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Reports US

US stock market daily report (March 10, 2014, Monday)

March 11, 2014, Tuesday, 06:04 GMT | 03:04 EST | 11:34 IST | 14:04 SGT
Contributed by Millennium Traders

According to reports Monday, the U.S. Securities and Exchange Commission is investigating whether currency traders at the world’s biggest banks distorted prices for options and exchange-traded funds by rigging benchmark foreign-exchange rates. The investigation reportedly has not yet been made public. The U.S. Justice Department, Federal Reserve, Office of the Comptroller of the Currency and New York’s top banking regulator are all involved in the manipulation probe. Such manipulation would have a rippling affect throughout a wide range of markets. Similar matters investigated by CFTC and Justice Department have resulted in sanctions on four banks and a brokerage firm in connection with the probe.

At least a dozen banks have been contacted by SEC authorities from London to New York during early stages of the investigation. Possible manipulation is also being investigated by the Commodity Futures Trading Commission. Dealers will be questioned regarding potential shared information about client orders to manipulate benchmark spot rates for currencies.

At the center of the probe by authorities is the WM/Reuters rates used by companies and investors around the world. Those rates serve as a basis for computing the day-to-day value of holdings by index providers such as FTSE Group and MSCI Inc., which track stocks and bonds in multiple countries.

Top currency-trading firms including Barclays Plc, Citigroup Inc. and Deutsche Bank AG have fired, suspended or put on leave over 20 traders, involved in the probe. Lloyds Banking Group Plc and Royal Bank of Scotland Group Plc have announced their own internal reviews.

Options derivatives account for over half of the $5.3 trillion-a-day foreign-exchange market with the remainder made up of spot transactions.

On Tuesday, Bank of England Governor Mark Carney is scheduled to appear before Parliament’s Treasury Committee to testify after minutes released by the central bank last week, to show that senior traders had discussed concerns that currency benchmarks were being manipulated since July 2006. Financial Conduct Authority, market regulator, is leading the British investigation.