Barclays and Deutsche Bank to be investigated over forex algorithm

The forex fixing scandal continues as New York regulators probe allegation of manipulation

Feature image
Reports suggest that the head of New York's Department of Financial Services has installed detective monitors at Barclays to investigate whether the bank is illegally using forex algorithms

As part of a year-long investigation, New York banking regulators are probing an allegation that Deutsche Bank AG and Barclays Plc may have made use of algorithms on their trading platforms to manipulate foreign exchange rates, according to reports. Head of New York’s Department of Financial Services (DFS) Benjamin Lawksy has allegedly fitted a monitor at Barclays, and is making plans for similar to be installed at Deutsche Bank, too, which would screen all trading activity and collect evidence of the supposed manipulation.

Head of New York’s Department of Financial Services (DFS) Benjamin Lawksy has allegedly fitted a monitor at Barclays

While neither institutions have commented on the most recent development, Renee Calabro, Deutsche Bank spokeswoman, said in January: “Deutsche Bank has received requests for information from regulatory authorities that are investigating trading in the foreign exchange market. The Bank is cooperating with those investigations, and will take disciplinary action with regards to individuals if merited.”

In November, six major financial institutions – not including Deutsche Bank or Barclay’s – agreed to pay a fine of $4.3bn to US, UK and Swiss authorities in the first settlements to emerge from the global investigation into forex manipulation. Barclays were, however, implicated in the 2012 Libor scandal, admitting misconduct and paying a total of $455m to the UK’s Financial Services Authority. Following the November settlement, the FCA said it ordered approximately 30 other banks to overhaul their operations, with Deutsche Bank being one of them.

Deutsche Bank has been the biggest FX trader in the world for nine years now, possessing 15.18 percent of global daily turnover in 2013. The German lender was slapped with a $9m fine in January 2014 from EU anti-trust regulators over interest rate manipulation. The rest of the market is largely dominated by three other major players; Barclay’s, Citigroup and UBS.