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EU Regulators Start Inquiry Into Currency Rate-Manipulation

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EU Competition Commissioner Joaquin Almunia
European Union Competition Commissioner Joaquin Almunia said he learned in the last few days of activities that “could mean violation of competition rules around the possible manipulation of types of exchange rates,” according to a live chat on the EU’s website. Photographer: Andrew Harrer/Bloomberg

European Union antitrust regulators are examining the possible manipulation of currency rates, following a Swiss probe into whether banks colluded to manipulate the $5.3 trillion-a-day foreign exchange market.

Joaquin Almunia, the EU’s competition commissioner, said he learned in the last few days of activities that “could mean violation of competition rules around the possible manipulation of types of exchange rates,” according to a live chat on the EU’s website today.

“I can’t anticipate any further because we are starting the inquiries,” Almunia said. “We are in a very, very preliminary phase.” His spokesman declined to comment further.

The probes come after Bloomberg News reported in June that dealers at banks pooled information through instant messages and used client orders to move benchmark currency rates. Britain’s Financial Conduct Authority said that month it was reviewing the allegations.

Switzerland’s Financial Market Supervisory Authority, Finma, and the competition commission last week said they were probing the potential manipulation of some foreign-exchange rates. The U.S. Commodity Futures Trading Commission has been also reviewing possible legal violations in foreign currency markets, according to a person familiar with the matter who asked not to be identified because the matter is private.

‘Multiple Banks’

Finma said last week it was “coordinating closely with authorities in other countries as multiple banks around the world are potentially implicated.” Separately, the competition commission said it had opened a preliminary probe on Sept. 30 after receiving allegations of collusion among banks to manipulate some foreign-exchange rates. Neither agency identified which firms are being probed.

Authorities around the world are investigating the alleged abuse of financial benchmarks by the firms that play a central role in setting them. EU regulators are already reviewing allegations of collusion in crude oil and biofuels markets and possible rigging by banks and brokerages of Libor and Euribor, benchmark interest rates. UBS AG, Switzerland’s largest bank, was among four firms fined about $2.6 billion for rigging the London interbank offered rate, the benchmark for more than $300 trillion of securities worldwide.

Four banks account for more than half of all trading in the foreign-exchange market, according to a May survey by Euromoney Institutional Investor Plc. Deutsche Bank AG is No. 1 with a 15 percent share, followed by Citigroup Inc with almost 15 percent and London-based Barclays Plc and UBS, which each have 10 percent. Sebastian Howell, a spokesman for Deutsche Bank, Aurelie Leonard of Barclays, Richard Morton of UBS and Jeffrey French of Citigroup all declined to comment.

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