The UK-based Serious Fraud Office (SFO) has followed in the footsteps of various other financial authorities around the world and opened an investigation into alleged cases of collusion and price manipulation in the $3trn-a-day forex market. Few details are available to the public at present, but the office’s probe comes only a few months after the Bank of England Governor Mark Carney speculated that corruption in the forex market could pose a bigger threat to global financial markets than Libor rigging.

[R]umours of price fixing, focusing principally on the 4pm fix, have circulated now for years

‘The Director of the Serious Fraud Office has today opened a criminal investigation into allegations of fraudulent conduct in the foreign exchange market,’ read an SFO statement on July 21. Although rampant allegations of collusion and price manipulation are yet to be proved true, rumours of price fixing, focusing principally on the 4pm fix, have circulated now for years.

The 4pm benchmark price is arrived upon by way of trades conducted in the lead up to the hour, and is the price most clients use as a reference point, given that it is a transparent one in principle. However, if a number of larger players were to collectively put through huge trades in the lead up to the hour, then this would in theory push up the price and allow traders to charge clients a higher price.

News of the SFO investigation comes only a few months after the Bank of England suspended a member of its staff in March as a result of its own investigations into forex rigging. The findings have since prompted a number of UK-based regulators, SFO among them, to step up their efforts in the field and uncover concrete proof that widespread allegations of price fixing are true.

The FCA begun its own investigations into the matter of price fixing last October, and, as a result, several investment banks have suspended suspect traders. “The SFO continues to work with its partner agencies for whom this investigation is of mutual interest, including the Financial Conduct Authority and the US Department of Justice,” said a spokesperson for the SFO, who was unable to pass further comment on the matter while the investigation is still ongoing.