RBS traders suspended in forex probe
- 31 October 2013
- From the section Business
Royal Bank of Scotland (RBS) has suspended two traders in connection to a growing investigation into the possible manipulation of foreign exchange rates.
The news follows reports that London-based executives at three other major banks have been placed on leave.
Regulators in the UK, US and Switzerland are looking into whether banks colluded to set exchange rates.
The global foreign exchange market is worth more than £3tn a day.
London is the most important centre for the market, accounting for about 40% of all foreign exchange trading.
The reports are that executives at Citigroup, JP Morgan and Standard Chartered have agreed to be placed on leave, but none has been accused of any wrongdoing.
They are Rohan Ramchandani of Citigroup, Matt Gardiner of Standard Chartered and Richard Usher at JP Morgan.
RBS declined to comment. It is among several banks believed to have been contacted by regulators in recent weeks about foreign exchange dealing. Others include Citigroup, Deutsche Bank and Barclays.
On Wednesday Barclays became the latest bank to confirm it had launched its own internal probe into its foreign exchange trading.
Regulators, including the UK's Financial Conduct Authority, are looking at allegations traders used instant messaging services to fix rates - similar to the Libor-fixing scandal which resulted in big fines for major banks in 2012.
Bankers were found to have colluded in fixing the Libor (London Interbank Offered Rate) rate - an interest rate used by many banks, mortgage lenders, and others to set the price of borrowing on trillions of pounds of financial contracts.
Currently, foreign exchange prices are set at 16:00 in London each day during a one minute window. There are suspicions traders used this window to manipulate prices.
Speaking on the BBC's Newsnight programme, Kathleen Brooks, research director at Forex.com, said it was not a surprise that the foreign exchange market has come in for regulatory scrutiny, given its size.
She said the outcome of the investigations might affect London's standing as the centre of the forex market.
"[London] has a very good reputation, but continual regulatory probes are chipping away at that," she said.