London - Foreign exchange benchmarks will be reviewed by the world’s top financial regulator, the latest front to be opened in a global probe into allegations of price manipulation in the largest financial market.

The Financial Stability Board (FSB), which co-ordinates regulation for the Group of 20 (G20) leading economies and is chaired by Bank of England governor Mark Carney, said on Friday it would open its own investigation.

It is the latest step in an investigation into allegations that a handful of senior traders exchanged market-sensitive information and colluded to manipulate benchmark currency rates.

The US Department of Justice and UK’s Financial Conduct Authority (FCA) are among those leading the probes into potential wrongdoing in the $5.3 trillion (about R57.5 trillion)-a-day market.

The US Federal Reserve was also involved in the probe, several sources with knowledge of the investigation have said, although the extent of that involvement is unclear.

“Recently, a number of concerns have been raised about the integrity of foreign exchange rate benchmarks,” the regulatory task force for the G20 said.

“The FSB has consequently decided to incorporate an assessment of foreign exchange benchmarks into its ongoing programme of financial benchmark analysis,” it added, confirming a Reuters exclusive last month.

The scale of the probe and severity of the allegations were outlined this month by FCA chief executive Martin Wheatley, who told British legislators that the investigation would last into next year and the allegations were “every bit as bad” as those in the London interbank offered rate (Libor) market.

Traders’ manipulation of Libor, a benchmark global interest rate, has resulted in banks shelling out $6 billion in fines and settlements.

The unfolding foreign exchange scandal has already seen more than 20 traders put on leave, suspended or fired. No charges of any kind have been brought yet.

Groups of senior traders are alleged to have shared market-sensitive information relevant for the popular WM/Reuters “fix”, or London fix, which is set at 4pm London time, using actual trades. London is the hub of the global market, accounting for about 40 percent of the $5.3 trillion traded on an average day.

Most of the major banks in the industry, such as Citigroup, JPMorgan Chase and Deutsche Bank, are co-operating with regulators, handing over e-mails and electronic chat room communications between traders.

An FSB spokeswoman said the regulator would inform G20 central bankers and finance ministers meeting in Sydney this week that the foreign exchange review was being undertaken. - Reuters