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LONDON, Nov 19 (Reuters) - The Bank of England's regulatoryarm will scrutinise bonuses awarded to traders involved inattempts to manipulate the currency market, a senior officialsaid on Wednesday.
BoE Deputy Governor Minouche Shafik said some of the sixbanks fined $4.3 billion last week for attempting to manipulatethe foreign exchange market were already clawing back bonusawards for traders that were involved.
The BoE's Prudential Regulation Authority supervises banksin Britain.
"I would certainly say that we will look at theirremuneration proposals when we get them in January," she toldparliament's Treasury Committee.
"These are clearly egregious cases of misconduct and onewould hope to see remuneration committees in these firms willuse these powers they have to hold these individuals toaccount," Shafik added.
Some banks have dipped into bonus pools to pay recent fines,which sends a very strong signal, she added.
"Attempts to manipulate financial markets are probably thesecond oldest profession," she told lawmakers.
She dismissed concerns that customers would take their FXbusiness elsewhere after the banks were fined for theirmisconduct in London.
"I don't attach much credibility to that view," she said,adding that enhancing the credibility of FX markets wouldultimately be to the country's comparative advantage.
She was pressed by some lawmakers to extend bonus curbs atbanks introduced under European Union law to the more juniorlevel traders who were found to have tried rigging FX markets.
Under the rules, a portion of the bonus to a "material risktaker" - typically a senior member of staff - has to be deferredover several years and can be clawed back.
Shafik said she agreed in principle the curbs could beextended to more junior level banks staff.
She said the Fair and Effective Markets review that sheco-chairs is consulting on how and whether bonus curbs at banksshould be extended to FX and other markets.
Andrew Tyrie, who chairs the Treasury Select Committee, toldShafik that the BoE would be questioned by the lawmakerssometime in future on the central bank's role in the FX riggingscandal.
Last week the BoE dismissed its chief foreign exchangedealer Martin Mallett, saying he had not alerted his bosses thattraders were sharing information. (Reporting by Huw Jones and Andy Bruce; editing by WilliamSchomberg)
Barclays (BARC)
