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* Probe of $5.3 trillion-a-day forex market at early stage
* Global libor investigation a useful template
By Kirstin Ridley
LONDON, April 28 Britain's financial regulator
has not yet concluded that there was any misconduct in the $5.3
trillion-a-day foreign exchange market despite working hand in
hand with other authorities to coordinate a complex, global
Britain's Financial Conduct Authority (FCA), along with
around 12 other authorities, has launched a worldwide inquiry
into allegations that some of the world's biggest banks colluded
to manipulate the largely unregulated foreign exchange market -
the world's biggest market.
"We are at a relatively early stage of ploughing through
some pretty detailed analysis of what was happening," Tracey
McDermott, the head of enforcement and financial crime at the
FCA told the Reuters Financial Regulation Summit in London.
"We are some way away from saying there was actually
misconduct at all."
But she stressed that it made sense for authorities, and for
the industry, to coordinate all regulatory action as much as
possible in terms of planning the focus of inquiries, who to
interview and how to be the most efficient.
The global investigation into the foreign exchange market,
has overshadowed a drawn-out inquiry into alleged rigging of
benchmark interest rates such as Libor (London interbank offered
rate) and Euribor, which has already led to around $6 billion in
fines for 10 banks and brokerages and criminal charges on 16
But Libor has proved a useful template. Authorities are now
working together on a different level - more focused, more aware
of each others' needs and keener to reach a speedy conclusion,
"One of the things we had to look at (in forex) is can we
get a better handle earlier, globally, as to who the main
players are and how we want to tackle it," she said.
Rather than tackling the investigation on a bank by bank
basis, McDermott said a better approach would be to aim for
so-called "coordinated outcomes" between regulators.
"I wouldn't want to speculate about what the end outcome
will be in relation to forex," she said. "We do think
coordinated outcomes in relation to individual firms are
generally better than uncoordinated outcomes.
"So coordinated outcome across firms may or may not be the
right answer in different circumstances - but I certainly
wouldn't rule out looking at those."
But she cautioned that it was far too soon to talk about any
prospect of the ultimate coordinated outcome - a global
settlement with the whole industry. "We are about a million
miles away from making those sorts of decisions," she said.
McDermott said regulators have learnt from Libor inquiries
to identify the challenges of different legal and jurisdictional
systems as well as the major practical questions including the
basis on which individuals can be questioned.
For example, compelling individuals to be interviewed has
been a long-standing feature in British investigations, but the
idea of a compelled interview is anathema in the United States,
where there is a far-reaching privilege against
"I think we have a much better understanding on what those
issues are now, and we can at least identify them upfront and
either work out that we can tackle them or that we can't. But we
need to be aware of them," she said.
According to a source familiar with the matter, criminal
prosecutors from the U.S. Department of Justice have travelled
to London to conduct joint interviews of UK-based currency
traders with the FCA in London.
Follow Reuters Summits on Twitter @Reuters_Summits
(Additional reporting by Clare Hutchison; Editing by Jane Baird
and Erica Billingham)