George Osborne To Tackle Currency Market Rigging In City Clean-Up Bid

Osborne To Tackle Massive Banking Scandal Before It All Blows Up
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Britain's Chancellor of the Exchequer George Osborne holds freshly minted coins during a visit to the Royal Mint in Llantrisant, Wales on March 25, 2014. In events surrounding the Chancellor's recent budget, a new design was revealed for a 12-sided one pound coin, designed to be much harder to fake and based on the pre-decimal 'threepenny bit' three pence piece. AFP PHOTO/POOL/Matthew Horwood (Photo credit should read MATTHEW HORWOOD/AFP/Getty Images)
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George Osborne could soon unveil measures to clean up the global currency markets in order to head off a potentially massive foreign exchange market manipulation scandal.

According to the BBC, the Chancellor is working with officials and the Financial Stability Board, a group of global regulators, to crack down on the largely unregulated £3.1 ($5.3) trillion-a-day market, which is the biggest market in the world.

Osborne told MPs in April that allegations of foreign exchange ("forex") manipulation was "potentially very, very serious". Others have warned that the scandal could be just as bad as the Libor rate rigging scandal that tarnished the banking industry, claiming the scalp of Barclays CEO, Bob Diamond.

David Buik, market commentator at Panmure Gordon, told the Huffington Post UK said that Osborne's planned crackdown made "the most enormous amount of sense".

He warned that the scale of market manipulation "could get massively out of hand and make all the previous scandals look like vicarage tea parties."

The prices in the forex market are set at the 4pm "fix", a City benchmark set by the median price of trades taking place in a 60-second window. It is alleged that traders were putting in client orders ahead of this window in order to influence the benchmark, against which currencies are priced.

Osborne could also be looking to head off any potential forex market rigging scandal in order to avoid the Tories' election efforts in 2015 being derailed by accusations that they failed to act over any misconduct.

"The Coalition's nightmare scenario is that billions of pounds of forex fines are announced in 2015 and Labour accuses the government of a lack of action. Mr Osborne is looking intently at tightening the forex rules to try and head off just such an eventuality," BBC business editor Kamal Ahmed wrote.

Regulators around the world are looking into allegations of forex manipulation, with at least fifteen banks reported to be involved including Barclays, HSBC, the Royal Bank of Scotland and Goldman Sachs.

London is central to the foreign exchange market, with 40% of trades taking place in the capital. Some banks, like Deutsche Bank, have already suspended or fired traders over the allegations, although no allegations have yet been proved.

The Financial Conduct Authority, the City watchdog, warned that banks and traders could face fines and bans if misconduct is found, after previously fining Barclays, RBS, UBS and money broker ICAP for Libor rigging.

