Manipulating foreign exchange, fixed income and commodities benchmarks could lead to jail sentences for rogue traders under new proposals from UK Chancellor George Osborne.

Manipulating foreign exchange, fixed income and commodities benchmarks could lead to jail sentences for rogue traders under new proposals from UK Chancellor George Osborne.

Osborne believes that by extending the legislation regulating Libor to cover other benchmarks, the City can regain some of its credibility after a torrid couple of years in which market manipulation has been exposed as rife.

“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,” the Chancellor said.

“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.”

At the same time the Treasury, Bank of England and FCA has launched a review of market abuse focusing on currency, fixed income and commodities trading.

The Fair and Effective Markets Review is to be headed by BoE deputy governor for markets and banking Minouche Shafik, with FCA chief executive Martin Wheatley and Treasury director general Charles Roxburgh co-chairing the investigations.

A panel to “reflect the views of the industry” will also be put together and chaired by Allianz Global Investors chief executive Elizabeth Corley.

The review aims to “reinforce confidence in the fairness and effectiveness of UK wholesale financial market activity, and influence the international debate on trading practices”. The review will take a year and recommend reforms.

"Confidence and trust are critical to financial markets – and robust, reliable benchmarks are the bedrock of market integrity. I welcome this review, which will ensure that key markets operate with the highest standards of integrity," Wheatley said.