UK regulator looks into report of foreign exchange rate manipulation
LONDON (Reuters) - Britain's financial watchdog is looking into a report that traders manipulated benchmark foreign exchange rates that are widely used by companies and funds.
The discussions come at a time of increased global scrutiny of financial benchmarks after the discovery that some other financial benchmarks, such as the Libor benchmark for interest rates, had been rigged.
Citing five dealers with knowledge of the practice, Bloomberg News said traders at some of the world's biggest banks had manipulated foreign exchange rates. It did not identify the banks.
"The FCA (Financial Conduct Authority) is aware of these allegations and has been speaking to the relevant parties," a spokesman for Britain's financial services regulator said. He declined further comment.
He would not confirm any aspect of Bloomberg's report including that one of Europe's largest money managers had complained about possible manipulation to British regulators within the past 12 months.
The spokesman also would not comment on whether any law may have been broken, or whether a formal investigation had been started.
Trades on the near $5 trillion a day forex market are not subject to the same degree of regulation or oversight as instruments listed on exchanges.
The Bloomberg report said some dealers had been front-running client orders - profiting from knowledge of trades in the pipeline - by pushing through trades before and during the 60-second window when WM/Reuters benchmark rates are set.
Rates are calculated hourly through most of the trading day, with closing rates set at 4 p.m. in London. Continued...