Is forex market controlled by someone? - page 15
You are missing trading opportunities:
- Free trading apps
- Over 8,000 signals for copying
- Economic news for exploring financial markets
Registration
Log in
You agree to website policy and terms of use
If you do not have an account, please register
Bank of England's Carney faces grilling over foreign exchange scandal
Mark Carney faces probably his toughest questioning so far as Bank of England governor next week when lawmakers will seize on a foreign exchange scandal to press their demands for tighter oversight of the central bank.
Carney arrived from Canada last July as an outsider with a mandate to shake up the 320 year-old institution, from monetary policy to its relationship with the powerful banks of the City of London.
A group of influential members of parliament wants Carney to change the way the BoE polices itself too.
Their long-standing frustrations with what they say is the Bank's outdated governance system broke out again last week when the BoE suspended an official amid an internal review into whether Bank staff turned a blind eye to possible manipulation of key rates by foreign exchange traders.
The meetings at which the BoE and traders discussed possible problems in the market took place as far back as 2006, seven years before Carney's arrival in London.
But lawmakers are angry that the Bank's Court of Directors - its governing board - only asked its oversight committee to investigate last week. Carney may also be asked to show how quickly he responded to the first signs of the case last year.
Mark Garnier, a member of the Treasury Committee which will hear Carney on Tuesday, said any perceptions that the BoE was not tough enough on tackling problems could damage London's reputation as a financial centre, potentially weakening Britain's hand in European Union talks over financial reforms.
"We will be asking the governor what steps he is taking to bring management arrangements and committee structure up to the standards of the 21st century," Andrew Love, another member of the Treasury Committee, said.
Former finance minister Alistair Darling said in 2011 that the governance arrangements were antiquated. "It is all to do with the governor being some sort of Sun King around which the Court revolves," he said.
read more
TIMELINE-The FX "fixing" scandal
Bank of England (BoE) governor Mark Carney faces a grilling from UK lawmakers on Tuesday about what Bank officials knew about allegations that currency traders colluded to manipulate key exchange rates.
The unfolding scandal has so far seen more than 20 traders placed on leave, suspended or fired by some of the world's biggest banks.
Below is a timeline on the scandal that has engulfed the largely unregulated $5.3 trillion-a-day foreign exchange market, the world's biggest financial market and which is now subject to a global investigation.
July 2006: Minutes of a meeting of the BoE's FX Joint Standing Committee's chief dealers sub-group say the group, chaired by BoE chief dealer Martin Mallett, discussed "evidence of attempts to move the market around popular fixing times by players that had no particular interest in that fix. It was noted that 'fixing business' generally was becoming increasingly fraught due to this behaviour."
Spring 2008: The Federal Reserve Bank of New York makes enquiries into concerns surrounding benchmark Libor interest rates, sharing its analysis and suggestions for reforms with "the relevant authorities in the UK."
May 2008: Minutes of a meeting of the BoE's FX Joint Standing Committee's chief dealers sub-group say there was "considerable discussion" on the benchmark "fixings" again.
July 2008: A meeting of the BoE's FX Joint Standing Committee's chief dealers sub-group discusses the suggestion "that using a snapshot of the market may be problematic, as it could be subject to manipulation," BoE minutes say.
April 2012: As the Libor scandal reaches its zenith, the regular chief FX dealers' meeting included a "brief discussion on extra levels of compliance that many bank trading desks were subject to when managing client risks around the main set piece benchmark fixings," BoE minutes say.
June 2013: Bloomberg News reports dealers used electronic chatrooms to share client order information to manipulate benchmark exchange rates at the 4:00 p.m. London "fixing".
July 2013: A scheduled chief dealers' meeting for 4 July never takes place.
Sept. 2013: Swiss bank UBS provides the U.S. Department of Justice with information on FX allegations in the hope of gaining antitrust immunity if charged with wrongdoing.
Oct 2013: The investigation goes global. The DOJ, Britain's Financial Conduct Authority and Bank of England, and Switzerland's market regulator all open probes. The Hong Kong Monetary Authority says it is cooperating.
