Bank of England to launch inquiry over forex fixing claims


By James Quinn
The Telegraph, London
Saturday, March 8, 2014

The Bank of England is to launch an independent inquiry into allegations it allowed manipulation of the foreign exchange market.

The Telegraph can reveal that the Bank's oversight committee is set to appoint an external heavyweight to run an independent assessment of the Bank's actions both in relation to the allegations made and how it has handled those allegations.

The heavyweight figure could be a judge, an academic or a City executive. He or she would need to be far enough removed from the Bank to ensure the inquiry is seen as independent.

The Bank's committee appointed the law firm, Travers Smith, last week to prepare a formal report which will be made public.

... Dispatch continues below ...


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Sources have now indicated that Travers Smith is on a fact-finding exercise, rather than an inquiry.

The sources went on to explain that, to eradicate any suspicion of wrongdoing, a "serious review of the data" was needed to "bring recommendations back to the oversight committee."

The move has yet to be given the go-ahead by the eight-man committee, which is chaired by Sir David Lees.

However, it is thought to have been discussed by a number of the committee’s members, and is seen as the next step in the Bank’s attempts to prove it has not condoned market fixing in the $5 trillion (£3 trillion) foreign exchange (forex) market.

The need for an independent inquiry is likely to be raised when Mark Carney, the Governor of the Bank, and Paul Fisher, the executive director of markets, appear before the Treasury Select Committee on Tuesday.

Andrew Tyrie, the committee's chairman, is expected to ask the two men for a detailed account of their actions and why it has taken since October -- when Bloomberg News first alerted the Bank to initial allegations regarding two of its officials -- for the organisation to take action.

Last Wednesday, alongside the appointment of Travers Smith, the Bank suspended one member of staff and emphasised that it had told all remaining staff about the rules regarding "management of records and escalation of important information."

At the same time it published minutes of its foreign exchange joint standing committee (chief dealers’ sub-group) from 2005 until last year when the group was closed.

The minutes, which reveal in detail what was discussed during quarterly meetings between Bank staff and commercial bank foreign exchange dealers, placed the spotlight on Martin Mallett.

Mr Mallett, the Bank’s chief dealer, chaired the group, which for the first few years of its inception held meetings in some of the City’s best restaurants, including The Don, Smiths of Smithfield and Imperial City.

Minutes show that fixing in the forex market was first discussed at a meeting in July 2006, when "there was evidence of attempts to move the market around popular fixing times by players that had no particular interest in that fix."

The Bank has examined 15,000 emails, 21,000 chat room records and has looked at allegations that Bank officials condoned dealers from different banks discussing clients position in chat rooms.

It also looked at 40 hours of telephone calls. The growing forex inquiry has seen 10 banks across three continents suspend or fire staff. The Financial Conduct Authority is one a number of national regulators investigating the situation.

A Bank of England spokesman pointed to its previously released statement, which says that it has found no evidence to date that staff colluded in any way in manipulating the foreign exchange market or in sharing confidential client information, and that it does not condone any form of market manipulation.

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