U.S. bank Morgan Stanley has been asked by the U.K.'s financial regulator, the Financial Conduct Authority, to provide details in relation to its foreign exchange investigation, according to sources with knowledge of the situation.
The investigation into the 3.4 trillion dollar forex market by regulators both in the U.K. and the U.S. has sparked fears that banks could be hit with another scandal as big as LIBOR.
Sources said that Morgan Stanley is one of 10 banks which have been approached by the regulator. However, none of the banks are under formal investigation as the regulator is still gathering data to identify any potential manipulation of the market. One insider said that the fast-moving investigation could expand beyond the original 10 banks.
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Earlier today, Lloyds Banking Group confirmed that it had been contacted by the regulator to investigation to check internally if there is any information about possible misconduct.
Neither Lloyds nor Morgan Stanley have so far taken no action against any of their employees, with some insiders suggesting both banks are unlikely to be found to have breached market rules.
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In the last two weeks, Barclays, Royal Bank of Scotland, Citigroup, Deutsche Bank, JPMorgan and UBS have either confirmed investigations and in some cases suspended staff in connection with the probe.
A source close to one of the banks involved in the probe said, "we have been very pro-active, and we haven't seen evidence of manipulation, some of the language used by employees involved meant we needed to do something."
Morgan Stanley, which in 2012 was ninth in the league tables for forex trading in Europe, declined to comment.
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