* Swiss antitrust, market regulators already probing forex
* Foreign exchange market one of the least regulated markets
* Regulators already investigating other benchmarks
* RBS said to have handed instant messages to Britain's
ZURICH, Oct 9 Swiss finance minister Eveline
Widmer-Schlumpf on Wednesday retracted an assertion that she
knew the foreign exchange market had been manipulated.
Her ministry said that it was aware only of a probe into
At a government press conference earlier on Wednesday,
Widmer-Schlumpf had said: "It's a fact that foreign exchange
manipulation was committed."
"It is unclear to what extent and which institutions are
affected. I think it's important that we wait until we have the
results (of the investigation)," she added.
Later the spokesman for her finance ministry said in a
statement: "Federal Councillor Widmer-Schlumpf did say this, but
did not mean it that way."
Instead, the finance minister had meant to say she was aware
that possible manipulation of the foreign exchange market is
being investigated, spokesman Roland Meier clarified.
Switzerland's competition commission WEKO and its financial
markets regulator FINMA said last week that they had opened
investigations into potential manipulation of foreign exchange
markets by banks. They declined to name the banks under
Regulators and investors have grown increasingly concerned
about the integrity of financial benchmarks in the wake of the
Libor interest rate rigging scandal.
Scrutiny of the $5 trillion-a-day currency market has
broadened in recent days, with authorities in Switzerland and
Britain looking into whether traders at banks sought to
manipulate benchmark foreign exchange rates.
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.
A FINMA spokesman declined to comment on Wednesday. UBS and
the Swiss National Bank also declined to comment.
Last week FINMA said it is working with authorities in other
countries and that multiple banks worldwide were potentially
Royal Bank of Scotland (RBS) has handed instant
messages sent by a former currency trader to counterparts at
other banks to Britain's financial regulator as part of its
probe into the foreign exchange market, a source familiar with
the matter said.
Britain's Financial Conduct Authority (FCA) said in June it
was examining allegations banks had manipulated foreign exchange
benchmarks by trading ahead of their own customers' orders, a
practice known in the markets as "front running".
A report by Bloomberg in June said traders at some of the
world's biggest banks had used their advance knowledge of
customer orders to push through trades before and during the
60-second window when the WM/Reuters benchmark rates are set.
The WM/Reuters benchmark rates cover 160 currencies. Data
from Thomson Reuters systems are a primary source of
the exchange rates used to calculate the benchmarks. World
Markets, a unit of Boston-based State Street Corp.,
applies its methodology and calculates the benchmark.
The Bloomberg report said traders had colluded with
counterparts at other banks to boost their chances of moving the
The foreign exchange benchmark rates, WM/Reuters, are
calculated using actual trades hourly through most of the
trading day, with closing rates "fixed" at 4 p.m. in London.
Many banks provide a service to their customers where they
guarantee to trade at the WM/Reuters rates and corporations use
the rate to value currency holdings since auditors accept the
WM/Reuters rates as independently fixed.
The G20's regulatory task force, the Financial Stability
Board, has set up its own working group on interest rate
benchmarks and reports back next year. It will look at how
transition to a more market-based interest rate benchmark could
work and what to do when markets dry up.
Regulators across the globe are already investigating
industry benchmarks for establishing the price of crude oil, the
interest rate swaps market and inter-bank lending rate Libor.