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Switzerland's competition commission WEKO said on Monday it had opened an investigation into several Swiss, British and US banks over potential collusion to manipulate foreign exchange rates.
WEKO said it is investigating UBS, Credit Suisse, Zuercher Kantonalbank (ZKB), Julius Baer, JP Morgan, Citigroup, Barclays and Royal Bank of Scotland.
"Evidence exists that these banks colluded to manipulate exchange rates in foreign currency trades," WEKO said in a statement. It said it assumed the most important exchange rates were affected.
Authorities in the United States, Britain, Germany and Singapore are also looking into allegations of collusion and manipulation by traders at major banks of the largely unregulated $5.3 trillion-a-day foreign exchange market. An international investigation into rigging of benchmark interest rates has already led to heavy fines for banks.
In the foreign exchange market, these authorities are examining whether traders from different banks worked together to influence currency prices and whether they traded ahead of their own customers or failed to accurately represent to customers how they were determining the prices.
WEKO Director Rafael Corazza said WEKO was in touch with some international authorities but had not been prompted by a foreign authority to open the investigation.
"We have to conduct the investigation ourselves. There's no legal basis at the moment to exchange data directly with foreign authorities," he told Reuters.
Credit Suisse said in a statement it was "astonished" to be drawn into such a probe after not being subject to a preliminary investigation last year.
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Credit Suisse said WEKO's press release contained incorrect references to Credit Suisse AG and these allegations were "inappropriate and harmful" to its reputation.
The Swiss competition authority opened a preliminary investigation last October after learning about potential manipulation of foreign exchange markets by banks.
UBS, Switzerland's biggest bank, JP Morgan, RBS and Citi declined to comment. Barclays did not immediately respond to a request to comment.
Julius Baer said an internal investigation had found no evidence of foreign exchange market abuse behaviour. Zuercher Kantonalbank, Switzerland's biggest regional bank, said it would cooperate with authorities.
Sources at some of the banks named in the statement expressed surprise at WEKO's action because they were given no advance notice.
WEKO Vice-Director Olivier Schaller said the WEKO investigation would certainly take months and could result in fines of up to 10 per cent of the turnover generated in the relevant market in Switzerland over the last three years.
Last week, UBS suspended several currency traders, pending international investigations into allegations of collusion and market rigging.
A survey by the Swiss National Bank (SNB) published in September showed the daily turnover in foreign exchange markets of 25 sizeable banks in Switzerland amounted to $216.4 billion.
Data compiled by the Bank of International Settlements (BIS) showed Switzerland handled 3.2 per cent of global turnover in foreign exchange markets in 2013, compared with 40.9 in the UK and 18.9 in the US.
Between 2010-2013, the United Kingdom, the United States and Singapore expanded their share in forex trading the most, with turnover growth of 47 per cent, 40 percent and 44 per cent, respectively, according to the BIS Triennial survey.
Singapore overtook Japan as the world's third major forex trading center in 2013. By contrast, trading activity fell by 13 per cent in Switzerland and by 5 per cent Australia.
