ANZ, Macquarie Bank Admit Rate Rigging in Malaysia

The Australian Competition and Consumer Commission (ACCC)
has commenced legal proceedings
on a consent basis against ANZ and Macquarie Bank in relation to alleged
attempts to engage in cartel conduct in FX markets.

The ACCC
says that following cooperation by ANZ and Macquarie, the parties have agreed that
a Macquarie trader and multiple traders within ANZ engaged in a private
chatroom to discuss daily submissions to be made to the Association of Banks in
Singapore (ABS) in relation to the benchmark rate for the Malaysian ringgit
fixing rate.

They also
agree that on various dates in 2011, traders employed by ANZ and the Macquarie
trader attempted to make arrangements with other banks that particular
submitting banks would make high or low submissions to the ABS in relation to
the  fixing.

The ACCC
alleges that on various dates in 2011, ANZ or Macquarie sought to influence the
ABS MYR fixing rate published on that day, and thus attempted to contravene the
cartel provisions of Australia’s Competition
and Consumer Act 2010
.

The ABS
rates in Singapore are used as reference rates for settling non-deliverable
forward contracts and in 2013 Bank Negara, the
Malaysian central bank ordered local banks to withdraw from the fixing

after whispers of misconduct that emerged in 2012 were confirmed.

The ACCC
says that ANZ was a submitting bank for the MYR, but that Macquarie was not,
however it claims it often initiated discussions between traders. It further
estimates that the annual MYR NDF turnover in Australia in 2011 was
approximately $9 to 10 billion.

The
Monetary Authority of Singapore (MAS) conducted
its own investigation into the allegations in 2013
and concluded that while
there were attempts to rig benchmarks, there was no “conclusive” evidence that
they were successful. In releasing its report, MAS said it had taken “supervisory
action” against 20 banks and 133 traders.

“These
proceedings are a reminder that Australian cartel laws apply to financial
markets, and capture cartel conduct by firms that carry on business in
Australia, regardless of where that conduct occurred,” says ACCC chairman Rod
Sims.

“The ACCC
recognises the integrity of foreign exchange markets plays a fundamental role
in our market economy.”

ANZ has
admitted to 10 instances of attempted cartel conduct and Macquarie to eight.

The ACCC
says it has made submissions to the Australian Federal Court that ANZ ANZ pay a
pecuniary penalty in the amount of $9 million and make a contribution to the
ACCC’s costs; and that Macquarie pay a pecuniary penalty in the amount of $6
million and make a contribution to the ACCC’s costs. Both banks have agreed to
the submission, however it is up to the court to decide the final penalities.

“We have an
obligation to ensure our people, both here in Australia and overseas, comply
with the law at all times,” says ANZ chief risk officer Nigel Williams.

“While
there is no evidence that FX benchmarks in Singapore were successfully
influenced, we accept responsibility and apologise for the actions of our
former employees. We have made significant improvements to our compliance,
training and monitoring systems to ensure this does not happen again.”

ANZ says
that the three employees identified in the investigation are no longer employed
by the bank.

For its part, Macquarie Bank in a statement “notes” the agreed settlement and stresses that no senior Macquarie management or other staffers were involved. It adds that the “junior” staff member’s employment was terminated in 2012 and that since the bank became aware of the matter it has “significantly strengthened its e-communication surveillance globally, improved
trade monitoring and intensified training for its front office staff”.

Colin_lambert@profit-loss.com

Twitter
@lamboPnL

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@Profit_and_Loss

Colin Lambert

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