BP probes in-house foreign exchange traders

Martin Arnold

BP is investigating whether in-house financial traders at the oil and gas group were involved in a foreign exchange manipulation scandal that has led regulators to levy $4.3 billion in fines on six banks.

The UK group launched an internal review of its currency trading operations in London last year when regulators first started probing banks over their foreign exchange activities. A person familiar with the situation said the inquiry was "ongoing".

Additional questions about the potential involvement of BP's traders in alleged attempts to rig the world's $5.3 trillionn-a-day forex markets have been prompted by a Bloomberg report that bank employees tipped off the oil and gas group ahead of some big currency trades.

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Bloomberg cited three undated messages sent to BP's traders by the powerful network of senior foreign-exchange traders calling themselves "The Cartel" at four banks — JPMorgan Chase, Barclays, UBS and Citigroup. It said BP was given "valuable information" about planned currency trades "sometimes hours before they happened". But it could not be determined whether any BP employees acted on any information received.

BP is not being investigated by financial regulators, said people familiar with the situation. But the report raises uncomfortable questions for the group at a time when it is being scrutinised as part of the European Commission probe into potential price fixing in oil markets.

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In an emailed statement, BP said: "Following regulatory market (not into BP) investigations regarding the forex markets, we conducted a review into our activities in this area. BP's forex desk has relationships (as a customer) with 26 relationship banks, including JPMorgan, Citibank and Barclays.

"BP has a robust framework of compliance requirements and internal controls which are constantly reviewed, and maintains an open dialogue with the appropriate regulators."

The group's treasury trading unit is responsible for managing its exposure to financial risks, including currency fluctuations. But it also operates as a profit centre, aiming to make money by betting on the direction of markets as well as hedging risks.

Bloomberg said Andrew White, a member of BP's treasury trading unit, had joined at least one electronic messaging conversation with members of "The Cartel".

BP declined to comment on that allegation. But it said Mr White still worked for the group and added that its "code of conduct includes mandatory requirements for employees to disclose potential conflicts of interests internally".

Spot forex traders are not required to seek authorisation from the UK's Financial Conduct Authority and Mr White is not on the FCA's list of "approved persons".

Last month, six banks — JPMorgan, Citigroup, UBS, Royal Bank of Scotland, Bank of America and HSBCpaid a total of $4.3bn to US, UK and Swiss regulators to settle allegations that their weak controls failed to prevent traders attempting to manipulate forex.