FX Rigging Probe Re-Emerges in South Africa as Regulator Seeks Fines

Banks including Citigroup, Nomura and Standard Bank are to pay fines equal to 10 percent of their annual revenues.

South Africa is stepping up its forex rigging probe, more than two years after Western financial watchdogs issued multi-billion dollar fines to global banks. The SA Competition Commission today said it concluded an investigation into whether banks took part in a cartel to rig currency quotes for customers who were buying or selling its local currency.

Banks including Citigroup, Nomura and Standard Bank, among others, are to pay fines equal to 10 percent of their annual revenues, the regulator recommends. The move signals that South Africa’s watchdog may be gearing up to open settlement although it did not indicate whether the fines will be imposed on the global revenues of each bank or just to their domestic arms. Either way, the figure is expected to be a starting point in settlement discussions, with some banks to be asked for more and some less.

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Following a string of similar lawsuits in the US and UK, the Competition Commission believes the banks in question acted in concert to manipulate either prices for bids, offers or spreads for spot trades involving the rand and the US dollar.

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The central bank comments

While the filing didn’t provide details of the investigation, which was launched back in April 2015, the commission said that Competition Tribunal prosecutors will be looking into whether banks conspired to fix prices quoted to clients for buying and selling currencies, known as a bid-ask spread. After holding hearings on anti-trust claims, the tribunal will make a finding. Upon sentencing, banks affected can appeal to South Africa’s Competition Appeal Court.

The Commission added that the cases will be brought under anti-trust rules, which effectively limit the class action to South African claimants.

A further eleven banks have been involved in the case. The list includes Investec, JP Morgan, BNP Paribas, Credit Suisse Group, Commerzbank AG, Standard New York Securities Inc, Macquarie Bank, Bank of America Merrill Lynch , ANZ Banking Group Ltd, Standard Chartered Plc and Barclays Africa (Absa), part of the Barclays Plc.

The South African Reserve Bank (SARB) commented on the development: “The SARB will allow the legal processes now initiated to run their course, and will continue to monitor developments closely to inform any action that we may need to embark upon in accordance with our mandate and jurisdiction.”

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