Osborne to ban manipulation of foreign exchange markets

<p>Banks are to be prevented from manipulating foreign exchange markets.</p>

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.

City's integrity

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.

Find up to date information on the FTSE 100 and spread betting strategies at City Index

Join our live webinars for the latest analysis and trading ideas. Register now

GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.