Dec 2013: Several banks, including JP Morgan Chase, Goldman Sachs and Deutsche Bank ban traders from multi-dealer electronic chatrooms.
Jan 2014: U.S. regulators visit Citi's main offices in London. Citi fires chief dealer Rohan Ramchandani, a member of the BoE-chaired chief dealers' sub-group and the first trader in the unfolding scandal to be sacked.
Feb 4, 2014: Martin Wheatley, chief executive the FCA, Britain's market regulator, says the FX allegations are "every bit as bad" as those in Libor. He also says the FCA's investigation will probably run into next year.
Feb 5, 2014: New York's banking regulator opens its investigation.
Feb 14, 2014: The Financial Stability Board, the world's top financial regulator which coordinates policy for the G20, says it will review FX fixings.
March 5, 2014: The Bank of England suspends an employee as part of its internal investigation.
source
Bank of America back in court over $2.1 billion fraud penalties
A U.S. judge wrestled on Thursday with a U.S. Justice Department request that Bank of America Corp pay $2.1 billion in penalties after being found liable for fraud over defective mortgages sold by its Countrywide unit.
In a second hearing on the penalties to be imposed on the bank, U.S. District Judge Jed Rakoff in New York said he had not yet decided how to rule in what was one of the few cases to go to trial stemming from the financial crisis.
But he tested the government's arguments that it should be awarded penalties based on revenue Countrywide Financial Corp earned selling loans to government-sponsored mortgage finance companies Fannie Mae and Freddie Mac.
Rakoff even asked why the government had not sought even more in penalties, based on the $4.8 billion paid by Fannie and Freddie, rather than seeking just $2.1 billion based on revenue earned only on the defective portion of the loans sold by Countrywide.
"I'm interested in the logic," Rakoff said. "It may be there is logic to the $2.1 billion, but at least to me there is logic under your theory of the case that would lead you to claim a gross gain of $5 billion."
Assistant U.S. Attorney Pierre Armand, meanwhile, suggested the government would increase its request for penalties from Rebecca Mairone, a former Countrywide executive, from $1.1 million to $1.6 million based on a $487,000 bonus she recently earned from her employer, JPMorgan Chase & Co.
The hearing followed a verdict by a federal jury in New York in October finding Bank of America and Mairone each liable for fraud in a civil lawsuit centered on a mortgage lending process at Countrywide called the "High Speed Swim Lane," also called "HSSL" or "Hustle."
Countrywide, which became a poster child for the U.S. mortgage meltdown, was acquired by Bank of America in July 2008.
The Justice Department contends that the Countrywide program, which began in 2007 and which the government says Mairone oversaw, emphasized quantity rather than the quality of loans produced, paying employees based on volume and speed and eliminating loan-quality checkpoints.
read more
U.S. regulator sues 16 banks for rigging key interest rate
The Federal Deposit Insurance Corporation sued 16 of the world's largest banks on Friday, accusing them of colluding to suppress interest rates.
The lawsuit, filed in the federal district court in New York, was the latest to accuse financial institutions of conspiring to manipulate Libor, or the London Interbank Offered Rate.
The FDIC said the defendants' conduct caused substantial losses to 38 banks that the U.S. regulator had taken into receivership since 2008, including Washington Mutual Bank and IndyMac Bank.
"The closed banks' losses flowed directly from, among other things, the harm to competition caused by the fraud and collusion alleged in the complaint," the FDIC said in the lawsuit.
The banks named as defendants include Bank of America Corp, Barclays PLC, Citigroup Inc, Credit Suisse Group AG, Deutsche Bank AG, HSBC Holdings PLC, JPMorgan Chase & Co, the Royal Bank of Scotland Group PLC and UBS AG.
The lawsuit also named the British Bankers' Association, the U.K. trade organization that during the period at issue administered Libor.
