What is Forex Rigging? – FX Rigging Meaning

Big banks and forex companies, driven by the allure of substantial profits, have at times engaged in unethical and illegal practices at the expense of their clients. These institutions have been found to manipulate forex rates, use confidential client information, and collude with rivals to set advantageous prices.

In past articles, we analyze forex rigging scandals and various forex scams, including forex signals scams. We know that forex as a business is not a scam, and forex is not rigged. Businesses can be legitimate, but some people can be greedy or unethical, leading to big corporate scandals.

Such malpractices not only betray the trust of their clients but also compromise the integrity of one of the world’s largest financial markets. The exposure of these underhanded tactics has led to massive fines and a demand for tighter regulations to safeguard market transparency and fairness.

What is Forex probe – fx manipulation

The Forex probe is a financial currency scandal involving the revelation and subsequent investigation of banks or large financial institutions conspiring to manipulate exchange rates for their financial gain.

After any forex scandal is detected, the affected country or countries’ regulatory authorities will investigate the scandal, determine who is responsible, how rules were flouted, and penalize those guilty of violating the norms.
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Currency rigging definition

What is forex rigging?

Currency price rigging, price-fixing, collusion, or forex rigging is a sporadic and illegal action of market manipulation that occurs when parties conspire to fix or inflate currency prices to achieve higher profits at the expense of the consumer.


  • Currency Price Rigging: This involves deliberately manipulating the price of a currency pair. Traders involved in such activities might execute trades that artificially increase or decrease the price of a currency, thereby benefiting from the subsequent price movement.
  • Price-Fixing: This is when multiple parties, often banks or traders from different institutions, conspire to set the price of a currency at a specific level. This can benefit their trading positions or make the market move in a desired direction.
  • Collusion: Traders from different institutions may communicate with each other, sharing confidential client information or coordinating their trading actions to move the forex market in the desired direction. This collusion undermines the very principle of a free market where prices are determined by supply and demand.


The Bank of International Settlements 2013 conducted a survey indicating that the daily turnover was approximately $5.35 trillion. Most of the transactions in the forex market are speculative trades since the currency rates are constantly fluctuating. This makes it highly suitable for financial institutions like hedge funds and banks with access to vast amounts of money to make quick profits through speculation.

Though it was widely believed that the enormous forex market would make it difficult to manipulate it, a few significant scandals have been detected. More details are provided for those wanting more information on forex rigging.

Forex Rigging Examples

  1. The WM/Reuters Fix Scandal (2013-2014):
    • What happened? Traders at some of the world’s biggest banks manipulated benchmark foreign exchange rates to set the value of trillions of dollars of investments.
    • Mechanism: The rates were “fixed” by conspiring to push through trades before and during the 60-second windows when the benchmarks are set, known as “banging the close.”
    • Outcome: Banks such as JPMorgan Chase, Barclays, Citigroup, and RBS faced billions in fines from UK, US, and Swiss regulators.
  2. The Bank of England Controversy:
    • What happened? It was alleged that the Bank of England had knowledge of the price manipulation in the forex market but did not take any action.
    • Mechanism: Traders supposedly openly talked about their business and trading activities in chatrooms, even sharing information with employees of the central bank.
    • Outcome: While the Bank of England denied any wrongdoing, it did lead to increased scrutiny of its operations, and some staff members were suspended or let go.
  3. Electronic Chatrooms Collusion:
    • What happened? Traders from different banks used online chatrooms with names like “The Cartel” and “The Bandits’ Club” to collude and share client order information.
    • Mechanism: By sharing information on their client’s pending orders, these traders could understand the potential future movement of currency prices and act in ways that benefit them collectively.
    • Outcome: Once discovered, this led to the suspension, firing, or resignation of several senior traders from multiple banks. Central banks were fined, and such chatrooms were banned in many institutions.
  4. HSBC’s Fraud (2016):
    • What happened? Two senior forex managers at HSBC executed a series of trades to take advantage of the $3.5 billion client order. They bought the currency themselves before the bank did, driving up the price in a manner that allowed them to profit.
    • Mechanism: The practice known as “front-running,” where one trades based on knowledge of a future transaction that will influence the price to make a profit.
    • Outcome: Both individuals faced criminal charges, and HSBC had to pay a substantial amount in settlement.

The currency fixes manipulation fines:

  • The Forex Scandal saw central banks penalized by UK, US, and Swiss authorities, with total fines surpassing $10 billion.
  • On 12 November 2014, the UK’s Financial Conduct Authority (FCA) levied fines of $1.7 billion on five banks.
  • These fines stemmed from the banks’ malpractices in G10 spot foreign exchange trading, particularly in handling risks related to client confidentiality, trading conduct, and conflicts of interest.
  • The banks colluded and manipulated G10 forex rates using confidential order details.
  • Simultaneously, the US Commodity Futures Trading Commission (CFTC) slapped these banks with $1.4 billion in fines for manipulating global forex benchmark rates.
  • On 20 May 2015, five banks admitted to felony charges by the US Department of Justice, resulting in fines totaling more than $5.7 billion.
  • While Barclays was absent from the initial November 2014 penalties, it later faced a fine of $2.4 billion and an additional $150 million penalty in November 2015 for electronic forex misconduct.

