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Banks Preparing to Settle EU FX Cartel Case? A report in the Financial Times says that eight banks are preparing to settle with the European Commission (EC) over allegations they formed a cartel to rig foreign exchange markets. The FT names six of the banks as Barclays, Citi, HSBC, JP Morgan, RBS and UBS and says two others are also preparing to settle. Any settlement may also provide extra impetus for the various legal firms seeking to replicate their success in winning civil settlements from banks in the US, in the European Union.
DFS Fines Credit Suisse $135 Million Over FX “Unlawful Conduct” Credit Suisse has agreed to pay a $135 million fine as part of a consent order with the New York State Department of Financial Services (DFS) for violations of New York banking law, including improper efforts with other global banks, front-running client orders, and additional unlawful conduct that disadvantaged customers. The violations stem from an investigation by DFS that determined that from at least 2008 to 2015, the bank “consistently engaged in unlawful, unsafe and unsound conduct by failing to implement effective controls over its foreign exchange business”.
ANZ Settles With Regulator Over Benchmark Case In a brief statement today, ANZ has announced it has reached a confidential in-principle agreement with the Australian Securities and Investments Commission (ASIC) to settle court action relating to the Australian interbank BBSW market. ANZ, along with NAB and Westpac, has been charged by ASIC in respect of allegations it attempted to manipulate the local interest rate benchmark setting process – the Bank Bill Swap Rate. The bank has not said how much it has agreed to pay, nor whether it is admitting guilt.
CLS Volumes Up Double Digits in September The average daily traded volume submitted to CLS was $1.75 trillion in September, up 10.7% from $1.58 trillion in August 2017. This increase is consistent with data that has already been reported by various FX platforms, which all showed a substantial increase in trading activity last month. The ADV of swap activity submitted to CLS was $1.14 trillion in September, up 8% from August and up 16% compared to September 2016. The average daily traded volume submitted to CLS was $1.75 trillion in September, up 10.7% from $1.58 trillion in August 2017. This increase is consistent with data that has already been reported by various FX platforms, which all showed a substantial increase in trading activity last month. The ADV of swap activity submitted to CLS was $1.14 trillion in September, up 8% from August and up 16% compared to September 2016.
HSBC Fined by Fed for “Unsafe and Unsound” FX Practices The Federal Reserve Board has fined HSBC just over $175 million for the firm's “unsafe and unsound practices” in its FX trading business. The Fed says it levied the fine for deficiencies in HSBC's oversight of, and internal controls over, FX. It adds that the firm failed to detect and address its traders misusing confidential customer information, as well as using electronic chatrooms to communicate with competitors about their trading positions. The Board's order requires HSBC to improve its controls and compliance risk management concerning the firm's FX trading.
Deutsche Settles FX Manipulation Claim One of two banks still to settle a class action lawsuit over FX manipulation claims has agreed to pay $190 million. Court documents filed today (September 29) show that Deutsche Bank has agreed to settle, leaving Credit Suisse as the only bank of 16 that were named in the class action yet to agree a deal. The proposed settlement remains subject to a Fairness Hearing – Deutsche has also agreed to provide “reasonable cooperation” in the continued prosecution of the Action, according to court documents.
Investec Bank Joins TraderTools’ ULN TraderTools has announced that Investec Bank has joined its Unique Liquidity Network (ULN). Through hosted facilities in Equinix LD4 and Equinix NY4, the ULN now consists of over 60 unique liquidity providers, making prices in G10 and emerging and underserved market currencies, the firm says. Using the ULN, Investec plans to provide its customers with improved pricing and execution, and to increase its reach within the electronic FX marketplace. Access by Investec customers will be via the TraderTools API, and through a variety of FX venues.
CLS to Launch Same-Day Settlement CLS Group plans to launch a same-day settlement service in the second half of 2018, subject to regulatory approvals. The new service, CLSNow, will offer bilateral, same-day, payment-versus-payment gross settlement in CAD, CHF, EUR, GBP and USD, with plans to extend the service to additional currencies in the future, based on client demand. The aim is to enable counterparties to optimise the use of available liquidity in the same-day market, while mitigating settlement risk. Currently, some of CLS’s largest clients have in excess of 10% of their daily euro business being transacted on a same-day basis, and the expectation is that the launch of CLSNow will further facilitate the growth of this same-day market.
CLS Volumes Flat in August Average daily volume (ADV) submitted to CLS was $1.58 trillion in August, down 1% from July. CLS recorded an ADV of $1.05 trillion in swaps in August, up from $1.04 trillion the previous month. Spot ADV submitted to CLS in July was $433 billion, down marginally from the $453 billion recorded in July. The ADV of forwards products submitted to CLS last month was $96 billion, down from $101 billion in July. Despite this month-on-month decrease, CLS volumes were up 14.8% year-on-year.
Judge Ticks Latest FX Benchmark Settlement Claim Judge Lorna Schofield of the Southern District Court of New York has approved the proposed settlement that sees five banks pay $111 million for alleged FX benchmark manipulation. The settlement, which was first proposed in July, involves Bank of Tokyo-Mitsubishi UFG, BNP Paribas, Morgan Stanley, Royal Bank of Canada and Standard Chartered Bank – all five banks continue to deny wrongdoing. The approval of the latest settlement means banks have now paid in excess of $2.1 billion to settle claims related to the benchmark litigation.