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Regulators crack down on currency exchanges

Barclays, RBS latest banks to suspend traders

LONDON — Nearly a dozen traders have been placed on leave at five large banks in recent days amid a wide-ranging investigation into potential manipulation of the foreign-exchange market.

Authorities in Britain, the United States, Switzerland, and Hong Kong are investigating whether traders colluded to rig some areas of currency trading, a market that overall generates more than $5 trillion of trades daily.

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In particular, they are looking at discussion logs in chat rooms between currency traders at various firms and whether those discussions corresponded with improper trading activity, according to people briefed on the investigation.

On Friday, two British banks, Barclays and Royal Bank of Scotland, placed traders on leave amid heightened scrutiny by regulators, according to people briefed on the investigation.

Six traders were placed on leave at Barclays and two traders were placed on leave at Royal Bank of Scotland, these people said.

They join currency traders who were placed on leave at Citigroup, Standard Chartered, and JPMorgan Chase in recent weeks. In many cases, the traders have been placed on paid leave pending the outcome of the investigation, according to people briefed on the matter.

On Tuesday, UBS said it had “taken and will take appropriate action with respect to certain personnel as a result of our review, which is ongoing.” However, the bank declined to say what those actions might be or whether anyone had been placed on leave.

The probe poses anotherproblem for banks in London, where more than 40%of trades inthe largely unregulated,foreign-exchange market take place.

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All the banks declined to comment Friday, citing their policies not to discuss personnel matters.

The latest investigation is another distraction for banks in London, which have been dealing with the fallout from accusations that they manipulated global interest rate benchmarks, including the London interbank offered rate.

Libor is used as a base interest rate for a variety of financial products and is also used to help set interest rates for mortgages, credit cards, and other loans.

Despite being one of the largest markets in the financial world, the foreign-exchange market is largely unregulated. More than 40 percent of all currency trades take place in London, by far the most concentrated market for such trades, according to industry figures.

In recent days, UBS, Deutsche Bank, Citigroup, JPMorgan Chase, RBS, and Barclays have all acknowledged that they have undertaken their own internal investigations and been asked by regulators to turn over documents related to their foreign-exchange trading.

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