The Treasury, Bank of England and the FCA will work alongside each other on the review, which focuses on those wholesale markets where concerns have been flagged. These include fixed income, currency and commodity markets.
This means that the market abuse regime will undergo a reform where foreign exchange and commodities do not fall under current rules covering market manipulation and insider dealings on securities.
Osborne is expected to announce plans later on Thursday in his annual Mansion House speech on extending the Libor legislation to cover further benchmarks in wholesale markets and expand domestic rules for market abuse.
The “Fair and Effective Markets Review” will be headed by Bank of England deputy governor for markets and banking, Minouche Shafik, as well as the FCA’s chief executive officer Martin Wheatley and Treasury director general of the Charles Roxburgh who will co-chair the inquiry.
Additionally, a panel of market practitioners will be appointed, chaired by Elizabeth Corley, CEO of Allianz Global Investors.
“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,” Osborne said.
Wheatley commented: “Confidence and trust are critical to financial markets – and robust, reliable benchmarks are the bedrock of market integrity.”
