At Lloyds Banking Group Plc, the 4 p.m. London currency fixing includes a new ritual: about an hour earlier, traders involved in transactions that use the benchmark are sequestered away from their colleagues in a special room.
The two employees who handle transactions using the daily 4 p.m. WM/Reuters fixing are banned from discussing trading with their colleagues, people with knowledge of the matter said. The bank is putting a firewall between employees involved with currency benchmarks and colleagues who trade on behalf of the bank and clients, said the people, who asked not to be identified because they weren’t authorized to speak publicly.
The move follows a rate-rigging scandal that has so far cost six banks $4.3 billion in fines. Britain’s markets regulator ordered banks last year to review their rules about conflicts of interest following allegations dealers leaked confidential client information to counterparts at other firms and colluded to rig currency benchmarks for their own profit.
While other banks have overhauled their practices in the awake of the scandal, barring employees from online chat rooms and limiting traders’ access to information about client orders, Lloyds is one of the first to separate traders physically.
Officials at the London-based lender declined to comment on the procedure. Lloyds, which wasn’t one of the six banks fined last year, is cooperating with regulators probing practices in the foreign-exchange market, according to its annual report.