Dean of Warwick Business School and former foreign exchange trader Mark Taylor told the BBC that extending the period over which the 4pm fix is calculated to an hour could take away any temptation to manipulate the currency markets.

Regulators around the world are investigating whether foreign exchange markets have been rigged, with Barclays, Royal Bank of Scotland, Citigroup, Deutsche Bank and UBS all confirming that they have been contacted as part of the probe.

RBS has suspended two traders and Barclays six as the Financial Conduct Authority (FCA) looks into the market in the UK.

London accounts for 40 per cent of the $5 trillion a day global foreign exchange market and there has been evidence of price spikes around the daily London 4pm fix for the WM/Reuters benchmark used for many large client orders that suggests ‘front running’ – traders deliberately placing large orders in order to influence the benchmark rate.

The benchmark rate is made by taking an average of the exchange rate in currency trades 30 seconds before and after 4pm in the London market. The benchmark rate is used to value trillions of dollars of assets, and is the rate at which some big investors agree with their bank to exchange currencies to settle their accounts at the end of every day. If the benchmark rate can be pushed up artificially, then the banks could charge the investor a higher rate than the rate at which the bank is able to cover the trade in the market a few minutes later, with the difference representing a profit for the bank. Some of the trades involved are huge – billions of dollars. So, if traders can move the benchmark rate just a tiny amount it could represent a profit of millions of dollars.

"If some of the big players in the market got together and put through some very large trades - billions of dollars each - then that could affect the market," said Professor Taylor on BBC News 24.

"It would take a huge amount of money to move the market, but you only have to move the market a small amount for a short period, and that could be worth millions of dollars of profit for the banks.

“Regulation of this would be very difficult, but one solution would be to take away the temptation to do this by taking the average over an hour - so 30 minutes either side of 4pm rather than 30 seconds. It’s a simple, workable solution because it would be a lot harder, if not impossible, to move a market as big as the FX market for an hour. Removing the incentive is much better than regulation because of the global, decentralised nature of the foreign exchange market.”

Professor Taylor says the growing investigation has some parallels with the Libor scandal that has seen banks across the world, including Barclays and RBS, fined billions of pounds for fixing the official inter-bank rate.

“These allegations have yet to be proved, but if they do turn out to be true, it will strike at the heart of business ethics,” said Professor Taylor. “It would be yet another blow to the integrity of the banks. Our pension funds invest billions of pounds in the financial markets and if they are being cheated in this way it affects every one of us.”

See a version of this article on BBC News and Euromoney.

Professor Mark Taylor is a Professor of Finance. Warwick Business School offers MSc Finance, MSc Finance & Economics, MSc Financial Mathematics as well as MSc Behavioural Finance.