Banks under Investigation for FX Rates Manipulation Could Face $1 Billion Fines from the US

The US federal executive legal department, the US Justice Department, is believed to be probing around the $1 billion mark for monetary fines it issues to banks found guilty of their involvement in the currency manipulation cases, according to Bloomberg sources. The move adds to the financial damage banks have already faced in light of the various scandals. Several global banks have faced substantial fines in both the Libor Libor Libor stands for London Inter-bank offered rate. It is an industry-specific term which most of us would never have heard of until the "Libor scandal" became popularized in 2012. Libor is considered to be one of the most important interest rates in finance, upon which trillions of financial contracts rest. The Libor rate effects over $800,000,000,000,000 in financial deals. Banks simply cannot lend money to one another whenever they like as there is a system in place. Every day a group of leading Libor stands for London Inter-bank offered rate. It is an industry-specific term which most of us would never have heard of until the "Libor scandal" became popularized in 2012. Libor is considered to be one of the most important interest rates in finance, upon which trillions of financial contracts rest. The Libor rate effects over $800,000,000,000,000 in financial deals. Banks simply cannot lend money to one another whenever they like as there is a system in place. Every day a group of leading Read this Term and FX fixing cases and the latest threshold could add more difficulty to the troubled global banking system.

The news comes on the same day as UBS’ report (in its 2014 Annual Report) which stated that it had agreed to a $135 million settlement in relation to the FX fixing probes.

Five of the world’s largest banking institutions were fined amounts in excess of $4.3 billion in November last year, the penalties came on the back of investigations carried out by UK and US financial regulators. People familiar with the matter reported to Bloomberg that there are substantial pending fines which could be around $4 billion, thus bringing the total amount of fines issued by watchdogs in the last five years to the formidable ten billion mark

Investigations have been monitoring and dissecting the way bank FX traders and employees collaborated in a cartel in a bid to manipulate global benchmarks used by corporates and other banks. Recently, the US Department of Justice and the New York’s state banking regulator started probes with banks assessing the way they use practices such as Last Look Last Look Last look is defined as the process where liquidity providers (LP) are rendered the chance to reject trades within a specific period. Generally, this practice by brokers is used to mitigate risk while rendering more favorable terms to the LP. This is due to significant risk that can arise from poorly concocted price quotes that can be used as an advantage by latency arbitragers. Not all last look settings are the same.Last look settings tend to vary by client, trading platform, a client’s connec Last look is defined as the process where liquidity providers (LP) are rendered the chance to reject trades within a specific period. Generally, this practice by brokers is used to mitigate risk while rendering more favorable terms to the LP. This is due to significant risk that can arise from poorly concocted price quotes that can be used as an advantage by latency arbitragers. Not all last look settings are the same.Last look settings tend to vary by client, trading platform, a client’s connec Read this Term, a method used by firms which enables them to retract from trades that they foresee to be problematic.

Several of the largest banks, including HSBC, Citi, JP Morgan, Barclays & RBS have found themselves on the radar. Banks are known to settle deals without pleading guilty as they avoid repercussions of the behaviour impacting their future business, however, both Credit Suisse and BNP pleased guilty on separate charges. People familiar with the matter explained to Bloomberg that legal professionals prosecuting Barclays, Citigroup, JPMorgan and the Royal Bank of Scotland have been pushing them to plead guilty.