$51bn

FINANCE Minister Pravin Gordhan yesterday weighed in on the outcry over allegations that major banks colluded to manipulate trading in the rand, calling for tougher market rules to curb such conduct.

Tabling the 2017 Budget in the National Assembly, Gordhan said there was evidence of a collusive culture at banks’ trading desks, and he asked Parliament quickly to pass the Financial Sector Regulation Bill to counter this practice.

“It is precisely because of such abuses that we have proposed a dedicated market-conduct regulator, and we hope Parliament will pass this bill as soon as possible,” Gordhan said.

The bill was tabled by former finance minister Nhlanhla Nene in 2015 to give effect to Value of daily trades in the US dollar and rand currency pair

the government’s decision in 2011 to shift to a Twin Peaks model of regulating the financial sector.

Last week, the Competition Commission said it had referred nearly 20 local and foreign banks to the Competition Tribunal for prosecution over collusion in foreign-exchange trading.

The banks, which included Absa, Investec and Standard Bank, were said to have agreed on an elaborate scheme to short-change clients over at least seven years.

The commission said currency trading involving the US dollar and rand currency pair accounted for $51 billion (R661bn) of the global daily trades in the market – valued at $5 trillion (R65 trillion) a day.

Earlier this week, American bank Citibank agreed to pay an administrative penalty of R69.5 million for its role in colluding on the price for bids, offers and bid-offer spreads for spot trades in relation to currency trading involving the rand.

The Competition Commission also said it would not seek to have a penalty imposed on Absa after it agreed to testify against the other banks that had been implicated in the manipulation of the rand.

The remaining banks run the risk of having 10% of annual turnover docked as fines, but the commission has invited them to co-operate and settle the matter. Gordhan also welcomed new participants in the financial services sector, heralding this as progress in transforming the sector.

“Three new banks have been granted provisional licences, including the PostBank, and two new stock exchanges.

“Their business models are based on technological innovation, with the potential to bring services more cost-effectively to more people,” Gordhan said.