Six Banks to Fix Foreign Exchange Fixing Violations Via £1-2 Bln Settlement

According to a Financial Times report the FCA started settlement negotiations with Barclays, Citigroup, HSBC, JPMorgan Chase, the Royal Bank

FCA logoThe Financial Times reported that the next phase of the foreign exchange fixing investigation has started, with six major banks allegedly entering negotiations with the Financial Conduct Authority (FCA) on settlements to the probe.

Barclays, Citigroup, HSBC, JPMorgan Chase, the Royal Bank of Scotland and UBS are all facing millions of pounds in fines, as the UK regulator started an investigation of the matter in October last year.

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According to sources cited in the report by the FT, the total aggregate amount which the six banks are likely to settle for comes to more than £1 bn, while Sky News reports that the settlements could total £2 billion.

Back in June last year a Bloomberg News report claimed that dealers from major banks were colluding together in online chatrooms. By sharing client order information, traders at major banks were allegedly manipulating the 4PM London fix of rates on the global foreign exchange markets.

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After a scheduled meeting of chief dealers of foreign exchange from major banks never took place in July, the story about manipulation of foreign exchange markets fixing rates was taken to the regulators.

In September 2013, Swiss bank UBS provided the U.S. Department of Justice with information about practices related to foreign exchange fixings which sought leniency, in a similar manner to the way in which the Swiss bank handled the LIBOR investigation crisis. As of this time, there is no information as to whether this strategy will work again.

The investigation spread out across the globe as the Swiss Financial Market Supervisory Authority, the FCA, the DOJ, the Bank of England, the Hong Kong and Singapore Monetary Authorities started investigating the major banks’ practices. Those were later joined by the UK Serious Fraud Office which raised additional concerns about criminal proceedings

After almost a year of investigation, the FCA is the first major regulatory authority to enter the final stage of its investigation. The costs to global banks from settlements of the FX fixing probe could be much higher than the LIBOR settlements last year.

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