A Freedom of Information Act request revealed BoE officials discussed the FX setting process with traders
A Freedom of Information Act request revealed BoE officials discussed the FX setting process with tradersReuters

A Freedom of Information Act request has shown that Bank of England officials discussed the foreign exchange setting process with chief currency dealers a year before any investigations were launched.

According to the documents, the FX setting was discussed with senior traders at some of the world's largest investment banks in April 2012, despite US, UK and European regulators launching their probes a year later.

"There was a brief discussion on extra levels of compliance that many bank trading desks were subject to when managing client risks around the main set piece benchmark fixings," said the bank in response to the Freedom of Information Act document.

The daily $5tn (£3.1tn, €3.7tn) currency market is the largest in the financial system and is pegged to the value of funds, derivatives and financial products.

Morningstar estimates that $3.6tn in funds, including pension and savings accounts, track global indexes.

However, IBTimes UK exclusively revealed that a whistleblower alerted regulators in the US, UK and Switzerland in 2011 about some of the world's largest trading companies and banks manipulating benchmark sterling, US dollar and Swiss franc currency rates.

However, it was not until 2013 that these authorities started investigating the allegations of market rigging.

FX rates are calculated are compiled by using data from a variety of submitted provisions on a number of platforms, such as Thomson Reuters.

It is then calculated by WM, a unit of State Street, to form WM/Thomson Reuters at 1600 GMT daily.

Meanwhile, a number of banks around the world have revealed that they have launched internal reviews into their FX trading procedures, after America's Department of Justice and the Federal Bureau of Investigation launched a criminal investigation into whether the world's biggest banks attempted to manipulate the currency markets.

Switzerland's Financial Market Supervisory Authority (Finma) is also looking into whether FX market rigging has occurred.

On 23 October, an RBS sales team sent an email to clients to say that it is reviewing how it trades in the minutes before key FX benchmarks are set.

At the beginning of November, Lloyds Banking Group confirmed that it is reviewing its currency trading processes.

On 30 October, the Royal Bank of Scotland revealed that it is assessing its currency trading processes in a bid to calm client fears over a potential marketing rigging investigations.

In the same month, Deutsche Bank revealed that its balance sheet was hit by billions of euros of litigation costs which subsequently led the German lender to report a near 100% drop in profits.

Deutsche Bank has allegedly spent millions of dollars going through traders' emails and chat sessions looking for specific dates, phrases and keywords in a bid to root out evidence of wrongdoing.