IMA calls for govt to act on derivatives after swaps scandal

The government should reconsider its decision not to adopt Vickers report proposals on derivatives and questions now need to be asked over a full split between retail and investment banking, according to the IMA.

In its submission to the Parliamentary Commission on Banking Standards, the IMA said "recent developments" should cause the government to toughen up its plans to safeguard retail banking units and even consider a full separation of retail and investment banks. The original report's proposal that retail banking be ring-fenced said derivatives such as interest rate and currency hedges be left outside the ring fence, a move supported by the IMA at the time. The government's subsequent June white paper on banking failed to adopt this recommendation, however. But the IMA said UK banks' ...