South African banks alongside other banks across the globe will be prosecuted for rand price fixing.
From our gathering, the banks will be prosecuted by the Competition Tribunal for what is considered to be a widespread collusion in fixing the price of rand.
The Competition Commission have been investigating the rand price fixing allegation which accused the banks of make fake orders to buy and sell rand just to manipulate its price since April 2015.
As alleged, the banks do use trading chat rooms to co-ordinate the time to sale or stop selling rand in order to manipulate its prices.
The investigations revealed that the banks colluded from at least 2007. As such, the Competition Commission is demanding of the banks to pay a penalty amounting to 10 percent of their annual turnover.
In a media statement, the commission related that it today, referred a collusion case to the Tribunal for prosecution against the under-listed banks.
- Bank of America Merrill Lynch International Limited,
- BNP Paribas
- JP Morgan Chase & Co
- JP Morgan Chase Bank N.A
- Investec Ltd
- Standard New York Securities Inc.
- HSBC Bank Plc
- Standard Chartered Bank
- Credit Suisse Group
- Standard Bank of South Africa Ltd
- Commerzbank AG
- Australia and New Zealand Banking Group Limited
- Nomura International Plc.
- Macquarie Bank Limited
- ABSA Bank Limited (ABSA)
- Barclays Capital Inc
- Barclays Bank plc
Confirming that it has been investigating a case of price fixing and market allocation in the trading of foreign currency pairs involving the Rand since April 2015, the commission affirmed that it has now referred the case to the Tribunal for prosecution.
“The Commission found that from at least 2007, the respondents had a general agreement to collude on prices for bids, offers and bid-offer spreads for the spot trades in relation to currency trading involving US Dollar / Rand currency pair.
“Further, the Commission found that the respondents manipulated the price of bids and offers through agreements to refrain from trading and creating fictitious bids and offers at particular times,” read the statement.
BuzzSouthAfrica gathered that traders of the banks primarily used trading platforms such as the Reuters currency trading platform to carry out their collusive activities.
Also, they used Bloomberg instant messaging system (chatroom), telephone conversation and had meetings to coordinate their bilateral and multilateral collusive trading activities.
While they assisted each other to reach the desired prices by coordinating trading times, they also, reached agreements to refrain from trading, taking turns in transacting by either pulling or holding trading activities on the Reuters currency trading platform.
More-so, it was found that they created fictitious bids and offers in-order to distort demand and supply and achieve their profit motives.
Based on the above, the Commission identified that it’s seeking an order from the Tribunal declaring that the respondents have contravene the Competition Act.
Also, the Commission added that it’s seeking an order declaring that the Bank of America Merrill Lynch International Limited, BNP Paribas, JP Morgan Chase & Co, JP Morgan Chase Bank N.A, Investec Ltd, Standard New York Securities Inc., HSBC Bank Plc, Standard Chartered Bank, Credit Suisse Group; Standard Bank of South Africa Ltd, Commerzbank AG; Australia and New Zealand Banking Group Limited, Nomura International Plc., Macquarie Bank Limited are liable for the payment of an administrative penalty equal to 10% of their annual turnover.