done nothing wrong in relation to themeasure.
The revised EU law also bans company managers from sellingtheir shares within a month of monthly, quarterly or annualstatements, aiming to help crack down on insider trading.Executives must also report any share transactions with a valueof more than 5,000 euros.($1 = 0.7538 euros) (Editing by David Holmes)
