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Probes See U.K. Market Manipulation Reports Rise 43%

The Financial Conduct Authority isn't the only U.K. agency to investigate market manipulation. Photographer: Chris Ratcliffe/Bloomberg
The Financial Conduct Authority isn't the only U.K. agency to investigate market manipulation. Photographer: Chris Ratcliffe/Bloomberg

Dec. 23 (Bloomberg) -- Reports of suspected market manipulation soared by 43 percent this year as the U.K. financial regulator investigated the rigging of multiple benchmark rates.

The Financial Conduct Authority received 117 reports of suspected “distortion and manipulation” of markets in the 12 months to August, compared with 82 in 2012, according to Bovill Ltd, a financial services consultant in London.

The FCA in 2013 has opened investigations into currency-rigging, issued a second wave of fines for manipulation of the London interbank offered rate, and levied its first fine against a high-frequency trader for manipulating commodities markets.

“Regulated businesses now know just how seriously regulators and politicians will treat market manipulation,” said Mark Spiers, Bovill’s head of wealth management. “They know that they can only expect leniency if they report pro-actively suspected cases of market manipulation that they come across.”

The FCA isn’t the only U.K. agency to investigate market manipulation. The first three individuals to face criminal proceedings filed by the Serious Fraud Office in a probe related to Libor entered not guilty pleas in a London court last week.

Tom Hayes, a former trader at UBS AG and Citigroup Inc., is scheduled to stand trial in January 2015. RP Martin Holdings Ltd. brokers, Terry Farr and James Gilmour, are set to follow in September of that year.

“The FCA has been working with the industry over the past 18 months to improve the standard of market surveillance undertaken by authorized firms, with a particular focus on increasing the scope of products and behaviors covered,” the regulator said in an e-mailed statement. “We also recognize that Libor fines and the misconduct that occurred may have indirectly contributed to the increased number of suspicious transaction reports.”

To contact the reporter on this story: Suzi Ring in London at sring5@bloomberg.net

To contact the editor responsible for this story: Anthony Aarons at aaarons@bloomberg.net

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