Spotlight on tricks of the trade

Some say banks’ incentive structures are such that collusion becomes the only way for currency traders to meet targets

The competition commission’s case against bank currency traders accused of colluding is heating up. It’s far from a done deal, but the authority will take heart from the guilty plea by BNP Paribas USA just last week to currency rigging, and its payment of a US$90M penalty to the US department of justice.

Its French parent is named in the SA commission’s case, which is gaining momentum amid a global clean-up of the $5.1 trillion-a-day foreign exchange market that has netted regulators more than $10bn in fines since 2013, according to Bloomberg.

Shortly before Christmas, as if in response to talk that the case was dead in the water, the commission filed a supplementary affidavit in which it provided details of how currency traders conspired to fix prices on rand-dollar currency trades — a $40bn-a-day currency pair at the end of 2016.

Fingering 35 individuals and 23 financial institutions — up from 18 previously, after it added related-party entities that were incorrectly excluded — the commission describes, over 32 pages, conversations between competing traders via the Bloomberg chat room.

In one example, Jpmorgan’s Akshay Aiyer is said to have asked Barclays Capital’s Nicholas Williams to stop buying US dollars, as Aiyer was trying to move the price down. Other examples reveal how traders allegedly set the bid-offer spread, shared information about customer orders and held trades to reserve liquidity for each other.

The affidavit will go some way towards addressing banks’ exception applications, many of which decried the commission’s February 2017 referral to the competition tribunal as “vague and embarrassing” — legal parlance for it being so defective as to prejudice the respond-