Foreign exchange riggers will go to jail, says George Osborne

Dastardly City boys seeking to make a few extra bob off the innocent masses: it's ripe for some well-timed pre-election legislation.

by Emma Haslett
Last Updated: 29 Jul 2014

One of the most common complaints over recent allegations about banks' rate rigging - and the financial crisis in general, actually - is that no one has been punished for it. Alright, so banks have had to pay fines (albeit fines seen by many as rather insignificant, compared to their balance sheets), and a few wideboys have been fired - but from a legal perspective, manipulating foreign exchange rates or commodity prices was never a criminal offence like, say, insider trading is.

That's about to change, though, if George Osborne's Mansion House speech, due to be delivered tonight, is anything to go by. The chancellor will set out plans to make rate rigging a criminal offence, meaning anyone who engages in it could end up in jail.

It's timely, considering investigations currently underway over forex rigging (Financial Conduct Authority boss Martin Wheatley said if the allegations are true, the resulting scandal could be 'as bad as Libor'. Be afraid). About 15 banks stand accused, although nothing has been proved yet.

It's also prescient, given London is one of biggest forex markets in the world, with just over a third of the market (Barclays, HSBC and RBS are counted among the world’s biggest traders of foreign exchange). So presumably Osborne is keen to be seen to be keeping his house in order in that respect.

Osborne's plans will start with something called a 'fair and efficient markets review', led by Minouche Shafik, the Bank of England's new deputy governor for markets and banking and the only woman on the Monetary Policy Committee. The assumption is that when she reports back in the autumn, she'll recommend the government extends criminal legislation that already covers Libor riggers to those who mess with other benchmarks, including forex, commodities and fixed income.

When Osborne takes to the lectern tonight, he’ll say that ‘The integrity of the City matters to the economy of Britain’.

‘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,’ he’ll add.

And it probably won't hurt if the Coalition can also be seen to have shoved a few naughty City boys behind bars in the months running up to the election, either...

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