The Serious Fraud Office (SFO) has opened a full-blown criminal investigation into alleged price rigging in the UK's £3tn-a-day foreign exchange (forex) market, the regulator confirmed today.
The probe will look at "fraudulent conduct in the foreign exchange market", according to an SFO statement.
The claims centre around allegations that traders would manipulate the flow of trades and as a result the price of currencies during a crucial moment when a fix is calculated.
Today's announcement sees the UK regulator follow the United States' Department of Justice teams that have launched investigations into whether currency traders manipulated markets to enhance their positions. It is alleged that traders used online chatrooms to communicate over fixing the benchmark prices.
In October last year, the Financial Conduct Authority (FCA) said it had joined forces with regulatory bodies in other countries, around 15 in total, to scrutinise firms over the potential rigging.
The announcement by the SFO comes following several months of intelligence gathering.
Last week, Royal Bank of Scotland chief executive Ross McEwan said that the impending investigation into forex manipulation could pose a bigger problem for banks than the Libor interest rate rigging scandal which has rocked the banking industry.