Forex scandal

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The forex scandal (also known as the forex probe) is a 2013 financial scandal that involves the revelation, and subsequent investigation, that banks colluded for at least a decade to manipulate exchange rates on the forex market for their own financial gain. Market regulators in Asia, Switzerland, the United Kingdom, and the United States began to investigate the $4.7 trillion per day foreign exchange market (forex) after Bloomberg News reported in June 2013 that currency dealers said they had been front-running client orders and rigging the foreign exchange benchmark WM/Reuters rates by colluding with counterparts and pushing through trades before and during the 60-second windows when the benchmark rates are set. The behavior occurred daily in the spot foreign-exchange market and went on for at least a decade according to currency traders.[1]


The foreign exchange market (forex) has been largely unregulated, because regulators considered it "too big to be manipulated".[2]


Secret trading chatrooms

Don't want other numpty's in mkt to know [about information exchanged within the group], but not only that is he gonna protect us like we protect each other ...

 —Citibank trader, on a prospective new member to the cartel chatroom[3][4]

At the center of the investigation were the transcripts of electronic chatrooms in which senior currency traders discussed with their competitors at other banks the types and volume of the trades they planned to place. The chatrooms had names such as "The Cartel", "The Bandits’ Club", "One Team, One Dream" and "The Mafia".[5][6][7] The discussions in the chatrooms were interspersed with jokes about manipulating the forex market and repeated references to alcohol, drugs, and women.[8] Regulators were particularly focusing in on one small exclusive chatroom which was variously called The Cartel or The Mafia. The chatroom was used by some of the most influential traders in London and membership in the chatroom was highly sought after. Among The Cartel's members were Richard Usher, a former Royal Bank of Scotland (RBS) senior trader who went to JPMorgan as head of spot foreign exchange trading in 2010, Rohan Ramchandani, Citigroup’s head of European spot trading, Matt Gardiner, who joined Standard Chartered after working at UBS and Barclays, and Chris Ashton, head of voice spot trading at Barclays. Two of these senior traders, Richard Usher and Rohan Ramchandani, were members of the 13-member Bank of England Joint Standing Committee's chief dealers group.[9]

At least 15 banks including Barclays, HSBC, and Goldman Sachs disclosed investigations by regulators. Barclays, Citigroup, and JPMorgan Chase all suspended or placed on leave senior currency traders. Deutsche Bank, continental Europe’s largest lender, was also cooperating with requests for information from regulators.[9][10] Barclays, Citigroup, Deutsche Bank, HSBC, JPMorgan Chase, Lloyds, RBS, Standard Chartered, UBS and the Bank of England as of June 2014 had suspended, placed on leave, or fired some 40 forex employees.[7][11][12][13] Citigroup had also fired its head of European spot foreign exchange trading, Rohan Ramchandani.[14] Reuters reported hundreds of traders around the world could be implicated in the scandal.[15]


As of December 2014, the monetary losses caused by manipulation of the forex market were estimated to represent as much as $11.5 billion per year for Britain’s 20.7 million pension holders (£7.5B/year).[16] The manipulations affected parties all around the world, for over a decade. The manipulations' overall estimated cost is not yet fully known, but the extent of fines and damages sought are an indication.


Fines imposed by UK, US, and Swiss authorities in Forex Scandal (US$ millions)[17]
Bank CFTC[18] DFS DOJ[19] FCA[20] Fed[21] FINMA[22] OCC[23] Total
BofA 205 250 455
Barclays[24][25][26] 400 635 650 441 342 2,468
Citibank 310 925 358 342 350 2,285
HSBC 275 343 618
JPMorgan 310 550 352 342 350 1,904
RBS 290 395 344 274 1,303
UBS 290 371 342 145 1,148
Total 1,875 635 2,520 2,209 1,847 145 950 10,181

On 12 November 2014, the United Kingdom's Financial Conduct Authority (FCA) imposed fines totaling $1.7 billion on five banks for failing to control business practices in their G10 spot foreign exchange trading operations, specifically: Citibank $358 million, HSBC $343 million, JPMorgan $352 million, RBS $344 million and UBS $371 million. The FCA determined that between 1 January 2008 and 15 October 2013 the five banks failed to manage risks around client confidentiality, conflict of interest, and trading conduct. The banks used confidential customer order information to collude with other banks to manipulate the G10 foreign exchange currency rates and profit illegally at the expense of their customers and the market.[20] On the same day the United States Commodity Futures Trading Commission (CFTC) in coordination with the FCA imposed collective fines of $1.4 billion against the same five banks for attempted manipulation of, and for aiding and abetting other banks’ attempts to manipulate, global foreign exchange benchmark rates to benefit the positions of certain traders. The CFTC specifically fined: $310 million each for Citibank and JPMorgan, $290 million each for RBS and UBS, and $275 million for HSBC.[27]

