New York Fed Probed Currency Benchmark Setting in 2012

The Federal Reserve Bank of New York in 2012 examined how benchmark currency rates were calculated after accusations emerged that banks manipulated the London interbank offered rate.

“In light of the focus on reference rates in other markets, we sought to better understand the various reference rates commonly used in the FX market,” Andrea Priest, a spokeswoman for the New York Fed, said in an e-mailed statement. The New York Fed-sponsored Foreign Exchange Committee “undertook an effort to catalogue existing rates. This effort did not reflect concerns specific to the FX rate.”

Minutes of the FX Committee’s October 3, 2012, meeting said that representatives of the New York Fed “expressed a desire to gather more information about the range, type, and use of benchmarks in the foreign exchange market.”

Representatives from firms including Barclays Plc, (BARC) Goldman Sachs Group Inc. and BlackRock Inc. attended the meeting, the minutes show.

The record of the industry group’s Nov. 14, 2012, gathering showed that New York Fed officials asked the group to “draft a catalogue of reference rates relevant in the foreign exchange market.” The Wall Street Journal previously reported that the NY Fed researched FX rates in 2012.

The Fed, which supervises U.S. bank holding companies, is among authorities from London to Washington that are now probing whether traders shared information that may have let them manipulate prices in the $5.3 trillion-a-day foreign-exchange market to maximize their profits.

The foreign-exchange inquiry looks at benchmark WM/Reuters rates used by companies and investors around the world.

Those rates are determined by trades executed in a minute-long period called “the fix” at 4 p.m. in London each day. By concentrating orders in the moments before and during the 60-second window, traders can push the rate up or down, a process known in the industry as “banging the close.”

To contact the reporter on this story: Caroline Salas Gage in New York at

To contact the editors responsible for this story: Chris Wellisz at Gail DeGeorge, Sara Forden

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