BBA To Osborne: City Traders 'Need Licence'

By Mark Kleinman, City Editor

All traders in Britain's financial markets should be forced to seek professional qualifications before they can operate, the banking industry's main lobbying group is to tell George Osborne.

Sky News has learnt that the British Bankers' Association (BBA) will say in a submission to a Treasury-led consultation that recent City scandals mean the time has come for participants in financial markets to be formally licensed.

It will suggest that a range of qualifications should be established which would constitute "a licence to trade", and will argue that industry codes of conduct should be endorsed by regulators in order to provide them with added teeth.

The recommendation will represent a watershed moment following years of resistance from the UK's biggest banks for a statutory professional qualifications regime for those operating in the fixed-income, currencies and commodities (FICC) markets.

If implemented, it would mean a new licensing regime would be required, potentially for hundreds of thousands of employees in London and across the UK.

The BBA paper, which is expected to be made public on Wednesday, is being submitted to the Treasury following the launch of an inquiry called the Fair and Effective Markets Review by the Chancellor last year.

Speaking at Mansion House last June, Mr Osborne said: "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.

"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."

The launch of the review followed two years of regulatory settlements between banks and financial watchdogs in London, New York and elsewhere in relation to the widespread manipulation of the Libor interbank borrowing rate.

Lenders including Barclays, HSBC, Lloyds Banking Group and Royal Bank of Scotland were fined hundreds of millions of pounds for the abuse, which have been followed by similar manipulation in the foreign exchange markets.

In December, the Treasury announced that the Government would extend legislation put in place to regulate Libor to seven additional financial benchmarks, with those found guilty of manipulating them facing up to seven years in prison.

The BBA's submission is also understood to call for an extension of UK regulators' senior managers' regime to all non-retail market participants in order to create a level playing field with retail banks.

It will also raise the alternative option of extending a certification regime on which the Financial Conduct Authority is consulting to those operating in wholesale markets who fall outside the current framework, according to an insider.

Since the financial crisis of 2008, a number of UK Government reviews have prompted a toughening of standards for bank employees.

The Parliamentary Commission on Banking Standards called for far greater accountability for senior bankers, with a string of measures now being implemented.

The industry has also attempted to weigh in with the creation of the Banking Standards Review Council, which will attempt to reshape culture and staff behaviour but will not have formal disciplinary powers.

The BBA declined to comment on Tuesday.

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