Standard Chartered Plc put Matt Gardiner, one of its most senior foreign-exchange dealers, on leave as regulators probe possible manipulation in currency markets, a person with knowledge of the matter said.
The allegations don’t relate to his work at Standard Chartered, said the person, who asked not to be identified because the move hasn’t been made public. He previously worked at Barclays Plc (BARC) and UBS AG (UBSN) and moved to Standard Chartered in September as assistant chief dealer of currencies in London.
Regulators are scrutinizing an instant message group used by senior dealers at firms including Barclays, Citigroup, Royal Bank of Scotland Group Plc and UBS to outline details of their positions and client orders, as well as make trades before key benchmarks were set, two more people with knowledge of the discussions said. Traders in the group included Gardiner and Richard Usher, then a senior trader at RBS and now JPMorgan Chase & Co.’s chief dealer in London, the people said.
Investigators are weighing whether those talks amounted to attempts to manipulate the market, two people said. None of the traders involved have been accused of any wrongdoing.
Gardiner didn’t immediately respond to an e-mail and a message left on his mobile telephone. Officials at Standard Chartered, Barclays, JPMorgan and RBS declined to comment. Usher didn’t respond to an e-mail sent to his work address.
Regulators including the Department of Justice, Britain’s Financial Conduct Authority and the Swiss Financial Market Supervisory Authority are probing the $5.3 trillion-a-day market for the possible manipulation of foreign-exchange rates.
UBS, Switzerland’s biggest bank, said today it’s taking measures against employees, while Germany’s Deutsche Bank AG said regulators have asked it for information. Zurich-based UBS didn’t identify or quantify the number of employees involved, or say what actions it took. Both firms said they’re co-operating with regulators.
UBS started an internal review of its currencies unit after Bloomberg News reported in June that traders at some banks said they shared information about their positions through instant messages, executed their own trades before client orders and sought to manipulate the benchmark WM/Reuters rates.
The WM/Reuters rates determine what many pension funds and money managers pay for their foreign exchange and are used by index providers such as FTSE Group and MSCI Inc. (MSCI:US) to calculate daily valuations of indexes that span multiple currencies. Even small movements could affect the value of what Morningstar Inc. (MORN:US) estimates is $3.6 trillion in funds including pension and savings accounts that track global indexes.
The rates are published hourly for 160 currencies and half-hourly for the 21 most-traded. They are the median of all trades in a minute-long period starting 30 seconds before the beginning of each half-hour. Rates for less-widely traded currencies are based on quotes during a two-minute window.
The data are collected and distributed by World Markets Co., a unit of Boston-based State Street Corp. (STT:US), and Thomson Reuters Corp. Bloomberg LP, the parent company of Bloomberg News, competes with Thomson Reuters in providing news and information as well as currency-trading systems.
Index funds typically buy and sell currencies at the 4 p.m. WM/Reuters rates, known as the London close. Money managers place their orders with banks in the hour or so before the close, giving dealers a picture of their complete order book in advance of the so-called fix. Banks agree with clients to trade at that price, regardless of later moves, leaving dealers at risk of losses if the market moves against them.
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