FX Fixing Scandal: CFTC Asks to Search Deutsche Bank and Citigroup Records

The US' Commodity Futures Trading Commission has prodded Deutsche Bank and Citigroup to hand over any evidence of wrongdoing related to potential currency market manipulation.

According to a report by the Wall Street Journal, the CFTC has asked the two major currency dealing banks to also allow it to search their records as part of a global probe into possible currency market manipulation.

This week, reports revealed that Deutsche Bank has started to question around 50 employees, as part of its internal investigation, into whether the benchmark interbank lending rates were rigged.

The staff, which are being questioned, are being allowed to bring lawyers or witnesses to the talks, following a probe by auditor Ernst & Young (E&Y).

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.

The daily $4.7tn (€3.5tn, £3bn) currency market is the largest in the financial system and is pegged to the value of trillions of funds, derivatives and financial products. Morningstar estimates that $3.6tn in funds, including pension and savings accounts, track global indexes.

Deutsche Bank and Citigroup declined to comment.

Currency Rigging Probes

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 only until this year that these authorities started investigating the allegations of market rigging.

On 13 October, 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.

The US agencies are following in the footsteps of the UK's Financial Conduct Authority (FCA), Switzerland's competition commission Weko and the alpine country's regulator Financial Market Supervisory Authority (Finma).

Meanwhile, the Royal Bank of Scotland handed over instant messages to the FCA after deeming that a former currency employee's communication with trading counterparts may have been inappropriate.

Reports have surfaced that JPMorgan's chief dealer in London, Richard Usher, isthe trader at the centre of a currency fixing probe related to his time at his former employer, the Royal Bank of Scotland.

Hong Kong's de facto central bank is also questioning a raft of banks over currency market manipulation allegations after conversations with foreign regulators prompted it to review rigging concerns.