By Daniel Hunter
The City regulator is assessing fresh claims of market-rigging.
The Financial Conduct Authority (FCA) has not yet launched a full investigation into the allegations which allege systematic manipulation of short-term interest rate contracts (Stirs) by traders on the London International Financial Futures Exchange (Liffe) in recent years.
The FCA has received complaints from traders and Liffe officials. One complaint was passed on from the Bank of England.
Complaints suggest that large volume trades could be placed on Stirs without any intention of them being traded. The practice is believed to be similar to that of Navinder Sarao, the man behind the Wall Street "flash crash" in 2010. Earlier this week, Mr Sarao was granted another week to secure a £5 million bail. He is accused of wire fraud, commodities fraud and market manipulation by the US Department of Justice (DoJ).
The Bank of England said: “The Bank of England has robust escalation procedures in place for staff to follow if they are made aware of potential misconduct in financial markets. Paul Fisher [Liffe trader and deputy head of the Prudential Regulation Authority], in his capacity as executive director of markets, drafted these procedures, which were approved by the executive and we have every confidence that he has followed them to the letter.”
This could be the latest scandal surrounding market manipulation to rock the financial markets. Last week, Deutsche Bank was fined $2.5bn and ordered to fire seven members of staff for its part in the Libor scandal. Several banks have been fined hundreds of millions for their part.
