Bank Of England Finds No Evidence Of FX Market Collusion (But Suspends Employee)
"This extensive review of documents, e-mails and other records has to date found no evidence that Bank of England staff colluded in any way in manipulating the foreign exchange market or in sharing confidential client information,” the Bank of England said today in a statement. Yet, as Bloomberg reports, a staff member was suspended amid the probe of a widening rigging scandal though "no decision has been taken on disciplinary action." As far back as 2006, they show concerns over the FX "fixings" that are at the core of this collusion but are careful not to condone any form of market manipulation. Well that's that then - until the next whistleblower exposes them.
As we noted in the past (via WSJ),
As previously reported by The Wall Street Journal, several of the fired and suspended traders, including Citigroup's former chief European trader Rohan Ramchandani, have at times served on a committee hosted by the BOE that serves as a forum for discussing industry issues. Mr. Ramchandani couldn't be reached for comment.
The presence of several of these traders on committees related to the central bank has raised questions over whether BOE officials were aware of how bank traders have operated, particularly regarding how they trade and what information they share in the run-up to benchmark snapshots of rates that are captured at 4 p.m. London time on each working day.
As The Wall Street Journal reported in December, the examination of banks' records do appear to show some efforts at collusion, people familiar with the matter say.
The BOE is probing allegations officials condoned practices at the heart of a widening rigging scandal involving traders at the world’s largest banks. It said today the investigation has found no evidence to date its employees were involved in collusion.
The suspended individual, who wasn’t named, is being investigated and “no decision has been taken on disciplinary action.”
At a July 4, 2006, meeting led by BOE chief dealer Martin Mallett, attendees discussed “evidence of attempts to move the market around popular fixing times by players that had no particular interest in that fix,” according to the minutes. “It was noted that ‘fixing business’ generally was becoming increasingly fraught due to this behavior.”
In a May 2008 meeting of the subgroup, a “large majority” of those present expressed “concern about the lack of transparency among some methodologies and the impacts in managing order flow and pricing liquidity at times of concentrated benchmarked interest such as the 4 p.m. London fix.”
At that discussion “it was suggested that using a snapshot of the market may be problematic” and “could be subject to manipulation,” according to the minutes.
“This extensive review of documents, e-mails and other records has to date found no evidence that Bank of England staff colluded in any way in manipulating the foreign exchange market or in sharing confidential client information,” the central bank said in today’s statement. “The Bank of England does not condone any form of market manipulation in any context whatsoever.”
It appears, however, that the BoE, once it began tto feel the pressure of investigation, ended its regular "meetings" with FX dealers (via Reuters),
Regular meetings between Bank of England officials and top foreign exchange dealers in London were discontinued in February last year, the BoE told Reuters on Wednesday.
This last meeting of the Foreign Exchange Joint Standing Committee's chief dealers subgroup (CDSG) took place four months before media reports of allegations of currency market manipulation.
The CDSG, held under the auspices of the BoE to discuss industry issues and usually chaired by the Bank's chief dealer Martin Mallett, last met at the Bank of England's offices in Threadneedle Street in London.
So arm's length now and back to business as usual, nothing to see here... we are sure the suspension of the staff member is for stealing too many paper clips or too much personal phone use...
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