Global banks face grilling

THE COMPETITION Commission had started an investigation into 11 foreign currency trading organisations for price fixing, two years after authorities began a global probe into market rigging.

Those covered by the probe included BNP Paribas, Citigroup, Barclays Africa Group, JPMorgan Chase, Investec and Standard Chartered Bank, the commission said yesterday.

“The commission’s investigation is focusing on trade in currency pairs involving the South African rand,” it said. “The alleged collusion, the ‘ZAR domination’, was carried out through electronic messaging platforms used for currency trading.”

The rand has dropped 43 percent against the dollar in the past three years. The commission said its probe followed investigations in other markets.

Citigroup, JPMorgan, Barclays and Royal Bank of Scotland Group are about to plead guilty in the UK and each pay about $1 billion (R12bn) in fines over allegations they manipulated currency markets, people with knowledge of the settlement talks have said.

‘Extremely seriously’

“We take such matters extremely seriously and will co-operate fully with the investigation,” Barclays Africa said.

The investigation included BNP Paribas South Africa, Citigroup Global Markets, Barclays Bank and JPMorgan South Africa, the commission said.

Kate Haywood, a spokeswoman for JPMorgan in London, declined to comment. Spokesmen for Citigroup, Standard Bank, Standard Chartered and Investec said they could not immediately comment.

“Conduct of this nature distorts the price of foreign exchange and artificially inflates the cost of trading in foreign currency paired with the South African rand,” commissioner Tembinkosi Bonakele said. “Indications are that this conduct was prevalent offshore, but with this investigation we are sending a clear message that we will pursue cartels affecting South Africa wherever they take place.”

The traders had allegedly been directly or indirectly fixing prices in relation to bids, offers and bid-offer spreads in respect of spot, futures and forwards currency trades, the commission said.

After the rand slumped 37 percent against the dollar in 2001, South Africa began what was known as the rand commission to probe irregular trades. While no such trades were found, investigators said transactions arranged by Deutsche Bank led to an outflow of money from South Africa. – Bloomberg