One could argue it’s like being the small fish in a big ocean and local banks donāt really have the clout to manipulate the foreign exchange market like the major global players. And in this instance it may have been in their better interests. The South Africa Reserve Bank has found some instances of client information sharing but no evidence of misconduct by the local banks on foreign exchange involving the Rand. This however is in contrast to the Competition Commissionās ongoing investigation. The watchdog is concerned some major global banking institutions colluded when customers traded forex, also involving the Rand, and has made known it has some information relating to the unlawful conduct. Given some of the major global banks were fined $5.7 billion for rigging exchange rates in May this year, there may be some merit in the investigation by the local watchdog.Ā But given the Rand is around the 18th most traded currency globally, with between 1-2 percent of global trade, these numbers are notĀ likely to keep global central bankers awake at night. ā Stuart Lowman
By Mfuneko Toyana
PRETORIA, Oct 19 (Reuters) – An investigation into the South African foreign exchange market found instances of confidential client information being shared by foreign exchange dealers but no evidence of misconduct by major banks, the country’s central bank saidĀ on Monday.
The South African Reserve Bank will look into stepping up surveillance to protect confidential client information and regulate foreign exchange dealers more closely, the bank said, following a year-long investigation.
Big moves on the foreign exchange market will now get closer scrutiny from the central bank, Mminele said. In addition, steps are under way to improve electronic monitoring of messages between dealers.
Read also:Ā US law firms set to sue London banks in FX rigging scandal
The bank’s foreign exchange review committee, set up in October 2014, said regulation of traders who were dealing individually was insufficient. It recommended the authorisation and regulation of inter-dealer brokers be reviewed.
Monitoring of messaging between dealers, using systems that troll for catch phrases that indicate malpractice, were already in use by a few institutions, said the head of review committee, James Cross.
“The use of automated electronic systems is really just beginning to be used here, but one has to say there are some major institutions world-wide that are in intending on fully implementing that in 2016,” Cross said.
Read also:Ā SA authorities not yet engaged 11 banks named in rigging probe
A parallel investigation by the Competition Commission into the fixing of foreign exchange trades by several global banks was still under way, the bank said, and it would take action if irregularities were uncovered.
“The Competition Commission made known that they have information relating to what could possibly relate to unlawful conduct by certain international banks in relation to rand trading in offshore centres,” Mminele said.
Read also:Ā UBS star trader Tom Hayes convicted on Libor rigging, jailed for 14 years
The competition watchdog announced that investigation in May, saying it was looking into alleged price rigging and collusion and naming BNP Paribas, Citigroup, Barclays, JP Morgan, Investec, Standard Bank and Standard Chartered. No results have been announced yet.
The watchdog said it investigating whether dealers at the banks had colluded, using electronic chat rooms and instant messaging, to coordinate their trading when giving quotes to customers who buy or sell currencies. Similar investigations are underway in Europe, Asia and the United States.
