NY regulator wants govt monitors in Deutsche Bank, Barclays - WSJ

July 29 (Reuters) - New York's banking regulator wants government monitors placed in the U.S. offices of Deutsche Bank (Xetra: 514000 - news) AG and Barclays Plc (LSE: BARC.L - news) as part of its investigation into the foreign-exchange market, the Wall Street Journal reported.

The New York Department of Financial Services notified lawyers for the European banks this month that it wanted to install a monitor inside each firm, based on preliminary findings in the agency's probe, the Journal said, citing people familiar with the matter. (http://on.wsj.com/UzWqy1)

The state regulator this year joined a global probe into possible manipulation of the $5.3 trillion-a-day currency market.

The New York investigators expect to reach an agreement soon with the banks to install on-site monitors, the Journal said.

Deutsche Bank and Barclays have been selected to host monitors because data collected point to the greatest potential problems there, the Journal said.

Barclays declined to comment and Deutsche Bank did not address questions about monitors.

"The bank is cooperating with those investigations, and will take disciplinary action with regards to individuals if merited," a Deutsche Bank spokeswoman said in an email to Reuters.

A spokesman for the regulator was not immediately available. (Reporting by Avik Das in Bangalore)