WM Company delays 4pm fix amendments in attempt to make it resistant to manipulation

Once bitten twice shy, the WM Company division of North American financial markets giant State Street Corporation, has declared that it is postponing proposed amendments to the 4pm fix, which is a snapshot of currency rates and benchmarks which are used globally by companies as well as investors and market participants to value FX assets following the FX rate manipulation investigations which cost six banks $3.3 billion in penalties in November.

The WM Company is charged with the responsibility of calculating this particular FX benchmark, and the reason for the postponing of changes is due to efforts within the firm to take preventative action in ensuring that the benchmark is more resistant to manipulation efforts following the publication of several inter-company messages between FX traders clearly depicting their bold activities in cashing in on deals made via collaborative rate fixing.

According to a report by the Wall Street Journal, Edinburgh-based WM Company stated in November in an internal memo that it would widen the window around 4 p.m. used for its computations from one minute to five minutes. The change was to have taken place at 10 p.m. London time on Dec. 14. In theory, a wider window makes it harder for traders to game the benchmark.

Despite this, a WM Company spokeswoman said in response to questions that the company had received requests from customers for more time to prepare. WM “had hoped to introduce the changes before the end of the year,” she said. WM now expects them in February 2015.

The benchmark is calculated daily from trades executed just before and after 4 p.m. in London. Its reputation was tarnished by the recent global probe into whether traders tried to influence the rate, thus preventative measures are now being investigated.

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