Australia launches latest forex investigation

The fight against foreign exchange rigging has spread to a new continent after the Australian financial watchdog said that it would investigate alleged manipulation of the currency markets.

The Australian Securities and Investment Commission will join more than 12 other regulators across the world that are looking into into the $5.3 trillion forex markets.

The Financial Conduct Authority and the Bank of England have opened investigations and at least six American authorities are believed to have done so.

A spokesman for ASIC said yesterday: “We are aware of the reports of international regulatory enquiries on potential misconduct in other jurisdictions in relation to the FX market. We will conduct our own enquiries in Australia.”

The forex-rigging scandal has led to the suspension of at least 20 currency traders around the world. In Britain, the scandal came to a head two weeks ago when the Bank of England suspended an employee and announced that it would investigate allegations that its staff took part in forex-rigging or knew that traders were doing so.

The US Securities and Exchange Commission was reported last week to have joined the fray by investigating securities linked to the currency markets. The SEC is understood to be worried that foreign exchange derivatives, which are used widely by multinational companies to hedge against price fluctuations, could have been affected by wrongdoing in the wider market. About $15 trillion of foreign exchange options contracts are in operation, according to the Bank for International Settlements.

The US Federal Reserve, the Commodity Futures Trading Commission, the Department of Justice, the New York Department of Financial Services and the Office of the Comptroller of the Currency are all known to have opened inquiries into forex-rigging.

The allegations of manipulation of the forex market centre on the WM/Reuters benchmark rate. The fixed rate is based on trades executed in a one-minute window every day. Some of these trades are believed to be suspect.