By Karen Freifeld and Suzanne Barlyn
(Reuters) - New York's banking regulator will not settle with Barclays Plc (L:BARC) over foreign exchange trading in coming weeks unless the deal excludes a probe of the possible rigging of rates through computer programs, the agency's superintendent said on Tuesday.
"There are two options: You can do a settlement in May with a carveout, or you can do a settlement later without a carveout," Benjamin Lawsky, superintendent of New York's Department of Financial Services, said after a Dow Jones event in midtown Manhattan.
Barclays is among a handful of banks expected to come to terms in the coming weeks with the U.S. Department of Justice and other authorities over manipulation of foreign exchange rates.
Barclays is the only bank in the group that is licensed and regulated by New York state. The other banks likely to settle are JPMorgan Chase & Co (N:JPM), Citigroup Inc (N:C), Royal Bank of Scotland Group Plc (L:RBS) and UBS Group AG (VX:UBSG).
Lawsky said on Tuesday it would probably take several months for the agency to complete its probe of whether Barclays has used computerized programs to manipulate foreign exchange rates.
Investigators have been trying to determine whether such programs allow banks to take advantage of clients when pricing currency transactions.
In November, regulators fined HSBC Holdings Plc (LONDON:HSBA)
Barclays did not join that settlement because of issues with the New York regulator, people familiar with the matter told Reuters at the time.
It is unclear how Lawsky's decision will affect any upcoming deals involving Barclays.
"That's going to be up to Barclays and up to the other regulators," Lawsky said.
Barclays spokeswoman Kerrie Cohen declined to comment, as did Justice Department spokesman Peter Carr.
Authorities probing the foreign exchange market have generally focused on suspected collusion between certain employees over the rates, as shown in transcripts of traders in online chat rooms that led to the November settlements.
New York installed monitors at Barclays and Deutsche Bank (DE:DBKGn) to assist with probes of foreign exchange algorithms.
Other banks under scrutiny by the state over their forex systems include Goldman Sachs Group Inc (N:GS), Credit Suisse Group AG (VX:CSGN), BNP Paribas SA (PA:BNPP) and Societe Generale (PA:SOGN), sources have told Reuters.