G20 regulators agree on plan to minimise currency manipulation

The one-minute window for setting a widely used currency market benchmark should be extended to five minutes to make it harder to manipulate prices, the Group of 20's (G20) regulatory task force said yesterday.

Several banks are being investigated by authorities in Britain, the United States and elsewhere for allegedly manipulating the US$5 trillion a day currency market, prompting regulators to map out reforms.

"Extending the width of the window to five minutes strikes a balance between reducing incentives for manipulation while at the same time still ensuring the fix is fit for purpose by generating a replicable market price," the Financial Stability Board (FSB) said in its final report on forex benchmarks.

The Global Financial Markets Association, which represents international foreign exchange dealers, welcomed the recommendations.

"As the report highlights, there may well be challenges and costs in implementing the changes, but enhancing confidence in the market is crucial and the industry will adapt to embrace these recommendations," said James Kemp, managing director of the association's foreign exchange division.

The probes into alleged misconduct in currency markets could result in some of the recommendations being turned into regulation, the FSB said.