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Bank of England hits back over forex allegations

Mark Carney says regulation could be needed for the foreign exchange markets in the wake of rate-rigging allegations.

Speaking to the Treasury select committee this week, the Bank of England governor said he acted swiftly when he heard allegations that the Bank had condoned trader manipulation.

Last week, the Bank of England suspended a member of staff over allegations that the individual had allowed traders to manipulate the market.

TSC chair Andrew Tyrie says the Bank’s “Byzantine” structure makes it difficult to hold staff to account.

Carney first knew about the allegations last October but defended the subsequent secret investigation and redacted minutes of board meetings.

The FCA is conducting a them-atic review of firms’ execution practices, including the way services are described to clients and arrangements for order execution and review. It expects to publish the results by the end of June.

Bank of England executive director of markets Paul Fisher, who was head of foreign exchange at the Bank until 2009, told MPs: “I have never come across specific allegations of people rigging the market until this news last year. The allegations are about the traders themselves. 

“It would have been very odd [for traders] to come to meetings with us and say ‘We are rigging the markets. What do you think?’ That is not going to happen.”

Banking consultant Mehrdad Yousefi says: “Everyone is looking at markets in more detail after the crisis so some areas will need to be regulated to end ambiguity. While not as big as Libor rigging, this scandal is still an international issue.”

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