George Osborne at the Mansion House 2015
Chancellor of the Exchequer George Osborne (L), the Lord Mayor of London Alan Yarrow (centre) and the governor of the Bank of England, Mark Carney at the annual Lord Mayor's Dinner to the Bankers and Merchants of the City of London at Mansion House on June 10, 2015Mary Turner/Getty Images

Within the already stiff and formal world of finance, regulation holds a special claim to be its least sexy topic. That's until you start talking jail time of course, which was the drift Mark Carney took last night in his Mansion House speech about cleaning up the fixed income, currencies and commodities (FICC) markets.

But in fact Carney's hands are tied; nobody's going to jail any time soon (no market abuser has so far been slapped with the maximum seven years in jail, never mind that being extended to 10 years).

Despite all this tough talk about the law, what is actually being proposed is essentially some added layers of self-regulation in an area which the public has come to believe operates like a Wild West card game - dealers bragging about fixes in private chat rooms and so on.

The bank has also done a bit of grafting: interdealer brokers and asset managers will become subject to the Senior Managers Regime. This set of rules has been established in the wake of financial collapse to make the most senior managers personally responsible for failings at the firms they govern.

But to be clear, the sanctions contained within this code of conduct are civil not criminal. This means the boss of a firm which participates in market rigging might lose their licence to operate, as well as incur a fine.

The City has a long tradition of self-regulating bodies comprising an alphabet soup of codes and standards councils ranging from banking to insurance to mortgage advice.

Relatively recent history has seen a pattern of establishing self-regulating bodies and then later dissolving these into complex rule books of statutory regulation; adding FICC regulation to the statute was something the authors of the Bank of England's Fair and Effective Markets Review seemed rather skittish about.

Creating statutory rules was the accepted protocol at the last regulator, the Financial Services Authority, which the Tories gleefully disassembled as soon as they got a whiff of power, branding it as Labour's ineffectual legislation factory. The job is now more evenly split between the Treasury, Bank of England and the renamed Financial Conduct Authority.

Dotted throughout the BoE review are pointers to regulatory gaps within interdealer market trading, and suggestions of where legislation may be drawn up. The current situation led some respondents from the industry to conclude that firms may begin to treat large enforcement fines as a cost of doing business.

So the government must be seen to do something. This latest regulatory salvo is typical of the fine line the Tories have had to walk with this. Regulation is expensive (big fines on firms works out cheaper for everyone) and the Conservative view of the City has always erred on the side of more freedom for markets, despite what they might have said in the wake of the crash.

More Statutory regulation is also the last thing they want with much uncertainty over Europe looming in the near future. George Osborne said at the dinner: "One of the greatest threats to our international competitiveness comes from ill-designed and misguided European legislation."

So what we have is some sabre rattling at the pirates still hiding in the rigging, and a promise of more surveillance and better education and training.

The BoE said it would look at the situation again a year on, in the probable hope that they are not forced to close this self-policing lacuna with the statute book.

But we should remember, some of the last areas to remain unregulated in the City such as mortgage advice, can turn out to be the catalysts of calamity. Regulation is only as strong as its weakest link. And while it's never sexy, without it, as we have seen, nothing else matters.