G 20’s Financial Stability Board commits to revamp the way FX benchmarks are calculated
According to a fresh Reuters report, the Royal Bank of Scotland has announced that it is suspending to accept orders in relation to several foreign exchange fixings. While the bank has declined to comment on whether it has something to do with recent FX benchmarks manipulation scandals, it has confirmed that the announcement is related to and internal review.
The suspension of taking orders affects pretty much all but the major US and European daily FX fixings and a small number of emerging markets based numbers. According to the Reuters report the bank has declined to comment on the total number of benchmarks that have been dropped from the bank’s total. Just recently, we have already heard from Deutsche Bank that it has suspended a dealer that was trading around the Argentinian Peso fixing.
Meanwhile as the investigation by global regulators is still going on – sources close to Reuters have reported there is a procedure at work that will start revamping FX fixing methodology discussed by the G20 regulatory overseer – the Financial Stability Board. It has already set up two groups that will report on how to resort to a better mechanism to calculate Libor benchmarks sometime in June.
The FX fixing scandal will in effect trigger a similar review and assessment of what solutions can be found to reduce corrupt practices by banks in exchanging crucial information about order flows. The FSB is expected to announce its efforts to scrutinize FX benchmarks pretty soon according to sources cited in the Reuters article on the matter.
It seems like an eternal “fun and games” moment for FX fixing trading has suddenly come to an end – luckily all the beneficiaries from this are the big majority of forex market participants.
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