* Banks asked to conduct independent reviews
* HKMA speaking to other regulators
* 30 traders globally suspended in probe so far
(Adds details on suspended trader at Deutsche Bank, background
By Rachel Armstrong
April 1 Regulators in Hong Kong and New Zealand
said on Tuesday that they are investigating banks' conduct in
the foreign exchange market as part of an investigation tied to
the global probe into FX markets.
The move shows that the regulatory crackdown on the $5.3
trillion-a-day-market is escalating and continues to broaden
from Europe to other parts of the world.
The Hong Kong Monetary Authority (HKMA) said in a statement
after an inquiry from Reuters that it is requiring several banks
to conduct independent reviews of their FX divisions and to then
send the HKMA the results.
"The HKMA is investigating into a number of banks in Hong
Kong," an HKMA spokeswoman said in the statement.
A spokesman for New Zealand's Commerce Commission said it
had also started looking into the matter.
"We've got an investigation but that's all we're saying
because it's an active investigation," a spokesman for the
commission told Reuters.
Regulators in Hong Kong, the third largest foreign exchange
market in Asia after Singapore and Tokyo, said in October they
were in contact with foreign regulators about the matter, but
this was the first time they have confirmed actual
investigations are taking place.
Market watchdogs around the world are looking closely at
traders' behaviour on a number of key benchmarks, spanning
interest rates, foreign exchange and commodities markets.
Several banks and brokers have already been fined billions
of dollars for manipulating benchmark interest rates, but the
foreign exchange probe could prove to be even more costly given
the size of the market and scale of investigation.
Authorities are looking at whether traders from different
banks worked together to influence currency prices and if they
traded ahead of their own customers or failed to accurately
represent to customers how they were determining the prices.
The probes are looking at whether a handful of senior
traders colluded to use knowledge of client orders to move
markets around the daily "fixings", which set prices for
billions of contracts and investments worldwide.
Singapore's central bank, which oversees dealers in Asia's
largest foreign exchange market, said in October that it was in
contact with foreign regulators about the issue but has not
provided any further comment on the matter since then.
News of these probes come a day after Swiss and British
regulators both stepped up their investigations into the matter.
Switzerland's competition commission WEKO said it formally
opened an investigation into several Swiss, British and U.S.
banks, including JP Morgan Chase & Co, Barclays PLC
and Citigroup Inc.
The UK Financial Conduct Authority (FCA), meanwhile, said it
will assess if banks have cut the risk of traders manipulating
benchmark rates in the coming year, to see if lessons have been
learned from the scandal over benchmark rate rigging.
Around 30 traders are known to have been placed on leave,
suspended, or fired as a result of the probe.
A source told Reuters on Monday that Kai Lew, a director of
institutional foreign exchange sales at Deutsche Bank AG
has been placed on leave as part of an internal
investigation into potential manipulation.
Lew was based in London and responsible for central bank FX
business at Deutsche, the world's largest currency trader. There
is no evidence she has been involved in wrongdoing and she could
not be reached for comment.
Last week Swiss bank UBS AG, the world's fourth
largest FX bank, suspended up to six currency traders in the
United States, Zurich and Singapore.
Deutsche Bank and UBS together see around a quarter of the
$5.3 trillion that flows through the global market on an average
day, according to the latest Euromoney poll.
(Additional reporting by Byron Kaye in Sydney and Michael
Flaherty in Hong Kong; Editing by Ryan Woo & Kim Coghill)