Banks face prosecution for collusion
The Competition Commission has referred a collusion case to the Tribunal for prosecution against several banks.
The banks are:
- Bank of America Merrill Lynch International Limited
- BNP Paribas
- JP Morgan Chase & Co
- JP Morgan Chase Bank N.A
- 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 (ABSA)
- Barclays Capital Inc,
- Barclays Bank plc
The Commission says it has been investigating a case of price fixing and market allocation in the trading of foreign currency pairs involving the Rand since April 2015.
It has now referred the case to the Tribunal for prosecution.
"The Commission found that from at least 2007, the respondents had a general agreement to collude on prices for bids, offers and bid-offer spreads for the spot trades in relation to currency trading involving US Dollar / Rand currency pair. 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," says the commission's Sipho Ngwema.
Ngwema says traders primarily used trading platforms such as the Reuters currency trading platform to carry out their collusive activities.
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"They also used Bloomberg instant messaging system (chatroom), telephone conversations and had meetings to coordinate their bilateral and multilateral collusive trading activities. They assisted each other to reach the desired prices by coordinating 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. They also created fictitious bids and offers, distorting demand and supply in order to achieve their profit motives," says Ngwema.
According to Ngwema, the Commission is seeking an order from the Tribunal declaring that the respondents have contravened the Competition Act.
Ngwema says the Commission is also seeking an order declaring that the Bank of America Merrill Lynch International Limited, BNP Paribas, JP Morgan Chase & Co, JP Morgan Chase Bank N.A, 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 are liable for the payment of an administrative penalty equal to 10% of their annual turnover.
"The referral of this matter to the Tribunal marks a key milestone in this case as it now affords the banks an opportunity to answer for themselves," says Commissioner Tembinkosi Bonakele.