Senior forex traders at RBS, Citigroup, JPMorgan and Standard Chartered put on leave.

The 4pm Fix investigation dominoes are starting to fall…. Rohan Ramchandani of Citigroup, Matt Gardiner of Standard Chartered and Richard Usher at JP Morgan, plus two unnamed Forex executives at RBS, were all separately either suspended or placed on leave from their respective banks, as global financial regulators intensified their investigation of the manipulation of the 4pm London Fix of key exchange rates.

After a couple of intense weeks surrounding the investigation of global regulators about FX rates price fixing at the London 4pm fix, we can now confirm that something fishy was indeed going on. Last night Bloomberg reported that some big banks, including JPMorgan (NYSE:JPM) and Citigroup (NYSE:C) were putting their European senior currency dealers on leave. On its part, RBS (NYSE:RBS)  has already suspended two traders as the Financial Times reported.

One could say, “finally, some action” as this week, it was uncovered by some major banks around Europe, that they are actively participating in the investigations by global regulators. UBS and Deutsche Bank were the first on Tuesday, followed closely by Barclays on Wednesday.

Citigroup’s head of European spot trading, Mr. Rohan Ramchandani, was placed on leave on Wednesday and JP Morgan’s chief dealer in London, Richard Usher two weeks ago. As Bloomberg stated, the reports are coming from anonymous sources as they were not authorized to speak publicly. While neither of them has been suspended, the investigation is most certainly reviewing activities conducted by them.

The Financial Times reports that RBS has declined to comment on the suspensions.

A set of ominous legal challenges that participants of these schemes will incur are very likely to affect the business substantially and provide further incentive for institutional players to switch their trading to services of ECNs and the institutional trading arms of firms such as FXCM (NYSE:FXCM) and Gain Capital (NYSE:GCAP). Full transparency will be greatly appreciated by every market participant, and the companies and platforms that provide it will benefit a big deal.

Next week will spill out some more major European banks earnings – HSBC (LON:HSBA) is reporting on Monday, Commerzbank (FRA:CBK) and Credit Agricole (EPA:ACA) on Thursday. While the latter two don’t have such a big weight in the foreign exchange business it would not be a big surprise if we see some more statements of “working closely with regulators”.

Since the nature of the business involves a lot of transfers of employees from one bank to another, it is pure speculation to state that somebody remained completely unaffected by this scheme. The period covering the investigation is of at least three years, as confirmed by several anonymous sources to Bloomberg last month.

While this will definitely have an impact in the eyes of the public on the forex business, banks and brokerages should focus on reestablishing their credibility and make sure that future collusion is impossible to organize. The main concept of a chat room full of major banks’ traders who provide access to quite a substantial amount of forex liquidity is a scary one to the retail trader.

Being a retail trader myself I cannot forget some wild swings in major currency pairs and the rumor mill that surrounded the London fix.

For more on the global Forex industry see the LeapRate-Dow Jones Forex Industry Report.