A former Lehman Brothers software engineer turned Conservative MP has launched a campaign to create tougher accounting standards for valuing derivatives trades.

Under the Financial Services (Regulation of Derivatives) Bill, proposed by Steve Baker, the Conservative MP for Wycombe, banks would have to produce two sets of accounts for derivatives. One would mark assets to market, in line with current auditing standards, while the other would require them to be valued at historic cost. The bill says companies should adopt the lower of these two valuations - a technique commonly known as the "prudent approach."