(Repeats story from Sunday)
By Huw Jones and David Milliken
LONDON, June 7 (Reuters) - Britain's regulators will unveil plans on Wednesday that aim to clean up behaviour in the financial markets, where banks have been fined billions of pounds for trying to rig currencies and interest rate benchmarks.
The Bank of England, Treasury and the Financial Conduct Authority will publish recommendations from their Fair and Effective Markets Review into conduct and operation of currency, bond and commodity markets.
"It is going to say some quite significant things about what the scope of regulation should be for asset classes that historically have not been heavily regulated," Martin Wheatley, FCA Chief Executive and co-chair of the review, told Reuters.
The review will focus on how to raise standards of behaviour among traders at banks, recommend tougher sanctions and give markets more detailed guidance on what are acceptable trading practices.
Finance industry officials expect the review to take on board some of their ideas, such as cracking down on traders known as "rolling bad apples," making it harder for a rogue trader to get a job unchallenged at another bank.
Some expect a new independent body to help with providing guidelines on market practices and enforce a new global code of conduct that central bankers are already working on.
Wheatley said, for example, there was a need to determine more clearly when legitimate hedging in markets becomes abusive "front-running," where banks use information to trade on their own account ahead of customers.
Guidance is also expected on when it is acceptable to pull out of a trade at the last minute in the currency markets, a practice known as "last look."
Given the global nature of forex, commodity and bond markets, Wheatley said international backing would be needed to make the review's recommendations effective in practice.
An industry official said British regulators could slap extra capital charges on banks that failed to apply the recommendations.
Bank of England Governor Mark Carney and British finance George Osborne, who ordered the review last year, are expected to touch on its findings in speeches on Wednesday evening at the Mansion House in the City of London financial district.
Economists are also waiting to hear if Carney will comment on the strength of sterling, which has risen 4 percent over the past year, and do not foresee a repeat of last year's warning that interest rates could rise sooner than expected.
"The underlying impression at the moment is that the Bank is very much in wait-and-see mode," Marc Ostwald, a bond strategist at ADM Investor Services, said.
Editing by Jane Merriman