http://finance.yahoo.com/news/u-said-open-criminal-probe-150559200.html "The U.S. Justice Department has opened a criminal investigation of possible manipulation of the $5.3 trillion-a-day foreign exchange market, a person familiar with the matter said. The Federal Bureau of Investigation, which is also looking into alleged rigging of interest rates associated with the London interbank offered rate, or Libor, is in the early stages of its currency market probe, said the person, who asked not to be identified because the inquiry is confidential. The U.S. investigation comes as the U.K. Financial Conduct Authority said in June it was reviewing potential manipulation of exchange rates. That month, allegations that dealers at banks pooled information through instant messages and used client orders to move benchmark currency rates were reported by Bloomberg News. Regulators are probing the alleged abuse of financial benchmarks used in markets from oil to interest rate swaps by the firms that play a central role in setting them." What's so new about this? This is the OTC FX market, I thought this was well known?
-WSJ reports UK authorities focus on FX chat room with major participants. -UK_FCA began investigations into FX market conduct in June. -FCA found trader groups with monikers like The Cartel & The Dream Team. -Swiss/UK/US regulators looking into allegations of FX fix rigging. US Justice Dept making inquiries but leaving most work to Europe lol The Cartel and The Dream Team ... good stuff. Where is this chat...
Didn't they used to agree to fix certain markets back in the day in a parking lot on their smoke break ? Maybe they should go back to that instead of being dumb and leaving evidence on a computer.
Maybe but different markets may be different. As far as I know there are a few fixes in FX, but generally I thought it was mostly corps who actually used it for whatever reason. If say there was a large order to go through at the fix, say the WMR fix, this was generally easy money for the bank on the other side of the transaction running the order for them, especially as they pretty much know how the market is positioned. If that's what they mean by fix rigging, but I don't know. I used to hear big fix order rumors all the time in the news feed, most times is was nothing worth a damn. I was always suspicious of it once it gets to a news feed anyway.
Obviously all that talk about FX market being too large to be manipulated were never true... http://www.hedgeworld.com/open_news/read_newsletter_aa.cgi?section=dail&story=dail22767.html
"Many banks provide a service to their customers where they guarantee to trade at the WM/Reuters rates. It is useful for buy-side investors like large funds to value and benchmark their portfolios, because most main stock and bond index compilers use these rates for their calculations." There going after the inside job on currency interest rate manipulation and front running by the bank's traders. Apparently, multiple banks around the world are now implicated out of some source documents coming out of the RBC involving instant messages about deeds done. Bottom line is that they are going after the banks - not the Retail Forex FCM and Broker entities, where there is a litany of other types of price manipulation that takes place on a far too routine basis. Interbank is the largest OTC market by far at $5.3 trillion per day in total transactions. It is very hard to toss around that much cash each and every day without somebody trying to pinch-off a handful of it for themselves and their business partners. This is an International Investigation at this point. There are more Governmental Agencies involved than your typically bowl of alphabet soup will allow you to spell. In fact, you'd probably have to crack open two can's just to spell the U.S. based agencies. If the FBI is involved, then it is "criminal" and they probably will obtain enough evidence to get Grand Jury indictments in a Federal Court. This does not look like the typical - slap them on the hands and let them back out to play type of investigation. This one looks more serious. Let's hope that whatever shakes out, that the Forex side of the business (though this is just Interbank for now) is forced to comply with protocols that deliver true Price Transparency for the trader.
"the Forex" market is the interbank market, the banks. It was never illegal for bank dealers to front run client orders ( so I thought) and I don't think it always guaranteed them profit to do so either, as they are not the only players that matter, it's not like those guys don't lose money. Their job is to provide liquidity at any time willing to buy/sell. Front running orders would be slightly speculative on their part. There are old documentaries on this. $5.3 trillion a day isn't just spot FX dealing of course. It was always a case of who you were in that realm as far as the pricing you see. So that won't change unless it becomes a central exchange, but that isn't the case. This is about bank dealers pooling info together in chat rooms and using client orders to move benchmark currency rates and the alleged rigging of interest rates associated with the LIBOR rate. So this may be a bit different.
But it is still true. Yes it is possible to move the Forex market in the very short term, and central banks have the power to do that (Bank of Japan intervention anyone?) but in the long term it is impossible, it's like trying to make the Pacific ocean saltier by pissing in it. After all, we are talking about trillions of dollars here.
Investigation goes global... http://www.hedgeworld.com/open_news/read_newsletter_aa.cgi?section=dail&story=dail22777.html