FX Fixing Scandal: BoE Condoned Traders' Private Client Data Sharing

Bank of England officials allegedly gave currency traders the green light, over the way they shared impending customer orders with counterparts at other firms, when they met the central bank's seniors in 2012.

According to documents handed over to the regulator, which were seen by Bloomberg's sources, BoE officials condoned the trading practices, which have now become a central part of the global foreign exchange manipulation investigations.

The BoE was not immediately available for comment.

Last month, a Freedom of Information Act request revealed that Bank of England officials discussed the foreign exchange setting process with chief currency dealers a year before any investigations were launched.

According to the documents, the FX setting was discussed with senior traders at some of the world's largest investment banks in April 2012, despite US, UK and European regulators launching their probes a year later.

"There was a brief discussion on extra levels of compliance that many bank trading desks were subject to when managing client risks around the main set piece benchmark fixings," said the bank in response to the Freedom of Information Act document.

The daily $5tn (£3.1tn, €3.7tn) currency market is the largest in the financial system and is pegged to the value of funds, derivatives and financial products.

Morningstar estimates that $3.6tn in funds, including pension and savings accounts, track global indexes.

FX rates are calculated are compiled by using data from a variety of submitted provisions on a number of platforms, such as Thomson Reuters.

It is then calculated by WM, a unit of State Street, to form WM/Thomson Reuters at 1600 GMT daily.

IBTimes UK exclusively revealed that a whistleblower alerted regulators in the US, UK and Switzerland in 2011 about some of the world's largest trading companies and banks manipulating benchmark sterling, US dollar and Swiss franc currency rates.

However, it was not until 2013 that these authorities started investigating the allegations of market rigging.