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US regulator investigates Barclays over forex algorithms

New York’s financial regulator is investigating whether Barclays and Deutsche Bank used computer algorithms to manipulate foreign exchange trades.

The Times reports the Department of Financial Services is widening its investigation into currency rigging.

It is understood the investigation into the use of algorithms is at an early stage. However, any evidence the banks used the algorithms to systematically manipulate currency deals would suggest more than a handful of rogue traders were involved, according to a source.

Last month, global regulators hit five banks with fines of almost £2bn for forex failings.

Barclays was not part of the settlement, however, and the FCA is continuing to pursue a case against the bank over forex.

The DFS also did not take part in the settlement. It is understood that the DFS decided to continue its interest in light of the algorithm issue.

Barclays uses algorithms in its BARX trading platform, and Deutsche Bank employs them in its Autobahn system.

It is not thought that traders at either bank are able to gain access to the algorithms that are used by the systems and it is unclear whether the DFS is exploring whether there was any co-ordinated activity between Barclays and Deutsche Bank.

Barclays and the DFS declined to comment.

Deutsche Bank says: “We have received requests for information from regulatory authorities that are investigating trading in the foreign exchange market. The bank is co-operating with those investigations.”


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