Banks review private account trading by forex traders -FT

Mon Feb 17, 2014 7:32pm EST

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Feb 17 (Reuters) - In a crackdown on currencies traders, financial institutions including Royal Bank of Scotland, Deutsche Bank and UBS are reviewing the rules governing how traders make bets with their own money, the Financial Times reported on Monday.

People familiar the matter told the newspaper that these lenders were looking at ways for a stringent policy regime on "private account" trading to curb manipulation in global foreign exchange markets. ()

"We do not want to prevent a sterling trader in London from buying lunch," one senior banker told the FT.

Deutsche Bank declined to comment on the story. UBS and Royal Bank of Scotland could not be reached outside of regular business hours.

Citing people familiar with the plans, FT said that Deutsche Bank is mulling a threshold for how much personal money a trader will be allowed to trade in each currency.

The FT had reported in November that the UK's Financial Conduct Authority is probing the use of private accounts by forex traders.

A person close to the situation told the newspaper that the FCA probe was ongoing and comes amid allegations that some traders might have used private accounts to place bets based on information gleaned by exchanging details about client orders with rivals.

Personal accounts trades are usually declared to the bank, and are recorded via automatic emails. However, in the case of personal accounts trading in forex, a trader converting euros into dollars for use in the United States could theoretically breach the rules.

London is the hub of the global forex market, accounting for some 40 percent of the $5.3 trillion traded on an average day.

Foreign exchange benchmarks are scheduled to be reviewed by the Financial Stability Board, which coordinates regulation for the Group of 20 (G20) leading economies soon after the Britain's market watchdog, the Financial Conduct Authority, opened probe in October last year followed by the U.S. Department of Justice.

Last year, banks including Barclays and UBS were fined $6 billion for rigging Libor benchmark interest rates. Some of the same banks are cooperating with regulators in the forex probe.

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