Standard Chartered admits to rigging rand

The Competition Commission will use the recent settlement between British banking group Standard Chartered and US authorities to strengthen its own evidence of currency manipulation involving the rand.

“We will be providing it as further evidence in our case before the tribunal because it involves the same period and the same currencies,” Competition Commission spokesperson Sipho Ngwema said.

“We are looking forward with keen interest [to] the next time we meet Standard Chartered, as to what they intend to do.”

Standard Chartered Bank reached an agreement with the New York state department of financial services last week, admitting it had manipulated currencies, including the rand.

In a statement on Tuesday, SA’s Competition Commission said it noted the agreement and would consider the effect of the order on its investigation into currency manipulation by banks operating in SA.

The banks being investigated include Standard Bank, Investec, Absa and JPMorgan Chase.

In terms of the agreement reached in New York, which has subsequently become a court order, Standard Chartered will pay a fine of $40m (about R536m). It is also required to take remedial action, including disciplinary procedures against employees guilty of the contraventions.

Standard Chartered South Africa confirmed a settlement had been reached.

“Since the conduct at issue took place, Standard Chartered has remediated its systems and controls, and now has an appropriate control framework in place,” it said in response to questions from Business Day.

The agreement signed on January 29 also described key findings from the department’s investigation into currency manipulation at Standard Chartered.

“Standard Chartered traders used a variety of improper tactics to benefit the bank – and themselves – by maximising profits or minimising losses at the expense of the bank’s customers, or customers of other banks that were impacted by the misconduct,” the consent order says.

It describes the mechanisms that facilitated these tactics, which included chatrooms such as “Zar domination”, as well as e-mails, phone calls and in-person meetings.

It also said traders based at the New York branch and in other major centres engaged repeatedly in these actions between 2007 and 2013.

In 2015, the Competition Commission began investigating market manipulation in currency pairs involving the rand by a host of local and international banks that also included Bank of America Merrill Lynch, BNP Paribas, Standard New York Securities, HSBC, Standard Chartered, Credit Suisse Group, Commerzbank, Australia and New Zealand Banking Group, Nomura, Macquarie and Barclays.

Citibank has been the only bank locally to plead guilty and paid an “administrative penalty” of R69.5m.

Ongoing proceedings between the commission and the banks have been dogged by protracted litigation.

The Constitutional Court is due to hear the matter between Standard Bank and the commission in March.

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