12:20 It seems that Andrew Bailey not read the book Dark Pools and Mudie is not impressed. However, Bailey has read all the literature raised in the recent claims by New York Attorney General alleging that Barclays defrauded investors when encouraging them to operate in its dark pools.

Here's what Wiki says about the Dark Pools author, Scott Patterson - sorry, it was the best I could do a short time. (I'm surprised he didn't brandish Flash Boys by Michael Lewis)

12:15 Mudie is still adamant that if high frequency trading is occuring in the US and Europe then surely it must occur in the UK. He is worried that regulators are not being proactive enough.

Carney says they are concerned enough about the structure and conduct in forex, fixed income, currency and commodity markets - not equities - to have launched a review, the responsibilty is the Financial Conduct Authority's.

The battle lines have been drawn.

^{George Mudie was quoting from a book published in 2012 called "Dark Pools"}

12:01 George Mudie wants reassurances on high frequency trading and "dark pools" .

Carney says the issue is one of conduct not policy, but Mudie is not happy. He believes this could become an issue should problems arise.

Carney, slightly exasperated, says he is looking at the market but adds this is really a question for FCA chief Martin Wheatley.

Mudie, waving a book published in 2012 called Dark Pools, presses: "Do you know how many dark polls operate in the UK"

Carney doesn't

Mudie replies: "I wouldn't want to play card with you" - I think what he's means is that he can't read the Governor - some it the market seem to have had the same problem.

11:58 Bailey says we should be concerned about the length of mortgages, especially if they extend to a point where the borrowers' income is falling - I think he means they start to draw a pension. There have been calls to introduce of 30-year mortages.

11:54 Kohn says we should look on the bright side with regards to interest rates; rising rates will be indicative of an improving economy

11:41 Andrew Bailey adds while he understands the arguments against buy-to-let, the BoE can only act in line with its objective to target 2pc inflation. It is up to lawmakers to act is they perceive that buy-to-let is taking too much housing supply out of the market.

11:33 The Governor explains that the curbs on the housing market were introduced not because people would be unable to pay those loans, but to head off the impact of such high household indebtedness on the economy. The recovery has been driven by consumption and it remains a key driver of growth.

On buy-to--let, he says it represents around 15pc of all mortages - consistent with historic averages. He adds that there has been no shift in underwriting standards (borrowers on the whole put down deposits of around 25pc, again in line with historic averages.

11:27 Carney has stepped in to say the hedging is not an issue for the Bank of England. At the heart of the issue MPs are raising is the recent interest swap misselling scandal, where many small businesses hedged against a rise in rates but not a fall - the crisis erupted and the BoE responded by cutting rates to an all-time low of 0.5pc.

Carney said:

If you buy insurance, which is effectively what you are doing by hedging through an interest rate, and if you match the maturity of the hedge, the maturity of the loan, then this is not an issue.

If you were speculating, by saying that I took out insurance at a certain interest rate and I wanted to redo it, then yes, there is always a break fee but the stance of monetary policy is determined not by interest rate speculation but by achieving the inflation target.

11:25 Andrew Bailey ventures into the buy-to-let issue, stressing he is nervous given the record of bank. However, he says there will clearly be customers of ring-fenced banked who will want hedging products.

(There is) a dreadful record of the British banks in selling hedging products to customers. But there is an underlying need amongst customers for hedging, it just needs to be properly done. We will have to be very vigilant about (future sales of hedging products by ring-fenced banks)."

11:21 We have moved off the housing market and on to the offering of hedging products within ringfenced banks. Martin Taylor is asked if he anything to say.

He says his view as well known, so "No". He has warned in the past that permitting the sale of even simple derivatives within the ring-fenced bank could be, as he put it , the "thin edge of the wedge". Mr Taylor has argued:

This seems to be absolutely the sort of area that will go the slippery slope way, as Paul Volcker described on Glass-Steagall.

11.19 Carney is asked what else does he have in the policy locker if the current measure to cool the housing market do not work? He replies

We are not currently looking at additional measures, including mortgage caps and forcing banks to ensure that borrowers can afford mortgage repayments if interest rates rise.

However, he adds that the 15pc cap on risky loans could be raised and loan to value ratios changed.

Carney says the cap on loans above 4.5 times income has the effect of making is more profitable for banks to offer loans where income to loan values are lower

11.17 The Governor is fearful of the indebted first time buyers - for single buyers house prices in London are now nine times one salary.

11.13 Carney says that the fear over rising house prices is the direct impact of personal indebtedness on the banking system.

Therefore the BoE is currently undergoing a major stress test based on a worst case scenario of a 35pc drop in house prices, plummeting unemployment levels, and a three year recession. Could the banks and building societies cope? This is underway.

11.04 Justifying Bank of England attempts to control the housing market, he says the FPC act to cap mortgages because it was not sustainable for house prices to rise faster than wages indefinitely.

While John Mann is concerned about they buy-to-let market. Kohn says...

We are well aware that buy-to-let market is a safety value that may need to be released.

11.03 Andrew Bailey says there has been a long term trend of rising house prices out-pacing wage growth - this can go on for a long time but is not sustainable.

11.00 At last on to house prices, even more relevant today given new ONS stats which show house prices are up 10.5pc in the 12 months to May.

