A few updates on the Forex settlement
Just a few more tidbits from the forex settlements announced yesterday.
Some more ideas from the WSJ coverage in their article, Citigroup, J.P. Morgan Take Brunt of Currencies Settlement.
Three agencies are still investigating: The Federal Reserve, Department of Justice, and NY Department of Financial Services. DoJ and DFS will probably have the big fines and sanctions.
Barclays will still need to work through their settlement with the UK FCA and US CFTC.
Total fines for the full range of banking fiascos are over $200B, according to the article.
Looks like a total of a dozen banks are involved, because that is how many have fired or suspended traders. Only six were sanctioned on Wednesday.
The article has a really cool version of the rather simple data table I used yesterday
A bit of other info –
The Swiss competition commission, called WEKO, has an open investigation.
For an explanation of why some of the Forex trading is considered illegal, check out Dan Davies article at Medium: Oranges, lemons and forex – How to understand the market-rigging scandal. He uses a story of five trips to the market to buy oranges for a customer. Those market trips illustrate transactions that start with a simple accounting or fairness issue and end with manipulating trades of other brokers to generate a profit.
First conclusion from the article is that forex is complicated. At the core is use of paying-with-information to generate enough profits to stay in business. I’m not sure but what the final paragraphs are saying that the illegal behavior is the fault of customers who want low trading commissions.