Trading in dark chatrooms

Commission’s case against rogue currency dealers heats up.

Competition Commission’s case against rogue currency dealers is heating up.

The mere fact that bank traders accepted invitations to join covert instant messaging platforms is an indication of their involvement in a rogue conspiracy to manipulate the randUS dollar currency pair, the Competition Commission has argued.

The commission’s case against bank currency traders is heating up, with the watchdog saying there was a clear intention to rig currency trades to boost profits.

Advocate Tembeka Ngcukaitobi, for the commission, said the acceptance by bank traders to join instant messaging platforms was “an acceptance to a conspiracy”.

The case implicates more than 30 individuals linked to 23 banks, where the commission found that from at least September 2007, traders from competing banks entered into a general agreement to collude on prices for bids, offers, and bid-offer spreads for the spot trades in relation to currency trading. In doing so, they allegedly used platforms such as the Reuters currency trading platform and the Bloomberg instant messaging system (chatroom), as well as phone conversations and meetings, to coordinate their alleged collusive trading activities.

“It’s clear what the general or overarching agreement was all about,” said Ngcukaitobi.

“The Bloomberg chatroom simply provided a forum – it is a smoke-filled darkroom and when you got in, you knew fully what you were getting yourself into.

“And when you stayed, you knew precisely what you were staying for because you knew the type of information that was [being] communicated,” he added.

Ngcukaitobi said bank traders accessed and shared sensitive information that was not in the public domain including customer currency orders and their personal information, successful trades and volumes, whether traders held long or short positions, and trading strategies.

Section 4 of the Competition Act prohibits the conduct arising out of an agreement among various parties to fix prices or collude.

The merits of the case have not been heard as the tribunal is still hearing technical issues including exceptions/objections by banks to the charges.