The UK’s Financial Conduct Authority (FCA) and the US Commodity Futures Trading Commission (CFTC), in a concerted action have imposed fines totalling $3.1bn on five banks for failing to control business practices in their G10 spot foreign exchange (FX) trading operations.Citibank, fined £225,575,000 ($358m), HSBC Bank Plc £216,363,000 ($343m), JPMorgan Chase Bank £222,166,000 ($352m), The Royal Bank of Scotland Plc £217,000,000 ($344m) and UBS AG £233,814,000 ($371m) by the FCA are in the spotlight as “failings at these banks undermine confidence in the UK financial system and put its integrity at risk,” charges the regulator. In the United States, the orders from the CFTC collectively impose over $1.4bn in civil monetary penalties, specifically: $310m each for Citibank and JPMorgan, $290m each for RBS and UBS, and $275m for HSBC.
The fines follow a year-long investigation by the FCA into claims that the foreign exchange market - in which banks and other financial firms buy and sell currencies between one another, was being rigged. In April this year the FCA said it was particularly looking into the way that firms reduce the risk of traders manipulating benchmarks; ensure confidentiality and control conflicts of interest. It also reviewed compliance with new regulations on the London Interbank Offer Rate (Libor), which were introduced in April 2013 following a number of enforcement actions for attempted manipulation of the benchmark.
The FCA found that between January 1st 2008 and October 15th 2013, ineffective controls at the banks allowed G10 spot FX traders to put their banks’ interests ahead of their clients, “other market participants and the wider UK financial system. The banks failed to manage obvious risks around confidentiality, conflicts of interest and trading conduct. These failings allowed traders at those banks to behave unacceptably. They shared information about clients’ activities which they had been trusted to keep confidential and attempted to manipulate G10 spot FX currency rates, including in collusion with traders at other firms, in a way that could disadvantage those clients and the market”.
- See more at: http://www.ftseglobalmarkets.com/news/regulators-fine-banks-$31bn-for-fx-rates-manipulation.html#sthash.ERGYGCRH.dpufThe FCA found that between January 1st 2008 and October 15th 2013, ineffective controls at the banks allowed G10 spot FX traders to put their banks’ interests ahead of their clients, “other market participants and the wider UK financial system. The banks failed to manage obvious risks around confidentiality, conflicts of interest and trading conduct. These failings allowed traders at those banks to behave unacceptably. They shared information about clients’ activities which they had been trusted to keep confidential and attempted to manipulate G10 spot FX currency rates, including in collusion with traders at other firms, in a way that could disadvantage those clients and the market”.
Regulators fine banks $3.1bn+ for FX rates manipulation - See more at: http://www.ftseglobalmarkets.com/news/regulators-fine-banks-$31bn-for-fx-rates-manipulation.html#sthash.ERGYGCRH.dpuf
