FX – Remediation

In November 2014, the FCA fined 5 major banks  for failing to control business practices in their G10 Spot FX trading operations. The FCA determined that between 1 January 2008 and 15 October 2013 the five banks failed to manage risks around :

  • Client Confidentiality
  • Conflict of Interest
  • Trading Conduct

At that time the FCA identified approximately 30 banks and several IDB’s who were all asked to carry out a remediation programme. The FCA identified a number of key risks in an FX trading operation. Amongst these are :

  • Attempts to manipulate fixes.
  • Hard mark-ups.
  • Co-ordinated trading
  • Partial fills
  • Layering & Wash trades
  • Triggering stops
  • Front-running
  • Inappropriate sharing of information
  • Inappropriate use of spreads (transaction “window” rates)
  • Personal account dealing
  • Breaches of client confidentiality.

 

New FX Benchmarking rules for FX are due.. 

It is expected that the FCA will soon introduce some new rules for FX Benchmarking . For LIBOR, “Market Abuse Regulation 8” covers the conduct of “benchmark submitters” and a new controlled function CF40 covers a person who undertakes that activity.