A panel of global regulators, responding to a manipulation scandal that’s shaken the financial industry, backed measures to make it harder for traders to exploit key benchmarks in the $5.3 trillion-a-day currency market.
Bloomberg News reports that the Financial Stability Board said it supports extending the width of the trading window used to calculate foreign-exchange rates to five minutes in a rule overhaul that also includes measures to address potential conflicts of interest between banks and their clients.
'The incentive to manipulate is always going to be there: what we have to make sure is the ability to actually do it is reduced,' Rosa Abrantes-Metz, a professor at New York University’s Stern School of Business, said in a telephone interview. The FSB report 'talks about many things, such as no sharing of information among traders beyond what is necessary, but that should have been in place for a long time.'
At least a dozen regulators on three continents are investigating whether traders in the world’s largest financial market colluded with counterparts at other firms to manipulate benchmarks used by money managers and pension funds to determine what they pay for foreign currency. More than 25 traders have been fired or suspended across the industry.
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