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* Carney: age of irresponsibility in finance is over
* Reforms will reverse tide on "ethical drift"
* Experts say plan not a game-changer
* For a FACTBOX: (Adds reaction)
By Huw Jones and William Schomberg
LONDON, June 10 (Reuters) - Britain announced a clamp-downon abusive practices in financial markets on Wednesday after astring of scandals involving the banking system, and Bank ofEngland Governor Mark Carney said "the age of irresponsibilityis over."
Under the proposals, criminal penalties for insider tradingwould be extended to Britain's huge fixed-income, currency andcommodity (FICC) markets and jail sentences for offenders wouldbe lengthened to up to 10 years.
So-called "rolling bad apples" or individuals who are firedfrom financial firms would no longer be able to move to anotherjob without their new employer knowing about their history.
And thousands more senior staff would be on the hook to makesure their teams stick to the rules, although unlike bankersthey will not automatically be presumed to be responsible formisconduct on their watch, potentially weakening the proposals'impact.
Bank of England Governor Mark Carney said central banks hadshared in the failings of the system in the past. The newaccountability rules would extend to him and his deputies at theBoE which was caught up in a foreign exchange scandal last year.
Carney said real markets were key for prosperity. "Notmarkets where transactions occur in chat rooms. Not marketswhere no one appears accountable for anything," he said.
His comments were made in excerpts of an annual speech hewas due to give to London's finance industry chiefs.
The Fair and Effective Markets Review (FEMR) -- which aimsto plug gaps in rules for the foreign exchange market inparticular -- was ordered by British finance minister GeorgeOsborne a year ago after British banks were fined billions ofpounds in 2013 for trying to rig a widely used interest ratebenchmark, the London Interbank Offered Rate or Libor.
Some of the same banks were hit later by more fines fortrying to manipulate the $5 trillion-a-day foreign exchangemarket even as the Libor rigging was being revealed.
"Individuals who fraudulently manipulate markets and commitfinancial crime should be treated like the criminals they are --and they will be," Osborne said.
The 100-page review was put together by the BoE, theFinancial Conduct Authority (FCA), Britain's top marketsregulator, and the finance ministry.
Britain has already introduced a law to prevent manipulationof eight major market benchmark rates, including those at thecentre of the Libor and foreign exchange scandals.
The British Bankers' Association welcomed the widening ofthe rules to trading firms beyond banks.
Rob Moulton, a regulatory lawyer at law firm Ashurst, saidthe changes were not far-reaching but could pave the way formore enforcement action by the FCA.
"Criminalising what has already been earmarked asunacceptable market practice is not a game changer. It doeshowever increase the pressure on the UK regulator to take itsfirst scalp," said
NO MORE ETHICAL DRIFT
Reaction was mixed to the creation of a new, industry-ledMarket Standards Board to promote good practice in markets.
"The FCA is there to regulate conduct, and a key part ofthis is encouraging firms to get their culture right," saidSimon Morris, a lawyer with law firm CMS. "We don't need anoverlapping conduct standard body to issue high-sounding codeswith few real powers to back them up."
Carney said firms would face tougher rules if they did notfollow the new body's recommendations.
The success of Britain's review will largely hinge onwhether regulators from other parts of the world follow suit,given the global nature of the markets involved.
Carney, who chairs a global regulators body, the FinancialStability Board, said he would urge his peers to adopt similarmeasures "to reverse the tide of ethical drift".
The European Union is close to approving a law to tightensupervision of market benchmarks after agreeing to penaliseabusive trading practices and inject more transparency intotrading. (Reporting by Huw Jones and William Schomberg)
