Rule forex with a light touch, investigator tells MPs

Lord Grabiner warns City could lose business to New York or Frankfurt if $5.3tn-a-day forex market is regulated too much

Lord Grabiner, the barrister who has led an investigation into the foreign exchange rate rigging scandal, said the $5.3tn-a-day forex market needs to be regulated – but not too much, or the City could lose business to Frankfurt or New York.
Appointed by the Bank of England last March to review allegations that its staff knew about foreign exchange rate manipulation, Grabiner told MPs on the Treasury Committee: “One of the curiosities of this marketplace is that it was not regulated.”
The Financial Conduct Authority fined five leading banks including the bailed-out Royal Bank of Scotland a total of £1.1bn in November for rigging the foreign currency markets.
Penalties from the US authorities brought the total tally to a record £2.6bn. The investigations centred on traders’ use of chat rooms to coordinate currency rates in the minutes leading up to a daily 4pm “fix”.
Grabiner told the parliamentary committee: “My own view is that you can’t leave a market of this size in an unregulated form. You really do need to have a careful look at it, but you must not undermine the valuable marketplace you have created because if you make it too expensive or too complicated it’ll end up in Frankfurt or New York or somewhere else and then UK Plc loses out.”
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