Greg Hernandez, a spokesman for the FDIC, declined comment. Representatives for the some of the banks either declined comment or did not immediately respond to requests for comment.
Regulators in the United States, Europe and Asia have been probing many banks for manipulating Libor and other rate benchmarks.
Libor, which is the average rate that a panel of banks say they can borrow unsecured funds, has become a key rate globally, underpinning more than $550 trillion in financial products, from home loans to derivatives.
The Libor and related Euribor investigations have so far seen U.S. and European regulators fine 10 banks and brokerages for $6 billion and bring charges against 13 individuals.
The FDIC lawsuit joins an array of civil actions filed in the wake of the scandal.
The complaint asserts claims against the banks including breach of contract, unjust enrichment, fraud, conspiracy and negligent misrepresentation.
It seeks unspecified damages in order to recover for losses sustained by the closed banks that the regulator seized.
Other defendants in the lawsuit include Rabobank, Lloyds Banking Group plc, Societe Generale, Norinchukin Bank, Royal Bank of Canada, Bank of Tokyo-Mitsubishi UFJ and WestLB AG.
The case is Federal Deposit Insurance Corporation, et al, v. Bank of America Corp, et al, U.S. District Court, Southern District of New York, No. 14-1757.
source
Bank of Canada Examines Loonie Fixings
The Bank of Canada said in an internal report that it’s examining the way its own reference rate for the Canadian dollar is set as pressure builds globally to prevent alleged manipulation of benchmark currency rates.
The methodology used to set most currency benchmarks, including the noon rate for the Canadian dollar, leaves foreign-exchange markets open to manipulation, according to documents obtained by Bloomberg News under the nation’s Access to Information law. The Bank of Canada said it views possible collusion between dealers as a “serious concern” and has produced at least three studies on its own reference rates since the allegations involving London-based traders were first reported by Bloomberg News in June.
A dozen authorities on three continents are investigating claims of manipulation as policy makers and the private sector look for ways to reform currency benchmarks. The Bank of England suspended one employee last week and Governor Mark Carney was questioned by lawmakers after documents showed concerns over manipulation were raised as early as 2006.
“If banks are colluding with information about their overall fix positions then this is a serious concern,” said an Oct. 25, 2013, Bank of Canada report titled “Reform of Financial Reference Rates and Potential Implications for FX Benchmarks.”
Under a section called “Scope for Manipulation,” the report notes the procedures used to set most currency benchmarks are susceptible to manipulation. The most recent report was dated Jan. 10.
read more
All central banks seem to be using illegal means to control the currency. That is why their bosses are getting payed so good : because they are master thieves and they know exactly what will it cause in the poor to rich relation (after all what information can they sell)
o there are not any regulatory body to control Forex. We can trade in Forex independently and if you are broker then you can participate in Forex through your clients.
Chatroom evidence questions BoE role in FX probe: sources
British regulators are examining evidence relating to a 2012 meeting of currency dealers and Bank of England officials which potentially challenges the central bank's assertion it had not condoned sharing details of client orders.
The practice of sharing details about such orders is at the centre of a global rigging probe.
Transcripts of a foreign exchange chatroom, now in the hands of Britain's Financial Conduct Authority, reveal for the first time that an un-named senior dealer who attended the meeting told fellow traders the next day that Bank officials had agreed there were advantages to sharing client order information to minimise market volatility around daily reference rates known as "fixings", two sources familiar with their content told Reuters.
By sharing information during these fixings, traders are able to match trades and minimise price swings, thereby lessening the risk they take on big transactions.
These and other transcripts are now part of the formal investigation by the FCA into allegations of collusion and manipulation of the $5.3 trillion a day global foreign exchange market. Reuters was unable to view the precise words of the senior trader because the transcripts are confidential.
The chatroom transcript, dated April 24, 2012, could now become a central piece of evidence in the probe as it is one of the few pieces of written material from the time of the April 23 meeting in London to have so far come to light.
