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FCA, BoE and Treasury join forces for market abuse review

The Treasury, Bank of England and FCA have launched a review of market abuse, while Chancellor George Osborne is set to announce a package of Government measures to toughen-up on financial crime.

The review will focus on currency, fixed income and commodities trading, although that remit could expand.

The ‘Fair and Effective Markets Review’ will be overseen by BoE deputy governor for markets and banking Minouche Shafik, with FCA chief executive Martin Wheatley and Treasury director general Charles Roxburgh co-chairing the investigations.

A panel will also be assembled to “reflect the views of the industry”. It will be chaired by Allianz Global Investors chief executive Elizabeth Corley.

The Treasury says the review will aim to “reinforce confidence in the fairness and effectiveness of UK wholesale financial market activity, and influence the international debate on trading practices”. It will will last 12 months and will recommend reforms if it believes they are needed.

Osborne says: ”The integrity of the City matters to the economy of Britain. Markets here set the interest rates for people’s mortgages, the exchange rates for our exports and holidays, and the commodity prices for the goods we buy.

”I am going to deal with abuses, tackle the unacceptable behaviour of the few and ensure that markets are fair for the many who depend on them.”

Wheatley says: “Confidence and trust are critical to financial markets – and robust, reliable benchmarks are the bedrock of market integrity.”

Market abuse has come under scrutiny in recent years following the Libor fixing scandal, accusations of foreign exchange market rigging and a surge in prosecutions over market abuse.

As part of a package of measures, George Osborne will also announce today plans to extend Libor legislation to cover FX, fixed income and commodity benchmarks; extend the Senior Managers Certification Regime to cover all foreign banks with a UK presence; and expand the criminal regime for market abuse to include some measures in place in Europe.

In July 2012 the EU made it a criminal offence to fix benchmarks.

In the UK, the 2012 Financial Services Act made it a criminal offence to make false statement in relation to Libor but that is not currently extended to other markets.

Further details of the planned changes are yet to be announced and the Government says it will consult on them in the autumn.

The measures announced will not affect the current investigation by the FCA into FX fixing. 

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  1. I bet they won’t investigate the abuse of the London Gold Fix by LBMA members and their Government sponsors on both sides of the Atlantic, plus the parallel BIS FX market in Gold. These scammers have used paper / derivative markets to srtificially suppress the London Gold Price to bolster the dollar exchange rate, even though the demand for gold bullion is greater than ever and the supply situation is tighter than ever. All the above mentioned authorities are paid to look the other way.

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