'Wild West' currency market hit by latest fixing scandal: City watchdog to probe accusations of exchange rate-rigging

Bank staff accused of making trades before processing customer orders
Whistleblowing traders say that practices have been occurring on daily basis
Industry insider likens the foreign exchange market to 'the Wild West'

PUBLISHED: 10:16 EST, 12 June 2013 | UPDATED: 03:22 EST, 13 June 2013

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City watchdogs are probing allegations that foreign exchange rates are being rigged by traders.

The investigation centres on claims that bank staff are making trades before processing customer orders, and also timing them to influence the setting of benchmark rates, according to a report by Bloomberg News.

The accusations are a fresh blow to financial markets already embroiled in the Libor rate-fixing scandal - which has seen Barclays and RBS handed heavy fines. The market in natural gas faces a probe into manipulation of prices, and questions have been raised over oil and petrol prices.

Probe: Foreign exchange rate market is not regulated but the big players like banks are supervised by City watchdogs

The £3trillion a day foreign exchange rate market is not regulated but the big players like banks are supervised by the Financial Conduct Authority.

A spokesman for the watchdog said: 'We are looking into this but we can't comment any further at this moment'.

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The Bloomberg story reports claims that bank employees have been 'front-running' client orders and rigging WM/Reuters foreign exchange rates by pushing through trades before and during 60-second windows when benchmarks are set.

Whistleblowing traders say that the alleged practices have been occurring on a daily basis for at least a decade, and have affected the value of funds and the complex financial instruments known as derivatives, according to Bloomberg.

It also quotes an industry insider who likens the foreign exchange market to 'the Wild West'.

While rates are not followed by ordinary investors directly, they are used by fund managers to calculate their holdings and index providers like FTSE Group and MSCI to track stocks and bonds.

This means their movements can affect the value of pension and savings accounts.

Barclays was hit with a £290million fine for manipulating the Libor interest rate last summer, when lurid emails were released showing how its traders boasted about their activities.

RBS also had to stump up £390million for its part in the scandal.

Meanwhile, BP and Royal Dutch Shell saw their offices raided last month as the European Commission launched an investigation into oil price fixing.

The Commission said it was concerned there has been collusion aimed at manipulating the prices of not only oil, but also petrol and biofuels.

Energy companies are also being investigated after accusations by a whistleblower that traders manipulated the wholesale gas price to boost profits, potentially pushing household bills higher.

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For repeat offenders, fine is insufficient, ... Jail time for the fat cats at the top and withdrawal of business license or even nationalization of the entity should be considered. They don't seem interested in learning their lessons and shareholders not on the board should be returned their value in equity so the company can be then broken up ... And sold to competitors with better track records

- Miked , Bucks, 13/6/2013 14:01

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And this should be categorised with the news that the Pope is Catholic and night follows day. The good old UK consumer being ripped of by banks, insurance companies, utility providers, pension providers, garages and just about every business you can think of. Makes you proud to live in such a country.

- aidan , Reigate, 13/6/2013 06:34

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Cameron wont change anything!! get a life and use a european bank account. my bank charges 9pence for withdrawls on Debit card and uses spot daily currency exchange rates while also paying 2.7% interest on in credit balances. should have changed years ago!!

- homer12 , plymouth, 13/6/2013 02:11

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Fuel really went down after the last scandal was revealed didn't it... let's see how much changes this time? More of the same no doubt?

- ks , Ippy, 12/6/2013 22:38

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the whole establishment is rotten to the core and the police need to investigate to get the big fish in the dock

- Bob , UKIP for goverment, United Kingdom, 12/6/2013 21:37

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And........

- Nick Grady , Coalville_Leicestershire_UK, United Kingdom, 12/6/2013 18:55

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Just who can be trusted these days?. What a poor state we have gotten into.

- Alan , Huddersfield, 12/6/2013 18:41

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If this is substantiated then, of course, implicated 'traders' should face severe penalties such as imprisonment and fines that liquidated their personal assets. In addition, their line managers and executives should be held accountable and dealt with likewise. On no account should companies pay fines -only individuals for that is the deterrent.

- Alfred , St. Leonards., 12/6/2013 18:30

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I applaud the traders and bankers in their efforts to accrue as much money for themselves a possible. I hope the government continues to channel public money into their institutions to protect them from the risks of their endeavours. This demonstrates the importance of continuing the squeeze on superfluous spending on things like benefits, education and the health service, to ensure our bankers continue to receive the funds they deserve, and that money continues to flow upwards from the poor into the hands of the wealthy.

- William , Denton, United Kingdom, 12/6/2013 18:30

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Lengthy jail sentences for ALL involved.

- Mark R , COVENTRY, United Kingdom, 12/6/2013 18:20

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