Banks Fined For Currency Fixing

The European Commission has fined 5 banks after traders got together to rig the foreign exchange market.  The European Commission (EC) said the rigging took place 2007 to 2013 with the commission having started its investigation in September 2013.

Traders  from Barclays, RBS, Citigroup and JP Morgan the 4 banks in one cartel were fined €811 million.  In addition, traders from Barclays and RBS again plus another bank MUFG 3 in the “Essex Express” cartel (so called because they met on the train from Essex into London each morning) were also fined €258 million.  A sixth bank, UBS, was spared financial penalties for ‘whistle blowing’ on the cartels.

The EC said “most of the traders in the chatrooms knew each other and invited certain people based on their expertise levels”.

Cartel chatrooms shared information on customers and orders, prices, opening risk stance positions and details of current and planned trading in different currencies. This enabled rogue traders to be ‘ahead of the game’ and fix currency prices early for maximum profit.

Comment

We have a saying at this firm “you can only con a greedy person”.  It would appear in this case that traders, greedy themselves, were conning their employer banks (more greedy than all) and investors playing in markets (also greedy).  Will rogue trading happen again, of course it will until penalties are much higher - €250m+ for 3 or 4 large banking groups is a drop in the ocean and then than a day or a weeks trading for most. 

If penalties were in the £billions and jail sentences were in decades then rogues may think twice before getting involved in illegal activities.