Britain should investigate the manipulation of currency rates, European Union officials said, after Bloomberg reported that traders have been rigging foreign exchange benchmarks for more than a decade.
Sharon Bowles, chairwoman of the European Parliament's economic and monetary affairs committee and a member of Britain's Liberal Democrats, said: "They need to get to the bottom of it. It's time we managed to restore the reputation of our banks."
Britain's Financial Conduct Authority, created in April to oversee markets and prosecute financial crime, is looking into potential manipulation in the US$4.7 trillion-a-day foreign exchange market, a person briefed on the matter said.
Bloomberg reported on Wednesday that traders at some of the world's biggest banks rigged the benchmark WM/Reuters rates, citing five dealers, past and present, who would not be named.
Tensions between Britain and its EU partners about oversight of the financial industry have intensified after three banks were fined US$2.5 billion for rigging the benchmark London interbank offered rate, or Libor. The European Commission is considering whether to move oversight of Libor away from Britain to a Paris-based watchdog.
EU regulators will be making a proposal this summer on the "framework for benchmarks" such as the WM/Reuters rates and Libor, said Chantal Hughes, a spokeswoman for Michel Barnier, the EU's financial services chief.
Last year the EU proposed making manipulation of financial benchmarks a crime.
Hughes said the WM/Reuters rate manipulation, "following on from the other recent allegations and investigations into the manipulation of oil, biofuel, gas as well as interest rate benchmarks, once again highlights the need for a broad-based regulatory regime. Benchmarks share similar vulnerabilities."
The Office of the Comptroller of the Currency, which regulates US national banks, supervises foreign currency trading within the firms, takes the allegations "very seriously", it said.
The agency was "working with other regulators, domestically and internationally, to look into these concerns", it said.