It was Bloomberg that first reported that dealers between the various banks might be exchanging details about client orders placed ahead of these trading windows, to try to gauge how the currency might move.
Knowing the scale of orders could help a trader. For instance, a trader with a large order to buy euros and sell US dollars, who discovers other banks are in a similar position, could take it as a clear signal that euros are going to rise during the trading window.
Theoretically, there could be an advantage in pushing up the price of the euros during the fixing period as it would fall back in the minutes afterwards, allowing the banks to sell at a higher price to their clients than they buy in the markets later.
Regulators, including the UK Financial Conduct Authority (FCA), FINMA in Switzerland and authorities in the US are thought to be at an early stage, gathering information from recorded telephone calls and instant messages.
It is a laborious process and the outcome may not be known for months. And, as was the case last week with a year-long investigation into gas prices by the FCA, evidence of manipulation may not be found. Yet if it is, the banks could be facing a whole new — and very expensive — scandal.