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Barclays, the British banking group, is reviewing its currency trading operations over several years, becoming the latest bank to announce that it was under investigation by regulatory authorities over possible manipulation of currency rates.
A day after UBS and Deutsche Bank said they were facing investigation, Barclays, releasing its third quarter results, said that it had received enquiries from some regulatory authorities and was reviewing its foreign exchange trading from August 2013 for several years proceeding.
“It is not possible at this stage for Barclays to predict the impact of these investigations on it,” a statement from the bank said.
The Swiss Financial Market Supervisory Authority, Britain’s Financial Conduct Authority and the US Department of Justice have all announced investigations into the possible manipulation of foreign exchange markets.
The investigations follow a story by Bloomberg News, which revealed that traders across banks had shared information about their positions through instant messages, and attempted to manipulate the WM/Reuters benchmark currency rates.
The global trade in foreign exchange has been booming: the average turnover was $5.3 trillion in April, against $3.3 trillion in April 2007, according to data published by the Bank of International Settlements earlier this year, with the bulk of activity centered in the UK, US, Singapore and Japan.
The scale of potential manipulation in the largely-unregulated global foreign exchange trade is unclear, though many have been quick to draw parallels with the LIBOR scandal, where regulators uncovered wide spread collusion between traders across different banks to “fix” the benchmark lending rate, with banks racking up billions of dollars in fines. Earlier this week, Dutch Rabobank agreed to pay $1 billion in fines for Libor manipulation.
The latest investigations will add to uncertainty over the banking sector. “So far there has not been a clear penalty regime for currency market manipulation but they could be getting pointers from LIBOR,” says Sandy Chen, banking analyst at Cenkos Securities in London.
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