Small Exchange: Credit Suisse currency manipulation, Norway FX transparency
Credit Suisse settles FX trading investigation, Norges Bank suggests greater market transparency and Turkey’s central bank wants financial stability.
Credit Suisse pays $135 million in currency manipulation settlement
Multinational financial services company Credit Suisse reached a US$135 million settlement with the New York Department of Financial Services (DFS) in relation to the conduct of its foreign exchange (FX) rates business.
This is the latest in a long line of international companies being investigated for deceptive FX trading.
Although the bank didn’t admit to any illegal practices, the DFS alleges traders at Credit Suisse shared private information about client’s currency orders and discussed these details with traders from other banks in order to turn a profit for the Swiss-based banking institution.
The bank was also accused of manipulating its electronic trading platform to cancel costly client trades.
The illicit activity was alleged to have occurred between 2008 and 2015.
Credit Suisse said the charges will be taken from fourth quarter results, to be announced on February 14, 2018.
Norway’s central bank wants global FX clarity
Norway’s central bank, Norges Bank Investment Management, has called for greater transparency in global foreign exchange markets. The appeal is aimed at lowering trading costs and improving transaction efficiency.
“We believe that transparency and verifiability are key to mitigating the impact of informational advantages, without negatively affecting the liquidity of this important market,” the fund said in a policy statement.
Norges Bank is the central bank of Norway. The bank manages Norway’s foreign exchange reserves and is responsible for the management of the Norwegian Government Pension Fund Global (GPFG).
In a letter to the editor of the Financial Times, David Mercer of LMAX Exchange in London said Norges was “right to challenge the foreign exchange industry to bring more transparency to the market”.
“The current situation is that foreign exchange traders are often forced to navigate inconsistent standards, market practices and evaluate different styles of liquidity.
“They face either complete opacity or the confusion of conflicting messages and benchmarks.”
Turkey to mitigate corporate sector’s exchange rate risk
Central Bank of the Republic of Turkey deputy governor Erkan Kilimci has revealed the institution has come up with a “Systemic Risk Data Monitoring Model” to analyze data and better manage corporate exchange rate risk.
The Turkish Central Bank will introduce the new model in the next few days, putting together a detailed data set in order to better monitor FX positions, cash flows and foreign currency-denominated borrowing variations.
“With the draft law currently under consideration, we aim to increase the effectiveness of the process through which information and data are collected from the corporate sector,” Kilimci said.
“It is important firms are not adversely affected by possible market fluctuations in terms of financial stability.”
In related news, the Central Bank of Serbia announced Friday that it would begin trading Turkish lira on the foreign exchange market by December 1, 2017 in an effort to strengthen economic ties between the countries.
The Daily Sabah reports Serbia’s exports to Turkey rose by 16.8% year-over-year in the first nine months of 2017 to US$229.3 million, while imports from Turkey jumped 17.8% to US$562 million.
Each week Small Exchange sums up global currency news, analyzing impacts on exchange rates and options.