How does a forex rigging fix take place?

A fix is a benchmark rate based on trades in a given time window. For fixing, we have three roles: trading companies, dealers or brokers, and banks; when we have fx fixing, banks guarantee their clients (trading companies) the market mid-rate (mid-rate between the bid and ask price).

Since the forex market is always open, banks and other traders would like a snapshot of the market activity. The forex rates benchmark is determined at 4 pm London daily, forming the closing currency fix. These benchmark rates are called the WM/Reuters rates and were calculated based on the sell-and-buy forex transactions by the traders in the interbank forex market during a window of total duration sixty seconds, thirty seconds before, and thirty seconds after 4 p.m. The median values of all the forex trades that take place during the one-minute are used to determine the benchmark rates for twenty-one significant currencies,

Worldwide, trillions of dollars are invested in pension funds and $3.6 trillion in index funds controlled by money managers. The value of these investments depends to a large extent on the benchmark rates. As a result, forex traders may collide to set the benchmark rates at artificially high or low levels to increase their profit. However, this profit is at the expense of investors like pensioners, who lose some money.

Collusion using instant messaging for manipulation.

In one of the biggest forex scandals, the two main allegations against the forex traders are discussed below.

– Forex traders are colluding by sharing proprietary and confidential information like pending orders from clients just before the fixing time of 4 pm. Instant messaging (IM) groups or chatrooms with memorable names like the cartel or mafia were used to share the information. However, access to these groups was closely controlled, and only a few of the senior traders in some of the largest banks dealing in forex could access these groups.

-“Manipulating the close” was used to describe the selling and buying of currencies during the sixty-second window fix, using the orders from clients, which the traders had received earlier, to manipulate the forex rate.

These manipulative methods are similar to front running to ensure a higher closing in the stock markets. Since these practices are prohibited in the stock market, the trader will be penalized if the evidence is against them. However, the spot-forex market has a daily turnover of two trillion dollars, and the forex market is mainly unregulated. While almost all financial products are subjected to stringent rules and regulations to prevent fraud, worldwide selling and buying currencies for immediate delivery is not considered an investment, so the regulatory authorities do not monitor any manipulation.

Libor is fixing Forex scandals.

One of the significant forex scandals was related to Libor fixing. In this scandal, the journalists detected that the banks’ forex rates were similar during the financial crisis 2008. Bloomberg News first reported the benchmark rate scandal in June 2013, after price surges were noticed just at the time of the fix at 4 p.m. The scandal was seen after analyzing the forex market data for two years. On the last day of the month, surges were detected in the forex rates for at least 14 major currency pairs.

These differences were noticed about half the time for popular currency pairs like Euro/Dollar. The exchange rates at the end of each month are essential since they are used for determining the net asset values for mutual funds and other assets. It should be noted that the Bank of England officials have been aware of the market manipulations since 2006. The officials also told the forex traders that they were allowed to share information regarding the orders for pending currencies, making the forex market less volatile.

Fx Investigation

The investigation mainly focuses on the transcripts of the electronic chatrooms used by senior-level currency traders. In these transcripts, the traders discussed the volumes and the types of forex trades they planned to place with their competitors from other banks. These chatrooms had names like The Bandits Club, The Cartel, One Team, One Dream, and the Mafia. In addition to discussing the forex trades, the traders also joked about manipulating the forex market and repeatedly mentioned women, drugs, and alcohol.

Specifically, the regulators focus on a small chatroom nicknamed the Mafia or Cartel exclusive. Some of London’s most influential forex traders used the chatroom, so many were trying to get access. Some cartel members were Richard Usher, Rohan Ramchandani, Matt Gardiner, and Chris Ashton, who were highly placed in JP Morgan, Citigroup, Standard Chartered, and Barclay. Usher and Ramchandani were also the groups of chief dealers of the Joint Standing Committee of the Bank of England, which had thirteen members.

Barclays, Goldman Sachs, and HSBC were some of the 15 banks that disclosed that they investigated them. As a result, the senior currency traders at some banks like Citigroup, JP Morgan Chase, and Barclays were suspended or asked to leave. Deutsche Bank also cooperated with the investigators of the forex scandal, providing the information required. By June 2014, UBS, Standard Chartered, RBS, Lloyds, JP Morgan Chase, HSBC, Deutsche Bank, Citigroup, Barclays, and Bank of England had fired, suspended, or sent at least forty forex employees on leave. Citigroup fired Rohan Ramchandani. According to Reuters, hundreds of traders worldwide were probably involved in the forex scandal.

