The Bank of England has suspended a member of staff as it stepped up the pace of its review into whether it knew of or even condoned alleged rigging of the multi-trillion-dollar-a-day foreign exchange market.
The highly unusual suspension of one of the Bank’s own staff will inevitably lead to suspicions that at least somewhere within the central bank there was knowledge or, at least, worries over the foreign exchange market.
Martin Wheatley, chief executive of the Financial Conduct Authority, has already warned that the forex rigging scandal could be "every bit as bad" as the Libor rigging one. At least 15 banks are under investigation by regulators worldwide over forex rigging claims.
The Bank, under Governor Mark Carney, started an internal review into allegations its officials "condoned or were informed of manipulation in the foreign exchange market or the sharing of confidential client information" in December.
Traders have alleged the Bank was told almost two years ago that they regularly exchanged information on the size of their clients’ orders before fixing exchange rates. They claim they were told by Bank officials there was nothing inappropriate in doing this.
The Bank has now asked an oversight committee of the Court of Directors to investigate officials’ roles and behaviour, and the committee has brought in law firm Travers Smith to prepare a report which will be made public.
The Bank said: “This extensive review of documents, emails and other records has to date found no evidence that Bank of England staff colluded in any way in manipulating the foreign exchange market or in sharing confidential client information.”
The Bank said it had already examined 15,000 emails, 21,000 Bloomberg and Reuters chatroom records and more than 40 hours of telephone call recordings in its review.
As part of today’s escalation of the forex investigation the Bank said it has “re-iterated its guidance to staff regarding management of records and escalation of important information. Those policies have been updated in recent months”.
It added that it "requires its staff to follow rigorous internal control processes”, and it had suspended the employee “pending investigation by the Bank into compliance with those processes."
The Bank said it had not taken any decision to discipline any member of staff, and emphasised that it is working closely with the FCA. Deputy Governor Andrew Bailey told MPs last month that the Bank did not condone any kind of market manipulation.