HSBC among five banks fined US$3.4 billion for rigging foreign exchange market
US, British and Swiss regulators fined HSBC and four other global banks more than US$3 billion for attempting to manipulate foreign exchange markets.
US, British and Swiss regulators fined HSBC and four other global banks more than US$3 billion for attempting to manipulate foreign exchange markets - the latest penalties for an industry previously criticised for rigging interest rates and for their role in triggering the global financial crisis.
The US Commodity Futures Trading Commission, the UK Financial Conduct Authority and the Swiss Financial Market Supervisory Authority said Citibank, JPMorgan Chase, Royal Bank of Scotland, HSBC and UBS had agreed to settlements totalling almost US$3.4 billion. The FCA said it was continuing to investigate Barclays Bank.
"Today's record fines mark the gravity of the failings we found, and firms need to take responsibility for putting it right," Martin Wheatley, chief executive of the FCA said yesterday. "They must make sure their traders do not game the system to boost profits."
Some US$5.3 trillion changes hands every day on the global foreign exchange market, with 40 per cent of trades occurring in London. Those trades have an impact on companies around the world that use market prices to value assets and manage currency risks.
The regulators found that between January 1, 2008, and October 15, 2013, the five banks failed to adequately train and supervise foreign currency traders. As a result, traders at the banks were able to form groups that shared information about client activity, using nicknames such as "the players, "the 3 musketeers" and "1 team, 1 dream".
The traders tried to manipulate the market to ensure that their banks made a profit, the Financial Conduct Authority said.
RBS has already started disciplinary action against six employees, three of whom have been suspended.
Separately, the Bank of England dismissed its chief foreign exchange dealer, Martin Mallett, who has worked at the bank for almost 30 years. He was faulted in a report by independent investigator Anthony Grabiner for failing to alert his superiors that currency traders were sharing information about client orders.
A spokesman for the bank said Mallett's dismissal was not linked to Grabiner's report but in relation to an internal disciplinary process unrelated to foreign exchange.
The US Department of Justice and other authorities are conducting their own investigations and further penalties are possible.
The fines come more than two years after the first banks settled with UK and US authorities over claims they rigged the London interbank offered rate (Libor), a benchmark interest rate used in US$300 trillion of securities including swaps and home loans. A dozen firms have so far been fined at least US$6.5 billion in investigations related to Libor and its derivatives. UBS was fined about US$1.5 billion in that probe.
The Libor investigations sparked a review of dozens of benchmarks used in markets from oil to precious metals.
