Ten banks turned over evidence to the U.K. Financial ConductAuthority (FCA) as part of an investigation into the manipulation of foreign-exchange benchmarks, its chiefexecutive officer told lawmakers.

The allegations are “as bad as Libor,” FCA CEO Martin Wheatleytold lawmakers in London today, referring to the global probe intorigging of the London interbank offered rate. Thoseinvestigations have resulted in global fines of about $6 billion,and authorities are now scrutinizing other benchmarks, such ascurrency rates.

The regulator is investigating “a number of benchmarks thatoperate in London,” Wheatley said. The foreign-exchange probe isunlikely to be concluded this year, Wheatley said, withoutidentifying any banks under investigation.

The regulator said in October it was opening a formal probe intocurrency-rate trading, joining regulators in the U.S. andSwitzerland in reviewing the $5.3 trillion-a-day market. Theworld's seven biggest foreign-exchange dealers have now alltaken action against their employees, with at least 17 traderssuspended, put on leave or fired.

Royal Bank of Scotland Group Plc has handed over records ofinstant messages to the FCA after concluding that a former currencytrader's communications with counterparts at other firms may havebeen inappropriate, according to two people with knowledge of thematter.

Antitrust Regulators

Switzerland's Financial Market Supervisory Authority and thecountry's competition commission said in October they were alsoopening probes into foreign-exchange rates, while the U.S. JusticeDepartment also opened a criminal investigation, a person familiar with the mattersaid last year. European Union regulators said on Oct. 7 they werereviewing the market.

The FCA is focusing on the WM/Reuters rates, which are published hourly for 160 currenciesand half-hourly for the 21 most-traded. They are the median of alltrades in a minute-long period starting 30 seconds before thebeginning of each half-hour. Rates for less-widely tradedcurrencies are based on quotes during a two-minute window.

The WM/Reuters rates are used by fund managers to determine whatthey pay for currencies and to compute the day-to-day value oftheir holdings, and by index providers such as FTSE Group and MSCIInc. that track stocks and bonds in multiple countries. While therates aren't followed by most investors, even small movements canaffect the value of what Morningstar Inc. estimates is $3.6trillion in funds including pension and savings accounts that trackglobal indexes.

The data are collected and distributed by World Markets Co., aunit of Boston-based State Street Corp., and Thomson ReutersCorp.

Bloomberg LP, the parent company of Bloomberg News, competeswith Thomson Reuters in providing news and information as well ascurrency-trading systems.

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