FTSE Group, the compiler of Britain’s FTSE 100, is reviewing the currency benchmarks it uses to value its global stock indexes amid a widening investigation into alleged manipulation of the $5.3 trillion-a-day foreign exchange market, said three people with knowledge of the plan.

The index provider, a unit of London Stock Exchange Group Plc, is setting up a working group to examine its use of the WM/Reuters foreign exchange rates, said the people, who asked not to be identified because they weren’t allowed to talk publicly. The review, at an early stage, is likely to focus on proposing changes to the way WM/Reuters calculates the figure rather than on whether to stop using it, one of the people said.

Each day, data providers such as FTSE calculate the value of indexes made up of securities in different currencies using the 4 p.m. WM/Reuters rates. Even small movements in the so-called London close could affect the value of the benchmarks and the $3 trillion of index funds which mirror them. Index funds buy and sell foreign exchange at the WM/Reuters rates to reduce tracking error, the drag on their performance relative to the securities they follow caused by currency swings.

“FTSE continually reviews its index methodologies to ensure that its indices reflect best practice and can be closely tracked by passive funds,” the London-based company said in a statement. “We wouldn’t comment specifically on any consultations that may or may not be taking place.”

Recurring Spikes

European Union antitrust regulators, Switzerland’s Financial Market Supervisory Authority and the country’s competition commission have said this month they are investigating potential manipulation of foreign-exchange rates.

The moves follows a Bloomberg News report in June that some dealers at banks may have pooled information through instant messages and also used client orders and moved key currency rates such as the WM/Reuters benchmarks. In September, Bloomberg News reported that recurring spikes in trading around the periods in which the rates are calculated suggested that dealers may have been trying to influence the benchmarks.

WM/Reuters rates are published hourly for 160 currencies and half-hourly for the 21 most-traded. They are the median of all trades in a minute-long period starting 30 seconds before the beginning of each half-hour. Rates for less-widely traded currencies are based on quotes during a two-minute window.

The data are collected and distributed by World Markets Co., a unit of Boston-based State Street Corp., and Thomson Reuters Corp. Bloomberg LP, the parent company of Bloomberg News, competes with Thomson Reuters in providing news and information as well as currency-trading systems.

‘Robust Benchmarks’

Thomson Reuters said in a statement it “supports any measures that create more robust benchmarks for the benefit of the market and all participants.” Lucy Davidson, a spokeswoman at State Street in London, declined to comment.

FTSE’s Global Equity Index Series, which includes the FTSE All-World and FTSE Global Small Cap indexes, are calculated using WM/Reuters rates. There were 166 exchange-traded funds with total assets under management of $143 billion tied to the series as of March 2013, according to FTSE’s website.

MSCI Inc. also uses the 4 p.m. WM/Reuters rates to calculate its global indexes, including the MSCI Emerging Markets Index and the MSCI ACWI Index. A spokesman for the company didn’t immediately respond to a request for comment.

Standard & Poor’s Dow Jones Indices, which compiles the S&P 500 Index, uses WM/Reuters rates in other indexes it produces, including the S&P Global Broad Market Index and the S&P Frontier Broad Market Index. The firm, a unit of McGraw Hill Financial Inc., said in a statement it has “no reason” to expect regulators’ probe will affect how it calculates its indexes at this stage.