US joins UK in probing foreign exchange trades

Tim Wallace
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THE US is set to join Britain’s regulators in investigating possible market manipulation in foreign exchange, it emerged yesterday.

The inquiry is the latest in a series of markets to be investigated, in a round of probes that kicked off with the Libor investigations.

Those probes, which are still ongoing, have found three banks so far where traders attempted to manipulate the benchmark interbank interest rate – RBS, Barclays and UBS.

Brokerage ICAP has also been fined over the attempted manipulation.

America’s Department of Justice (DoJ) is launching a criminal investigation into the foreign exchange markets, according to Bloomberg News.

Federal Bureau of Investigation (FBI) sources also told Bloomberg they are looking at the market for signs of abuse.

It comes after RBS gave City watchdog the Financial Conduct Authority emails and internal message files as part of its investigation.

The FCA has been looking at the market since June, when it said it was investigating a practice known as front running. This involves banks using knowledge of clients trades to take positions in advance of those trades, giving forward knowledge of some market activity.

The Swiss authorities are also studying the market to see if any manipulation has taken place.

However there are some questions over the scale of rigging in the $5 trillion (£3.1 trillion) per day market.

Swiss bank Credit Suisse’s chairman Urs Tohner yesterday said it would be very difficult to manipulate such a huge, liquid international market.

“We have up to now found no evidence of malpractice. To date it is also still not clear what precisely the topic of investigation is,” he told the newspaper NZZ am Sonntag.