The CFTC found that currency traders at the five banks coordinated their trading with traders at other banks in order to manipulate the foreign exchange benchmark rates, including the 16:00 WM/Reuters rates. Currency traders at the banks used private chatrooms to communicate and plan their attempts to manipulate the foreign exchange benchmark rates. In these chatrooms, traders at the banks disclosed confidential customer order information and trading positions, changed trading positions to accommodate the interests of the collective group, and agreed on trading strategies as part of an effort by the group to manipulate different foreign exchange benchmark rates. These chatrooms were often exclusive and invitation only.[27]

On 20 May 2015, the five banks pleaded guilty to felony charges by the United States Department of Justice and agreed to pay fines totaling more than $5.7 billion. Four of the banks, including Barclays, Citigroup, JP Morgan, and Royal Bank of Scotland pleaded guilty to manipulation of the foreign markets; while the others had already been fined in settlements from the November 2014 investigation, Barclays had not been involved and was fined $2.4 billion. UBS also pleaded guilty to committing wire fraud and agreed to a $203 million fine. A sixth bank, Bank of America, while not found guilty, agreed to a fine of $204 million for unsafe practices in foreign markets.[28][29]

On 18 November 2015 Barclays was fined an additional $150m for automated electronic foreign exchange misconduct.[26]

Criminal proceedings[edit]

On 19 December 2014 the first and only known arrest was made in relation to the scandal. The arrest of a former RBS trader took place in Billericay, Essex, and was conducted by the City of London Police and the Serious Fraud Office.[30]

Several traders have been incarcerated for market manipulation in recent years. The longest conviction was that of Tom Hayes; Hayes, a British citizen and ex-UBS trader, received a 14-year sentence in 2015.[31]


As of November 2014, respective authorities announced remediation programmes aimed at repairing trust in their banking systems and the wider foreign exchange market place. In the United Kingdom, the FCA has stated that the changes to be made at each firm will depend on a number of factors, including the size of the firm, its market share, impact, remedial work already undertaken, and the role the firm plays in the market.[20] The remediation programme was to require firms to review their IT systems in relation to their spot FX business, as the banks relied on legacy technologies that allow for the existence of dark-data silos within which manipulation is able to occur unnoticed by compliance systems.[32]

In Switzerland, the Swiss Financial Market Supervisory Authority announced in December 2014, that for a period of two years UBS would be limited to a maximum annual variable compensation to 200% of the basic salary for foreign exchange and precious metals employees globally. UBS was instructed to automate at least 95% of its global foreign exchange trading, while effective measures must be taken to manage conflicts of interest with a particular focus on organisational separation of client and proprietary trading.[33]

As of May 2015, the window in which the daily 4pm fix is calculated was extended to five minutes as recommended by the Financial Stability Board, a watchdog advising the G20 finance ministers and the Bank for International Settlements tried to get banks to agree a unified code of conduct.[2]

See also[edit]


