The Bank of Canada is conducting a survey to determine how the foreign-exchange rates it publishes are used as part of a review begun in the wake of allegations that global currency benchmarks were manipulated.
The survey, available on the bank’s website, is meant to determine how the daily rates are used and the impact of any changes in how they are calculated or released, according to a statement today. The review is part of international efforts to reform foreign exchange reference rates, the bank said.
The central bank has said the methodology used to calculate most currency benchmarks, including its own noon rate for the Canadian dollar, are open to manipulation, according to internal documents obtained by Bloomberg News in March. The official review of the Canadian dollar rate was sparked by allegations, first reported by Bloomberg in June 2013, that traders had colluded to fix the most widely used foreign exchange reference rates set each day in London.
The WM/Reuters Rates are used for 160 currencies and help set the value for what Morningstar Inc. estimates is $3.6 trillion in funds. They are determined by trades executed in a minute-long period called “the fix,” starting 30 second before 4 p.m. in London.
Regulators are investigating allegations traders at some of the world’s largest banks shared information about client orders to manipulate the WM/Reuters rates in their favor, current and former dealers with knowledge of the practice told Bloomberg News last year.
The Bank of Canada uses a similar method, averaging trades over a two-minute window around noon, to determine its reference rate for the value of the Canadian dollar versus its U.S. counterpart. The central bank says on the website the rate is for informational purposes only, though some firms use it as a benchmark.
The WM/Reuters Rate is collected and distributed by World Markets Co., a unit of Boston-based State Street Corp., and Thomson Reuters Corp. The Bank of Canada uses prices from the Reuters trading platform to determine its noon rate.
Bloomberg LP, the parent of Bloomberg News, competes with Thomson Reuters in providing news and information, as well as currency-trading systems and pricing data. Bloomberg offers its own benchmark currency rate fixings.
To contact the reporter on this story: Ari Altstedter in Toronto at firstname.lastname@example.org