Probe into alleged 'instant-message fixing'
NEW YORK: An instant-message group involving senior traders at banks, including Barclays Plc, Citigroup Inc and Royal Bank of Scotland Group Plc, is being scrutinised by regulators investigating potential manipulation of the foreign-exchange market, said four people with knowledge of the probe.
Over a period of at least three years, the dealers exchanged messages through Bloomberg terminals outlining details of their positions and client orders, and made trades before key benchmarks were set, said two of the people.
The roster of firms changed over time and included other banks such as UBS AG as the men switched employers, one of the people said. Two traders who weren't involved in the conversations said that they and others in the market referred to the message group as "The Cartel".
Regulators are weighing whether those messages amounted to attempts to manipulate the market, two people said. The four banks account for more than 40 per cent of trading in the US$5.3 trillion (RM16.72 trillion)-a-day foreign-exchange market, according to a survey by Euromoney Institutional Investor Plc.
The United Kingdom's Financial Conduct Authority this week opened a formal probe into currency trading, joining a global investigation that also involves regulators in the United States, European Union and Switzerland.
"If the information shared is sufficiently precise to indicate collusion, then the regulators will have a case for prosecution," said David Corker, a lawyer in London.
Bloomberg News reported in June that traders at some banks said they shared information about their positions through instant messages, executed their own trades before client orders and sought to manipulate the benchmark WM/Reuters rates. In August, it was reported that recurring spikes in trading around the periods in which the rates are calculated suggested that dealers may have been trying to influence the benchmarks.
Officials at the four banks declined to comment on the discussions among dealers. RBS said on Wednesday it was "cooperating fully" with the FCA inquiry. Bloomberg