Reports are becoming more frequent that a settlement is in the works between the UK Financial Conduct Authority and money center banks regarding the FX benchmark pricing scandal. These discussions are supposed to involve a total fine of about $3 billion (at the low end of expectations) and importantly, only charge the banks with maintaining insufficient compliance procedures to catch individual traders. It is the traders who would be seen as the true purveyors of misconduct.
UBS today reported that it is in talks with an unnamed regulator that could result in material fines for not having sufficient controls to prevent misconduct of their employees.
There is a belief that the regulators of many countries are working multilaterly, even if not exactly together. If they all pursue a line of reasoning as discussed above, this would indicate a much lighter hit for the banks. The fines may be less than assumed, and importantly, the banks may not have to plead guilty to criminal behavior. With settlement talks ongoing, some are now expecting settlements before year end.
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