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U.K. urged by EU to probe alleged currency rigging in Libor’s wake

Tensions intensifying

By Ambereen Choudhury, Gavin Finch and Liam Vaughan

June 13, 2013 • Reprints

Least Regulated

The currency market, the biggest in the financial system, is one of the least regulated as it takes place away from exchanges. Traders colluded with counterparts at other firms to boost chances of moving the WM/Reuters rates, according to two of the people with knowledge of the manipulation.

The data are collected and distributed by World Markets Co., a unit of Boston-based State Street Corp., and Thomson Reuters Corp. Bloomberg LP, the parent company of Bloomberg News, competes with New York-based Thomson Reuters in providing news and information, as well as currency-trading systems and pricing data. Bloomberg LP also distributes the WM/Reuters rates on Bloomberg terminals.

“The process for capturing this information and calculating the spot fixings is automated and anonymous, and the rates are monitored for quality and accuracy,” State Street said in an e-mailed statement. The data are derived from “multiple execution venues through a streaming rather than solicitation process,” the company said.

Spot foreign-exchange transactions aren’t considered financial instruments in the same way as stocks and bonds. They fall outside the EU’s Markets in Financial Instruments Directive, which requires dealers to take all reasonable steps to ensure the best possible results for their clients.

That should be changed, according to Bowles, the EU lawmaker who unsuccessfully applied to be governor of the Bank of England last year.

Market abuses are “part of the bonus culture,” Bowles said. “You are in a competitive race to show you are better and can earn more.”

www.bloomberg.com

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oil 6597forex 2882European Union 2864Reuters 1669Bank of England 1529California 1387Michigan 789Barclays Plc 573European Commission 483UBS AG 455EU 389UK 223Department of Justice 218Royal Bank of Scotland Group Plc 206Financial Services Authority 192Rates 181Oregon 163Manipulation 133European Parliament 121Bloomberg LP 118currency 117Comptroller of the Currency 105House Financial Services Committee 90U.S. Treasury Department 75Gordon Brown 72Carl Levin 62Michel Barnier 54Labour Party 49Thomson Reuters Corp. 41State Street Corp. 34Jeff Merkley 19financial-services 10Chantal Hughes 10Sharon Bowles 10Maxine Waters 9Bryan Hubbard 9World Markets Co. 6currency-trading systems 6Northern Rock Plc 4House of Lords 3rigged 2Lloyds Banking Group Plc. 2U.K. Liberal Democrat party 2Paul Myners 2Senate Permanent Subcommittee 1

Free Newsletter Modern Trader Follow

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