Government unveils tighter rules for financial markets

The government has unveiled new rules aimed at reducing abuses in the financial markets.

The financial sector is to be subject to tighter laws and regulations under new government plans announced by the Treasury.

Following consultation between the Treasury, the Bank of England and the Financial Conduct Authority (FCA), new legislations has been announced, as well as the setting up of a review system to consider new measures.

The new laws will include making the manipulation of markets a criminal offence, particularly if it applies to Libor. A new set of standards will also be established, with the Treasury stating that these will not be linked to European standards as the new UK legislation will actually be tougher.

In addition to this, the Senior Managers and certification regime will be extended and apply to all banks operating in the UK, including those not based in Britain.

Chancellor George Osborne said: "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."

The panel being set up to consider further measures will be co-chaired by Bank of England deputy governor for markets and banking Minouche Shafik, chief executive of the FCA Martin Wheatley and director general for financial services at the Treasury Charles Roxburgh. There will also be a public consultation starting in the autumn of this year. This panel will complete its work a year from now, although the response of the government to its findings may depend on who is in power after the general election next May.

Concerns about Libor manipulation emerged when it was revealed that Barclays had been involved in such activity since 2005. The bank was fined in 2012 and last month saw three of its New York-based staff appearing in court in London after being charged by the Serious Fraud Office.