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UK Treasury soon to announce new forex market regulations

BBR Staff Writer Published 03 June 2014

The UK Finance Ministry is expected to soon reveal new measures to prevent the repeat of a rate-fixing scandal in the London’s foreign exchange market.

Osbourne

An unnamed senior government official was quoted by BBC News as saying that a set of measures to clean up the forex market are likely to be unveiled by the UK Chancellor George Osborne within the next two weeks.

Osborne is scheduled to deliver the annual Mansion House speech to London's financial community alongside Bank of England Governor Mark Carney on 12 June.

Meanwhile, a UK Treasury spokesman refused to disclose the details or exact timing of any announcement by Osborne, but noted that the ministry was keen to influence new international regulations on benchmarks for financial instruments.

"A key part of the government's long-term plan is building stronger and safer banks that can do more to support Britain's consumers and businesses," the spokesman added.

"Ensuring confidence in the fairness and effectiveness of financial markets is central to this, which is why we've taken action to reform Libor, and why we're now using the lessons we have learned here to inform and shape the important ongoing global debate on benchmark reform."

The ministry is currently working with the Financial Stability Board (FSB) on new regulations that will be imposed on the market to improve currency fixings, and are expected to be announced next month.

Under the new proposals, attempted forex manipulation could be made a criminal offence as was done by the government with the London interbank offered rate (Libor) in 2013, as reported by The Guardian.

Carney, who chairs FSB, told last week that the board should recommend changes to market infrastructure surrounding the setting of benchmarks, including Libor and foreign exchange fixings.

London's £3trn-a-day forex market is currently subject to regulatory investigations following allegations of manipulation of Libor interbank interest rates and daily exchange rate fixing.

Image: UK Chancellor George Osborne will soon reveal new measures to prevent the manipulation of forex benchmarks. Photo: HM Treasury.