“The global investigation into the manipulation of the foreign exchange market is proving as serious as the Libor rigging probe, which has resulted in more than $6bn of fines for banks, the head of the UK’s financial watchdog warned on Tuesday.

“Martin Wheatley, chief executive of the UK’s Financial Conduct Authority, told a parliamentary hearing that allegations traders had colluded to rig prices in the $5.3tn spot market were “every bit as bad as they have been with Libor”.

“The intervention by Mr Wheatley, who said the strength of the allegations had come as a “surprise”, underscores the scale of the threat to banks’ reputations and finances, which have already been severely damaged by the Libor scandal.

“The sprawling investigation into alleged forex rigging has prompted at least 15 banks to co-operate with regulators in London, Europe and the US or to conduct their own internal probes.”

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