Switzerland Launches Probe into Foreign Exchange Manipulation

Switzerland’s competition commission has launched an investigation into several Swiss, British and US banks over possible collusion to manipulate foreign exchange (FX) rates.

The Bern-based watchdog, known as Weko, said it is investigating UBS, Credit Suisse, Zuercher Kantonalbank (ZKB), Julius Baer, JP Morgan, Citigroup, Barclays and Royal Bank of Scotland (RBS). Weko opened a preliminary investigation last October.

“Evidence exists that these banks colluded to manipulate exchange rates in foreign currency trades,” Weko announced. It said it assumed the most important exchange rates were affected.

Weko director Rafael Corazza told Reuters that the watchdog was in touch with some international authorities but had not been prompted by a foreign authority to open the investigation. “We have to conduct the investigation ourselves. There’s no legal basis at the moment to exchange data directly with foreign authorities,” he said.

Regulators in the US, UK, Germany and Singapore are investigating allegations of collusion and manipulation by traders at major banks of the largely unregulated US$5.3 trillion-a-day FX market. An international investigation into rigging of benchmark interest rates has already led to heavy fines for banks.

However, Credit Suisse responded that it was ‘astonished’ to be drawn into such Weko’s probe after not being included in the preliminary investigation. The group claimed that Weko’s press release contained incorrect references to Credit Suisse and these allegations were ‘inappropriate and harmful’ to its reputation.

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