Ten banks turned over evidence to the U.K. Financial Conduct Authority as part of an investigation into the manipulation of foreign-exchange benchmarks, its chief executive officer told lawmakers.
The allegations are “as bad as Libor,” FCA CEO Martin Wheatley said in London today, referring to the global probe into rigging of the London interbank offered rate. Those investigations have resulted in global fines of about $6 billion and led to reviews of other benchmarks, including currency rates.
The regulator is investigating “a number of benchmarks that operate in London,” Wheatley said. The foreign-exchange probe is unlikely to be concluded this year, he said, without identifying any banks under investigation.
The regulator said in October it was opening a formal probe into currency-rate trading, joining regulators in the U.S. and Switzerland in reviewing the $5.3 trillion-a-day market. The world’s seven biggest foreign-exchange dealers have now all taken action against their employees, with at least 17 traders suspended, put on leave or fired.
Royal Bank of Scotland Group Plc has handed over records of instant messages to the FCA after concluding a former currency trader’s communications with counterparts at other firms may have been inappropriate, according to two people with knowledge of the matter.
HSBC Holdings Plc (HSBA) suspended two London-based foreign-exchange traders, according to a statement in Jan. Citigroup Inc. has put two spot traders who specialized in G-10 currencies on leave, another person with knowledge of the matter has said.
Switzerland’s Financial Market Supervisory Authority and the country’s competition commission said in October they were opening probes into foreign-exchange rates, while the U.S. Justice Department also opened a criminal investigation, a person familiar with the matter said last year. European Union regulators said on Oct. 7 they were reviewing the market.
The FCA is focusing on the WM/Reuters rates, which 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.
Separately, Wheatley also told lawmakers today that the FCA had spoken to banks about a time-limit on compensation claims for improperly-sold insurance products. The regulator will seek views with consumers before making any decisions, Wheatley said.
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