The European parliament has voted in favour of new rules imposing tougher sanctions for manipulating financial markets, insider dealing or abuse of inside information, which will cover a wider range of trading venues and financial instruments than current regulations and provide for substantial fines for misconduct.

Under the new proposals, which were adopted by 659 votes to 20, with 28 abstentions, companies convicted of market abuse could be fined up to 15% of their annual turnover or €15m (£12m). Individual perpetrators would face fines of up to €5m (£4m) and a temporary or some cases permanent ban on doing certain jobs within investment firms.

The new rules will be extended to cover a variety of financial instruments including commodity derivatives affecting food and energy prices, traded inside and outside the exchanges. In response to the LIBOR scandal, MEPs also argued that transmitting false or misleading information or providing false or misleading inputs which manipulate the calculation of a benchmark should fall under the market abuse rules to cover all possible and future manipulation.

Arlene McCarthy, the MEP who lead on this legislation, said: 'There is still much to do in restoring the trust and confidence in banks and the financial services industry. We must get the real economy moving again and make sure consumers are protected in the financial services sector. We are sending a clear signal that the EU is not a soft option or safe haven for perpetrators of market abuse.'

Parliament will start the negotiations with member states on the directive covering criminal sanctions for market abuse in October.