Banks may have to pay up billions for fixing rand

STANDARD Bank may have to pay tens of billions of rands for its traders allegedly fixing the prices for which they bought and sold rands.

But legal and financial experts believe the chances of banks accused of price fixing actually having to pay such huge fines are unlikely even if they are found guilty of colluding on the price of rand.

The Competition Commission on Wednesday asked the tribunal that 15 banks pay 10% of their annual turnover for all the years that traders allegedly colluded on the prices at which they traded rands.

Its investigation started in April 2015 and goes back to 2007. Absa is exempt from a fine because it cooperated with the commission, with reports that one of its staff was the whistle-blower.

If there was any possibility of a real fine the bank’s share price would be plummeting but the prices have barely changed since the announcement‚ said Intellidex analyst Stuart Theobald. This is because the market was not expecting such large fines to be paid‚ he said.

It could be a very difficult case to prosecute, he said, as the trades took place offshore‚ according to the Competition Commission.

Lawyers confirmed that the Competition Act gave authorities jurisdiction over activities that took place in and had an economic effect on South Africa.

Fullard Meyer director Mitch Morrison said this meant banks that were not in the country might be able to blow off regulators.

Some of banks cited do not have a physical presence in South Africa.

Wits University Associate Professor of Competition Law Kasturi Moodaliyar said that as long as the conduct had an economic effect in South Africa‚ the competition authorities would have jurisdiction over those companies.

But the real economic effect of the trades could be hard to prove.

JustOneLap Trader Simon Brown said it sounded as if traders had colluded to increase or lower the price that rand was sold at for single trades, but without having longterm effects on the rand’s value.

As traders trade currency to four decimal points of the rand and trade in millions of dollars they can manipulate the price of currency by changing it from 13.0410 to 13.0400 without changing the overall price.

Local banks cited in the case – Investec and Standard Bank – may also settle with a negotiated fine to avoid a drawn-out prosecution if usual trends are anything to go by.

Speaking in parliament yesterd President Jacob Zuma said that banks had a case to answer at the competition tribunal. — TMG