(Corrects quote attribution in 8th paragraph to Lord Grabiner'sreport, not the Bank of England)
By Jamie McGeever and William Schomberg
LONDON, Nov 12 (Reuters) - The Bank of England has fired itschief foreign exchange dealer after an investigation criticisedhis handling of suspicious market practices, the BoE said onWednesday.
The review commissioned by the oversight committee andchaired by Lord Grabiner detailed communications, includingemails and telephone call transcripts, between Martin Mallettand FX market participants going as far back as 2006.
In them, Mallett expressed concern that communicationsbetween traders could be seen as collusion and possible marketmanipulation.
In one call on October 3, 2011, Mallett and a trader at abank discussed the activities of brokers and banks around theso-called "London fixing", the one-minute window when globalbenchmark exchange rates are set.
Trader: It's being, it's being exaggerated shall we put...
Mallett: Well that's market manipulation isn't it?
Trader: Yep absolutely.
And in a call On November 28, 2012, Mallett told a marketcommentator he felt the FX market was "too chatty" and there wasa "fine line" between that and collusive behaviour.
"I'm a little bit nervous about the FX market's approach tobenchmarking, fixing, because of its inherent chattiness andlike I say, there's a fine line between chattiness and, andacting in a way which disadvantages others," he said.
Despite being uncomfortable with the practice, Mallett didnot escalate the matter, which "constituted an error in judgmentthat deserved criticism, but such criticism should be limited inthat the individual was not acting in bad faith", Grabiner'sreport said. The report said Mallett was not aware of anyspecific instances of unlawful or improper behaviour.
Attempts to reach Mallett for comment were unsuccessful.
The BoE said his dismissal on Tuesday was "unrelated" to thescandal in which five banks have been fined $3.4 billion forfailing to stop their traders from trying to manipulate foreignexchange markets.
In his report, Grabiner said there was no evidence any Bankofficial had been involved in unlawful or improper behaviour inrelation to the FX investigation, and that none knew of improperbehaviour by traders at banks based on shared confidentialinformation, including aggregated information about clientorders.
Grabiner's report said Mallett was aware that traders weresharing information, which was not necessarily improper butcould increase the potential for improper conduct.
CHIEF DEALERS' MEETINGS SCRAPPED
Mallett, who joined the BoE in September 1986, was suspendedin March as the Bank looked into what officials might have knownabout alleged manipulation of key currency rates by traders.
The BoE also said on Wednesday it had scrapped the formalmeetings with London-based chief currency dealers that had beenheld regularly until last year, just before the globalinvestigation got under way.
The meetings, which were chaired by Mallett, have been"disbanded" and there will be "no more", a BoE spokesperson toldReuters.
The Foreign Exchange Joint Standing Committee's chiefdealers' subgroup (CDSG), held under the auspices of the BoE todiscuss industry issues, met up to four times a year.
Its first meeting was in 2005, and the last at the BoE'soffices in Threadneedle Street, London, in February last year.
Separately, British finance minister George Osborne saidBritain was taking "tough action to clean up corruption by a fewso that we have a financial system that works for everyone".
The country's regulatory response to the financial crisismeant "the world can have confidence in the integrity ofBritain's financial markets". (Reporting by Jamie McGeever and William Schomberg; Editing byAndrew Roche)