(Refiles to fix dropped letter in first paragraph)
* Osborne to speak at 2000 GMT, Carney 2015 GMT
* Plans for regulation of London currency trading expected
* Osborne may detail plans for new UK criminal legislation
* Carney may also address risks from house price boom
By David Milliken
LONDON, June 11 Tougher rules for the world's
biggest currency trading hub - including potential new criminal
sanctions - are likely to be high on the agenda when Britain's
finance minister and central bank chief address London's
financial community on Thursday.
Finance minister George Osborne said last week he wanted to
strengthen the integrity of London's financial markets in
response to an investigation into the possible manipulation of
daily foreign exchange benchmarks.
London is the main global centre for the $5-trillion-a-day
trade in foreign exchange. Annual speeches by Osborne and Bank
of England Governor Mark Carney at the Lord Mayor of London's
ornate Mansion House residence provide a chance to show that
rhetoric will translate into tough regulation.
Carney may also touch on measures to reduce risks to the
economy from Britain's rapidly rising house prices. The BoE
meets next week to finalise a twice-yearly report on financial
stability, and is expected to consider tighter curbs on mortgage
But Britain's housing market worries are likely to be
overshadowed by the global push to reform codes of conduct for
traders. The European Union will make rigging of financial
benchmarks a specific criminal offence from 2016, subject to
implementation from national parliaments.
Osborne may wish to regain the initiative by announcing a
plan of his own to criminalise specific malpractice in English
law and avoid accusations of being soft on financial wrong-doing
in the run-up to a national election due in May 2015.
"He will be likely to suggest not only the criminalisation
of the manipulation of benchmarks ... but he will also I think
impose further measures of transparency," Marshall Bailey, chief
executive of FX trade body ACI, told Reuters.
Foreign exchange is the least-regulated financial market in
the world. Until the past year's concern about price rigging
there had been little appetite to change this in Britain or
More than 40 currency dealers around the world have now been
fired or suspended following claims that traders used client
order information improperly to attempt to manipulate prices.
Even the BoE suspended an employee earlier this year after
an internal investigation into "internal control processes".
No individual or bank has yet been formally accused of any
wrongdoing, far less prosecuted under England's more general
anti-fraud laws. ACI's Bailey said it was important to wait
until investigations were concluded before passing judgement.
Osborne was more likely to set out general plans rather than
very specific measures, he added.
"I think it is very unlikely that there will be
announcements of anything other than intent," Bailey said.
Detailed rules are likely to be announced only after a
report due in the next few weeks from the Financial Stability
Board - a committee chaired by Carney which reports to leaders
of the G20 group of major economies.
Past Mansion House speeches have set the ball rolling on
major policy developments in Britain. Two years ago, Osborne and
then BoE Governor Mervyn King announced the Funding for Lending
Scheme which helped restart mortgage lending after the financial
Carney is also likely to want to address issues of market
malpractice, said Philip Shaw, an economist at Investec.
Last month Carney said that as well as the prosecution of
wrong-doers, financial markets needed higher ethical standards
or they risked losing their legitimacy.
(Editing by Ruth Pitchford)