A number of regulators around the world are trying to investigate whether FX market manipulation has occurred (Photo: Reuters)
A number of regulators around the world are trying to investigate whether FX market manipulation has occurred (Photo: Reuters)

America's Department of Justice and the Federal Bureau of Investigation have launched a criminal investigation into whether the world's biggest banks attempted to manipulate the currency markets.

According to a number of media reports, citing sources familiar with the matter, the US agencies are following in the footsteps of the UK's Financial Conduct Authority (FCA) and Switzerland's Financial Market Supervisory Authority (Finma) to determine whether FX market rigging has occurred.

Less than one week ago, the Royal Bank of Scotland handed over instant messages to the FCA after deeming that a former currency employee's communication with trading counterparts may have been inappropriate.

While RBS has yet to respond to IBTimes UK about this report, unnamed sources cited said the bank has also opened an internal investigation into whether currency market rules had been breached after the FCA said it was looking into whether traders at global banks attempted to manipulate the FX markets.

According to media sources, the FCA has also asked four banks for information regarding possible FC market manipulation.

The daily $4.7tn (€3.5tn, £3bn) currency market is the largest in the financial system and is pegged to the value of trillions of funds, derivatives and financial products. Morningstar estimates that $3.6tn in funds, including pension and savings accounts, track global indexes.

This month, Switzerland's financial regulator revealed that it is probing a number of domestic and foreign institutions over possible rigging of foreign exchange rates in the currency markets.

"Finma is currently conducting investigations into several Swiss financial institutions in connection with possible manipulation of foreign exchange markets," the regulator said in a statement, adding it is co-ordinating closely with authorities in other countries as multiple banks around the world are potentially implicated.

Meanwhile, the US Commodity Futures Trading Commission is also investigating the markets for possible currency market rigging.

Although regulators are ramping up efforts to investigate banks over market rigging, 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.

FBI