The UK’s Financial Conduct Authority (FCA) is investigating whether or not claims traders intentionally pushed up the price of government bonds before attempting to sell them to the Bank of England (BoE) in 2011.
Paul Fisher, BoE executive director for markets, said the regulator was examining suspicious movements in the price of the 2017 bond auction, where the Bank was looking to buy billions of pounds of gilts for its quantitative easing (QE) programme.
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BoE markets director, Paul Fisher, told MPs on the Treasury Select Committee he had become suspicious after the price of one particular government bond appeared to be moving in the opposite direction to the rest of the gilts in the market.
The claims relate to a reverse auction of gilts, where one lender tried to sell gilts to the Bank at an inflated price.
The BoE declined the purchase of the bonds from one lender after it became suspicious of the sharp rise in their price.
The suspicions centred around an auction of gilt-edged securities, which took place on 10 October 2011.
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By GlobalDataThe BoE pulled out of the deal, reprimanded the lender and passed the information on to the FCA.
Fisher said: "We did not allocate any purchases to one particular bond that was being offered to us whose price had gone up very substantially in the market that morning against the run of the market trend.
"We do pay a lot of attention to those sorts of market moves and that was taken as a shot across the bows."
