The Royal Bank of Scotland has handed over instant messages to the Financial Conduct Authority after deeming that a former currency employee's communication with trading counterparts may have been inappropriate.

According to unnamed sources cited by Bloomberg, RBS opened an internal investigation into whether currency market trading rules had been breached after the FCA said it was looking into whether traders at global banks attempted to manipulate the FX markets.

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.

This month, Switzerland's financial regulator revealed that it is probing a number of domestic and foreign institutions over possible rigging of foreign exchange rates in the currency markets.

"Financial Market Supervisory Authority (Finma) is currently conducting investigations into several Swiss financial institutions in connection with possible manipulation of foreign exchange markets," the regulator said in a statement, adding it is co-ordinating closely with authorities in other countries as multiple banks around the world are potentially implicated.

Representatives from RBS and the FCA were not immediately available for comment at the time of publication.

Late to Act?

Although regulators are ramping up efforts to investigate banks over market rigging, 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.

But the watchdogs in question were sketchy on whether they were actively investigating claims, despite a raft of emerging reports which suggest that market manipulation forced currencies to swing by double-digit percentages within a day.

In a number of documents and emailed correspondence seen by IBTimes UK, the unnamed whistleblower, who has worked at major companies that are vulnerable to swings in currency market movements, contacted the Commodity Futures Trading Commission (CFTC) in the US, Britain's Financial Services Authority (FSA), and Switzerland's Finma over two years ago.