Embattled RBS Drops Several Forex Fixings Services Amidst Investigation

In the midst of a lingering probe into the manipulation of Forex Forex Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Read this Term and benchmark rates, the beleaguered Royal Bank of Scotland (RBS) announced today the cessation of orders for a number of currency fixings, according to a company statement.

Cessation of Forex Services Only in Select Areas

Benchmark forex rates, also known as daily fixings, have long been a mechanism used in financial markets and by some of the world’s largest banks. In a multi-trillion dollar a year industry, foreign exchange forms the backbone of financial transactions. However, the decision to drop these services was not unilateral in nature, as the company indicated a continuation of daily market fixings in the United States, Europe and select emerging markets. According to RBS, this initiative was done to better Bridge Bridge The bridge or liquidity bridge is an essential component for brokers that are enabling their clients to trade at interbank rates directly via a Prime Broker or a Prime-of-Prime (PoP). While market makers do not require a bridge in order to service its clients, brokers which are sending through orders to a liquidity provider or an electronic execution venue need a bridge to connect their trading platform to the interbank market.Bridges are used extensively in forex trading, specifically for Metat The bridge or liquidity bridge is an essential component for brokers that are enabling their clients to trade at interbank rates directly via a Prime Broker or a Prime-of-Prime (PoP). While market makers do not require a bridge in order to service its clients, brokers which are sending through orders to a liquidity provider or an electronic execution venue need a bridge to connect their trading platform to the interbank market.Bridges are used extensively in forex trading, specifically for Metat Read this Term the needs of RBS and its client constituency.

Not surprisingly, the move comes on the heels of an investigation into the tinkering of these rates, bordering on historic proportions. Indeed, RBS has been the subject of numerous headlines and sanctioned fines dating back to last year for several violations unearthed by a regulatory probe. RBS has not released an immediate statement divulging the precise details of the dropping of services, however the move was made on accounts of an internal review of procedures at the company itself, done so in accordance with a parallel investigation by US and international regulators.

Leading Banks Tread Perilously

The ultimate goal of the investigation is to ascertain whether traders improperly utilized client order information to manipulate the currency fixes. The operative word here is ‘improperly’, as banks typically accept and process forex orders ahead of fixings, a move that by itself is strictly legal. This practice quickly becomes illegal however, when traders attempt to rig these rates by topping each other off via market-sensitive information, data and orders.

This development or announcement by RBS is the latest in a sea of moves that has gripped the global forex industry. Several other banks, including UBS, Deutsche Bank and Credit Suisse are all under similar investigations, with regulators placing their respective operations under the microscope. As such, a total of three probes are currently eying a number of leading banks, consequently culminating in a series of resignations, firings and suspensions of traders for fraudulent activity along with record fines.