Banks prepare for massive forex market fines

The six banks allegedly involved in the rigging of the £3trn-a-day foreign exchange market face a triple whammy of multimillion-pound penalties today as US and Swiss regulators join forces with the City’s top watchdog.

The Financial Conduct Authority, the US Commodity Futures Trading Commission and Switzerland’s Finma are finalising details of an 18-month investigation and the penalties they will impose on the banks.

With the FCA expected to fine the six up to £1.5bn, it has emerged that the CFTC could add a further £1bn to the bill, while Finma is likely to punish only UBS.

Barclays, HSBC and Royal Bank of Scotland, along with Citigroup, JP Morgan and UBS, could be fined an average of $300m (£190m) apiece by the CFTC.

The scale of the fines will vary according to the depth of involvement of each bank in the alleged manipulation of forex markets. The FCA declined to comment and the CFTC was not available for comment.

The FCA had earlier told the banks it wanted to reach a settlement with all of them by the end of this month. Today is now the target. But one senior banking source cautioned that last-minute negotiations were continuing and that a deal might still slip into next week.

Three of the banks were hit by huge fines by the CFTC over the separate and earlier Libor-rigging scandal. Barclays was penalised $200m, RBS $325m and UBS $700m. Finma also fined UBS Sfr59m (£38m) over Libor.

The Libor investigation was spearheaded by the CFTC with back-up from the US Department of Justice and the FCA. In the forex investigation it has been the FCA which has led the investigation, with support from US and other global regulators.

Today’s potential settlement could also include the Office of the Comptroller of the Currency in Washington, an offshoot of the US Treasury which regulates banks. Hong Kong regulators have also been running investigations.