The forex market manipulation by rogue traders affected customers worldwide for over a decade. Sources indicate that the financial losses caused due to the manipulation of the forex rates, the market is estimated at $11.5 billion yearly for the 20.7 million pensioners in Britain. However, to date, the total losses caused due to the forex market manipulation have not been determined.

How The Forex “Fix” May Be Rigged?

Instead of keeping their customer orders confidential, the banks misused colluding information with other unethical banks. As a result, they manipulated the forex currency rates, illegally increasing their profit and exploiting their customers and market.

On the same day, in the United States, the regulatory body Commodity and Futures Trading Commission (called the CFTC) coordinated with the FCA to impose fines of $1.4 billion on the same five central banks. These fines were imposed to manipulate, help, and abet the other banks in manipulating the global benchmark forex rates.

In 2015, on 20 May, these five banks that faced felony charges by the Department of Justice in the United States also pleaded guilty. These banks agreed to pay fines of approximately $5.7 billion. Bank of America was not found guilty. However, it was asked to pay a $204 million fine for its unsafe trading practices in the forex markets. On 18 November 2015, Barclays was also fined an additional $150 million for its misconduct using the automated electronic systems for foreign exchange. In December 2014, one former RBS trader was arrested.

Forex probe and reforms

After the forex probe was completed, regulatory authorities in various countries announced measures to prevent similar scandals in the future and increase trust in the banking system and foreign exchange markets. For example, in the UK, FCA announced that firms dealing with forex would have to make changes that will vary depending on the firm size, market share, corrective measures implemented, and the firm’s role in the forex market.

Forex Rigging Reforms:

  1. Stricter Supervision and Regulations: Regulatory bodies, especially in the major financial centers like the UK, US, and EU, have strengthened their oversight of the forex market. This includes stricter rules on trading, reporting, and risk management.
  2. Code of Conduct: The Bank for International Settlements (BIS) formed a Foreign Exchange Working Group, which, in 2017, released the FX Global Code. This code provides a shared set of guidelines to promote the integrity and effective functioning of the wholesale foreign exchange market. It addresses areas like ethics, transparency, and data sharing.
  3. Banning of Chatrooms: Many banks have banned traders from using multi-dealer online chatrooms, previously exploited for collusion and information sharing between traders from different banks.
  4. Whistleblower Programs: Several countries have established or expanded whistleblower programs, encouraging industry insiders to report unethical or illegal activities. These programs often come with protections against retaliation and sometimes offer financial rewards.
  5. Increased Transparency: Efforts have been made to increase transparency in forex trading, especially in setting benchmarks. This includes more transparent pricing and the publication of trade data.
  6. Advanced Surveillance Technology: Banks and financial institutions have started to employ advanced technology, including AI and machine learning, to monitor trading activities in real time and identify patterns that could suggest manipulation or collusion.
  7. Higher Capital Requirements: Some regulatory bodies have raised capital requirements for banks’ trading desks to ensure they have enough capital to cover potential losses, thereby reducing the incentive for risky or manipulative trading strategies.
  8. Regular Audits: Institutions are now subjected to more regular and comprehensive audits, ensuring compliance with the new regulations and standards.

The corrective program recommends that the banks review their IT systems, especially those dealing with the spot forex market. Most banks use older systems, where some data silos can be manipulated without being noticed by the compliance measures. Similarly, in Switzerland, the financial regulatory authorities instructed UBS to take corrective actions, automate the forex trading, prevent conflicts of interest, and limit the variable pay for the forex traders.

Please read our article about the pyramid scheme.


Forex rigging, involving the illegal manipulation of currency prices, undermines the integrity of one of the world’s largest financial markets and erodes trust among participants and investors. The exposure of past scandals has highlighted the critical need for stringent regulatory oversight and increased transparency in the forex sector.

The various forex scandals again prove that though the forex market is large and vital, there is almost no regulation and transparency compared to other financial needs. Financial experts are questioning the risks in giving a small group of closely connected individuals great powers to control the exchange rates, which affect the actual value of investments, assets worth trillions of dollars. Some countries like Germany are proposing that the forex exchanges be regulated.

Usually, the regulator will impose fines when scandals are detected, yet most traders are extraordinarily wealthy and can quickly pay the penalties. However, these scandals adversely affect the reputation of the forex market.



Igor has been a trader since 2007. Currently, Igor works for several prop trading companies. He is an expert in financial niche, long-term trading, and weekly technical levels. The primary field of Igor's research is the application of machine learning in algorithmic trading. Education: Computer Engineering and Ph.D. in machine learning. Igor regularly publishes trading-related videos on the Fxigor Youtube channel. To contact Igor write on: igor@forex.in.rs

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