Two suspended over forex fixing at RBS

1 November 2013

Royal Bank of Scotland has suspended two traders in connection with an investigation into the fixing of the currency market, it has been reported.

The Financial Times said the two traders would be the first RBS employees to be suspended in the widening probe that echoes the Libor interbank lending scandal. RBS declined to comment.

The Financial Conduct Authority (FCA) revealed earlier this month it had launched its own investigation into the forex market, which is worth £3 trillion a day globally.

At the time, taxpayer-backed RBS confirmed it had been contacted by the FCA over the issue and was "co-operating fully".

The bank is understood to have handed over electronic messages to the FCA in connection with the investigation.

It said: "We can confirm that we were contacted by the FCA on this matter. Our ongoing inquiry into this matter continues and we are co-operating fully with the FCA and our other regulators."

Earlier this week Barclays revealed it had also been drawn into the investigation and said it was co-operating with the FCA and was reviewing its foreign exchange trading over a period of several years to August this year.

Regulators are looking into whether currency traders shared information about their positions and knowledge of client orders through instant messages to rig the foreign exchange market in their favour.

A spokesman for the FCA said: "We can confirm that we are conducting investigations alongside a number of other agencies both in the UK and abroad into a number of firms relating to trading on the foreign exchange (forex) market.

"As part of this we are gathering information from a wide range of sources including market participants."

The FCA said it first sent out letters to firms in April, before launching a formal investigation later.

Currency exchange rates are set on a daily basis by analysing actual trading volumes at leading banks during a short time window.

It is thought that traders could potentially influence exchange rates by pushing through large orders during the 60-second window to make a profit.

Even a small movement in exchange rates could affect the value of investments worldwide, including pension funds.

It threatens to engulf the industry in yet another embarrassing scandal at a time when many financial firms are still battling to restore their reputations following the Libor rigging revelations.

According to the Bank for International Settlements, global foreign exchange activity rose to 5.3 trillion dollars (£3.3 trillion) a day this year, from four trillion dollars (£2.5 trillion) in 2010.

London accounts for the bulk of currency trading, with 41% of global turnover in the market, followed by the United States, which has a 19% share, Singapore with 5.7%, Japan with 5.6% and Hong Kong with 4.1%.

Two suspended over forex fixing at RBS

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