Swiss, UK watchdogs step up scrutiny on forex traders

Mon Mar 31, 2014 8:40am EDT
 
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By Caroline Copley and Patrick Graham

ZURICH/LONDON (Reuters) - Swiss and British regulators stepped up their scrutiny of alleged manipulation of foreign exchange markets on Monday, as watchdogs take a closer look at whether banks have a tight enough grip on the behavior of their traders.

Switzerland's competition commission WEKO said it opened an investigation into several Swiss, British and U.S. banks over potential collusion to manipulate currency rates.

The UK Financial Conduct Authority (FCA), meanwhile, said it will assess if banks have cut the risk of traders manipulating benchmark rates in the coming year, to see if lessons have been learned from the scandal over benchmark rate rigging.

WEKO said it is investigating UBS, Credit Suisse, Zuercher Kantonalbank (ZKB), Julius Baer, JP Morgan, Citigroup, Barclays and Royal Bank of Scotland.

"Evidence exists that these banks colluded to manipulate exchange rates in foreign currency trades," WEKO said, adding it assumed the most important exchange rates were affected.

Regulators around the world are looking closely at traders' behavior on a number of key benchmarks, spanning interest rates, foreign exchange and commodities markets.

Eight financial firms have already been fined billions of dollars by U.S. and European regulators in the past two years for manipulating benchmark interest rates and several more are being investigated.

The probe into currency trading could be even more costly. Authorities in the United States, Britain, Switzerland, Germany and Singapore are looking into allegations of collusion and manipulation by traders at major banks of the largely unregulated $5.3 trillion-a-day foreign exchange market.   Continued...

 
File photo illustration of various Euro banknotes lying next to various Swiss Franc notes at a bank in Warsaw, July 18, 2011. REUTERS/Kacper Pempel/Files