Losses of more than $6bn (£3.7bn) have been felt since JP Morgan’s chief executive Jamie Dimon announced the bungled derivatives trade back in May.
According to a report from the New York Times total losses could exceed $9bn by the time the trades have worked through the system.
In a statement issued late last night the FSA said its regulatory response to the matter is ongoing and it is ‘liaising with other regulators’.
The City watchdog’s announcement came after supervisory orders were announced by the New York Federal Reserve Bank and the Office of the Comptroller of the Currency on Monday.
The US authorities gave JP Morgan 60 days to deliver a plan to improve its internal risk oversight and audit.
Meanwhile, the FSA said: “In addition to its extensive supervisory agenda, the FSA is continuing to conduct a formal enforcement investigation into the trading losses. Conclusions will be reached in the enforcement investigation in due course and any further appropriate action determined at that time.”
By moving its initial analysis to a formal investigation the FSA has given itself the power to demand documents and question executives from the investment bank.
The regulator did not reveal when the nature of its investigation had changed.
