* FCA says work on probing FX markets continuing
* FCA to check on lawmaker concerns over share prices
(Adds more comment, background)
By Huw Jones
LONDON, July 2 Collusion among banks in setting
the gold price benchmark was possible but there is no evidence
of this, a senior British regulator said on Wednesday when
answering lawmakers' questions on the trustworthiness of the
Gold prices and other benchmarks have come under scrutiny,
with banks fined $6 billion for rigging the Libor interest rate,
used to price a range of financial products. Allegations are
also emerging of potential rigging of currency markets.
Four banks -- the Bank of Nova Scotia, Barclays
, HSBC, and Societe Generale -- talk
twice a day to each other on the telephone to "fix" the gold
price that is used as a benchmark across the world.
Parliament's Treasury Select Committee asked David Bailey,
head of markets infrastructure and policy at the Financial
Conduct Authority, if there was collusion in setting gold
"It is possible but I have no clear evidence that that has
actually happened," Bailey said.
The FCA is one of several regulators from across the world
which have fined 10 banks and brokerages for rigging Libor. It
is also probing the $5.3 trillion a day foreign exchange market
for possible manipulation and Bailey said "we continue to
progress our work".
"All benchmarks I think are susceptible to people attempting
to manipulate them. They are susceptible to a variety of
conflicts of interest," Bailey said.
It was up the market how benchmarks are set but any reform
to the process should comply with new principles on controls and
governance set by global regulators and the FCA, Bailey added.
The lawmakers repeatedly expressed concern over how the gold
price is set by banks, but Bailey said the FCA had no legal
authority to regulate the price-setting process.
A public review is underway on whether gold and other
benchmarks should come under the remit of the FCA, as has Libor.
The watchdog has studied the gold fix and fined Barclays
26 million pounds for failures in internal controls
that allowed a gold options trader to manipulate the setting of
Alberto Thomas, a partner at consultancy Fideres, told the
committee in separate testimony that his firm's research
suggested the gold fix may have been manipulated between 10
percent and 30 percent of days between 2010 and the end of 2013.
SHARE PRICES TOO?
Bailey said he has not listened in to the twice-daily gold
fixing calls as some lawmakers expressed surprise that the calls
could last up to an hour, with customers of the banks also able
to dial in.
"This is a flawed and manipulable market," committee member
John Mann said.
"We do not regulate the gold fix," Bailey replied.
The London Bullion Market Association is currently
evaluating the results of a market consultation on a possible
replacement to the gold fix and is likely to make an
announcement in coming days.
Another committee member, Mark Garnier, said that attempts
to manipulate the closing prices of shares was "common
knowledge" and a "well-known secret" among traders going back
"This is widely spoken about among equity traders across the
world. If nothing else, it's market abuse surely?" Garnier said.
"We are all amazed that these closing equity prices have not
been looked at," committee chairman Andrew Tyrie added.
Bailey said he would check if any action has been taken.
(Additional reporting by Jan Harvey; editing by Keiron