Citi has become the first bank to settle with South Africa’s Competition Commission, paying the equivalent of a just over $5 million fine related to charges it participated in a cartel that manipulated prices in the rand.
The Commission found that from at least 2007, Citi and its competitors had a general agreement to collude on prices for bids, offers and bid-offer spreads for the spot trades in relation to currency trading involving USD/ZAR. The Commission last week charged 14 banks with collusion.
BNP Paribas has been fined $350 million as part of a consent order entered into with the New York State Department of Financial Services (DFS) for “significant, long-term violations of New York banking law” in the bank’s global foreign-exchange business.
DFS says its investigation found the improper conduct at BNP included collusive activity by traders to manipulate FX prices and benchmark rates; executing fake trades to influence the exchange rates of emerging market currencies; and improperly sharing confidential customer information with traders at other large banks.
In spite of spending a night at the back end of a 747 I am in a strangely optimistic mood this morning - and even more surprisingly I am so after reading through the New York Department of Financial Services' report on its investigation into Credit Suisse’s FX business. I have also read through the GFXC release that highlights the progress being made on last look, however and that, allied with a few voices of dissension recorded in the pages of the DFS report have brightened my mood.
The US legal system continues challenge many aspects of the OTC market structure, the latest being a lawsuit brought by interest rate swap trading venue provider TrueEx against a group of banks. To me, not only does the lawsuit highlight the general misconception that liquidity is an apparently valueless commodity, but it also signals - should the decision a certain way - a fundamental change in who decides what liquidity goes where...and believe me the LPs will not be the ones deciding.
More than a few people have told me in recent weeks that they see the trial (which is now at the appeal stage) of Mark Johnson, and that of the Cartel threesome – which started this week in New York – as being inextricably linked. You all know what’s coming…I don't agree. In fact I would argue there are some fundamental differences that mean this week’s trial – complex as it is – cannot be seen through the same lens.
In this week’s podcast Galen Stops reports from Stockholm on his observations from last week’s Profit & Loss conference in that city, and his interruption by abseiling window cleaners gives Colin Lambert the opportunity to tell his favourite window cleaning story.
On more pertinent topics, they discuss the obvious discord between Sweden’s central bank and local economists and Lambert gives his thoughts on the start of the Cartel trial – stressing the differences between this and the impending appeal of Mark Johnson.
Technology is also in our podcasters cross hairs as they look at blunt instruments to manage market risk and Lambert asks the philosophical questions, ‘Is the market always lagging technology and is this a good thing?’ and ‘at what stage do market participants revert to making the tech work for them rather than have the tech dictate their modus operandi?’
There’s also a quick skip through the latest from the crypto world and Lambert also feels obliged to call out one company for its chaotic start to live under a new moniker, and another for good “spin” around its volume numbers.
This week’s podcast sees Colin Lambert and Galen Stops discuss the latest lawsuit facing banks over their actions in FX markets, during which Lambert invokes the spirit of a film that he can’t remember the name of, by asking, “Could you ask me that question again Galen?”
Stops also has a series of questions relating to the Virtu-ITG tie up reported this week as our two podcasters discuss the evolution of the non-bank trading firm business model. Where do these firms expand? Lambert is fairly confident (is he ever not?) that it is not by buying other trading firms, but both men see opportunities away from trading.
They also discuss volatility in crypto markets and ask – at what stage does the institutional enthusiasm for crypto start to weaken?
This week’s podcast also highlights how Lambert giveth…and taketh away…as it is bookended by praise and ridicule for his colleague! Find out why by listening in to this week’s edition.