LONDON (Reuters) - Britain will widen the scope of laws which make the manipulation of market benchmarks a criminal offense to include seven more rates covering the currency, gold, oil and silver markets by April 1, the government said on Monday.
The move is the latest by the Conservative-led government to clamp down on malpractice in the City of London whose reputation has been tarnished by an interest rate-rigging scandal and claims that traders colluded to manipulate currency rates.
“Ensuring that the key rates that underpin financial markets here and around the world are robust, and that anyone who seeks to manipulate them is subject to the full force of the law, is an important part of our long-term economic plan,” finance minister George Osborne said in a statement.
Under the law, people found guilty of manipulation can be handed jail sentences of up to seven years. It was originally introduced to cover the London Interbank Offered Rate (Libor) market after a global manipulation scandal which resulted in banks being fined billions of dollars.
The finance ministry said seven benchmarks including the WM/Reuters 4 p.m. London fix -- the dominant global benchmark in the $5.3 trillion-a-day currency market -- would be subject to the law, pending a consultation by Britain’s financial watchdog.
The European Union has criminalized the rigging of financial market benchmarks after the Libor scandal, but those laws will not take effect until 2016.
A former trader from Royal Bank of Scotland was arrested on Friday in connection with a criminal investigation into allegations that bank traders tried to manipulate currency markets, according the Financial Times.
For the full list of affected benchmarks see:
Reporting by William James; Editing by William Schomberg/Ruth Pitchford