Three developments would be needed for an enforcement agency to work, and all are foreshadowed in the SIB report. The most basic is centralised surveillance of equities, futures and options, to trace suspect patterns of dealing that nowadays are likely to involve more than a single market. The SIB is now working on this, but it will be a tough nut to crack.
Unified surveillance must be matched by common ideas of what constitutes malpractice, and where the borders with criminality lie. Again, the inter-regulator group proposed by the SIB would make a start on harmonising the practices of different authorities.
The third element would be a single organisation able to draw all this together, deal with criminal prosecutors and take tough action itself.
The SIB has created a new department to track important cases where criminal prosecution is on the cards. It also plans to encourage better liaison between other Financial Services Act regulators and the prosecuting authorities, and will use its existing (rather narrow) powers more effectively, for example by naming guilty individuals.
But if a City enforcement body is to command respect and deal on an equal footing with criminal prosecutors, this is not nearly enough. For example, the power to fine is devolved to the junior regulators that report to the SIB. If there are negotiations over whether a case should go to court or be dealt with by big fines and expulsion, the SIB's role would be a weak one of persuading the junior authorities to act.
For the SIB to develop an enforcement role, as its chairman Andrew Large acknowledges, it would have to be able to take on tough new powers itself, or the prosecutors - and the City - would not take it seriously. Legislation would be required but the Treasury does not want to get involved. It should think again.