Credit Suisse Fined $135 Million by New York Watchdog for Rigging FX Market

In one example cited by DFS, traders in the bank's eFX unit used algorithm to front-run clients' stop-loss orders.

Credit Suisse has been slapped with a $135 million fine by the top financial regulator in New York, which found a long pattern of unsafe and unsound practices in the bank’s foreign exchange business from at least 2008 to 2015.

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The Department of Financial Services also ordered the Swiss bank on Monday to put in place a program to ensure that the alleged violation doesn’t happen again.

The DFS said Credit Suisse had insufficient oversight and controls over its FX traders, who allegedly discussed trading positions with competitors, using electronic chatrooms.

In one example cited by DFS, operators of Credit Suisse’s electronic trading platform, eFX, used a variety of algorithms to manipulate currencies including ‘front-running’ customers’ limit and stop-loss orders.

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Elsewhere, traders in the bank used a tactic called ‘building ammo’, where they improperly shared customer information on trading the euro/yen currency pair to ensure that they were not taking positions that would hurt one another.

New York regulators have accused more than a dozen traders and salespeople working for Switzerland’s second-biggest bank of manipulating the $5.3 trillion a day forex market and other illegal activity over the course of eight years, running up to 2015.

The watchdog found that the bank’s traders, using different names to disguise client requests for quotes and trading activity, shared information and conspired to move currency benchmarks in order to reap higher profits at customers’ expense.

Monday’s action is the latest step taken by the US authorities as part of a long-running crackdown on price-fixing across FX markets, in which several lenders have already pleaded guilty to conspiring to manipulate currency prices.

Other banks have also faced huge fines for allowing their traders to club together to rig prices in FX markets. Last year, four banks – Barclays, Royal Bank of Scotland, Citigroup and JP Morgan Chase – pleaded guilty to conspiracy to rig the foreign exchange market and fines totalling $5.6 billion were handed down by the US Department of Justice.

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