At stake is whether the Bank of England, in its role as the official monitor of London currency markets that command some 40 percent of the global market, was aware of and condoned activity among market-making banks that is now alleged to have amounted to collusion and manipulation.
A Bank of England spokeswoman said the Bank's oversight committee is conducting an investigation into whether any Bank official was involved in the sharing of confidential client information or aware of the sharing of such information between FX market participants, and therefore it would not be appropriate to comment. The FCA also declined to comment.
read more
Credit Suisse to Pay $885 Million to Settle FHFA Lawsuits
Credit Suisse Group AG (CSGN), Switzerland’s second-biggest bank, agreed to pay $885 million to settle lawsuits by the Federal Housing Finance Agency over mortgages sold to Fannie Mae and Freddie Mac.
The company will book a charge of 275 million francs ($312 million) after taxes in the fourth quarter of 2013, resulting in a restatement of results to a net loss of 8 million francs for the period, the Zurich-based bank said yesterday.
Credit Suisse was among 18 lenders sued by the FHFA in 2011 to recoup losses on about $200 billion in mortgage-backed securities sold to the two government-sponsored companies before the financial crisis. Nine companies, including JPMorgan Chase & Co., Deutsche Bank AG and UBS AG (UBSN), have agreed to pay more than $9.2 billion to settle similar lawsuits by FHFA.
“It’s definitely good for Credit Suisse to have this thing out of the way,” said Guido Hoymann, a Frankfurt-based analyst with Bankhaus Metzler.
Chief Executive Officer Brady Dougan in February called mortgage-related litigation one of the bank’s two most important legal issues alongside the U.S. investigation into whether it helped Americans evade taxes. The company sai
The settlement relates to about $16.6 billion of residential mortgage-backed securities sold to Fannie Mae and Freddie Mac between 2005 and 2007, the bank said. Credit Suisse will pay about $651 million to Freddie Mac and about $234 million to Fannie Mae, according to the FHFA.
read more
Thomson Reuters tightens currency trading rules
Thomson Reuters Corp is proposing changes to its foreign exchange trading rules and implementing controls it hopes will minimise the scope for market manipulation and abuse, the company said on Tuesday.
Foreign exchange, the largest and one of the least regulated markets in the world, has for the past six months been the subject of investigations by regulators around the world into allegations of price-rigging and collusion between traders.
Thomson Reuters is one of the two dominant global currency trading platforms along with ICAP Plc-owned EBS.
After 12 months of consultation with market participants, Thomson Reuters is proposing changes to its Rule Book, a code of conduct designed to foster higher trading standards "through a combination of platform controls and behavioural rules", Phil Weisberg, global head of FX at Thomson Reuters, said.
There will be a six-week window for feedback before publication in the summer, a Thomson Reuters spokesman said.
The proposals include more clearly defined guidelines making it easier to execute orders and promoting closer surveillance and reporting of client trading activity.
"By raising the bar on expected trading behaviour, the rules aim to discourage abuse, manipulation or disorderly conduct, as well as behaviours that do not enhance liquidity for the market as a whole," Thomson Reuters said in a statement.
The consultations with market participants began six months before regulators including Britain's Financial Conduct Authority and the U.S. Department of Justice formally opened their probes into allegations of wrongdoing.
At the centre of the investigations are allegations that senior traders shared market-sensitive information relevant for the London fix, which is set at 4 p.m. London time, using actual trades.
London is the hub of the global currency market, accounting for some 40 percent of the $5.3 trillion traded on an average day.
The key benchmark, known as the WM/Reuters fix, relates to several exchange rates including the euro, sterling, Swiss franc and yen. These are compiled using data from Thomson Reuters and other providers, and are calculated by WM Company, a unit of State Street Corp, and are important because they are used as reference rates for trillions of dollars worth of investments, trade and corporate deals around the world.
WM Company is the administrator for the WM/Reuters Service. Through an agreement, Thomson Reuters is a primary source of rates to WM, to which WM applies its methodology and calculates the benchmark. Thomson Reuters is one of the various distributors of the rate.
source