UPDATE 2-Bank of England suspends official amid FX probe

The central bank also released minutes that said allegations had been raised as long ago as July 2006 that manipulation was occurring in the so-called benchmark fixings. Those fixings are used to price trillions of dollars worth of investments and deals and relied upon by companies, investors and central banks.

The role of the BoE in monitoring the largely unregulated currency marketplace has become a central focus of a global probe into allegations of collusion between dealers at some of the world’s biggest banks.

The BoE statement said an internal review had so far found no evidence that BoE staff colluded in any such manipulation or shared confidential client information.

“However, the Bank requires its staff to follow rigorous internal control processes and has today suspended a member of staff, pending investigation by the Bank into compliance with those processes,” it said. “The Bank has today re-iterated its guidance to staff regarding management of records and escalation of important information,” the statement said.

A bank spokesperson declined to comment on the identity of the individual or the reasons for the suspension.

The Bank also confirmed that regular meetings between chief currency dealers in London and BoE officials, which had been held since 2005, were discontinued in February 2013, shortly before media reports of the allegations first surfaced.

Minutes of all the meetings of the Foreign Exchange Joint Standing Committee’s chief dealers subgroup (CDSG), which was set up in 2005 to discuss industry affairs, say that possible manipulation of benchmark exchange rates were first raised in July 2006.


The CDSG last met in February 2013, even though a meeting had been scheduled for the following July. Media reports of allegations of FX market manipulation first surfaced in June. A Bank spokesperson was unable to say why the meetings with chief dealers had stopped or at whose behest.

The Bank’s internal review began in October last year and has to date examined around 15,000 emails, 21,000 chat room records and more than 40 hours of telephone call recordings.

Britain’s Financial Conduct Authority and the U.S. Department of Justice also formally opened investigations in October last year. They are among regulators around the world looking into possible wrongdoing in the $5.3 trillion-a-day FX market.

More than 20 traders have been placed on leave, suspended or fired by banks in recent months, including the chief dealers at currency trading giants Citi, JP Morgan Chase, Barclays and UBS.

“Alarm bells should be ringing when a central bank suspends staff in connection with market rigging,” said Simon Morris of law firm CMS. “This is serious, because the whole basis of regulation is based on trust and integrity.”

The global probe centres on allegations a handful of traders exchanged market-sensitive information to manipulate benchmark exchange rates set daily in London, known as the “London fix”.

Martin Wheatley, chief executive of Britain’s FCA, said the allegations are “every bit as bad” as those in the Libor interest rate scandal that has resulted in banks shelling out $6 billion in fines and settlements.

The Libor investigation is still ongoing, but reached its zenith in mid-2012 when Barclays chief executive Bob Diamond resigned and then BoE deputy governor Paul Tucker gave testified in front of UK lawmakers.

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