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SA probes 11 foreign exchange traders on price fixing

Johannesburg - South Africa’s Competition Commission said it has started an investigation into 11 foreign currency trading organisations for price fixing, two years after authorities began a global probe into market rigging.

Those covered by the probe include BNP Paribas SA, Citigroup, Barclays Africa, JPMorgan Chase & Co, Investec, a unit of Standard Bank and Standard Chartered Bank, the Pretoria-based commission said in an e-mailed statement on Tuesday.

“The commission’s investigation is focusing on trade in currency pairs involving the South African rand,” it said. “The alleged collusion, the ‘ZAR domination,’ was carried out through electronic messaging platforms used for currency trading.”

The rand has dropped 43% against the dollar in the past three years. The commission said its probe follows investigations in other markets. Citigroup, JPMorgan, Barclays and Royal Bank of Scotland Group are about to plead guilty in the UK and each pay about $1bn (R11.91bn) in fines over allegations they manipulated currency markets, people with knowledge of the settlement talks have said.

‘We take it extremely seriously’

“We take such matters extremely seriously and will cooperate fully with the investigation,” Barclays Africa said in an e-mailed statement on Tuesday.

The investigation includes BNP Paribas South Africa, Citigroup Global Markets, Barclays Bank and JPMorgan South Africa, the commission said.

Kate Haywood, a spokesperson for JPMorgan in London, declined to comment. Spokespersons for Citigroup, Standard Bank, Standard Chartered and Investec said they couldn’t immediately comment.

“Conduct of this nature distorts the price of foreign exchange and artificially inflates the cost of trading in foreign currency paired with the South African rand,” Competition Commissioner Tembinkosi Bonakele said in the statement.

“Indications are that this conduct was prevalent offshore, but with this investigation we are sending a clear message that we will pursue cartels affecting South Africa wherever they take place.”

The traders have allegedly been directly or indirectly fixing prices in relation to bids, offers and bid-offer spreads in respect of spot, futures and forwards currency trades, the commission said.

After the rand slumped 37% against the dollar in 2001, South Africa began what was known as the rand commission to investigate any irregular trades.

While no such trades were found, investigators said that transactions arranged by Deutsche Bank AG led to an outflow of money from South Africa.

* With assistance from Paul Wallace in Lagos and Vernon Wessels, Neo Khanyile and Emily Bowers in Johannesburg.

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