Although the foreign exchange market is one of the largest markets in the financial world, it is largely unregulated and that is where it is important for players/traders to have self-restraint; however, this seems not to be the case in the London Forex market which forms 40 percent of all currency trades in the world.
As investigations are going on, two British banks Barclays and the Royal Bank of Scotland placed traders on leave. Whereas six traders belong to Barclays, two traders are from Royal Bank of Scotland. Earlier, Citigroup, Standard Chartered, and JPMorgan Chase sent some of their traders on leave.
Though many of these employees are on paid leave, it is definitely going to bring disgrace to them and their employers if they are found guilty. The nature of action on the employees is not yet clear as no bank is ready to comment what would it do with those who are found guilty as they all consider it personal matter and unfair .
Disgrace for London, a Financial Center
The largest center of financial activities, London is facing credibility issue with the latest investigations as these are going to rattle the confidence of stakeholders. Not one or two but more than ten banks are facing the investigation as these have been accused of manipulating global interest rate benchmarks, including the London interbank offered rate or Libor.
It is to be noted that Libor is used as a base interest rate for a variety of financial productions. Libor is also used to help set interest rates for mortgages, credit cards, and other loans.
Rabobank Pays More Than One Billion Dollars in Deferred Prosecution Agreement
In another remarkable development, to avoid criminal prosecution as long as it avoids further wrongdoings, the Dutch lender Rabobank paid more than one billion dollars for criminal and civil penalties. The bank admitted that its employees were involved in wrongdoings and manipulated Libor and other global benchmark rates.
Some other banks Barclays, UBS, R.B.S. and the British financial firm ICAP too have been through the accusations and found guilty earlier. These have paid more than 2.5 billion dollars combined over the last year in a deferred prosecution agreement to settle accusations that they manipulated Libor. The credibility of Deutsche Bank, Citigroup, and several other banks from the U.S. are already at risk, as these too have been accused of manipulating of Libor.
To contact the reporter of this story: Jonathan Millet at email@example.com