Wednesday, June 18, 2014

U.K. Treasury Sets Bold Plans for Market Abuse Regulation Outside of Recently E.U Legislation

The U.K. Treasury announced a major overhaul of financial market regulation that will involve enhanced financial benchmark oversight beyond LIBOR and set the U.K. going its own way on the recently enacted E.U. legislation on market abuse. The Fair and Effective Markets Review will be led by Bank of England Deputy Governor for Markets and Banking, Minouche Shafik, with Martin Wheatley Chief Executive Officer of the Financial Conduct Authority, and Charles Roxburgh, Treasury Director General for Financial Services, as co-chairs.

In a statement, the Government said that it plans to extend the new legislation put in place to regulate the LIBOR benchmark to cover further benchmarks in the foreign exchange, fixed income and commodity markets. As part of expanding the tough U.K. criminal regime for market abuse, the U.K. will not opt in to recently enacted E.U. legislation providing criminal sanctions for insider dealing and market manipulation, including abuse of LIBOR and other financial benchmark. Treasury vowed that U.K. rules in this area will be as strong or stronger than those of the E.U., while preserving the flexibility to reflect specific circumstances in the U.K.’s globally important financial sector. FCA CEO Wheatley remarked that robust and reliable benchmarks are the bedrock of market integrity.

The U.K. will also extend the Senior Managers and Certification Regime to cover all financial institutions with a presence in the country, by bringing in foreign financial institutions with branches in the U.K.