Banks Face Huge Rigging Claims after US Payouts

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Top Headlines

Banks Face Huge Rigging Claims after US Payouts – The Times (subscription)
The High Court will become the battleground for billions of pounds in new rigging claims against some of the world’s biggest banks after lawyers in the United States won $2.1 billion in settlements for manipulation of the global currency market.

BNP Paribas to Pay $115 Million to Settle FX-Rigging Lawsuit-source – Reuters
BNP Paribas has agreed to pay $115 million to settle investor claims of price-rigging in the foreign exchange market, a source familiar with the matter says.

FX Scandal’s Lessons for Asset Owners – Pensions & Investments
The foreign exchange manipulation scandal involving major global banks demonstrates that at their core, currency conversions are not merely operational processes. They are significant drivers of value that must be carefully managed. Pension boards and investment managers should undertake to ensure their FX spot execution practices are designed to preserve and protect this value.

Individuals to Come Under Fire in FX Cases within a Year – FX Week (subscription)
The prison sentence handed down at the beginning of July to an individual trader for rigging the Libor benchmark has bolstered FX investigators’ confidence in successfully convicting traders for market manipulation.

Interest Rate Trading on SEFs Increases, FX and Credit Down – Profit & Loss
Interest rate trading activity on Swap Execution Facilities (SEFs) increased in May, while credit and FX volumes declined, according to data from the Futures Industry Association.

 

Regulatory News

A Green Light Doesn’t Mean Go for Swaps Clearing – Financial News (subscription)
Just because 20 of the world’s most powerful people want something to happen does not mean it will happen.

Esma Seeks Power to Ban Directors and Levy Supersize Fines – Financial News (subscription)
Europe’s top markets regulator is asking for sweeping new powers, including the ability to make spot checks on finance firms without approval from a judge, levy fines 10 times bigger than at present, and ban people from the boards of the firms it directly regulates.

EBA Proposes Trade-By-Trade CVA Test for Non-EU Corporates – Risk Magazine (subscription)
European dealers are split on a proposal that may require them to assess on a trade-by-trade basis whether to apply the credit valuation adjustment (CVA) capital charge to non-EU corporate customers. Currently, some banks are applying it more broadly than others, which is driving up the prices they charge their customers by as much as 500% according to one corporate treasurer’s estimate.

British Trader Charged in ‘Flash Crash’ Released After Bail Reduction – New York Times
Navinder Singh Sarao, the British futures trader charged by United States authorities with contributing to a sudden plunge in American stock markets five years ago, was assigned a reduced bail at a court hearing on Friday, allowing him to be released from custody.

 

Company News

CNH Volumes Surge on Primary FX Venues – Profit & Loss
The People’s Bank of China’s move to devalue its currency last week resulted in a 600% increase in trading volume in the Chinese currency (CNH) across Thomson Reuters’ FX platforms on Wednesday 12 August. CNH made up 15% of total EBS volume.

Novo Says New US Plant May Be Best Bet to Offset the FX Bite – FiercePharma
Novo Nordisk, like all European pharma companies, has had to negotiate a volatile foreign exchange environment as the dollar has risen in value. It has forecast that currency hedging losses will leave it with an $850 million net loss for the year. But CEO Lars Rebien Sørensen thinks he may have landed on a new way to traverse that rough terrain: Build a plant in the US.

Wall Street’s New Chat Service is Deleting Problematic Messaging – MarketWatch
For a start-up that says it’s focused on secure messaging, Symphony has been deleting a lot of its own messaging to the public about what it provides for its financial services clients. The firm has been editing out references on its website to data deletion and its ability to help banks keep their data away from the government.

 

Market Savvy  

IMF Set Stage for China Currency Shift
Financial times (subscription)
The International Monetary Fund set the stage for Beijing’s dramatic currency policy shift this week by warning Chinese authorities in May that it was becoming “increasingly critical” for Beijing to allow its currency to trade more freely, according to an IMF report.

China’s Yuan Closes Flat as Market Looks for Direction
Reuters
China’s yuan closed flat against the dollar on Monday after a historic weekly loss last week, with the market looking for direction on where the currency will move.

Fed Move Is No Sure Thing for Bank Profits
Wall Street Journal
A target-rate increase from the Federal Reserve next month looks very likely. But the attendant boost to profits at banks may be far more modest than anticipated.

IMF’s Christine Lagarde Tells Europe Again: Cut Greece’s Debt
CNN
The International Monetary Fund has reiterated how it feels about the Greece bailout: It’s squarely behind it, but it believes strongly that Europe must do more to cut the country’s debt.

 

Industry Events