Is this the next Libor? Switzerland's top market regulator has announced a sweeping investigation into an alleged conspiracy to rig benchmark currency exchange rates, the Wall Street Journal reports. The regulator, Finma, says it's investigating "several" Swiss firms, but is also "coordinating closely with authorities in other countries, as multiple banks around the world are potentially implicated." British regulators have previously announced a similar investigation, and sources tell Bloomberg that they've requested information from Deutsche Bank and Citigroup, the world's top two currency traders.
This summer, Bloomberg reported that bankers were allegedly rigging the rates by pooling information via instant message and pushing through big trades before and during the 60-second windows in which rates are set, and the activity in these periods has often looked suspicious. But traders say that's a natural time to trade to hedge against client moves. "If you try to hedge afterwards, you're an idiot,"one says. But, the Journal points out, traders said similar things when irregularities started showing up in Libor. (Read more Forex stories.)