The world's top banks have backed the bulk of recommendations from regulators to reform the setting of the leading global currency benchmark following allegations of market rigging, making changes inevitable. The $5.3 trillion-a-day foreign exchange market is the world's largest and least regulated financial market and is being investigated for collusion.
At the center of the investigations is activity around the WM/Reuters currency fix at 4 pm local time in London, a 60-second window at which major exchange rates are set. These prices are used as reference rates for trillions of dollars of investment and trade globally.
Last month the Financial Stability Board (FSB), the regulatory task force for the Group of 20 economies (G20), proposed deep-rooted change in a document put out to public consultation.
"We agree with and support many of the recommendations set forth in the consultative document and believe they can produce a number of benefits for all FX market participants," a group of trade associations said in a letter to the FSB, which was made available to the media on Wednesday.
The group represents 23 global banks and dealers, which account for about 90 percent of the market. The WM/Reuters fix is compiled using data from Thomson Reuters and other providers, which is calculated by WM, a unit of State Street Corp.
The FSB will present its final plans to reform the forex market to G20 leaders at a summit in November.