George Osborne Looking At Things
Chancellor George Osborne Visits Business Affected By The Budget(01 of25)
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LLANTRISANT, WALES - MARCH 25: Chancellor George Osborne is seen during a visit to the Royal Mint to see how it has been affected by the budget on March 25, 2014 in Llantrisant, Wales. In the Chancellor's budget statement last week he announced a new design for a 12-sided one pound coin which is designed to be much harder to fake and is based on the pre-decimal 'threepenny bit' three pence piece. (Photo by Matthew Horwood - WPA Pool/Getty Images) (credit:Getty Images)
Chancellor George Osborne Visits Business Affected By The Budget(02 of25)
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CARDIFF, UNITED KINGDOM - MARCH 25: Chancellor George Osborne speaks with Paul Varughese during a visit to Castle Bingo to see how it has been affected by the budget on March 25, 2014 in Cardiff, Wales. In the Chancellor's budget statement last week he announced a cut in tax on the profits of Bingo halls from 20 per cent to 10 per cent. (Photo by Matthew Horwood/Getty Images) (credit:Getty Images)
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Chancellor of the Exchequer George Osborne talks to Callum Johnstone, 19, during a visit to Haas-Tek, an export-driven business in Lockerbie, Scotland that specialises in the relocation and installation of industrial machinery and equipment. (credit:PA)
George Osborne regional visit to the Midlands(04 of25)
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Chancellor George Osborne tries his hand at some engineering work with chargehand Paul Wicket (left) during a visit to Cube Precision Engineering in Rowley Regis, West Midlands. (credit:PA)
Chancellor George Osborne Visits Business Affected By The Budget(05 of25)
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PORT TALBOT, UNITED KINGDOM - MARCH 25: Chancellor George Osborne drives a train during a visit to Tata Steel to see how it has been affected by the budget on March 25, 2014 in Port Talbot, Wales. In the Chancellor's budget statement last week he announced support for energy intensive manufacturing, Tata's Port Talbot factory is the largest steel plant in the UK, producing five million tonnes of steel annually and employs over 4,000 people. (Photo by Matthew Horwood - WPA Pool / Getty Images) (credit:Getty Images)
Chancellor George Osborne Visits Business Affected By The Budget(06 of25)
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PORT TALBOT, UNITED KINGDOM - MARCH 25: Chancellor George Osborne in a control room with CEO of Tata Steel Europe Karl Koehler (L) during a visit to Tata Steel to see how it has been affected by the budget on March 25, 2014 in Port Talbot, Wales. In the Chancellor's budget statement last week he announced support for energy intensive manufacturing, Tata's Port Talbot factory is the largest steel plant in the UK, producing five million tonnes of steel annually and employs over 4,000 people. (Photo by Matthew Horwood - WPA Pool / Getty Images) (credit:Getty Images)
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Chancellor George Osborne talks to kegging operative Paul Joyce (left) during a visit to Marston's Brewery in Wolverhampton. (credit:PA)
George Osborne regional visit to the Midlands(08 of25)
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Chancellor George Osborne views a store of kegs during a visit to Marston's Brewery in Wolverhampton. (credit:PA)
Budget 2014(09 of25)
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Chancellor of the Exchequer George Osborne is passed a block by a trainee during a visit to a Barratt Homes building site in Nuneaton, the day after he said in his annual budget that the government would extend the equity loan portion of the Help to Buy scheme for four years longer than planned to 2020, a move he said would deliver 120,000 new homes. (credit:PA)
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Chancellor of the Exchequer George Osborne watches Ander Bryden at work during a visit to Haas-Tek, an export-driven business in Lockerbie, Scotland that specialises in the relocation and installation of industrial machinery and equipment. (credit:PA)
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Chancellor of the Exchequer George Osborne joins trainee chefs at a cookery school during a visit to the Dean Clough Mills in Halifax where he visited small businesses during his trip to West Yorkshire, to promote the introduction of the Employment Allowance in April. (credit:PA)
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Chancellor of the Exchequer George Osborne meets students who are learning to write computer code at the Royal Society of Arts in London at the launch of the 'Year of Code' campaign. (credit:PA)
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Chancellor George Osborne watches Dr Simon Hughes, Senior Scientist OGT during a visit Begbrooke Science Park in Oxfordshire. (credit:PA)
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Chancellor George Osborne meets setter operator Dean Thompson (right), during a visit to manufacturing company Sertec, Coleshill in Birmingham, where he also gave a speech on the economy. (credit:PA)
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Chancellor George Osborne meets children (names not given) at his annual Christmas party at No11 Downing Street in London. (credit:PA)
Downing Street St Andrew's Day reception(16 of25)
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Chancellor of the Exchequer George Osborne (2nd left) with chef for the event Tom Kitchin (2nd right) and his apprentices Reece and Blair, in the kitchen of No 10 during a St Andrew's Day reception in Downing Street, London. (credit:PA)
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Chancellor George Osborne down the mineshaft during his visit to Thoresby Colliery, Nottinghamshire. (credit:PA)
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Chancellor George Osborne during a visit to Birds Eye in Lowestoft as More than 1,100 small firms have benefited from a Government scheme designed to help early-stage companies raise equity finance, the Treasury has said. (credit:PA)
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Chancellor of the Exchequer George Osborne with mechanic Steve Davidson as he visits Swift Cycles in London. (credit:PA)
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Chancellor of the Exchequer George Osborne speaks with management trainee Robert Taylor during a visit to AW Hainsworth and Sons in Leeds as figures are likely to show the UK economy has enjoyed a third successive quarter of improved growth. (credit:PA)
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Chancellor of the Exchequer George Osborne visits Cartwright vehicle manufacturers in Altrincham, Cheshire, where he toured the factory and met workers. (credit:PA)
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Chancellor George Osborne is shown the cockpit of land speed record car Bloodhound by Wing Commander Andy Green (right) during a visit to the Bloodhound Technical Centre at Avonmouth near Bristol. (credit:PA)
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Chancellor of the Exchequer George Osborne eats some Ubuntu Chocolate watched by owner Jeremy Wickremer during a visit to a pop up shop where ten new small companies are trying to produce growth and become established, in Piccadilly central London. (credit:PA)
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Chancellor of the Exchequer George Osborne meets staff at Warburtons Bakery in Wednesbury near Birmingham. (credit:PA)
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Chancellor of the Exchequer George Osborne during a visit to a branch of Lloyds TSB on The Strand, in central London. (credit:PA)