Five International Banks Accused of FX Collusion in Australia

This post references an article originally written by Byron Kaye for Forex StockNews, published on May 27, 2019.

An Australian law firm has filed a class action lawsuit against five banks: UBS AG, Barclays Bank Plc, Citigroup Inc, Royal Bank of Scotland, and JP Morgan AG. The five international banks are accused of “colluding to increase the price clients paid for certain investment products in order to fix exchange rates at more costly levels”, reports Forex Stock News. The banks would supposedly exchanged confidential information via internet chatrooms; this act of collusion which apparently took place between 2008-2013.

It is no coincidence that the banks involved in the Australian lawsuit are some of the same banks involved in the recent currency market scandals across Europe and the United States. As the investigations and lawsuits are ongoing, it is important to remember the importance of client-bank trust—especially in foreign markets. The banks acted to fix exchange rates at a higher cost, an act which highlights the importance of FX Rate Integrity® in foreign exchange transactions.

Read more on Forex StockNews.

-Paola Gasca, Analyst

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Checkout.com’s Unstoppable Presence Represents the Growing Importance of Data Analytics in Banking Services

This post references an article originally written by Peter Rudegeair for The Wall Street Journal, published on May 25, 2019.

The Wall Street Journal published a story on Guillaume Pousaz, the young CEO of Checkout.com—an international provider of online payment solutions. The site, launched in 2012, serves as a platform for companies to process and accept cross-border payments from multiple sources (i.e. online banking systems, credit/debit cards, and eWallets). Checkout.com recently sold a $230 million stake to investors, valuing the company at $2 billion. The investment is indicative of the influence tech startups hold in the banking industry—for example, The WSJ reports JP Morgan Chase & Co. acquired an internet payment-processing startup to keep up with this wave of digital banking services.

With a history in foreign exchange banking and data analytics, Mr. Pousaz understands the potential in combining the two and the importance of being able and willing to do so. “The future of banking is going to come out of payment companies”, Mr. Pousaz said, “I believe that 50% of financial services brands that we know today will not be here in 20 years, and maybe 10 years.”

The dominating presence of Checkout.com, and its founder’s comments, serve as a reminder of the importance of adapting to the changing environment of the banking industry—especially as it relates to foreign exchange. Checkout.com is an example of a service that takes responsibility in creating a positive client experience when it comes to their transactions. This, in turn, highlights the importance of client-bank trust. Companies are often blind-sided by their banks, especially in foreign exchange lending transactions, which is why it is imperative clients are aware of their bank’s rates and markups. FX Rate Integrity® is a great way for clients to feel confident in their foreign exchange transactions.

To read the full story, visit The Wall Street Journal.

-Paola Gasca, Analyst

 

Banks Apprehensive to Adopt MiFID, Raising the Question of Client-Bank Trust in Forex.

This post references articles originally written by Eva Szalay for the Financial Time, published on May 15, 2019 and Patricia Kowsmann for Market Watch, published on May 16, 2019.

Backed by the Association for Financial Markets in Europe (AFME), global banks are fighting MiFID regulation requiring them to disclose information regarding foreign exchange markups and costs to clients. MiFID II (Markets in Financial Instruments Directive) was introduced early last year to encourage transparency between banks and clients, emphasizing the importance of maintaining the integrity of investors, consumers, and businesses when it comes to foreign exchange financial services. However, that is not all MiFID II does. “MiFID II is designed to offer greater protection for investors and inject more transparency to all asset classes”, reports the Financial Times; this means MiFID II will affect equities, fixed income, exchange traded funds, and foreign exchange.

Reluctant banks feel the new regulations carry heavy and unnecessary costs, they also find it unnecessary to provide such inclusive information to clients.

According to Financial Times, the AFME plans to “urge regulators to make an exemption of wholesale forex transactions and professional clients” from MiFID II rules. Banks feel an exemption is suitable for the wholesale forex market because they are already required to provide thorough reports to professional clients. However, it has now come to light that MiFID’s transparency rule applies only to liquid bonds; it is unclear if this clarification will affect AFME’s requests.

The pushback comes amid news the EU is fining five global banks for foreign exchange misconduct. The banks in question are accused of manipulating the foreign-currency market. This announcement, along with AFME’s desire for exemptions, demonstrates the importance of client-bank trust especially as it relates to FX markups. In turn, this highlights the advantages of FX Rate Integrity®.

For more information on MiFID pushbacks, read the Financial Times.

In addition, read more on EU fines on big banks.

-Paola Gasca, Analyst

The EU Fines Big Banks, Highlighting the Growing Importance of FX Rate Integrity®.

This post references articles originally written by Patricia Kowsmann and Margot Patrick for The Wall Street Journal and Eva Szalay for the Financial Times, both published on May 16, 2019.

The EU has fined five global banks Barclays, Citigroup, The Royal Bank of Scotland, JPMorgan, and MUFG more than €1 billion. The fine comes after a 6-year long investigation looking into the banks for the manipulation and rigging of the foreign exchange market. According to the Wall Street Journal, “individual traders at the five banks exchanged information in a way that allowed them to coordinate whether and when to sell and buy currencies for their advantage”. In a similar article, the Financial Times reported “the market-rigging activity took place between 2007-2013, and involved 11 currencies, including the euro, pound, dollar”.

As the investigation comes to a close, news of the manipulation highlights the importance of knowing your FX markups and the benefits of FX Rate Integrity®.

To read the full story visit The Wall Street Journal and the Financial Times.

-Paola Gasca, Analyst

 

Banks brace for closure of EU currency manipulation probe

By:  Eva Szalay and Rochelle Toplensky

Published on: May 10th, 2019 – Financial Times

“After a 4 year probe, Banks finally prepare to settle with the European Commission on allegations they formed a Cartel to rig the $5.3 trillion Global FX Market.  This further highlights how the market, after scrutiny, is becoming more transparent and is another example of the benefits of FX Rate Integrity ®” – Bob Blades

To view article on Financial Times click here

Barclays Trader’s Case is Dismissed

This post references an article originally written by Aruna Viswanatha for The Wall Street Journal, published on March 4, 2019.

A federal judge recently dismissed a case against Robert Bogucki, a former senior Barclays PLC trader. Robert Bogucki was accused of “illegally trading in anticipation of a major client deal”, reports The Wall Street Journal. The case was unusually dismissed without being sent to jury by U.S. District Judge Charles Breyer stated, “I think the government completely overreached in this case” seeing as the foreign-exchange market is “an unregulated business” and the deal was conducted between “two highly sophisticated individuals who entered the deal eyes wide open”.

These statements by Judge Breyer highlight the need to manage Commercial FX Markups and the benefits of FX Rate Integrity® and how it helps executives know and understand their true FX costs.

Read more on The Wall Street Journal.

-Paola Gasca, Analyst