The Bank of England has suggested that the max jail term for anyone guilty of market abuse be extended to 10 years from the current 7, in its Fair and Effective Markets Review out on Tuesday evening.
If the UK government follows through with the suggestion, this means anyone guilty of insider trading or market manipulation of energy products covered by the market abuse regulation could get up to 10 years in jail – this includes emissions allowances and exchange-traded energy derivatives.
The bank also suggested that the government keep under consideration extending the scope of the UK’s criminal liability regime to markets and instruments not covered by the market abuse regulation.
It is clear the general public weariness with trading scandals has prompted the bank to suggest extending possible jail time for market abuse to show it and the government are willing to crack down on such behaviour. But as the report points out, nobody has served a full term for market abuse under the current regime in the UK.
What is interesting for energy traders will be how this might affect the application of REMIT in the UK. London introduced criminal sanctions for insider trading and market manipulation under REMIT in April. The max sentence is for 2 years, but the government has made it known it will keep the idea of extending it to match penalties in the financial world under consideration. It is unlikely to change in the short term, but if a scandal or two emerges from energy that could change quite quickly.