The Competition Commission has named the forex traders accused of engaging in collusive practices to fix the price of the rand.
In a complaint referral to the Competition Tribunal, the commission alleges that traders representing 18 local and foreign banks entered into agreements and/or engaged in a concerted effort to directly or indirectly fix bids, offers and bid-offer spreads and to allocate customers and suppliers in respect of trade in USD and the ZAR currency pair between 2007 and 2013.
The commission’s investigations into the conduct date back to April 2015, when the commissioner initiated a complaint against 11 banks for collusive conduct with regard to trading in the rand. The initiation was amended in August 2016 to include 12 more banks.
Following its investigation, the commission alleges that 18 banks had a general understanding to collude on bids, offers and bid-offer spreads for the spot trades in relation to USD/ZAR pair trading.
It also accused the banks of having a general understanding to divide the market by refraining from trading, taking turns to trade and pulling and holding trading activities on the Reuters trading platform as well as dealers’ owned trading platforms.
The traders involved in the conduct are said to have communicated via chatrooms and by phone, and operated predominantly in South Africa and the US.
Absa, Investec and Standard Bank are the South African banks implicated in the report.
As per the commission’s investigations, Absa’s Duncan Howes was found to have entered into agreements to fix bids and offers prices on the trading platform as well as the prices of bids and offers quoted to customers, and to coordinate trading. Howes and colleagues John Daly, Elaine Naidoo, Premal Bhana and Thulani Kunene were implicated in entering into agreements to fix bid-offer spreads.
An Absa spokesperson confirmed that appropriate action will be taken against implicated employees once the bank’s internal investigation, already underway, had been concluded. Insiders speculate that those directly involved in the collusive practices have already been suspended.
Investec’s Clinton Fenton is accused of entering into agreements to fix bids and offers on the trading platform, bids and offers prices quoted to customers and to coordinate trading.
“We note that the case against Investec Limited is confined to the conduct of a single trader who is employed by the bank. The bank intends to seek further information from the Competition Commission with respect to the specifics of the charges in order to continue to co-operate with them in this regard,” Investec said in a statement.
Bryn Brownrigg from Standard Bank is alleged to have agreed to fix bid-offer spreads. Standard Bank said it could not comment on the matter while the Competition Tribunal process continues (although it will engage with the authorities).
The conduct, which may amount to price fixing, is in contravention of the Competition Act. The commission has recommended that administrative penalties amounting to 10% of their annual turnover be imposed on 17 banks. Moneyweb previously reported that Absa, which applied for corporate leniency as a whistle blower, will be spared the fine.