The foreign exchange market needs no extra regulation from British regulators but currency market players must remain vigilant on market discipline, says a senior UK regulator.

Mr Michael Foot, managing director of the deposit takers and markets directorate at Britain's Financial Services Authority (FSA), warned against complaceny and said responsibility for good practice rested with banks and senior managers.

At a three-day European Congress on the Financial Markets Association (ACI) in Luxembourg, Mr Foot said "operations in the \ market are pretty unregulated and I'd be very disappointed if that changed". After a series of financial market scandals and crises, ACI executives are concerned that the $1.2 trillion a day global currency market could have to submit to greater regulation.

The ACI is keen to pre-empt any move to step up supervision, but is sensitive that shocks such as the collapse of Enron and the Allfirst currency trading scandal have damaged the image of financial markets generally. But Mr Foot insisted that market disciplines were what mattered.

"Here is a market where there are many participants, huge transparency, huge volumes in all the major currencies. If a market like that can't run in a competitive and open spirit, then heaven help us all," he said. Firms and regulators had become better at measuring risk in the last decade, but risks still exist, he said.

"I am pretty comfortable that among the banks and firms we regulate, the risks they take in this market are properly assessed, But no one can ever be complacent about this because as instruments develop," he said