NewHSBC and StanChart among 15 banks probed for rigging Brazilian currency
Investigation comes after six financial giants settle US charges for US$5.8 billion
Fifteen of the world’s largest banks are under investigation on suspicion of rigging the Brazilian currency, antitrust watchdog Cade said, the first such probe in one of the busiest foreign-exchange markets globally.
In a document, Cade alleged that the banks colluded to influence benchmark currency rates in Brazil by aligning positions and pushing transactions in a way that deterred competitors from the market between 2007 and 2013, at least. Foreign-exchange trading in Brazil is estimated at about US$3 trillion a year, excluding swaps and derivative transactions.
The banks named in the Cade probe are Bank of America Merrill Lynch, Bank of Tokyo-Mitsubishi UFJ, Barclays, Citigroup, Credit Suisse Group, Deutsche Bank, HSBC Holdings, JP Morgan Chase, Morgan Stanley, Nomura Holdings, Royal Bank of Canada, Royal Bank of Scotland Group, Standard Bank Group, Standard Chartered and UBS.
The Brazilian investigation comes weeks after six of the world’s largest financial institutions agreed to pay US$5.8 billion to the US government to settle charges of currency rigging. The US probe took more than five years and five of those banks, which are being probed by Cade, pleaded guilty.
Globally, currency trading is estimated at about US$4.7 trillion a day and has been targeted in recent government probes in Europe, the United States and Japan. Those probes allege that banks prioritised the execution of their own currency trades at the expense of client orders, taking advantage of the fact that those deals often take place away from exchanges.
The Cade probe highlights the growing importance of international cooperation in efforts to root out different forms of market rigging. It sets a milestone for a country long characterised for lax law enforcement standards for white-collar crime.
"The probe will probably follow similar patterns to those that took place in larger financial hubs, with banks seeking a settlement with Cade instead of fighting the accusations in courts," said Luís Andre de Moura Azevedo, a capital markets law professor with Fundacao Getulio Vargas in Sao Paulo.