10.57 Mr Carney is asked to repond to the International Monetary Fund's blistering attack on Europe’s authorities for allowing the eurozone to remain stuck in a low-growth trap.

The Governor is not that impressed:

It's an interesting report made in the vacuum of Basle ... where they are not responsible. He said the BoE has a responsibilty to target inflation, althogh the government may change that. This is an analysis that is outside political and political economic reality.

Here's how the Telegraph's Ambrose Evans-Pritchard reported the IMF attack.

10.51 Elsewhere, the British Chamber of Commerce has commented on today's inflation figures for June - which rose to 1.9pc, up from 1.5pc in May.

The largest contributions to the rise in inflation came from clothing, food, non-alcoholic drinks and air transport

Goods price inflation in June 2014 was 1.4pc, while services inflation was 2.5pc

David Kern, Chief Economist at the British Chambers of Commerce (BCC) said:

The increase in inflation in June should not spark a knee jerk reaction on interest rates by the Monetary Policy Committee (MPC). Monthly fluctuations in the inflation figures are normal and there are no significant upward pressures, particularly as wage growth remains weak.

The UK recovery is still not secure and growth amongst UK businesses must be fostered prior to any future interest rate rises. To sustain business confidence, the MPC must be more clear and consistent on the future path of interest rates, while the Government must place more emphasis on improving access to finance for growing firms and exporters.

10.50 Asked by Jesse Norman whether the Mansion House speech was meant to "shake up" the markets, Carney replied "absolutely".

He said:

If some people are on the wrong end of that, so be it.

Carney has faced a lot of criticism over what is regarded a flip-flopping on rates.

10.49 The TSC asks whether they agree with that big players, such as central banks, shift markets, and cause a herding effect and are therefore destabilising? Unsurprisingly, they don't.

10.42 Carney is asked - do you accept that you are deliberately setting expectation in the market - there are thousands of people employed to analyse your every word? He's pushed on this point.

He claims his core expectation setting is around inflation - target of 2pc.

10.38 Carney stresses his early interest rate rise comments were intended to make markets more aware of risks.

We were concerned that markets were not reacting to data ... despite us saying that any interest rate rise will be data driven.

10.36 But he concerned about market volatility, driven by increased index funds, mark to marketing and risk models.

10.35 Carney says macro volatility has gone down - which is not just about guidance and for the overall monetary policy environment the ECB and Bank of Japan are very relevant.

10.33 The panel is asked if the low level of volatility in markets influenced by forward guidance?

Kohn replies that there are other reasons, particulary the slow recovery from a deep recession.

10.29 MPs ask: Does forward guidance drive excessive risk taking? BoE replied:

Yes we are concerned. Resources are devoted to looking at risks and the fact that the structural model of investment banking is changing away from fixed income trading to large scale loan underwriting block trading.

BoE has also introduced stress tests in commercial property.

10.27 Carney is asked if the lines are being blurred between the MPC and FPC - and is asked if they merge.

In his, his reply is, "No". The long-winded version is the that people on these committees have different skills sets and it would not be advisable to merge them.

10.24 Back to banking capital requirements...TSC chairman Andrew Tyrie is concerned that the Bank is proposing a time-varying leverage ratio (ie, the amount of capital that banks must hold could change depending on the economic climate).

10.22 In the meantime, the Office of National Statistics says house prices have risen 10.5pc over the last year to May - the highest rate for four years. The reason Carney sits in front of MPs today.

That is up from 9.9pc in the previous month.

Once again, the market was in large part driven by London, where house prices rose by a record 20.1pc over the year.

10.21 Donald Kohn of the PRA says he would be concerned if the Financial Policy Committee raised bank capital requirements and the leverage ratio did not increase.

10.20 MPs present are Mr Andrew Tyrie (Chairman of the Treasury Committee), Steve Baker, Mark Garnier, Stewart Hosie, Andy Love, Pat McFadden, John Mann, Brooks Newmark, George Mudie, Jesse Norman, Teresa Pearce, David Ruffley, and John Thurso.

10.18 Carney also adds that the leverage ratio is not a backstop but is an integral part of the bank capital framework.

10.05 Carney is chastised for putting out publications just days before a Treasury Select Committee hearing.

Carney is being quizzed on leverage ratios. He tells MPS that a potential higher leverage ratio would have a most marked effect on building societes and investment banks.

Here's a link to James Titcomb's article on the latest moves by the Bank of England

09.58 Witnesses appearing include Dr Mark Carney, Governor, Andrew Bailey, Deputy Governor, Prudential Regulation and Chief Executive of the Prudential Regulation Authority, Donald Kohn, and Martin Taylor, External Members of the Financial Policy Committee, Bank of England.

09.50 The Governor of the Bank of England is today appearing in front of the Treasury Select Committee to give evidence on his attempts to curb rising house prices. Here are the new measures implemented by Mark Carney in June's Financial Stability Report.

• Only 15pc of new mortagages can by 4.5 times a borrower's income
• Bank to stress test borrowers to see if they repay if rates hit 3pc
• Buy-to-let borrowers limited to 4.5 times income
• Loans of 4.5 times income no longer be available under Help to Buy

www.telegraph.co.uk