Mexico fines banks for bond trade fiddle

Mexico’s securities regulator has fined banks, traders and brokers for simulating bond trades to pump up volumes, according to a state document and source, in one of the country’s widest probes into the sector since the financial crisis.

Citigroup unit Citibanamex, Spain’s BBVA Bancomer, Britain’s Barclays, Switzerland’s Credit Suisse and Germany’s Deutsche Bank have been notified of the fines, according to the document seen by Reuters.

The fines for the banks, eight traders and two brokers totalled more than $1m, according to a government source with direct knowledge of the matter.

Those sanctioned can still appeal the fines.

Citibanamex said it was aware of the fines and was evaluating whether to appeal.

Barclays, Credit Suisse and Deutsche Bank declined to comment. BBVA Bancomer did not respond to a request for comment.

Over the past decade, regulators in the US, Britain and other markets have slapped banks with billions of dollars in fines for manipulating rates and currency markets.

The probe by Mexico’s regulator CNBV did not find evidence of price manipulation, the source said. While simulating trades violates Mexico’s stock market law, the source said the regulator is not seeking any criminal charges.

The CNBV did not respond to a request for comment.

The probe discovered traders had pre-arranged trades through local brokers to boost the apparent volume of trades in government bonds, said the source, who was not authorised to speak to the media, and who requested anonymity.

It was not clear what the banks would gain from manipulating trading volumes, but to be market-makers in government bonds, banks need to meet minimum trading volumes.

The Mexican unit of Swiss broker Tradition and Mexican broker Enlace were also fined, according to the document.

An Enlace spokesperson said the broker had received a notification from the CNBV for one trade in 2013.

The CNBV launched its probe of government bond players in 2017 after Mexican antitrust regulator Cofece announced a probe into possible price-rigging for peso-denominated government debt.