Rigging of the foreign currency markets is to be banned by the Treasury, with chancellor George Osborne set to make a major speech on the issue later today (June 12th).
In his annual Mansion House address, Mr Osborne will state that manipulation of foreign currency markets will be made a criminal offence.
The keynote speech is also set to include a promise to target "the unacceptable behaviour of the few and ensure that markets are fair for the many who depend on them".
Mr Osborne wants to extend legislation that was used by the government to clean up the financial system after the Libor interest rate-fixing scandal. There have long been fears that the foreign currency markets are subject to being manipulated by banks.
The forex currency market will be brought under the rules, along with those who trade in commodities, in a bid to make trading more transparent.
Mr Osborne is set to say: "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."
But Labour's shadow Treasury minister Cathy Jamieson stated that the changes being outlined by the chancellor in the Mansion House speech today are "too little, too late".
She said: "We pressed ministers to regulate commodities markets and the full array of financial benchmarks back in 2012, but the chancellor failed to act."
However, Labour has regularly been criticised for failing to get a grip on the UK's financial sector, with a lack of regulation on the sector blamed as one of the factors involved in the global crash and the worldwide recession it caused.
Mr Osborne is also expected to reveal in the speech that the UK will not be opting in to European Union rules on market abuse. The changes to legislation are due to come into force in 2016.
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