A global investigation into the manipulation of forex markets is underway this week as it has been revealed that Barclays have suspended six traders and a string of large US banks are under scrutiny. Direct Market Touch are here to bring you the facts on what’s going on.
The chief of currencies in London at Barclays has been suspended and things seem set to be shaping up in a similar way to the Libor rigging scandal. The Libor (London Inter-Bank Offered Rate) is the average interest rate calculated through submissions of interest rates by major banks in London. The scandal was born when it was found that banks were falsely inflating/deflating rates to benefit from trades. It led to the dismissal of dozens of traders.
Now, authorities in Switzerland, the UK, US and Hong Kong have opened investigations into whether banks have rigged the forex market. The market has daily volumes of $5.3 trillion and benchmarks are generally set based on transactions made during very brief windows for large currencies. The investigation aims to discover whether or not traders colluded to change these benchmarks.
Within these large banks, all currencies are traded, from the major USD to smaller players like the Hungarian Forint. Banks including Citigroup, Barclays, RBS and Deutsche Bank are now operating under the watchful eye of regulators aiming to observe practices. Goldman Sachs and HSBC are also being looked at for wrong-doings.
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