Johannesburg – Rogue traders implicated in a currency collusion case have been named in an affidavit filed by the Competition Commission.
On Wednesday the commission referred the case to the Competition Tribunal for prosecution against 17 banks. These include three local banks: Absa, Standard Bank and Investec.
The complaint was initiated on April 1 2015 and amended on August 31 2016 to include more banks, said Mfundo Ngobese, who submitted the application on behalf of the commission’s cartel division.
The implicated banks used Bloomberg chatrooms to enter into arrangements to fix prices of the USD/ZAR exchange and divide the market by allocating customers, said Ngobese.
The collusion was initiated as far back as 2007 and was conducted using the Reuters trading platform. The trades were conducted by traders operating predominantly in the US and SA, according to the affidavit.
READ: Competition Commission prosecutes banks for collusion
The affidavit details how the price fixing was conducted and which banks were involved as well as their representatives.
Agreements to fix bids
This was conducted from 2007 and involves Absa’s Duncan Howes. In 2015, Howes, a foreign exchange trader for Barclays Africa Group, was suspended. Reasons were not disclosed to Bloomberg which reported it.
Others implicated include Clint Fenton from Investec.
Investec on Friday said the case against it is confined to the conduct of a single trader.
"The bank intends to seek further information from the Competition Commission with respect to the specifics of the charges in order to continue to co-operate with them in this regard."
BNP Paribas, Citibank and JP Morgan were also involved. According to Ngobese, fictitious bids and offers were posted on the trading platform which was designed to prompt upward and downward movements on bids and offers.
Absa and Investec were also involved in price fixes for bids and offers quoted to customers, according to the affidavit.
The banks shared information on customers including their identities, positions, and whether customers were splitting orders. A customer splits an order by dividing one big order into many small orders between different dealers, the affidavit explained.
Sharing this information enabled banks to coordinate and fix quotations for these customers, said Ngobese.
Other banks involved include Bank of America, BNP Paribus, Citibank, Standard Chartered, Credit Suisse, HSBC and ANZ.
Agreements to fix bid-offer spreads
Absa’s Howes, director at Absa Capital John Daly, Elaine Naidoo, Premal Bhana and Thulani Kunene were allegedly involved in fixing bid-offer spreads. Standard Bank’s Bryn Brownrigg was also named.
In the normal course of trading, traders determine their prices of bid-offer spreads independently of each other. They should not discuss and agree among themselves about how much bid-offer spreads to charge to customers, doing so amounts to price fixing, according to the affidavit.
BNP Paribas, Citibank, Standard New York, Nomura, Macquarie Bank, Australia and New Zealand Banking Group and JP Morgan were among the other banks involved.
Agreements to coordinate trading
From 2010 Bank of America, BNP Paribus, Citibank, Standard Chartered, JP Morgan, HSBC , Credit Suisse as well as Absa and Investec “manipulated” prices of bids by arranging to trade at particular times.
Currency traders should trade in competition with each other without taking any turns and pulling or holding trading activities, explained Ngobese. They should not withhold trading to benefit their fellow traders.
ALSO READ: How banks allegedly colluded on currency trades
Banks involved here include BNP Paribus, Barclays, Citibank, JP Morgan. Standard Chartered, Credit Suisse and Bank of America.
The commission is seeking an order declaring that 14 of the banks - Bank of America Merrill Lynch, BNP Paribas, JP Morgan Chase & Co, JP Morgan Chase Bank, Investec, Standard New York Securities, HSBC Bank, Standard Chartered Bank, Credit Suisse Group; Standard Bank of South Africa, Commerzbank; Australia and New Zealand Banking Group, Nomura International and Macquarie Bank - are liable for the payment of an administrative penalty equal to 10% of their annual turnover.Read Fin24's top stories trending on Twitter: