Switzerland’s financial regulator has launched an investigation into “several Swiss financial institutions” it suspects of cashing in on foreign currency trades by rigging exchange rates through underhand tactics.
The latest rate rigging probe follows hard on the heels of the Libor scandal that engulfed UBS along with other global banking giants.
The Swiss Financial Market Supervisory Authority (FINMA) has not named any bank in its latest investigation, nor has it given any further details.
FINMA said in a statement on Friday that it was “coordinating closely with authorities in other countries as multiple banks around the world are potentially implicated”. The British regulator launched its own foreign exchange (forex) probe in London in the summer.
Currency exchange rates are set by the WM Group and Reuters on a daily basis by analysing actual trading volumes at leading banks during a short time window.
Traders could potentially influence exchange rates by pushing through large orders exactly at that time.
If those suspicions are proved correct, it could result in yet another embarrassing reputational scandal, not just for individual banks but also for the integrity of the global financial sector.
The $4.7-trillion-a-day (CHF4.2 trillion) currency market, the biggest in the financial system, is also one of the least regulated, according to experts. Even the smallest movement in exchange rates could affect the value of investments made by institutional investors, including pension funds.
swissinfo.ch and agencies