Banks in hot $$$: Another regulator investigates currency manipulation

The South African Competition Commission (“SACC”) has recently commenced an investigation into several banks and financial institutions for allegedly price-fixing in relation to the ‘Bid and Ask’ amounts, and consequently the ‘Bid-Ask spreads’, which the institutions allegedly make available make available for foreign exchange currency trading derivatives; specifically: Spot Trades; Forwards and Futures.

The SACC stated that the banks and financial institutions named, BNP Paribas SA, Barclays Plc’s African operations, JP Morgan South Africa, Investec and a unit of Standard Chartered Plc provided, have allegedly colluded to synchronize trades when quoting prices to customers seeking to buy or sell foreign currencies through the use of electronic messaging software utilized for currency trading.

The SACC investigation currently relates only to currency exchange trades involving South African Rand (ZAR). the SACC alleges that the conduct has the consequence of devaluing the ZAR with the following concomitant effects:

• Foreign currencies exciting the country;
• Local inflation in South Africa increasing as the cost of foreign imports into the Republic of South Africa increases e.g., oil; raw materials; steel etc.