U.K. regulators held talks with six global banks in order to reach a settlement on a long-standing probe regarding the suspected rigging of currency market. The Financial Conduct Authority FCA, the British independent financial regulator, was involved in preliminary settlement talks with the representatives from six banks, including three banks from U.K. – The Royal Bank of Scotland Group plc RBS, HSBC Holdings plc HSBC and Barclays PLC BCS; two banks from U.S. – Citigroup Inc. C and JPMorgan Chase & Co. JPM; and one bank from Switzerland – UBS AG UBS.

In order to settle the wrongdoings by these big banks, regulators seek to collect fines in the range of $2.4–$3.3 billion.

The probe primarily hinges upon the suspicion that the traders at the banks manipulated the foreign exchange rates which served as benchmarks for huge amount of investments. The traders allegedly colluded to manipulate prices, and influenced customers by maneuvering their bets based on the orders of the clients.

Deeper Wounds

Currency market rigging is not new to the banking industry. Earlier, some big banks were penalized for rigging the London interbank offered rate (LIBOR), a benchmark for credit card rates and other loans. Whatsoever, the recent probe by the FCA has brought to fore a more important question that whether these banks have rigged other markets too where they were allowed to operate. This has not only led to a gamut of legal actions but also a wave of public policy concerns.

Lacks Consensus

Over recent months, the U.S. and U.K. authorities have proposed ways, albeit separately, to protect the important benchmarks. The British government has disclosed its intention to expand the oversight of major benchmarks in the foreign exchange, fixed-income and commodity markets. It also plans to make the manipulation of currency price a criminal offense for traders. However, no concerted efforts have been made to address this issue of currency markets rigging.

This time also, the FCA has chosen to tread alone. On the other hand, several U.S. authorities, including the Department of Justice, are conducting their own investigations. However, improved coordination among global regulators while imposing penalty on banks, will help address this widespread problem of currency market rigging in a better way.