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#1 23-05-2014 11:39:48

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Commerzbank suspends two traders due to exchange rate manipulation

Commerzbank suspends two traders due to exchange rate manipulation

Article by the Wall Street Journal:

FRANKFURT— Commerzbank AG said Wednesday it has suspended two currencies traders, alleging it caught them in the act of attempting to manipulate foreign-exchange rates. The two traders were trying to move the Polish zloty's rate against the euro, according to a person familiar with the matter.

All told, around a dozen banks around the world have suspended or fired at least 30 traders and sales people in a year-long investigation into currencies trading practices. The comments from the German lender after its first suspensions over the matter form the most detailed explanation for disciplinary action to date, and offer further evidence that the global probe is spilling beyond the most heavily-traded currencies and into emerging markets.

In an emailed statement, the bank said the individuals were suspended after the firm discovered "a breach of internal rules." The firm added that it believes this incident was an isolated event and one from which the bank and the individuals concerned didn't profit.

Commerzbank, which is a relatively small bank in the currencies market, didn't identify the traders.

A person familiar with the matter said the two traders were trying to move the exchange rate between the euro and the zloty to help a client, which it didn't name. The efforts failed because they were discovered and prevented by Commerzbank's internal control system. The alleged incident took place in January, the bank said—some nine months into the global regulatory investigation that began in the U.K. last year.

It is Commerzbank's first public case of traders attempting to manipulate currencies. Previously, Deutsche Bank AG, the country's largest lender and one of the world's largest currencies dealers, had been the only German bank to have fired and suspended members of its foreign exchange staff engaged in alleged misconduct.

The manipulation of foreign exchange came into spotlight again Tuesday when Germany's financial watchdog BaFin said it has found evidence that traders attempted to manipulate foreign-exchange rates and it has broadened a probe of Deutsche Bank to include other domestic banks.

"We have asked all German banks (significantly) active in currency trading to probe whether their staff has engaged in the manipulation of currency trading," said Raimund Roeseler, head banking supervision at BaFin. Mr. Roeseler, who didn't identify other banks, said the regulator found evidence that traders attempted to manipulate currencies from Asia and Latin America, for example.

Authorities from the U.K, U.S., Asia and Europe are scrutinizing the $5.3 trillion-a-day foreign-exchange industry, and probes have resulted in a long list of staff suspensions and terminations at a wide range of banks.

Deutsche Bank has fired at least three staff members since investigations into the market began around a year ago. It also recently placed a London-based salesperson on leave after finding what it regarded as inappropriate communication between the staff member and Singapore's central bank, according to a person familiar with the matter.

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