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German Regulator BaFin Finds First ‘Evidence’ of FX Manipulation

Germany’s Federal Financial Supervisory Authority (BaFin) claims to have found evidence of attempted manipulation across several currencies and involving more than one institution.

As part of a wider global probe, the national regulator is investigating allegations that traders from the German institutions under its remit have tried to manipulate FX benchmarks, including the Fix.

BaFin is the first agency to say it has found concrete evidence of wrongdoing in the FX markets.

"There were clearly attempts to manipulate prices, that’s what was disturbing," Raimund Röseler, BaFin’s head of banking supervision, said during a press conference.

"It’s not the really big currencies, not the USD/EUR, but several currencies were involved.”

But he added that it was also not just the “really small” currencies which were involved, noting the Mexican peso was one of those affected.

Röseler said BaFin had requested a number of the 24 German banks under its supervision to conduct internal investigations of their respective FX businesses.

Deutsche Bank is currently the only German institution known to be involved in the probe.

Switzerland’s Competition Commission (WEKO) also claimed in March that it had spotted potentially illegal activity and named a number of leading global banks under investigation (Squawkbox, 3 April).

BaFin will be handing over responsibility for banking supervision to the European Central Bank (ECB) in November.

Röseler said the agency expected to conclude a separate investigation into the manipulation of key interest rate benchmarks during the summer and before the ECB takes over.

But he warned the global investigations into alleged collusion in the FX markets are likely run for years.

He adds, “This is a subject that is going to be with us for a long time. We’re not going to be done in 2014 but hopefully before 2018.”

nicola@profit-loss.com

Profit & Loss

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