FRANKFURT Jan 29 The way daily currency
benchmarks are set in the $5-trillion-a-day market needs to be
looked at but limiting trade at daily fixings is not the answer,
Deutsche Bank chairman Paul Achleitner said on Wednesday.
Banks, worried over legal fallout from allegations that
traders may have used client order information improperly, have
said little publicly on the options for rebuilding confidence in
the way the currency benchmarks are set.
Royal Bank of Scotland, however, told customers on
Tuesday it would stop accepting client orders for some currency
fixings and there have been other tentative signs of the start
of a shift in market practices and trading patterns.
Deutsche is the world's biggest currency trader. Asked
whether it would also curb its fixing offerings, Achleitner, who
chairs the bank's supervisory board, said: "It's not a question
of the submission or the contribution of the bank to such a
fixing but they are being evaluated on the basis of trade flows.
"So, stopping trade shortly before five and shortly after
five (around the fixing time) would not be the answer. You have
to have well-controlled processes and make sure they exist in
these windows," he told a conference.
"Still the question remains where we want to participate in
terms of submission and we will review this on a continuous
basis," Achleitner added.
Regulators and investors have grown increasingly concerned
about the integrity of financial benchmarks in the wake of the
Libor interest rate rigging scandal.
RBS told clients it would stop accepting orders for a number
of currency fixings, citing an internal review and declining
comment on any link to the global inquiry.
RBS will drop such services around all but the main U.S. and
European daily market fixings and a handful of those in major
emerging markets, and it said that was aimed at balancing the
needs of the bank and its customers.
Benchmark foreign exchange rates, or daily fixings, are a
cornerstone of global financial markets, used to price trillions
of dollars worth of investments and deals and relied upon by
companies, investors and central banks.
The market is the biggest in the financial system and one of
the least regulated, with most trading taking place away from
exchanges. Companies need foreign exchange benchmark rates to
value currency holdings at a uniform rate.
Banks traditionally accept foreign exchange orders from
clients ahead of the fixings and investigators are seeking to
establish whether traders shared market-sensitive information
with other banks to try and rig FX rates, tipping each other off
about their positions to try and influence the rate set.
The probes have resulted in the firing or suspension of
several traders at major banks. Deutsche itself suspended
traders in New York earlier this month.
Reuters reported last week that representatives from
Germany's financial watchdog Bafin were to visit the London
offices of Deutsche.