Standard Chartered pleads guilty to fixing the rand

Standard Chartered Bank pleaded guilty to manipulating the rand and had reached an agreement with the New York state department of financial services which became an order of court.

South Africa's Competition Commission said this in a statement on Tuesday.

"In the consent order, Standard Chartered pleaded guilty to currency manipulation which included the SA rand (ZAR) between 2007 and 2013," the commission said.

The commission investigated several banks for fixing prices and the market allocation of foreign exchange since April 2015. It referred its case to the Competition Tribunal in February 2017.

The commission found that from 2007 the banks had "at least a general agreement" to collude on prices for bids, offers and bid-offer spreads for the spot trades in trading involving the US dollar and the rand.

"Further, the commission found that the respondents manipulated the price of bids and offers through agreements to refrain from trading and creating fictitious bids and offers at particular times."

The traders used fake bids and offers to distort demand and supply.

"They assisted each other to reach the desired prices by co-ordinating trading times. They reached agreements to refrain from trading, taking turns in transacting and by either pulling or holding trading activities on the Reuters currency trading platform."

The banks included:

• Bank of America Merrill Lynch International Limited;
• BNP Paribas;
• JP Morgan Chase & Co;
• JP Morgan Chase Bank NA;
• Investec Ltd;
• Standard New York Securities Inc;
• HSBC Bank Plc;
• Standard Chartered Bank;
• Credit Suisse Group;
• Standard Bank of South Africa Ltd;
• Commerzbank AG;
• Australia and New Zealand Banking Group Limited;
• Nomura International Plc;
• Macquarie Bank Limited;
• ABSA Bank Limited;
• Barclays Capital Inc; and
• Barclays Bank plc (respondents).

Citibank NA pleaded guilty and reached a settlement with the commission which will see it pay a R69.5m administration fee and provide witnesses to help the commission prosecute other banks.

The commission has been in litigation with the other banks since February 2017.

"Despite the commission filing its papers to the tribunal on February 15 2017 against 17 banks, none of the banks have to date filed their answer to the merits of the case except HSBC, which has filed papers disputing its participation in the cartel."

The commission wants the banks to pay 10% of their annual profits as an administration penalty and wants the Competition Tribunal to rule that the banks contravened the Competition Act.