Currenex pushes back in fight to dismiss class-action lawsuit

Defence lawyers mount stubborn defence in civil suit brought by XTX and two other financial firms


Lawyers for foreign exchange trading venue Currenex, its parent State Street and two large market-makers have mounted a staunch defence against antitrust claims brought against them, citing lack of credibility and rumours in the latest phase of the high-profile court case.

The defence has also pushed back against efforts by London-based XTX Markets to get a New York court to deny a motion to dismiss the proposed class-action lawsuit.

They argued in recent court filings that plaintiffs XTX, Edmar Financial and Irish Blue & Gold have failed to credibly explain how an alleged tie-breaking protocol used in limited circumstances on one platform could materially impact the world’s largest financial market.

The defence lawyers said the alleged protocol is not bid rigging. They also told the court that there is no horizontal agreement among the trading defendants to co-ordinate their activity – a necessary ingredient to plead a per se antitrust violation – since they were competing with each other on the platform.

Instead, they said XTX and the other plaintiffs are continuing to rely on generic allegations and speculation, rather than specific facts, to show the alleged existence of vertical agreements or any antitrust injury they suffered. The defence also accused XTX and the two financial firms of trying to alter their claim of antitrust violation because its success now looks uncertain.

“No doubt sensing the implausibility of their antitrust claim, plaintiffs recast their case as one ‘about a massive fraud’, rather than a bid-rigging scheme. But they fail to identify any actual false statements, which is unsurprising given their concessions that there are many fifo-variants (first in, first out) in the industry, that there is no one ‘true fifo”, and that the platform employs a form of fifo,” reads a joint motion to dismiss all claims filed on July 18.

Currenex, State Street, Goldman Sachs, HC Technologies and up to five unnamed defendants were sued last August in a class-action complaint alleging fraud, conspiracy, antitrust violations and racketeering stemming from secret deals that gave a narrow subset of liquidity providers unfair bidding advantages on the platform.

The stakes rose earlier this year when the complaint was amended to include XTX, a top-three provider of spot FX liquidity, and new allegations that Currenex granted admin-level access to rival high-frequency trading firm HC Technologies.

The platform and other defendants moved to dismiss the case in February, citing the court’s lack of personal jurisdiction and that a UK court is better suited to hear the case. However, the motion has met stiff resistance from XTX, which argues that the defence is trying to split the case, with the potential for conflicting legal results.

But a stubborn defence has dug in its heels, urging the court to toss out the case on those very grounds, arguing that XTX’s arguments about the practical downsides of parallel litigation are irrelevant and highly speculative.

“In the event of parallel litigation, which assumes all of plaintiffs’ claims survive defendants’ motion, the parties and applicable courts can take steps to facilitate an orderly resolution, including the possibility of temporarily staying certain claims (eg, staying XTX’s aiding and abetting fraud claim pending resolution of its underlying fraud claim), co-ordinating discovery, or otherwise,” defence lawyers told the court.

Additionally, the defence reminded the court that the allegations are time barred, and cited numerous deficiencies in the claims brought to it.


In some instances, the defence lawyers sought to cast the case off as hearsay that lacks specificity around when the alleged deals were cut and how they were sustained in the years after some alleged key players departed the accused firms.

“Plaintiffs allege that a confidential witness ‘said Currenex negotiated [Goldman’s] superpriority privileges with [Goldman] senior employee and head of eFX sales, Rick Schoenberg.’ But there are no well-pled facts, from a confidential witness or otherwise, explaining when during the 14-year class period the purported agreement was reached, how it was maintained during the six-year period after the departure of the scheme’s alleged perpetrators from Goldman and Currenex in 2014, or any other facts about the supposed agreements,” the document read.

Focusing on each allegation, defence lawyers said claims of fraud fail because the plaintiffs cannot point to any false statements made by their clients. They argue that any pivot to fraud by omission also collapses, claiming that the alleged omission was immaterial because XTX and others do not plausibly allege that the supposed tie-breaking protocol adversely impacted pricing or explained what they would have done differently had they known more.

“Since plaintiffs say they scoured the market for the ‘best prices possible for their spot trades’, the only plausible inference is that plaintiffs traded on the platform when it offered the best prices. As such, plaintiffs cannot explain how disclosing the allegedly omitted tie-breaking protocol would have ‘significantly altered the total mix of information made available’ when they decided where to trade,” the document read.

“Plaintiffs make a passing reference to an allegation that State Street received preferences when its prices were worse than competitors’ prices. But plaintiffs do not develop any arguments around this solitary allegation, and there is no context for when this allegedly happened, how often it allegedly happened, and which counterparties were involved,” they explained in a footnote further detailing why they believe the claim fails.

The defence lawyers told the court that the burden is on XTX and other plaintiffs to show how alleged misrepresentations regarding tie-breaking protocols on a single trading platform could somehow distort the now $6.6 trillion-a-day currency market.

“The lack of any allegations that plaintiffs received a below-market price on any trade (as distinct from allegations they would have gotten even better prices if the platform operated differently) is fatal to their fraud claim,” the lawyers stated.

They also told the court that claims for conspiracy and aiding and abetting have failed because the plaintiffs do not claim that the trading defendants knew about Currenex’s alleged fraud or that they substantially assisted in any such fraud.

“They claim the trading defendants ‘accept[ed] the benefits flowing from [the alleged tie-breaking agreements], while assisting in the cover-up by remaining silent. But, in the context of an aiding and abetting claim, where the alleged primary violations consist of misrepresentations in a document, the defendant must be alleged to have given substantial assistance to the making and dissemination of that document. Silence is not substantial assistance,” the defence added.

Regarding the racketeering allegations, the defence lawyers pointed to a number of weaknesses, and stated that Currenex cannot be in a Rico enterprise solely with itself or its parent company. They accuse XTX and the others of attempting to salvage a “Currenex-State Street Enterprise” by limiting it to the period prior to 2007. That is the year State Street signed a deal to acquire Currenex.

“[It] fails because the [amended complaint] contains no non-conclusory allegations that Currenex and State Street jointly engaged in any pre-2007 racketeering activity for a common purpose,” they argued.

“When it comes to defining the scope of the Currenex-HC Tech Enterprise and the Currenex-Goldman Enterprise, plaintiffs argue that each enterprise includes State Street. But when it comes to arguing that they pled actionable agreements among the enterprise members, they omit State Street. Plaintiffs do not allege any agreement between State Street and either HC Tech or Goldman (or between HC Tech and Goldman), nor would it be reasonable to infer such an agreement since the trading defendants competed with each other.”

XTX Markets declined to comment.

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