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London - Britain's financial regulator has not yet concluded that there was any misconduct in the $5.3trn-a-day foreign exchange market, despite working hand in hand with other authorities to coordinate a complex, global investigation.
Britain's Financial Conduct Authority (FCA), along with around 12 other authorities, has launched a worldwide inquiry into allegations that some of the world's biggest banks colluded to manipulate the largely unregulated foreign exchange market - the world's biggest market.
"We are at a relatively early stage of ploughing through some pretty detailed analysis of what was happening," Tracey McDermott, the head of enforcement and financial crime at the FCA told the Reuters Financial Regulation Summit in London.
"We are some way away from saying there was actually misconduct at all."
But she stressed that it made sense for authorities, and for the industry, to coordinate all regulatory action as much as possible in terms of planning the focus of inquiries, who to interview and how to be the most efficient.
The global investigation into the foreign exchange market, has overshadowed a drawn-out inquiry into alleged rigging of benchmark interest rates such as Libor (London interbank offered rate) and Euribor, which has already led to around $6bn in fines for 10 banks and brokerages and criminal charges on 16 men.
But Libor has proved a useful template. Authorities are now working together on a different level - more focused, more aware of each others' needs and keener to reach a speedy conclusion, McDermott said.
"One of the things we had to look at (in forex) is can we get a better handle earlier, globally, as to who the main players are and how we want to tackle it," she said.
"Better approach"
Rather than tackling the investigation on a bank by bank basis, McDermott said a better approach would be to aim for so-called "coordinated outcomes" between regulators.
"I wouldn't want to speculate about what the end outcome will be in relation to forex," she said. "We do think coordinated outcomes in relation to individual firms are generally better than uncoordinated outcomes.
"So coordinated outcome across firms may or may not be the right answer in different circumstances - but I certainly wouldn't rule out looking at those."
But she cautioned that it was far too soon to talk about any prospect of the ultimate coordinated outcome - a global settlement with the whole industry.
"We are about a million miles away from making those sorts of decisions," she said.
McDermott said regulators have learnt from Libor inquiries to identify the challenges of different legal and jurisdictional systems as well as the major practical questions including the basis on which individuals can be questioned.
For example, compelling individuals to be interviewed has been a long-standing feature in British investigations, but the idea of a compelled interview is anathema in the United States, where there is a far-reaching privilege against self-incrimination.
"I think we have a much better understanding on what those issues are now, and we can at least identify them upfront and either work out that we can tackle them or that we can't. But we need to be aware of them," she said.
According to a source familiar with the matter, criminal prosecutors from the U.S. Department of Justice have travelled to London to conduct joint interviews of UK-based currency traders with the FCA in London.
