Bank of England officials discussed trading practices around key foreign-exchange benchmarks with senior currency dealers 18 months before regulators opened formal investigations into alleged rate-rigging.
Bloomberg reports that records of a meeting in April 2012 released yesterday by the central bank show dealers discussed the rules they were subject to when trading close to the times when key market benchmarks, such as the WM/Reuters rates, are set.
The traders, concerned by regulators’ scrutiny of instant messages in the London interbank offered rate probe, talked about how they shared information about orders to reduce the risk of losses in the minutes before benchmarks are calculated, said two people with knowledge of the meeting who asked not to be identified because the meeting was private. Investigators are deciding whether those communications amount to collusion.
The discussion raises the question of how much Bank of England officials, already criticized by lawmakers for failing to heed warnings Libor was vulnerable to abuse, knew about the potential for manipulation of the $5.3 tril-a-day currency market before regulators opened their formal probes. Three members of the panel, two of whom were at the meeting at BNP Paribas SA’s London office, have since been fired, suspended or put on leave by their firms.
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