British regulators are considering root and branch changes to the way Libor, which serves as a fundamental benchmark for around £350 trillion of financial contracts around the world, is calculated as international probes allege that the interbank lending rate may have been manipulated.

The London Interbank Offered Rate and other benchmark lending rates that are worked out in the UK have been the subject of ongoing investigations by regulators in North America, Europe and Japan.

Libor is set by a 16-bank panel who are all asked how much it would cost to borrow from one and other and the rate is calculated and published daily by Thomson Reuters on behalf of the British Bankers’ Association, a trade association for the UK banking and financial services sector, covering a variety of currencies and time durations.

The British Bankers’ Association, and many of the banks that help set it, met with UK regulator the Financial Services Authority yesterday to start a review process on how the system may be overhauled. The working out of Libor every day at 11am in the UK could now come under the jurisdiction of the Financial Services Authority.

“As part of the normal reviewing processes of Libor, a number of contributing banks met today to consider future regulatory and market developments, such as the incoming liquidity rules, relevant to the parameters that Libor measure,” said the British Bankers’ Association, which represents the banks that contribute to the rate, in a statement to the UK newspaper Financial Times.

“A technical discussion with interested groups, including users of the rate, will commence shortly. It will focus specifically on the most likely future developments. The market will be kept updated as the work progresses.”

International regulators have been investigating banks that helped set Libor, and Tokyo’s Tibor, since late 2010 over allegations that banks understated borrowing costs to artificially suppress the lending rate.

More than a dozen traders at US and European banks and interdealer brokers have suspended or fired in recent months following allegations of abuse over Libor.

Libor rates, set each day for 10 currencies with 15 maturities, are used as the primary benchmark of short-term interest rates globally, a barometer to measure strain in the money markets and the basis for settlement of interest rate contracts on many of the world’s major futures and options exchanges.

Asset managers also use Libor as a benchmark for a number of funds.

The Financial Services Authority currently imposes no specific restrictions on banks to prevent communications between traders and rate-setters over Libor beyond a broad requirement for them to identify and prevent conflicts of interest, according to its website.