US regulators are investigating Swiss bank UBS over unusual price fluctuations in US government securities markets.

A spokesman said the bank was “co-operating with the government’s investigation”.

Separately, a government bond trader at Credit Suisse has left the firm, according to a regulatory filing. A spokesman for Credit Suisse declined to comment. A Treasury official said last month that cases of alleged questionable trading had been referred to the Securities and Exchange Commission and the Commodity Futures Trading Commission.

It is not known exactly what specific activities are under scrutiny. But market participants suggested as possibilities two squeezes that occurred in February on a five-year note and on a two-year note, both of which were in short supply that month.

In the case of the five-year note, which was auctioned on February 1, the security was in such high demand that for most of the month its holders could use it as collateral on cash loans and pay interest of just 0.25 per cent in return.

Market participants say that the two-year note was scarce partly because demand for paper to settle two-year note futures was about six times the outstanding notes available.

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