Australian Regulator to Conduct Inquiries Into Currency Market

Australia’s securities regulator said it will conduct inquiries into the nation’s foreign exchange market amid international probes of alleged manipulation of benchmark currency rates.

“We are aware of the reports of international regulatory inquiries on potential misconduct in other jurisdictions in relation to the FX market,” the Australian Securities and Investments Commission said in an e-mailed statement today. “We will conduct our own inquiries in Australia.”

The review will take at least a year to complete given the complexity and depth of the foreign-exchange market in Australia, the Financial Times reported, citing an interview with ASIC Chairman Greg Medcraft. The regulator will try to ascertain whether it has any concerns about the market in Australia, he was cited as saying.

At least a dozen regulators on three continents are examining allegations first reported by Bloomberg News in June that traders colluded with counterparts at other banks to manipulate benchmark foreign-exchange rates. More than 20 traders have been suspended or fired as a result of the probes.

Total average daily turnover in all over-the-counter currency instruments in Australia was $168.6 billion in October 2013, according to central bank data.

The most-used benchmarks for 160 currencies are the WM/Reuters Rates, which help set the value for what Morningstar Inc. estimates is $3.6 trillion in funds, and are determined by trades executed in a minute-long period called “the fix,” starting 30 seconds before 4 p.m. in London.

Regulators are investigating allegations traders at some of the world’s largest banks shared information about client orders to manipulate the WM/Reuters rates in their favor, five current and former dealers with knowledge of the practice told Bloomberg News in June.

Bloomberg LP, the parent of Bloomberg News, competes with Thomson Reuters Corp. in providing news and information, as well as currency-trading systems and pricing data. Bloomberg offers its own benchmark currency rate fixings.

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