In his Mansion House speech later today, George Osborne (pictured) is expected to propose making the manipulation of foreign currency markets by banks a criminal offence, the BBC reports.
He plans to extend the legislation used to deal with LIBOR interest rate-fixing to the currency, commodities, and fixed income markets.
His speech will come as the government announces a joint review into the way wholesale financial markets work, in reaction to serious allegations of misconduct. This will be led by the Bank of England, the Financial Conduct Authority, and the Treasury.
The review will run for 12 months and is expected to recommend a new set of principles and reforms, tools to strengthen the power of market overseers and consider whether international action is required.
Meanwhile, the government has also pledged to make criminal rules for market abuse “strong or stronger” than those of the EU.
Osborne will 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, tackle the unacceptable behaviour of the few, and ensure that markets are fair for the many who depend on them.”
The government introduced new legislation to deal with the LIBOR scandal. However, many of the headline prosecutions have come from the US, where Barclays, HSBC, and RBS were all issued with subpoenas.