Swiss regulator hunts for hints in Credit Suisse FX probe

Switzerland’s Competition Commission (Comco) says it is still hunting for signs that could confirm whether Credit Suisse colluded with other banks to rig the $5 trillion-a-day foreign exchange market.

Comco closed its investigations into FX market manipulation on June 6, imposing a CHF 90 million ($90.7 million) fine on five banks for several anti-competitive arrangements detected between 2007 and 2013.

The banks that have settled are Barclays, Citigroup, JP Morgan, RBS and Mitsubishi UFJ Financial Group (MUFG). UBS escaped penalty because it was the first to disclose the behaviour to Swiss regulators.

Allegations have been dropped against two others – Bank Julius Bär & Co and Zürcher Kantonalbank – because the commission’s initial suspicion has not been confirmed.

“Part of the settlement is that the banks mentioned committed not to repeat the behaviour in question,” says Comco president Andreas Heinemann.

Our procedure consists in verifying if there is indeed evidence that a violation of competition has occurred

Andreas Heinemann, Comco

He says Credit Suisse is the only bank that did not agree to a settlement and so the commission’s investigation will continue.

“For us, in order to open a procedure, we need some indicia which makes us examine more profoundly, so we are continuing the procedure,” Heinemann adds. “This is the normal way to go forward if there is no settlement... Our procedure consists in verifying if there is indeed evidence that a violation of competition has occurred.”

‘Vigorously contest substance’

Credit Suisse tells FX Week the allegations against its employees date back to 2012. The bank says it launched an internal investigation that concluded competition rules in Switzerland had not been violated.

“Credit Suisse is continuing to co-operate fully with Comco’s investigation process and intends to vigorously contest the substance of the allegations,” a spokesperson for the bank says. “A number of other regulators have concluded their FX-related inquiries without taking any enforcement action against Credit Suisse.”

Comco claims traders at the banks used two separate “cartels” to co-ordinate their conduct in the spot market at various times over the six-year period. The alleged misconduct targeted several major currencies, including the dollar, euro, pound, yen, Australian dollar, New Zealand dollar, Canadian dollar, Swiss franc, Norwegian krone and the Swedish Krona.

Traders and chatrooms

Swiss regulators say traders at Barclays, Citigroup, JP Morgan, RBS and UBS participated in a group known as the ‘Three way banana split’ between 2007 and 2013, while others at Barclays, MUFG, RBS and UBS used a chatroom known as the ‘Essex express’ to co-ordinate certain trades.

Last month, the European Commission fined the same banks $1.19 billion for similar trading in the spot market, claiming they used the chatrooms to share client information, such as the amount and currencies being traded, bid/ask spreads and open-risk positions.

In October 2018, jurors in New York acquitted three UK traders accused of being part of a cartel that colluded to manipulate EUR/USD prices because they believed the US did not have enough evidence to convict them.

Comco says its decisions can be appealed to Switzerland’s Federal Administrative Court.