LONDON (Reuters) – Britain’s financial watchdog will likely zero in on a chunky pound futures deal, which many reckon drove sterling’s mystery spike just seconds before the Bank of England’s interest rate announcement this week

The currency’s jump to $1.3075 from $1.3024 in less than a minute before the central bank kept rates on hold — instead of cutting as some had expected — has raised questions on whether any market players knew of the decision before it became public.

While it is possible that the moves were coincidental, the Financial Conduct Authority said it would look into the issue in response to a request from the central bank.

But given the watchdog has regulatory oversight over derivatives rather than spot exchange rate markets, it will likely focus on the 100 million pounds in orders for sterling futures placed seconds before prices spiked, according to data from the CME, the world’s largest futures exchange operator.

The CME page does not reveal who placed the bid for the chunky futures order, but Refinitiv data shows the pound quoted by a major bank at $1.3064 in the spot market, seven seconds before the BOE announcement hit newswires. That was 40 pips above the $1.3022 level contributed by another big bank two seconds earlier.

Any action in the futures market translates quickly into the spot market, analysts say.

There is no suggestion of wrongdoing by the banks which can place orders on behalf of clients or just submit price quotes as market makers.

Rachel Kent, a securities lawyer at Hogan Lovells noted spot exchange rate markets do not come under the market abuse rules that allow regulators to fine firms for misconduct.

But the FCA could have room for enforcement if it were clear the sterling spike directly affected instruments that are regulated by the body, such as derivatives, she said.

In theory, it could also fall back on the FX code of conduct, a voluntary set of rules which were introduced globally after banks were fined for trying to rig currency markets. A senior manager at each regulated firm is legally accountable for upholding the code.

Regulated firms are also required to abide by the FCA’s so-called general principles, a breach of which was used to fine banks for seeking to manipulate the Libor interest rate benchmark.

“If you are a regulated firm and even if the code is voluntary, the FCA could justify taking action for failure to act with integrity under one of its principles,” Kent added.

The incident comes as FCA boss Andrew Bailey prepares to take over as BoE governor in March.

What’s more, BoE’s request for an FCA investigation is the second of this nature in recent weeks. In December the central bank said a rogue supplier had misused audio feeds from its news conferences, giving traders access to potentially market-moving information seconds before rivals.

The bank’s Monetary Policy Committee members vote on interest rates a day before the announcement. BoE staff then write the minutes and a Monetary Policy Summary which are published along with the decision at 1200 GMT on Thursday.

“There is confidential information circulating in the Bank for quite a long time,” former MPC member Andrew Sentance told the BBC’s Today program, though he urged markets not to “jump to conclusions.”

The FX community meanwhile continues to debate the topic, with traders and analysts interviewed by Reuters calling on regulators and market participants to get to the bottom of the issue quickly.

“Banks have the means to look into it. They’ve done it in the past so they can do it again,” said Athanasios Vamvakidis, global head of G10 FX strategy at Bank of America Merrill Lynch.

“You definitely want to make sure that any question marks are being addressed, because you want to have an efficient market.”

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