LONDON, March 25 Thomson Reuters Corp is proposing changes to its foreign exchange trading rules and implementing controls it hopes will minimise the scope for market manipulation and abuse, the company said on Tuesday.
Foreign exchange, the largest and one of the least regulated markets in the world, has for the past six months been the subject of investigations by regulators around the world into allegations of price-rigging and collusion between traders.
Thomson Reuters is one of the two dominant global currency trading platforms along with ICAP Plc-owned EBS.
After 12 months of consultation with market participants, Thomson Reuters is proposing changes to its Rule Book, a code of conduct designed to foster higher trading standards "through a combination of platform controls and behavioural rules", Phil Weisberg, global head of FX at Thomson Reuters, said.
There will be a six-week window for feedback before publication in the summer, a Thomson Reuters spokesman said.
The proposals include more clearly defined guidelines making it easier to execute orders and promoting closer surveillance and reporting of client trading activity.
"By raising the bar on expected trading behaviour, the rules aim to discourage abuse, manipulation or disorderly conduct, as well as behaviours that do not enhance liquidity for the market as a whole," Thomson Reuters said in a statement.
The consultations with market participants began six months before regulators including Britain's Financial Conduct Authority and the U.S. Department of Justice formally opened their probes into allegations of wrongdoing.
At the centre of the investigations are allegations that senior traders shared market-sensitive information relevant for the London fix, which is set at 4 p.m. London time, using actual trades.
London is the hub of the global currency market, accounting for some 40 percent of the $5.3 trillion traded on an average day.
The key benchmark, known as the WM/Reuters fix, relates to several exchange rates including the euro, sterling, Swiss franc and yen. These are compiled using data from Thomson Reuters and other providers, and are calculated by WM Company, a unit of State Street Corp, and are important because they are used as reference rates for trillions of dollars worth of investments, trade and corporate deals around the world.
WM Company is the administrator for the WM/Reuters Service. Through an agreement, Thomson Reuters is a primary source of rates to WM, to which WM applies its methodology and calculates the benchmark. Thomson Reuters is one of the various distributors of the rate.