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Categorized | Banks

Australia banks admit to attempted cartel conduct

Posted on November 25, 2016

Two of Australia’s biggest banks have agreed to pay a combined A$15m (US$11m) fine after admitting to attempted cartel conduct aimed at rigging the benchmark rate for the Malaysian ringgit.

The Australian Competition and Consumer Commission, Australia’s competition watchdog, said on Friday that ANZ Bank had admitted to 10 instances of attempted cartel conduct, while Macquarie had admitted to eight instances in 2011.

The case involves a Macquarie trader, and traders employed by ANZ and other banks, who communicated via private online chat rooms about submissions made to the Association of Banks in Singapore (ABS) in relation to the benchmark rate of the Malaysian currency, the ACCC said.

On various dates in 2011, the Macquarie trader and traders employed by ANZ attempted to arrange for particular banks to make high or low submissions to the ABS in relation to the fixing rate for the currency, the ACCC said.

“These proceedings are a reminder that Australian cartel laws apply to financial markets, and capture cartel conduct by firms that carry on business in Australia, regardless of where that conduct occurred,” said Rod Sims, ACCC chairman.

“The ACCC recognises the integrity of foreign exchange markets plays a fundamental role in our market economy,” he said.

The ACCC case stems from an earlier investigation by Singapore authorities in which 20 banks were disciplined. Singapore revealed in 2013 that 133 traders had attempted to manipulate three interest rate and foreign exchange benchmarks, including the Singapore interbank lending rate.

The Monetary Authority of Singapore said at the time that while there was no conclusive evidence that the benchmarks had been manipulated, the traders’ conduct “reflected a lack of professional ethics”.

The Singapore probe was prompted by the 2012 investigations that resulted in Barclays paying US and UK fines for seeking to manipulate Libor. Macquarie and ANZ were among the institutions sanctioned by the MAS.

The foreign exchange spot benchmarks, set by a panel of banks, are used to settle derivative instruments linked to the Malaysian ringgit, Indonesian rupiah and Vietnamese dong. The contracts are settled in dollars and are used to speculate on — or hedge exposure to — these emerging market currencies.

Investigations into the alleged rigging of foreign exchange markets by more than a dozen regulators in Europe, the US and Asia have led to a shake-up in regulation of the industry and billions of dollars in fines levied against global banks.

ANZ on Friday said that three employees based in Singapore had engaged in conduct that contravened Australia’s Competition and Consumer Act. The three employees are no longer employed at the bank, it said.

Nigel Williams, ANZ’s chief risk officer, said the bank had made improvements to its compliance, training and monitoring systems.

“While there is no evidence that FX benchmarks in Singapore were successfully influenced, we accept responsibility and apologise for the actions of our former employees,” said Mr Williams.

Macquarie said it had strengthened its e-communication surveillance globally, improved trade monitoring and intensified training for its front office staff.

“Macquarie notes that the ACCC acknowledges that no Macquarie senior management, or any other Macquarie employees were involved in or aware of the conduct of the former junior employee. The individual’s employment was terminated in 2012,” the bank said in a statement.

The latest penalties levied on ANZ and Macquarie come amid political pressure for the Australian government to order a comprehensive investigation into the conduct of the country’s banks.