Brazil currency probe may grow, but trading ban unlikely

Brazil’s investigation of an alleged currency cartel formed by 15 of the world’s largest banks could expand to more financial institutions but it is unlikely to result in trading bans, the head of antitrust watchdog Cade said on Wednesday.

Vinicius Carvalho, making his first public comments on the investigation, said the case was built around a plea deal with one of six banks that had agreed to pay US$5.8 billion in the United States to settle charges of currency rigging.

The US settlement came just weeks before Cade went public with its case this month. As other banks agreed to cooperate, Carvalho said more names could be drawn into the investigation.

He said it would not make sense to ban banks from the foreign exchange market as punishment for manipulating currencies between 2007 and 2013, as his agency has alleged.

“I can’t imagine a situation in which you simply ban a company from operating. I don’t think that makes sense from a competitive standpoint,” Carvalho said.

The US currency rigging probe took more than five years to draw guilty pleas from banks now under investigation in Brazil, where the spot foreign exchange market moves more than US$3 trillion a year.

Asked why no Brazilian banks had been named in Cade’s investigation, Carvalho said: “That’s a question I ask myself too.