June 13 - The UK has set out its own set of proposals to clean up financial services. It says the European Union's plans to outlaw currency market manipulation don't go far enough he's planning to make any rate rigging a criminal offence.
They're already London's bad boys in many people's eyes - but city traders could now be in for more than just reputational harm. The UK is to conduct a comprehensive review of standards in fixed income, currency and commodity markets. Previously unregulated benchmarks will be regulated - and those who flout the rules could be charged with a criminal offence. Finance Minisiter George Osborne says, after the revelations about the manipulation of LIBOR, financial services can't afford another scandal. (SOUNDBITE) (English) UK FINANCE MINISTER GEORGE OSBORNE SAYING: "The integrity of these markets matters to us. London is home to 40 percent of the global foreign exchange business, 45 percent of the over the counter derivatives trading, 70 percent of trading in international bonds. And Mark Carney and I intend to keep it that way." The European Union has already announced plans to outlaw currency manipulation From 2016 anyone found guilty of rigging certain key markets could be jailed for four years. But Osborne has rejected those plans in favour of Bank of England-led sanctions, which he hopes to introduce by the end of this year. Foreign banks must also take note. (SOUNDBITE) (English) UK FINANCE MINISTER GEORGE OSBORNE SAYING: "I'm also extending the Senior Managers regime to cover all banks which operate in the country, including the branches of foreign banks." It's the prospect of a LIBOR-style scandal over foreign exchange rates which has focussed a few minds in the UK. Much of the $5-trillion-a-day trade takes place in London. But Commerzebank's Chief Economist Peter Dixon says Osborne must be careful. SOUNDBITE: Commerzbank Chief Economist, Peter Dixon, saying (English): "I don't think it's a dangerous move but I think there are risks involved. To say that the industry needs cleaning up, what it really needs is to make an example of those people who flout the rules. So I think what Osborne has to do is tread a fine line between not killing the goose that lays the golden egg, but ensuring that those people who do transgress are punished appropriately." l Osborne says it's all about having appropriate rules for a financial centre that dwarfs others in continental Europe. But he also knows financial services make up around 10% of the UK's GDP. And there are elections next spring - bashing bankers generally goes down well with voters.