BANK PROBES ITS OWN PART IN RATE-RIGGING SCANDAL
THE Bank of England has launched an internal investigation into its alleged involvement in rate-rigging in the $5 trillion-a-day foreign exchange market,
Andrew Bailey, deputy governor of the Bank, told MPs on the Treasury Select Committee that the Old Lady takes the claims ‘extremely seriously’.
‘The Bank of England does not condone any form of market manipulation in any context whatsoever,’ he said.
The Bank initiated a full review led by its own legal counsel, supported by external lawyers, as soon as it learned about the accusations in October last year, he added.
A report on financial news service Bloomberg last week said currency traders at large global banks had confessed to Bank officials at a meeting in April 2012 that they shared information about customers’ orders before the currency benchmarks were set.
This is one of the practices being probed by the Financial Conduct Authority into possible malpractice in the forex market. Bailey claimed neither the Bank nor the FCA had seen the evidence cited in the Bloomberg report, said to be notes made by a senior trader of the meeting between currency dealers and two officials – Martin Mallett, the Bank’s chief currency dealer, and James O’Connor from its foreign exchange division
Bailey agreed with Labour MP Pat McFadden that if it were proved the Bank had turned a blind eye to questionable behaviour, it would be ‘enormously damaging’ to confidence, particularly following the Libor scandal when former deputy governor Paul Tucker was engulfed in the row.
Bailey added: ‘We have no evidence to substantiate the claim that Bank officials in any sense condoned or were informed of price manipulation or the sharing of confidential client information, but we do not regard that review as over.
‘You can be assured that the governors take the whole question of the reputation and the integrity of the central bank extremely seriously – this is the most important thing we have.’