Seven banks have settled a class action lawsuit brought in the US regarding the ISDAfix. The ISDAfix is a benchmark rate used in daily pricing of trillions of US dollars in derivatives, including interest rate swaps, futures and exchange traded options. The seven are JP Morgan, RBS, Deutsche, Credit Suisse, Barclay's, Citi and BOA.
The lead law firm, Scott + Scott, is the same as in the FX benchmark manipulation class action suit. The charges are similar to the FX suit and to the LIBOR charges as well. The charges included placing numerous orders at the close ("banging the close"), collusion leading to to submission of identical orders and placing off-market rates. Eight other banks remain in the suit. If this follows the trajectory of the FX suit, banks that settle later will tend to pay larger settlements.
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Showing posts with label Credit Suisse. Show all posts
Showing posts with label Credit Suisse. Show all posts
Thursday, May 5, 2016
Tuesday, October 6, 2015
Investigations of Electronic FX Trading Continue
Reuters reports that the New York Department of Financial Services (NYDFS) investigation of several money center banks for FX rate manipulation on electronic trading platforms is continuing. They report that NYDFS has interviewed dozens of traders and executives at Barclay's, Deutche Bank and Credit Suisse among other banks (NYDFS has its strongest remit with foreign banks) over the past several months. Subpoenas have also been sent to BNP, Goldman Sachs and Societe Generale according to Reuters sources.
NYDFS has already been known to be investigating FX algorithms on these platforms at the banks to determine if there is an attempt by the banks to advantage themselves at their clients' expense during the time between a rate being posted and then being accepted by a client. The concern is that this period may be used to front run client orders or otherwise manipulate FX rates. Earlier bank settlements with regulators covered spot market trading, but NYDFS agreements particularly, did not cover electronic trading. The Department of justice is also investigating FX electronic trading.
No information is available on how these investigations will play out against the various banks involved. The fact that they continue and appear to have widened from initial reports limited to Barclay's and Deutche, may indicate that regulators have found potential issues worthy of investigation, but do not provide clues as to the outcome.
NYDFS has already been known to be investigating FX algorithms on these platforms at the banks to determine if there is an attempt by the banks to advantage themselves at their clients' expense during the time between a rate being posted and then being accepted by a client. The concern is that this period may be used to front run client orders or otherwise manipulate FX rates. Earlier bank settlements with regulators covered spot market trading, but NYDFS agreements particularly, did not cover electronic trading. The Department of justice is also investigating FX electronic trading.
No information is available on how these investigations will play out against the various banks involved. The fact that they continue and appear to have widened from initial reports limited to Barclay's and Deutche, may indicate that regulators have found potential issues worthy of investigation, but do not provide clues as to the outcome.
Wednesday, June 4, 2014
Credit Suisse Estimates US Fines and Other Litigation Costs of $104 Billion
FT Alphaville reports the doubling of Credit Suisse's estimate for US litigation costs from last year to this, from $58B to $104B. Of this, only $69B has been reserved to date. US regulators are looking for substantially higher penalties for misconduct on the part of banks than in the past, and many European banks are expected to be severely penalized for many actions. Credit Suisse breaks down its reserves into seven areas, as can be seen in the article.
The WSJ reports that litigation costs have been a part of US bank stress testing but have not been captured in European stress tests. That is now changing as the European Central Bank and European Banking Authority are both concerned with the potential scope of the costs. The EBA has asked individual countries to look at "conduct risk" as part of their stress testing. The ECB takes over the role of European banking supervisor on November 4 from national regulators. Based upon CS's litigation costs equaling about half of the losses from the financial crisis, the ECB will be kept quite busy in its new role.
The WSJ reports that litigation costs have been a part of US bank stress testing but have not been captured in European stress tests. That is now changing as the European Central Bank and European Banking Authority are both concerned with the potential scope of the costs. The EBA has asked individual countries to look at "conduct risk" as part of their stress testing. The ECB takes over the role of European banking supervisor on November 4 from national regulators. Based upon CS's litigation costs equaling about half of the losses from the financial crisis, the ECB will be kept quite busy in its new role.
Tuesday, April 22, 2014
Credit Suisse Concludes FX Benchmark Rate Investigation
At the end of March the Swiss Competition Commission named 8 banks including Credit Susisse to be investigated for collusion in manipulating FX rates. Reuters reported Credit Suisse to be "astonished" to be included in the investigation after not being included in a preliminary investigation in 2013.
Last week during the Q1 earnings release conference call, Credit Suisse's CFO stated that the bank's internal FX benchmark investigation was completed and nothing "materially untoward" was found.
It is not clear why the regulators feel that there may be collusion involving Credit Suisse while the bank sends out the "all clear" message after an internal investigation. Time will tell.
Last week during the Q1 earnings release conference call, Credit Suisse's CFO stated that the bank's internal FX benchmark investigation was completed and nothing "materially untoward" was found.
It is not clear why the regulators feel that there may be collusion involving Credit Suisse while the bank sends out the "all clear" message after an internal investigation. Time will tell.
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