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JP Morgan Agrees New Settlement for FX Manipulation

JP Morgan has agreed a settlement, believed to be worth $100 million, in an antitrust litigation lawsuit brought against 12 major banks for alleged manipulation of the FX market.

The bank submitted a letter to judge Lorna Scholfield of the Court of the Southern District of New York, stating that it had reached a settlement agreement with the plaintiffs in this litigation and that is planning to file a copy of the settlement terms with the court for approval by the end of January.

The exact figure will not publically be disclosed until then, but reports are widely claiming that JP Morgan will pay $100 million to end its part in the case. A spokesperson for the bank had not responded to requests for comment at the time of publication.

This lawsuit, and subsequent settlement, is separate and distinct from the $1 billion that JP Morgan is thought to have paid in fines to various regulatory bodies regarding in November regarding FX market malpractice (Squawkbox, 12 November).

Alongside JP Morgan the other US banks named in the lawsuit are Bank of America, Goldman Sachs, Morgan Stanley and Citi, while the non-US banks included are UBS, Credit Suisse, HSBC, Barclays, the Royal Bank of Scotland, BNP Paribas and Deutsche Bank.

In the lawsuit the plaintiffs allege that the banks conspired to manipulate the WM/Reuters closing spot rates.

They claim that the defendants regularly shared confidential information regarding customers’ order flow via chat rooms, instant messages and emails before the London Fix and executed concerted trading strategies designed to manipulate the WM/Reuters closing spot rates.

The 12 plaintiffs in this latest settlement include US hedge funds, pension funds and the City of Philadelphia.

In a court filing dated 27 February 2014, the City of Philadelphia cited independent analysis showing that the city’s pension fund engaged in at least $33 billion in FX transactions, which occurred with almost all of the named defendants.

It added that this pension fund had at least $768 million in transactions directly tied to the London 4pm Fix.

“Indeed, it is unclear from the public filings whether any other plaintiff engaged in any significant volume of trading at all with the defendants at the 4pm closing rate. Consequently, not only is the City the largest plaintiff, but its active participation in this action may be critical to its success,” it concluded.

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