Washington, D.C. – Barclays Bank PLC has been slapped with a $400 million penalty by the U.S. Commodity Futures Trading Commission (CFTC) for its role in a scheme to manipulate global foreign exchange (FX) benchmark rates. The CFTC issued an order on May 20, 2015, detailing charges of attempted manipulation, false reporting, and aiding and abetting the manipulation efforts of other banks.
The settlement requires Barclays to pay the substantial civil monetary penalty and implement stricter internal controls and procedures to oversee its FX traders. The CFTC noted that the penalty amount was increased due to Barclays’ delayed acceptance of responsibility and failure to settle earlier in the investigation.
This action follows a November 2014 CFTC penalty of $1.475 billion levied against five other major banks – Citibank, JPMorgan Chase, The Royal Bank of Scotland, UBS, and HSBC – for similar misconduct involving FX benchmark manipulation.
Aitan Goelman, the CFTC’s Director of Enforcement, emphasized the importance of market integrity, stating, “There is very little that is more damaging to the public’s faith in the integrity of our markets than a cabal of international banks working together to manipulate a widely-used benchmark.”
The investigation focused on Barclays FX traders’ attempts to manipulate the World Markets/Reuters Closing Spot Rates (WM/R Rates), a widely referenced benchmark used to determine currency values. Traders also targeted the Russian Ruble/U.S. Dollar Chicago Mercantile Exchange (CME)/EMTA benchmark rate.
These FX benchmark rates are crucial for pricing a vast array of financial instruments, including cross-currency swaps, futures, and options. The CFTC asserts that the manipulation of these rates undermines the integrity of both U.S. and global markets. The CME/EMTA Rate, in particular, is the primary rate used for settling Russian Ruble transactions and calculating final settlement prices for Russian Ruble futures contracts.
The CFTC’s order alleges that Barclays traders colluded with traders at other banks to coordinate trading and rate submissions in an attempt to influence the benchmarks for their own benefit.
Source: CFTC.gov
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