Banks 'knew of unusual trading'

Banks were aware of unusual currency trading at a key period during the trading day four years before regulators began an investigation into the manipulation of the so-called "London fix", it has been reported.

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Regulators are investigating possible manipulation of the 'London fix'.

The BBC said it has seen research by Morgan Stanley showing the banks were concerned about the London fix - a key rate which is widely used by pension funds and other investors to value portfolios and set a price for deals - as far back as 2009.

The Morgan Stanley analysis was said to have uncovered unusually sharp movements in exchange rates at around 4pm - the point at which the London fix is set each day through counting currency trades over a one minute period.

It warned that anyone trading at that time was unlikely to get the best possible deal on the day, and that it could have "debilitating" effect on investments costing up to 5% annually.

The disclosure comes after last October, Barclays suspended six traders and Royal Bank of Scotland suspended two in connection with the regulators' inquiry into the London fix.

In all, 15 banks are reported to have been contacted in relation to the investigation, although, at this stage, no-one has been formally accused of any wrongdoing.

Conservative MP David Ruffley, a member of the Commons Treasury Committee, has now written to the Serious Fraud Office to ask what action it intends to take.

"I think it's fairly clear that everyone in this country who has shares in pension funds, and that's most of us one way or the other, will have seen a fall in the value of those shares as a result of this," he told the BBC.

"And that's not a politician saying it - it is what a bank was telling its own customers in 2009."