LONDON Jan 15 Global investigations into
alleged currency market manipulation intensified on Wednesday as
U.S. regulators descended on Citigroup's London offices
and Deutsche Bank suspended several traders in New
York, sources told Reuters.
The presence of Federal Reserve and Office of the
Comptroller of the Currency officials at Citi's Canary Wharf
office in the east of London this week comes after Citi last
week fired its head of European spot foreign exchange trading,
Rohan Ramchandani, following a prolonged period on leave, one
source familiar with the matter said.
The suspensions of staff at Deutsche Bank in New York and
possibly elsewhere in the Americas followed investigations into
"communications across number of currencies," a second source
These are the latest developments in the worldwide
investigation into allegations that traders at some of the
world's biggest banks colluded to manipulate the largely
unregulated $5.3 trillion-a-day foreign exchange market, by far
the world's biggest.
Deutsche and Citi are the two biggest players in that
market, accounting for a combined 30 percent of that turnover,
according to a Euromoney magazine poll. Deutsche has been the
biggest FX bank for nine years running.
The Fed and OCC officials visiting Citi in London are at the
"preliminary stage" of information-gathering and their presence
is "independent" of Ramchandani's sacking, the first source
The OCC is an independent regulatory and supervisory bureau
of the U.S. Treasury supervising nationally chartered banks,
while the Fed oversees the holding company. Both declined to
comment on the investigation.
An OCC spokesman said the OCC has an office in London to
support its large bank supervision team there, so it would not
be surprising that they have people visiting London branches of
In addition to having the London office, the OCC will often
augment a team at any one office with teams from elsewhere with
particular expertise, he added.
Citigroup, Deutsche Bank and Britain's financial watchdog,
the Financial Conduct Authority (FCA), declined to comment.
A third source familiar with the investigation said the
British regulator was aware of the operation at Citi.
"HUNDREDS" COULD BE IMPLICATED
In October last year, the FCA began a formal investigation
and the U.S. Justice Department confirmed it was actively
investigating possible manipulation of the global FX market.
The FCA is focusing on around 15 banks, whom it has asked
for - or required to provide - information about currency
Although several traders at several banks have been
suspended or put on leave, Ramchandani is the highest profile
departure to date. Ramchandani could not be reached for comment.
The investigations centre on senior traders' communications
in electronic chatrooms, which also featured prominently in a
five-year probe into the rigging of a key interest rate known as
the London interbank offered rate, or Libor.
The Libor scandal has already cost banks $6.0 billion in
settlements and seen the first suspects brought to court.
In an effort to avoid the further wrath of authorities,
global banks such as Citi, Deutsche, JP Morgan, UBS
, and Goldman Sachs have curtailed the use of
Traders at banks and other financial institutions often
communicate with each other via third-party services including
those offered by Bloomberg LP and Thomson Reuters Corp.
, the parent of Reuters News.
Groups of senior FX traders on Bloomberg chatrooms, known by
names such as "The Cartel" and "The Bandits' Club", are alleged
to have shared market-sensitive information surrounding the
popular benchmark currency rate known as the London "fix".
This is the WM/Reuters "fix", which is set at 4 pm London
time, using actual trades and order rates from Reuters and
rivals such as EBS during a 1 minute "fix" period. WM, a unit of
State Street, calculates the benchmark using the median
of the trades and the orders.
The WM/Reuters FX rates are used by investors and
corporations looking for a rate to price their portfolios and
currency holdings. Most of the main equity and bond index
compilers also use the rates in their calculations.
Another source familiar with the investigation told Reuters
in New York that "hundreds" of traders around the world were
potentially engaging in these practices.