UK move to clean up banking sector expected

Britain’s finance ministry is likely to announce measures soon to reduce the risk of a repeat of a rate-fixing scandal in London’s world-leading foreign exchange market.

Finance minister George Osborne is due to deliver an annual speech to London’s financial community alongside Bank of England governor Mark Carney on June 12. Both men have recently stated their desire to clean up Britain’s banking industry.

London’s reputation has been damaged in recent years by a scandal over the fixing of Libor interbank interest rates and more recently over daily exchange rate fixings.

A BBC report yesterday said Osborne was expected to announce measures to clean up the market within the next two weeks, citing an unnamed senior government official.

A finance ministry spokesman declined to comment on the details or exact timing of any announcement by Osborne.

He said the finance ministry was keen to influence new international rules on benchmarks for financial instruments.

The Financial Stability Board, a global body chaired by Carney, is expected to report next month on how to improve currency fixings.

“Ensuring confidence in the fairness and effectiveness of financial markets is central ... 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,” a finance ministry spokesman said.

“Merely prosecuting the guilty to the full extent of the law will not be sufficient to address the issues raised. Authorities and market participants must also act to re-create fair and effective markets,” the Bank of England Governor said in a speech.