§ Mr. Cashasked the Chancellor of the Exchequer how the provisions of the Financial Services Bill will affect the Bank of England's surveillance of the wholesale money and foreign exchange markets.
§ Mr. Ian StewartThe Government have been considering the arrangements for supervision of the wholesale money, foreign exchange and gold bullion markets. These markets have by tradition generally been132W overseen and supervised by the Bank of England. on a non-statutory basis. The main participants are recognised banks and deposit-taking institutions, building societies, and specialised brokers and dealers.
Certain transactions in these wholesale markets, such as dealings with brokers in certificates of deposit and dealings in currency and gold options and futures, fall within the scope of the Financial Services Bill as at present drafted. Others, such as dealings in commercial bills, and normal spot and forward currency transactions, are excluded. We have concluded that the supervision of each of these wholesale markets should in future be the responsibility of the Bank of England. This supervision will continue to be on a non-statutory basis. The Government will be issuing a consultative document later this year seeking views on the arrangements for future regulations of these markets.
To reduce supervisory overlap, the Secretary of State for Trade and Industry will be bringing forward amendments to the Financial Services Bill which will exclude from the definition of carrying on investment business wholesale transactions in these markets if at least one party to the transaction is a recognised bank, licensed deposit taker, building society or an institution on a list to be drawn up by the Bank of England. The bank's criteria for inclusion on such lists and its arrangements for maintaining them will be subject to the approval of the Treasury. The Department of Trade and Industry will be consulting on detailed amendments. A copy of its letter to interested parties is being placed in the Library of the House.