Tens of thousands more City workers face an unprecedented crackdown on bad behaviour. The Bank of England last night recommended extending the senior managers’ regime to all fixed income, currencies and commodities traders at banks, as well as their counterparts at interdealer brokerages and buy-side asset managers.
Bank of England governor Mark Carney also wants to increase the maximum jail sentence for criminal market abuse from seven year to 10 years.
And his Fair and Effective Markets Review (FEMR) proposes extending market behaviour rules to cover areas such as spot foreign exchange trading, interest rate derivatives.
Carney last night spoke of an “ethical drift” in the City which contributed to the scandals of recent years.
“Unethical behaviour went unchecked, proliferated and eventually became the norm,” he told an audience at the Mansion House.
“Too many participants neither felt responsible for the system nor recognised the full impact of their actions.”
With these announcements, he declared: “The age of irresponsibility is over.”
Senior Bank of England bosses, including Carney, will become more personally accountable, with responsibilities publicly set out for different areas of Bank operations.
There will be a major consultation in the autumn to which all interested parties are invited to contribute ideas for making financial markets fairer and more transparent, so they serve customers better.
However, lawyers cautioned that the changes are less sweeping than Carney claims.
“Despite what FEMR would like us to think, this is really business-as-usual,” said Rob Moulton from law firm Ashurst. “Criminalising what has already been earmarked as unacceptable market practice is not a game changer. It does however increase the pressure on the UK regulator to take its first scalp.”