Forex traders at RBS and Barclays suspended over manipulation claims

A number of traders at Barclays and the Royal Bank of Scotland have been suspended amid a growing investigation into allegations of possible manipulation of the $5.3trn (£3.3trn) a day foreign currency market.

Six traders at Barclays and two at RBS have been suspended against the backdrop of inquiries by international regulators, including the UK's Financial Conduct Authority. The action follows reports earlier this week that JP Morgan and Citigroup had put senior London-based dealers on leave.

At Standard Chartered, meanwhile, a recently hired currencies trader is believed to have gone on leave of absence. None of the traders in question has been accused of any wrongdoing.

The banks involved declined to comment yesterday.

Earlier this week, Barclays said it was co-operating with authorities in connection with investigations into foreign exchange trading that involved a number of participants. It is also reviewing its records, going back several years. Other banks have also said they are cooperating with the investigation, which first came to light earlier this year when the FCA said it was looking into the forex market. At the time, the regulator said the inquiry was at an early stage.

In the US, the Justice Department acknowledged its own investigation into the forex market in late October, with the acting head of the department's criminal division, Mythili Raman, telling Reuters in an interview that both criminal and anti-trust officials were conducting an "active, ongoing investigation" into allegations of possible manipulation.

The inquiries are damaging for an industry that has just had to endure months of negative publicity as a result of the scandal surrounding allegations that bankers had manipulated the key Libor interest rate.

Commenting on the forex investigations, Will Nicholls, a dealer at Capital Spreads in London, said: "Just as the banks start to hand the reins of the 'country's most contentious industry' moniker over to the energy suppliers, it appears the likes of British Gas may be able to limit their time at the top of this list as yet another banking scandal looks likely to be unearthed."