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Lloyds Opens Internal Probe Into Potential Currency Manipulation

The Lloyds' prancing horse logo sits in the window of a Lloyds Bank branch, a unit of Lloyds Banking Group Plc, in London. Photographer: Chris Ratcliffe/Bloomberg
The Lloyds' prancing horse logo sits in the window of a Lloyds Bank branch, a unit of Lloyds Banking Group Plc, in London. Photographer: Chris Ratcliffe/Bloomberg

Nov. 6 (Bloomberg) -- Lloyds Banking Group Plc, Britain’s largest mortgage lender, opened an internal probe into its currency-trading operations as regulators around the world scrutinize the possible manipulation of foreign-exchange rates.

“We are aware that a number of regulatory and enforcement authorities are investigating foreign-exchange trading,” Lloyds said in a statement in response to questions from Bloomberg News. “It is prudent to review our own foreign-exchange trading over recent years and we have commenced such a review. We will, of course, report anything we find to the relevant authorities and assist them as requested.”

Lloyds started the inquiry after the Financial Conduct Authority asked the lender to review its trading operations and report any irregularities, said two people with knowledge of the matter who asked not to be identified because they weren’t authorized to speak publicly. The London-based bank isn’t being formally probed by any regulators and no traders have been put on leave, suspended or terminated, said the people.

At least seven banks including Britain’s Barclays Plc and HSBC Holdings Plc have said they are being investigated by authorities examining the $5.3 trillion-a-day foreign-exchange market and are co-operating. Citigroup Inc., JPMorgan Chase & Co. and Barclays have all suspended or put on leave some of their most senior currency traders amid the inquiry. No one has been accused of wrongdoing. Lloyds ranked 38th by global market share in currency trading, according to a May survey by Euromoney Institutional Investor Plc.

WM/Reuters Rates

Bloomberg News reported in June that dealers in the industry said they shared information about their positions through instant messages, executed their own trades before client orders and sought to manipulate the benchmark WM/Reuters rates by pushing through trades before and during the 60-second windows when the benchmarks are set.

The WM/Reuters rates determine what many pension funds and money managers pay for their foreign exchange and are used by index providers such as FTSE Group and MSCI Inc. to calculate daily valuations of indexes that span multiple currencies. Even small movements could affect the value of what Morningstar Inc. estimates is $3.6 trillion in funds including pension and savings accounts that track global indexes.

Because banks agree with clients to trade at the WM/Reuters rates, regardless of later moves, dealers are at risk of losses if the market moves against them.

The rates are published hourly for 160 currencies and half-hourly for the 21 most-traded. They are the median of all trades in a minute-long period starting 30 seconds before the beginning of each half-hour. Rates for less-widely traded currencies are based on quotes during a two-minute window.

The data are collected and distributed by World Markets Co., a unit of Boston-based State Street Corp., and Thomson Reuters Corp. Bloomberg LP, the parent company of Bloomberg News, competes with Thomson Reuters in providing news and information as well as currency-trading systems.

To contact the reporters on this story: Gavin Finch in London at; Ambereen Choudhury in London at

To contact the editor responsible for this story: Edward Evans at

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