The move is the latest in a bid to clamp down on malpractice in the City of London whose reputation has been tarnished by an interest rate-rigging scandal and claims that traders colluded to manipulate currency rates.
“Ensuring that the key rates that underpin financial markets here and around the world are robust, and that anyone who seeks to manipulate them is subject to the full force of the law, is an important part of our economic plan,” Chancellor George Osborne said.
Under the law, people found guilty of manipulation can be handed jail sentences of up to seven years. It was originally introduced to cover the London Interbank Offered Rate (Libor) market after a global manipulation scandal which resulted in banks being fined billions of dollars.
The finance ministry said seven benchmarks including the WM/Reuters 4pm London fix – the dominant global benchmark in the $5.3 trillion-a-day currency market – would be subject to the law, pending a consultation by the financial watchdog.
The European Union has criminalised the rigging of financial market benchmarks after the Libor scandal, but those laws will not take effect until 2016.