The Serious Fraud Office (SFO) in the United Kingdom has launched an official investigation to determine whether foreign exchange markets have been subject to manipulation. The UK SFO are joining an increasing number of authorities investigating the issue. Authorities in the U.S., Asia and Europe have also opened similar investigations.
The criminal investigation into allegations of fraudulent conduct in the market, opened by David Green, Director of the SFO, is the latest investigation indicating how serious the world-wide probe into the foreign exchange market may be.
The Foreign Exchange Market - said to be worth $5.3 trillion a day - has been investigated by the UK’s financial market regulator, the Financial Conduct Authority (FCA) since April 2013.
The initial issue behind the investigations was possible efforts by traders to manipulate a key market benchmark to their unfair advantage. However, the investigations have now escalated to include an examination of all areas of currencies trading.
The Chief Executive of the FCA, Martin Wheatley, confirmed last week that the agency is exchanging documents with the SFO regarding the investigation. The FCA has also commented that the probe has created "unprecedented global cooperation" between worldwide financial regulators.
More than 30 staff in various locations have lost their jobs in top currency dealing banks since the beginning of the investigation.
Regulators and bankers have said the probe could be as big as the investigation into attempts to rig a key interest-rate benchmark, the London interbank offered rate, or Libor.
Ten of the firms involved in the Libor scandal have settled the allegations against them or have been fined by authorities. More than a dozen individuals in the UK and the US have criminal charges against them.
The outcome of these investigations are unlikely to be made public before 2015.
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