JPMorgan Chase & Co. and Citigroup Inc., two of the three largest U.S. banks, said they’re cooperating with various probes into the firms’ foreign-exchange trading businesses.
“These investigations are in the early stages and the firm is cooperating with the relevant authorities,” New York-based JPMorgan said today in a quarterly filing with the U.S. Securities and Exchange Commission. Citigroup, also based in New York, said in its 10-Q filing that it’s responding to requests for information on probes by government agencies in the U.S. and other jurisdictions.
Regulators in London, Zurich, the U.S. and Asia are probing the foreign-exchange market after Bloomberg News reported in June that dealers in the industry said they had been front-running client orders, attempting to rig the benchmark WM/Reuters rates by colluding with counterparts and pushing through trades before and during the 60-second windows when the benchmarks are set.
Both JPMorgan and Citigroup put their top London currency dealers on leave after regulators started investigating the traders’ use of an instant-message group, three people with knowledge of the moves said this week. Barclays Plc suspended three foreign-exchange traders, including a chief dealer in London, a person with knowledge of the decision said today.
Regulators are focusing on an instant-message group the traders set up to share information about their positions and client orders over a period of at least three years, four people with knowledge of the probe said last month. The roster of banks in the group changed as the men changed firms and also included Barclays, Royal Bank of Scotland Group Plc and UBS AG, three people with knowledge of the communications said.
Investigators are weighing whether the messages amounted to attempts to manipulate the market, two people said. The five firms account for about 47 percent of the $5.3 trillion-a-day foreign-exchange market, according to a May survey by Euromoney Institutional Investor Plc. Two other traders, who weren’t part of the conversations and who asked to not be identified because they do business with those involved, said that they and others in the market referred to the message group as “The Cartel.”