A global investigation into allegations of manipulation in the £3tn-a-day currency markets appeared to be deepening with more banks admitting they were co-operating with regulators and Barclays suspending six of its traders.
JP Morgan, America's biggest bank, and Citigroup added their names to the growing list of banks forced to admit they have been contacted by regulators investigating the potential manipulation of currency benchmarks.
The investigation – at an early stage and involving regulators in the US, UK, other parts of Europe and Asia – is being compared to the one into the rigging of Libor, which has now so far led to five big financial firms being fined by regulators around the world.
Barclays had revealed this week that it was co-operating with regulators, and on Friday it emerged that six staff had been placed on suspension while an internal investigation into currency dealings was under way. Barclays declined to comment.
Bailed out Royal Bank of Scotland was also said to have suspended two of its traders and it has been reported that traders at other banks in the City have been suspended while investigations begin.
RBS, in its third quarter results statement, said it had received enquiries from government and regulatory authorities looking at foreign exchange trading and that the investigations appeared to involve "multiple financial institutions".
RBS said it was "reviewing communications and procedures to certain currency exchange benchmarks as well as its foreign exchange trading activity" and was co-operating with the authorities. It declined to comment on the reports that two of its traders had been suspended.
The bank was fined £390m for rigging Libor and in June was penalised by the Singaporean authorities for deficiencies in handling benchmarks, including a foreign exchange spot benchmark, between 2007 and 2011. The Singaporean authorities required the bank – and others – to hold an additional S$1.2bn (£600m) on reserve until it could design a "remediation plan".
The investigation into foreign exchange markets appears to have been prompted by allegations that traders at big banks were putting in client orders before a 60-second window when benchmarks run by WM/Reuters – and used by fund managers to value their investments – are set.
Deutsche Bank and UBS revealed this week they are co-operating with the investigation, during which regulators are expected to look at the electronic chats that traders exchange, as was the case during the Libor investigation.
The Financial Conduct Authority has said its investigation could take months and it could be "some time" before it can determine if any misconduct has taken place.
The admission by JP Morgan that it had been contacted by regulators investigating the foreign exchange markets adds to its list of potential problems. It also disclosed that authorities outside the US are now investigating its Asian hiring practices. It had already disclosed it faces an investigation in the US over the recruitment of staff related to well-connected Chinese officials.
JP Morgan's latest regulatory filing said the Wall Street regulator, the securities and exchange commission, and the justice department were also looking at its "engagement of consultants in the Asia Pacific region".
"Separate inquiries on these or similar topics have been made by other authorities, including authorities in other jurisdictions, and the firm is responding to those inquiries," the bank said in its statement.
JP Morgan, which has put aside $23bn for potential litigation since 2010, joins a list of companies, including Avon and News Corp, that are being investigated by US authorities under the foreign corrupt practices act (FCPA). Violations of the act can trigger fines running to hundreds of millions of dollars.
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