R.B.S. to Reduce Foreign Exchange Benchmark Offerings

LONDON - The Royal Bank of Scotland said Tuesday that it would reduce the range of foreign exchange benchmarks it offers to clients who trade currency markets.

In a memo sent to clients and reviewed by DealBook on Tuesday, the bank said it would only offer a limited array of “fixes” - a benchmark rate that reflects what a currency is trading at a certain time of day - beginning on Feb. 8.

The change comes as R.B.S. and many of the world’s largest banks are facing a series of investigations by regulators into whether traders attempted to manipulate key currency benchmarks in the $5-trillion-a-day foreign exchange market.

“Subject to market conditions, we will continue to accept orders you place with us at these fixings but it is important for you to be aware that in order for R.B.S. to appropriately manage market risk, we may enter the market ahead of the fix,” the bank said. “This, or other market factors, may result in the market moving for or against you depending on the size of your order relative to market liquidity.”

More than a dozen traders at some of the world’s largest banks, including traders at R.B.S., Deutsche Bank and HSBC, have been placed on leave amid questions about whether they colluded to manipulate benchmark currency rates.

Authorities in the United States, Britain, Switzerland, Germany and Hong Kong have all begun investigations, which are in the early stages.

Many of the world’s largest banks, including Citigroup, Barclays and UBS, have acknowledged that they are subject to those inquiries. None of the banks nor any of the traders who have been suspended has been accused of wrongdoing.

The foreign exchange market is lightly regulated, and the banks that dominate the marketplace control much of the information about how currencies are priced.

Trading around the “fixes” is one area that regulators have focused on, given the potential that large orders placed just ahead of the allotted measurement time could impact a benchmark price, such as the United States dollar to the British pound.

The benchmark, particularly the 4 p.m. prices in London and in New York, are used by insurance companies, fund managers and others in calculating their holdings.

“Going forward, we will implement a cut-off for acceptance of orders at fixings,” R.B.S. said. “The appropriate cut-offs for each fixing will be communicated to you by your FX coverage person.”

The bank will continue to provide fixes at 9 a.m. and 4 p.m. in London, 4 p.m. in New York and a 1:15 p.m. Central Europe Time tied to the European Central Bank. It also will provide fixes related to the Indian rupee, the Korean won and the Thai baht.