resolution of foreign exchange ("FX") market
, major banks are now bracing themselves for penalties from the New
York Department of Financial Services ("DFS"), as a result of
investigations over manipulation of automated FX trading. The news
was first reported by The Financial Times.
The DFS has been investigating whether banks systematically rigged FX market by using automated trades driven by computer algorithms. The trading platforms at Barclays PLC BCS and Deutsche Bank AG DB are currently under probe by the DFS. Further, the regulator has subpoenaed The Goldman Sachs Group, Inc. GS , Credit Suisse Group AG CS , BNP Paribas SA BNPQY and Société Générale.
The probe against Barclays stands at an advanced stage and several employees have been summoned to provide evidence. Moreover, persons familiar with the ongoing probe claimed the investigation has led the regulator to suspect that the major British bank knowingly manipulated automated FX trading platform to gain unfair advantage over customers and counterparties.
Notably, the DFS was one of the global regulators that reached a settlement with Barclays over FX-related rigging last week. However, the above-mentioned investigation is separate from the already resolved one.
Additionally, while the DFS has reached a similar inference in its probe against Deutsche Bank, it is still undergoing the document review stage. Further, probes against other banks are at a very nascent stage and nothing can be concluded at this point.
We believe that once these probes are over, banks may have to shell out billions to settle the allegations as the DFS is determined to handle such cases severely. This will dissuade such practices in the future, bringing justice to sufferers and punishing the wrongdoers.
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CREDIT SUISSE (CS): Free Stock Analysis Report
BARCLAY PLC-ADR (BCS): Free Stock Analysis Report
DEUTSCHE BK AG (DB): Free Stock Analysis Report
GOLDMAN SACHS (GS): Free Stock Analysis Report
BNP PARIBAS-ADR (BNPQY): Free Stock Analysis Report
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