Bank of England Suspends Worker as FX Rigging Probe Launches
The Bank of England (BoE) said that it has suspended a member of staff after investigating potential rigging of the foreign exchange (FX) market.
The UK’s central bank, which has been reviewing whether any of employees knew about or condoned manipulation in currency markets, said that an internal review so far had 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,” a statement added.
“The Bank has today re-iterated its guidance to staff regarding management of records and escalation of important information.”
According to reports, the law firm of Travers Smith, will prepare a report after the investigation. So far, the BoE has reviewed 15,000 emails, 21,000 chat room records and more than 40 hours of telephone recordings.
Allegations of currency market manipulation follow fines for lenders, including Barclays, Royal Bank of Scotland (RBS) and UBS, found to be manipulating or attempting to manipulate the benchmark London Interbank Offered Rate (Libor), at which banks lend to each other.
The chief executive (CEO) of UK watchdog the Financial Conduct Authority (FCA), Martin Wheatley, said last month that currency manipulation was “every bit as bad” as the Libor scandal. He told British members of parliament (MPs) that 10 banks were assisting the regulator with its investigations.
Professor Mark Taylor of the UK’s Warwick Business School, who is a former BoE and International Monetary Fund (IMF) senior economist and foreign exchange (FX) trader commented: “These allegations have yet to be proved, but if they do turn out to be true, it will strike at the heart of business ethics.
“It would be yet another blow to the integrity of the banks. Our pension funds invest billions of pounds in the financial markets and if they are being cheated in this way it affects every one of us.
“One solution would be to take away the temptation to do this by taking the London 4pm fix average over an hour – so 30 minutes either side of 4pm rather than 30 seconds. It’s a simple, workable solution because it would be a lot harder, if not impossible, to move a market as big as the FX market for an hour. Removing the incentive is much better than regulation because of the global, decentralised nature of the foreign exchange market.”