It seems that the New York State Financial Services Superintendent, Benjamin Lawsky, has cast his net a little wider in the search for what really goes on under the hood of the FX pricing engines at several major banks. He has now issued subpoenas to Credit Suisse, Societe Generale, Goldman Sachs and BNP Paribas. This comes a few months after he had begun investigations at Barclays and Deutsche Bank.
It is one thing to accuse individual traders of colluding in order to “manipulate” the rates around benchmark fixings, but it is a whole new ball game if he suspects that the algorithms in the banks pricing engines may have been written in such as way that could disadvantage customers who are trading on the platform.
When you look at the CV’s of the brilliant minds that some of the major banks have hired to develop their e-trading capabilities, it would be naïve to think that they hadn’t written the alogorithms in favour of their employers. I expect they thought that’s what they were being paid to do !! …………..Time will tell.