The Competition Commission on Tuesday announced an investigation into price-fixing in the multibillion-rand foreign currency trading market‚ the latest in a worldwide move to probe such trades.
It could have ramifications for the rand‚ possibly weakening it as the probe progresses.
A number of local and foreign companies will be investigated: Investec‚ Standard New York Securities (a division of Standard Bank)‚ Barclays Africa‚ BNP Paribas‚ Citigroup‚ Barclays Bank‚ JP Morgan Chase and Standard Chartered.
Barclays Africa Group‚ Standard Chartered and Investec said they would co-operate with the investigation. JP Morgan‚ which paid nearly $100-million (R1.2-billion) to settle a similar case in the US‚ declined to comment‚ as did BNP Paribas. Standard Bank said it could not immediately comment.
The investigation did not come as a surprise to some, as there had been talk of traders already being suspended pending investigations.
Industry sources said the probe followed a questionnaire sent out by the Reserve Bank, in which all foreign exchange desks of the major banks had to provide information on their activities.
The rand weakened nearly 20c against the dollar after the announcement‚ but analysts said it mainly related to the stronger dollar. It was at R11.9019/$ in late afternoon trade from an overnight close of R11.76/$.
Competition commissioner Tembinkosi Bonakele said the investigation followed similar ones by other competition authorities.
“Price-fixing distorts the price of foreign exchange and artificially inflates the cost of trading in foreign currency paired with the rand.”
He said indications were it was prevalent offshore. Spokesman for the commission Mava Scott said no specific event had prompted the probe‚ which would be done by the cartel division.
Bidvest Bank chief currency dealer Ion de Vleeschauwer said the investigation was probably influenced by international developments, where a number of foreign exchange divisions at banks had been targeted.
“I don’t know what they will find as the market is massive and it is very difficult to manipulate markets.”
The UK’s Financial Conduct Authority looked into allegations of trading based on shared information and the EU antitrust regulatory authority initiated an investigation two years ago.
The alleged collusion among traders was carried out through electronic messaging platforms‚ which enabled them to coordinate trading when quoting customers who buy or sell currencies.
The commission said this co-ordination enabled them to charge an agreed price for a specific amount of currency‚ eliminating competition. — BDlive/Bloomberg
Foreign exchange traders face probe
It could have ramifications for the rand‚ possibly weakening it as the probe progresses.
A number of local and foreign companies will be investigated: Investec‚ Standard New York Securities (a division of Standard Bank)‚ Barclays Africa‚ BNP Paribas‚ Citigroup‚ Barclays Bank‚ JP Morgan Chase and Standard Chartered.
Barclays Africa Group‚ Standard Chartered and Investec said they would co-operate with the investigation. JP Morgan‚ which paid nearly $100-million (R1.2-billion) to settle a similar case in the US‚ declined to comment‚ as did BNP Paribas. Standard Bank said it could not immediately comment.
The investigation did not come as a surprise to some, as there had been talk of traders already being suspended pending investigations.
Industry sources said the probe followed a questionnaire sent out by the Reserve Bank, in which all foreign exchange desks of the major banks had to provide information on their activities.
The rand weakened nearly 20c against the dollar after the announcement‚ but analysts said it mainly related to the stronger dollar. It was at R11.9019/$ in late afternoon trade from an overnight close of R11.76/$.
Competition commissioner Tembinkosi Bonakele said the investigation followed similar ones by other competition authorities.
“Price-fixing distorts the price of foreign exchange and artificially inflates the cost of trading in foreign currency paired with the rand.”
He said indications were it was prevalent offshore. Spokesman for the commission Mava Scott said no specific event had prompted the probe‚ which would be done by the cartel division.
Bidvest Bank chief currency dealer Ion de Vleeschauwer said the investigation was probably influenced by international developments, where a number of foreign exchange divisions at banks had been targeted.
“I don’t know what they will find as the market is massive and it is very difficult to manipulate markets.”
The UK’s Financial Conduct Authority looked into allegations of trading based on shared information and the EU antitrust regulatory authority initiated an investigation two years ago.
The alleged collusion among traders was carried out through electronic messaging platforms‚ which enabled them to coordinate trading when quoting customers who buy or sell currencies.
The commission said this co-ordination enabled them to charge an agreed price for a specific amount of currency‚ eliminating competition. — BDlive/Bloomberg
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