The New York banking regulator is investigating if Deutsche Bank and Barclays PLC used algorithms on their trading platforms to manipulate foreign exchange rates, a source with direct knowledge of the matter told reporters.
Benjamin Lawsky, the head of New York’s Department of Financial Services (DFS), has ordered a monitor to be installed at Deutsche Bank and already has one in place at Barclays — a move that would allow him to collect greater evidence of alleged manipulation, said the source, who did not want to be named.
Deutsche Bank spokeswoman Renee Calabro declined to comment, but cited an earlier statement on the probes.
“Deutsche Bank has received requests for information from regulatory authorities that are investigating trading in the foreign exchange market. The bank is cooperating with those investigations,” Calabro said, quoting the earlier statement.
Barclays spokesman Mark Lane declined to comment on the matter. A DFS spokesman also declined to comment.
Last month, regulators fined six major banks a total of US$4.3 billion for failing to stop traders from trying to manipulate the foreign exchange market, following a year-long global investigation. Deutsche Bank and Barclays were not among the six banks.
Lawsky, who started his probe into possible manipulation of currency markets in February, chose not to coordinate a settlement with other regulators because he viewed those deals as too weak, a source told reporters last month, an indication that he is likely to go after the banks later and demand larger penalties.
Reuters reported last month that the civil settlements struck between six global banks and US and UK authorities set the stage for negotiations over related ongoing probes that could bear much more severe consequences.
More than 30 traders at some of the world’s largest banks have been suspended or fired after internal inquiries.
Several of those traders could face criminal charges, depending on the outcome of investigations by the US Department of Justice and the Serious Fraud Office in Britain.
British bank HSBC has dismissed a senior foreign currency trader in London, according to a person briefed on the matter.
The trader is the latest bank employee to lose his job as HSBC and other lenders have paid out billions of US dollars to regulators over misconduct in their currency operations.
Stuart Scott, the head of foreign exchange trading for Europe, the Middle East and Africa at HSBC, was dismissed on Tuesday, said the person, who was not authorized to discuss the matter publicly.
Scott had been employed by the bank since January 2007, according to a register of financial services employees maintained by the Financial Conduct Authority of Britain.
HSBC declined to comment on Wednesday. Scott could not immediately be located for comment.
Additional reporting by NY Times
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