Swiss and British Authorities Deepen Probe into Alleged Rigging of Benchmark Rates

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Swiss and British Authorities Deepen Probe into Alleged Rigging of Benchmark RatesU.K. and Swiss regulators deepened their investigation into the alleged fixing of foreign exchange markets today, as they analyzed whether banks have solid oversight over their dealers.

WEKO, Switzerland’s competition authority, disclosed that it had launched a probe into various U.S., Swiss and British banks over possible plot to fix benchmark currency rates in the $5.3 trillion- a-day foreign exchange market. The commission will investigate JP Morgan, Julius Baer, UBS, Royal Bank of Scotland, Citigroup, Zuercher Kantonalbank and Barclays.

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The UK Financial Conduct Authority also revealed that it is assessing if banks have implemented measures to reduce the possibility of dealers rigging the benchmark rates in the following year. This aims to check whether the banks have learnt lessons from the forex rate manipulation scandal.

“Evidence exists that these banks colluded to manipulate exchange rates in foreign currency trades,” said WEKO. Olivier Schaller, the Vice Director of WEKO said the probe will take months to complete, and may result in fines of up to 10 percent of the turnover recorded in Swiss market in the past three years.

Estimates of the Swiss National Bank indicate that the daily turnover in the forex markets of 25 Swiss banks was $216 billion, according to Reuters.

So far, eight financial institutions have been slapped with fines running into billions of dollars by European and U.S. regulators over the last two years of charges of benchmark rates manipulation.

“Even if there is no further alleged wrongdoing, the current concerns will take years to work out,” said Marshall Bailey, who heads the ACI Financial Markets Association, the main body that represents forex traders worldwide.

To contact the reporter of this story; Yashu Gola at yashu@forexminute.com