BOE met with senior currency dealers 18 months before FX fixing investigation

Bank of England officials could have known about practices surrounding the 4 pm London fix

The 4pm London FX fixing scandal is taking a new direction from a document that UK’s central bank released yesterday responding to a Freedom of Information Request made by Reuters. Bank of England officials have met with senior FX dealers to discuss the process that was used in determining the daily FX benchmark and the surrounding practices back in April 2012.

According to the Reuters report that covers the story, traders have approached the subject themselves driven by scrutiny surrounding the Libor investigation at the time. Sources cited in the story claim that practices were discussed with officials from the central bank including order sharing. Currently investigators are still in the process of deciding whether this common knowledge between traders at big banks amounts to collusion.

Members of UK’s Parliament are already expressing concern with the issue not being addressed at the time in any sensible way. The public credibility of the UK’s central bank is at stake, as ongoing investigations are not very likely to remain just that. The close relationship between the Bank of England and commercial banks raises some eyebrows with the public’s eyes being already wide open since the Libor scandal was unveiled.

The central bank denies that manipulation per se was discussed at the meeting, and claims it was only related to business practice compliances related to risk mitigation around the time when the benchmark was calculated. However what is important is whether it knew about business practices of sharing order information between major FX dealers.

Stay tuned to LeapRate for more news on the 4 pm fix investigation.

For the full article by Reuters, visit their website.

For more on the global Forex industry see the LeapRate-Dow Jones Forex Industry Report. 

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BOE met with senior currency dealers 18 months before FX fixing investigation


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