UK fraud office to launch currency trading probe

UK fraud office to launch currency trading probe

LONDON - Britain's Serious Fraud Office is poised to begin its first criminal investigation of alleged rigging by traders in the foreign exchange market, the Sunday Times reported.

The SFO, which is already conducting a criminal probe into the rigging of benchmark interest rate Libor, is expected to declare the move "within days", the newspaper reported, without citing sources. "We are receiving and examining complex data on this topic,"a spokeswoman for the SFO said in an emailed statement in response to the report. "If and when we open a criminal investigation, that decision will be announced in the usual way." Allegations of foreign exchange market rigging have also been under investigation by the Financial Conduct Authority, the UK regulator, since last year. The FCA declined to comment on the Sunday Times report.

The US Department of Justice opened a criminal probe into the matter last October.

It is alleged that traders used online chatrooms with names such as The Bandits Club to collude in the fixing of benchmark prices.

Scrutiny is focused on activity around London's 4 p.m. currency fix, a 60-second window where key exchange rates are set. These prices are used as reference rates for trillions of dollars of investment and trade globally.

Thomson Reuters is one of the two biggest global currency trading platforms along with ICAP-owned EBS.

The WM/Reuters fix relates to several exchange rates and is compiled using data from Thomson Reuters and other providers. They are calculated by WM, a unit of State Street Corp.

Thomson Reuters said in June that it was revising its foreign exchange rules following consultations with market participants. Thomson Reuters is the parent company of Reuters News, which is not involved in the fixing process.

The Financial Stability Board, the world's top financial regulator based in Switzerland, last week called for profound change to how currency benchmarks are set.

London is the hub of the global currency market, accounting for some 40 per cent of the $5.3 trillion average daily volume.

Banks involved in the Libor scandal have so far been forced to pay billions in fines, with more expected.

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