  1. ^ Vaughan, Liam; Finch, Gavin & Choudhury, Ambereen (12 June 2013). "Traders Said to Rig Currency Rates to Profit Off Clients". Bloomberg News. Retrieved 21 January 2014.
  2. ^ a b "How the forex scandal happened". BBC News. 20 May 2015. Retrieved 5 March 2022.
  3. ^ McCoy, Kevin (12 November 2014). "Forex traders plotted strategy in secret chats". USA Today. Retrieved 13 November 2014.
  4. ^ "FCA Final Notice 2014: JPMorgan Chase Bank N.A." Financial Conduct Authority. Retrieved 13 November 2014.
  5. ^ Vaughan, Liam; Finch, Gavin & Ivry, Bob (19 December 2013). "Secret Currency Traders' Club Devised Biggest Market's Rates". Bloomberg News. Retrieved 3 February 2014.
  6. ^ Martin, Katie & Enrich, David (19 December 2013). "Forex Traders Said to Have Colluded in Effort to Profit". Wall Street Journal. Retrieved 3 February 2014.
  7. ^ a b "Forex Chatrooms Show Traders Shared Order, Price Details: Report". NDTV Profit. Reuters. 19 June 2014. Retrieved 1 July 2014.
  8. ^ Enrich, David & Martin, Katie (1 November 2013). "Currency Probe Widens as Major Banks Suspend Traders". Wall Street Journal. Retrieved 3 February 2014.
  9. ^ a b Schäfer, Daniel; Ross, Alice & Strauss, Delphine (12 November 2013). "Foreign exchange: The big fix". Financial Times. Retrieved 3 February 2014.
  10. ^ Sebag, Gaspard & White, Aoife (19 December 2013). "Banks Said to Snitch on FX Rivals in Race to Avoid Fines". Bloomberg News. Retrieved 21 January 2014.
  11. ^ Ross, Alice; Schäfer, Daniel & Chon, Gina (15 January 2014). "Deutsche Bank suspends traders amid global forex probe". Financial Times. Retrieved 3 February 2014.
  12. ^ Comfort, Nicholas & Matussek, Karin (30 January 2014). "Deutsche Bank Said to Suspend Moraiz in Currency Probe". Bloomberg News. Retrieved 3 February 2014.
  13. ^ Schäfer, Daniel; Jenkins, Patrick; Mackenzie, Mike; Scannell, Kara; Barker, Alex; Hall, Camilla; Binham, Caroline & Strauss, Delphine (16 February 2014). "Forex in the spotlight". Financial Times. Retrieved 18 February 2014.
  14. ^ Bases, Daniel (10 January 2014). "Citi's European spot forex head trader Ramchandani out amid probe". Reuters. Retrieved 3 February 2014.
  15. ^ McGeever, Jamie (15 January 2014). "Deutsche Bank, Citi feel the heat of widening FX investigation". Reuters. Retrieved 28 July 2016.
  16. ^ Mathiason, Nick (4 December 2014). "New banking scandal could cost savers billions". London: The Bureau of Investigative Journalism.
  17. ^ "Five Banks To Plead Guilty To Global Currency Manipulation". Retrieved 8 June 2015.
  18. ^ "CFTC Orders Five Banks to Pay over $1.4 Billion in Penalties for Attempted Manipulation of Foreign Exchange Benchmark Rates" (Press release). Commodity Futures Trading Commission. 12 November 2014. PR7056-14. Archived from the original on 13 November 2014. Retrieved 9 June 2020.
  19. ^ "Five Major Banks Agree to Parent-Level Guilty Pleas".
  20. ^ a b c "FCA fines five banks £1.1 billion for FX failings and announces industry-wide remediation programme" (Press release). Financial Conduct Authority. 12 November 2014.
  21. ^ "Federal Reserve announces fines totaling more than $1.8 billion against six major banking organizations for their unsafe and unsound practices in the foreign exchange (FX) markets".
  22. ^, Matthew. "UBS bears brunt of forex rigging fines - SWI". Retrieved 8 June 2015.
  23. ^ "OCC Fines Three Banks $950 Million for FX Trading Improprieties". 12 November 2014. Retrieved 14 April 2018.
  24. ^ "NYDFS Announces Barclays To Pay $2.4 Billion, Terminate Employees For Conspiring To Manipulate Spot FX Trading Market" (Press release). New York State Department of Financial Services. 20 May 2015. 1505201. Archived from the original on 24 May 2015. Retrieved 9 June 2020.
  25. ^ "FCA fines Barclays £284,432,000 for forex failings". 20 May 2015.
  26. ^ a b "NYDFS Announces Barclays to Pay Additional $150 Million Penalty" (Press release). New York State Department of Financial Services. 18 November 2015. 1511181. Archived from the original on 18 March 2016. Retrieved 9 June 2020.
  27. ^ a b "CFTC Orders Five Banks to Pay over $1.4 Billion in Penalties for Attempted Manipulation of Foreign Exchange Benchmark Rates". Commodities Futures trading Commission. 12 November 2014. Retrieved 13 November 2014.
  28. ^ Freifeld, Karen; Slater, Steve & Bart, Katharina (20 May 2015). "Major banks admit guilt in forex probe, fined $6 billion". Reuters. Retrieved 20 May 2015.
  29. ^ "Record fines for currency market fix". BBC. 20 May 2015. Retrieved 20 May 2015.
  30. ^ "First arrest made in foreign exchange market rigging investigation". The Guardian. 19 December 2014. Retrieved 3 August 2021.
  31. ^ Economist, The (4 August 2015). "Sentenced to 14 years' hard LIBOR". The Economist. Retrieved 26 December 2015.
  32. ^ Howes, Gary (14 November 2014). "Exchange Rate Rigging Allowed to Thrive in 'Dark Data' Blindspots". Pound Sterling Live. Retrieved 22 December 2014.
  33. ^ "FINMA sanctions foreign exchange manipulation at UBS". Swiss Financial Market Supervisory Authority. 11 December 2014. Archived from the original on 15 November 2014. Retrieved 22 November 2014.

External links[edit]

Bank of America