Admission of cheating is evidence for local forex case
The Competition Commission will use the recent settlement between British banking group Standard Chartered and US authorities to strengthen its own case of currency manipulation by local and international banks.
Standard Chartered Bank reached an agreement with the New York state department of financial services last week after it admitted that it manipulated currencies, including the rand, between 2007 and 2013.
In terms of the agreement reached in New York, which has subsequently become a court order, Standard Chartered will pay a fine of $40m (about R536m). It is also required to take remedial action, including disciplinary procedures against employees guilty of the contraventions.
The Competition Commission said in a statement on Tuesday it “noted” the agreement and that it would consider the effect of the order on its investigation into currency manipulation by banks operating in SA.
“We will be providing it as further evidence in our case before the tribunal because it involves the same period and the same currencies.
“We are looking forward with keen interest the next time we meet Standard Chartered as to what they intend to do,” said Sipho Ngwema, spokesperson for the commission.
In 2015, the Competition Commission began investigating market manipulation in currency pairs involving the SA rand by a host of local and international banks, including Bank of America Merrill Lynch, BNP Paribas, JPMorgan Chase, Investec, Standard New York Securities, HSBC, Standard Chartered, Credit Suisse Group, Standard Bank, Commerzbank, Australia and New Zealand Banking Group, Nomura, Macquarie, Absa and Barclays.
Citibank has been the only bank locally to plead guilty and paid an “administrative penalty” of R69.5m. Ongoing proceedings between the commission and the banks have been dogged by protracted litigation.
The Constitutional Court is due to hear the matter between Standard Bank and the commission in March.
According to the consent order issued in the US, Standard Chartered’s “traders used a variety of improper tactics to benefit the bank and themselves by maximising profits or minimising losses at the expense of the bank’s customers, or customers of other banks that were impacted by the misconduct”.
It goes on to describe the mechanisms that facilitated these tactics, which included chatrooms such as “Zar domination”, e-mails, phone calls and in-person meetings.
It also stated that traders
based at the New York branch and in other major trading centres “engaged repeatedly” in these actions between 2007 and 2013.
Standard Chartered SA confirmed a settlement had been reached in the US. “Since the conduct at issue took place, Standard Chartered has remediated its systems and controls, and now has an appropriate control framework in place,” it said in response to questions from Business Day.
The bank continues to “cooperate fully” with the SA investigation, it said.