LONDON - Regulators in Britain are reviewing whether global benchmarks tied to gold trading were improperly influenced as part of a wide-ranging investigation of potential manipulation of the $5 trillion-a-day currency market, according to a person familiar with the investigation.
The review by Britain’s Financial Conduct Authority is in a preliminary stage and it is unclear whether it will ultimately result in any allegations of wrongdoing, said the person, who wasn’t authorized to discuss the investigation publicly.
The inquiry by the FCA is the latest avenue being explored by regulators as they focus on whether traders manipulated a variety of financial benchmarks.
The FCA declined comment Wednesday.
Those benchmarks, often referred to in the industry as the “fix,†provide a window into spot trading prices at different periods during the day and are often used by fund managers to help determine the value of their portfolios or, in the case of gold, to help set the price of jewelry and other products that include gold.
The benchmark price for gold in London is set twice a day and dates back to 1919, according to the London Bullion Market Association. Barclays, Societe Generale, Deutsche Bank, Scotiabank and HSBC are the member firms that help set the daily benchmarks for gold in London.
Bloomberg News reported the FCA inquiry into gold benchmarks on Wednesday.
The commodities inquiry follows authorities in Europe and Hong Kong who have opened a series of investigations into the foreign exchange market in recent months. The Justice Department in Washington and the Commodity Futures Trading Commission also are scrutinizing trading.
Nine of the largest banks in currency trading have publicly disclosed that they have received inquiries from regulators. As many as 15 banks are under scrutiny, people familiar with the investigation have said.
Twelve traders have been placed on leave pending the outcome of the investigation and several banks are considering limiting the use of chat rooms, which is an area of focus for regulators exploring potential collusion in the market. None of the traders has been formally accused of wrongdoing.
Despite its size, the foreign exchange market is largely unregulated and dominated by banks that control access to information about currency prices. Deutsche Bank, Citigroup, Barclays and UBS account for about half of all trading.
The vast majority of currency trading is conducted out of London, which is still reeling from a long-running investigation into alleged manipulations of the London interbank offered rate, a global benchmark interest rate known as Libor.
Five financial companies, including Barclays, Royal Bank of Scotland and UBS, have paid more than $3 billion in the Libor scandal in total. Several of those banks are now under scrutiny in the currency investigation.
