Mega Banks Are Fined for Foreign Exchange Rigging – Now It’s Back To “Business as Usual”

Michael Krieger
Liberty Blitzkrieg: November 12, 2014

Far from chastening the world’s biggest currency trading firms, the multi-billion dollar fines levied by regulators on Wednesday are more likely to draw a line under the affair and gradually allow a return to business as usual.

A year into a wide-ranging industry probe into charges that banks routinely fleeced clients over currencies, industry observers and politicians were frustrated by a deal they said showed the affair will end just with fines rather than any reform of what they say is the Wild West of financial markets.

– From the Reuters article: Banks pay up and carry on after FX fines

[…]

Absolutely nothing will change despite mega banks once again being caught in extraordinarily unethical behavior. [Reuters] admits the mega banks are essentially allowed to self-regulate in this market and will continue to do so. […]

But in essence, Wednesday’s rulings put the foreign exchange market, long “self-regulated” by banks and people who provide services to banks, well on the way to seeing off any risk of a new era of overarching global regulation.

“It seems to be business as usual — banks blow up, pay fines, and we move on. They just seem to be inventing new ways to break the rules,” said Mark Garnier, a former City financier and Conservative member of the UK parliamentary committee charged with overseeing finance.

They have fallen over themselves to play ball with the regulators and, given the complicated technical and financial nature of the probe, lawyers and consultants employed by banks have done much of the actual investigative work.

“The banks have been allowed to investigate themselves,” one source familiar with the investigation told Reuters. “The investigated decide what they want to investigate, what they admit to, and how much they will pay.”

Meanwhile, Bloomberg (the media outlet) provided some snippets from the crooked traders’ chatrooms. Here are a few:

Traders worked together to “whack” the market, called themselves a “cartell” and congratulated each other for a job well done, according to transcripts released by regulators today.

“Ok, i got a lot of euros,” a currency trader at JPMorgan Chase & Co. said in an undated 3:51 p.m. message to his counterpart at Citigroup Inc. A minute later he says, “tell you what, lets double team it.”

In another excerpt, traders at Citigroup, JPMorgan, and UBS debate whether to invite a fourth into a private chat room. “Are we ok with keeping this as is .. ie the info lvls & risk sharing?” the UBS trader asks at 7:49 a.m.

A minute later the JPMorgan trader tries to ensure that the new member puts the interests of the group first. “You know him — will he tell rest of desk stuff — or god forbin his nyk…” referring to New York colleagues.

The Citigroup trader then chimes in, “yes — that’s really imp[ortant] q[uestion] — dont want other numpty’s in mkt to know,” according to the transcripts, which added the wording clarification.

“But not only that,” the trader added. “Is he gonna protect us like we protect each other against our own branches?”

You can’t make this stuff up.

No jail sentences, no reduction in criminality. This isn’t rocket science.

(read the full article at Liberty Blitzkrieg)