Bank of England ‘knew traders were sharing data with rivals’

Notes from 2012 meeting suggest Bank gave tacit nod to contentious practice

Associate Business Editor

The Bank of England was under pressure on Friday night amid claims that officials gave tacit approval to practices at the heart of the escalating investigation into London’s foreign exchange market.

A senior currency trader has reportedly handed over notes from a meeting with officials from the central bank in April 2012, which are said to indicate that traders were told that sharing information about impending customer orders at other firms was not improper.

That practice is at the centre of a year-long inquiry by the Financial Conduct Authority (FCA), which is investigating whether traders colluded in attempts to manipulate prices during the flurry of trading ahead of daily exchange rate “fixes”. While results of what could become the next great banking scandal are not expected until next year, Martin Wheatley, the FCA’s chief executive, told MPs on the Treasury Select Committee this week that practices were “every bit as bad” as what came to light in the Libor interest rate-fixing scandal which has cost banks billions of pounds in fines.

The Bank has released its minutes of the same 2012 meeting but they say only that “there was a brief discussion on extra levels of compliance that many bank trading desks were subject to when managing client risks”.

According to Bloomberg, however, the trader’s note of the same meeting said attendees were told that there was not a policy on communication between traders and that banks should make their own rules.

That tallies with City accounts. If correct, it could leave the Bank of England in an awkward position. The Bank has already faced criticism for failing to act on the Libor scandal after US watchdogs raised concerns about the way Libor and other similar interest rates – used to price a huge range of financial transactions – were being set, although at that time the Bank had no responsibility for its oversight.

A spokesperson said on Friday: “The Bank of England has already released its record of the April 2012 CDSG meeting, and we are continuing to support the FCA in its investigations.”

The scandal further widened this week when the New York banking regulator Benjamin Lawsky sought documents from some of the biggest banks in the field, including Deutsche Bank, Goldman Sachs and Barclays.

Several traders have been suspended as a result of the investigation and bankers have privately told The Independent that the inquiry is “causing real concern to the industry”.

Andrew Tyrie, the chairman of the Treasury Select Committee, said: “Allegations that banks may have been rigging the forex market are extremely serious, particularly for firms but also for regulators who had been telling Parliament that banking standards were improving.”

Mr Tyrie called for “a fundamental reform” of the structure of variable pay, or bonuses. He said variable pay had “for too long incentivised people to do the wrong thing”.

Start your day with The Independent, sign up for daily news emails
ebooksAn unforgettable anthology of contemporary reportage
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Payments Operations Assistant

£23000 - £25000 per annum: Recruitment Genius: They win lots of awards for the...

Recruitment Genius: Telephone Debt Negotiator

£13500 - £20000 per annum: Recruitment Genius: This nationwide enforcement com...

Guru Careers: Communications Exec / PR Exec

£25 - £30K: Guru Careers: We are seeking a highly-motivated and ambitious Comm...

Guru Careers: Pricing Analyst

£30 - 35k: Guru Careers: We are seeking a Pricing Analyst to join a leading e-...

Day In a Page

On your feet! Spending at least two hours a day standing reduces the risk of heart attacks, cancer and diabetes, according to new research

On your feet!

Spending half the day standing 'reduces risk of heart attacks and cancer'
Liverpool close in on Milner signing

Liverpool close in on Milner signing

Reds baulk at Christian Benteke £32.5m release clause
With scores of surgeries closing, what hope is there for the David Cameron's promise of 5,000 more GPs and a 24/7 NHS?

The big NHS question

Why are there so few new GPs when so many want to study medicine?
Big knickers are back: Thongs ain't what they used to be

Thongs ain't what they used to be

Big knickers are back
Thurston Moore interview

Thurston Moore interview

On living in London, Sonic Youth and musical memoirs
In full bloom

In full bloom

Floral print womenswear
From leading man to Elephant Man, Bradley Cooper is terrific

From leading man to Elephant Man

Bradley Cooper is terrific
In this the person to restore our trust in the banks?

In this the person to restore our trust in the banks?

Dame Colette Bowe - interview
When do the creative juices dry up?

When do the creative juices dry up?

David Lodge thinks he knows
The 'Cher moment' happening across fashion just now

Fashion's Cher moment

Ageing beauty will always be more classy than all that booty
Thousands of teenage girls enduring debilitating illnesses after routine school cancer vaccination

Health fears over school cancer jab

Shock new Freedom of Information figures show how thousands of girls have suffered serious symptoms after routine HPV injection
Fifa President Sepp Blatter warns his opponents: 'I forgive everyone, but I don't forget'

'I forgive everyone, but I don't forget'

Fifa president Sepp Blatter issues defiant warning to opponents
Extreme summer temperatures will soon cause deaths of up to 1,700 more Britons a year, says government report

Weather warning

Extreme summer temperatures will soon cause deaths of up to 1,700 more Britons a year, says government report
LSD: Speaking to volunteer users of the drug as trials get underway to see if it cures depression and addiction

High hopes for LSD

Meet the volunteer users helping to see if it cures depression and addiction
German soldier who died fighting for UK in Battle of Waterloo should be removed from museum display and given dignified funeral, say historians

Saving Private Brandt

A Belgian museum's display of the skeleton of a soldier killed at Waterloo prompts calls for him to be given a dignified funeral