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
- 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.