Forex markets

["Ian Murray" <seamus2001@xxxxxxxxx>]

US investigates banks over FXAll

David Teather in New York
Thursday May 16, 2002
The Guardian

A group of the world's largest banks are under investigation by the US
justice department for allegedly restricting competition in the
multi-trillion dollar foreign exchange and bond markets.

Federal investigators are looking into the electronic currency exchange
FXAll, owned by 17 of the best-known financial institutions on Wall
Street and in the City. The investigation aims to establish whether FXAll
illegally elbowed out rival services.

The backers of the online marketplace include Citigroup, JP Morgan Chase,
Goldman Sachs and Credit Suisse First Boston.

A spokeswoman for the justice department said: "The anti-trust division
is looking at the competitive effects of certain joint ventures in the
online bond trading industry as well as the foreign exchange industry."
She said the investigation was "active and ongoing" but refused to give
details.

European competition commissioner Mario Monti said he might also launch
an investigation. "This is a type of problem that does concern the
commission."

More than $1.2 trillion is traded each day on the currency markets, among
some of the least regulated financial exchanges in the world. Online
trading is growing rapidly because of its ability to provide real-time
information on pricing and market movements.

The justice department has informed Congress of the investigation. The
concerns outlined include an undertaking by the founding members of FXAll
not to work with competing online services.

Smaller rivals, including Currenex and a service owned by State Street
Boston Group, have attempted to edge their way into the sector. Another
platform, Ariax, put together by Deutsche Bank, Reuters, Chase Manhattan
and Citibank, folded last month.

FXAll has maintained that it is acting within the law. None of the banks
contacted had any comment on the reports.