Cheat on FX? Off to jail you go – UK toughens stance on FX rigging

The British government has adopted a very tough stance with regard to those party to the manipulation of FX rates in a new plan which is scheduled to be unveiled by Chancellor of the Exchequer George Osborne this evening.

Mr. Osborne will use his annual speech at the Mansion House to unveil a twelve month review by the Treasury, Bank of england and Financial Conduct Authority (FCA) with regard to the method by which the FX market operates, including the extension of legislation to regulate benchmarks used by FX traders to set prices.

As a major development, it will become a criminal offence to manipulate LIBOR currency rates as well as other markets, for which a jail sentence can be adminstered.

According to a report today by This is Money, the Daily Mail’s City news source, the review will report back in the autumn with recommendations on which markets the clamp down should apply to. The Government aims to implement the new legislation by the start of the next financial year.

The Labour Party’s opposition (shadow) Treasury minister Chris Leslie said: ‘It’s astonishing it’s taken the Chancellor so long to act.’

Reacting to this stance, Marshall Bailey, President of ACI, the Financial Markets Association, today made public comments regarding Chancellor Osborne’s proposals to reform the FX market, by stating that “must evolve and learn the lessons from recent events.

“Foreign exchange is the largest and most liquid market in the world. It is a global market that is integral to the flow of global business and commerce, but its reputation and integrity has been tainted in recent months.”

“London is at the heart of the global FX system and it is good to see the UK lead on reform where it is needed. Action taken here will have a global impact.

“It is important that we strengthen oversight in the global foreign exchange market with a balanced, effective and co-ordinated approach which avoids the unintended consequences.

“While the market’s structure is broadly very effective and well designed, we have a duty to the global financial system to ensure we repair where needed.

“A coordinated international response is the right approach, as regional regulation could drive trading institutions away to less-stringent jurisdictions.

“It is also critical that we instill a common set of ethics and a consistent code of conduct to support any regulatory and infrastructure changes.

“A globally agreed standard of guidelines and best practices ensures consistent standards are applied across financial markets. This should be backed up by appropriate regulation or legal systems that can deal with any malfeasance” concluded Mr. Bailey.

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