In June this year, Financial Conduct Authority or FCA of Britain had said that it was looking into claims regarding several traders manipulating foreign exchange benchmark rates and also indicated its intention to launch an official investigation into the matter. As of now, it is not clear whether the latest expose has any connection with the claims made by FCA earlier this year.
FCA said that allegations regarding banks trading before their customers had actually arranged orders have been brought to its notice. This practice is known as front running.
Financial Market Supervisory Authority (FINMA) – the Swiss monetary regulator – issued a statement in which it said that the 5 trillion dollars a day market of forex trading might experience been rigged by several banks but it stop petite of naming them.
“FINMA is currently conducting investigations into several Swiss financial institutions in connection with feasible manipulation of foreign exchange markets,” the Swiss regulator said in a statement on October 4.
FINMA revealed that it is with coordinating with the authorities of countries other than Switzerland.
“FINMA is coordinating nearly with authorities in other countries like multiple banks around the world are potentially implicated.”
UBS AG and Thanks Suisse Group AG – the two largest Swiss banks, which are among the meridian banks globally in currency dealing, refused to say anything when asked by media to interject on the development. Earlier inquiries about scams of such nature resulted in UBS agreeing to pay 1.6 billion dollars to American, British and Swiss authorities in connection with the Libor inquiry.
The Libor or London interbank rate is a benchmark that is used for setting interest rates on mortgages and other loans involving trillions of dollars. In this particular case, several banks were accused of manipulating Libor rate. According to The Wall Street Journal, the latest case is the fifth such case that is being under inspection for rates and benchmark manipulation on a global level.
The case of foreign exchange rates being manipulated isn’t new. However, the Libor scandal first came to light in 2012 when a British bank was fined after some of its traders submitted artificial bids amounting to manipulation of the interest rates. However, it was in April 2008 that The Wall Street Journal had chief reported of ‘irregularities’ in Libor.
According to a report, four financial institutions own paid around 2.7 billion dollars as fine for rate-rigging. The result of this is that the authorities are now also investigating whether banks allow similarly been rigging Euro Interbank Offered Rate or Euribor and the Tokyo Interbank Offered Rate or Tibor.