Tuesday, June 25, 2019
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Banks rig the Forex market.

UBS, Citibank, RBS, HSBC - Econ Alerts

So the Banking industry is hit with yet another scandal. UBS, RBS, Citibank, Bank of America, JP Morgan Chase and HSBC have all been fined a collective total of £2.6billion for manipulating the Forex market. This new revelation is of particular interest to me because I mainly trade Forex, I’m attracted to the Forex market because of the vast trading activity and many participants this is the ingredients for a very liquid market. It is the vastness of the Forex market which led me to believe that the Forex market was hard (not impossible) to manipulate unless a central bank decides to do so. However a group of traders working at the banks mentioned above (and probably others) worked together to manipulate the price, they would place orders at the same time forcing the market to move in the direction they wanted. The traders would coordinate their trades via private chat rooms, they would sometimes share with each other their client’s positions (possibly engaging in stop-hunting), other times the traders would gain access to confidential information regarding an upcoming news event which could affect the market. The Head of RBS, the Head of the FCA and the UK Chancellor have all been quick to clarify it was only a few individuals involved, although that may be true I find it hard to believe the heads institutions involved had no idea that this activity was going on under their roofs, for 5 years! I believe that people at the top of these organisations knew exactly what was happening but decided to turn a blind eye as the traders involved was making tonnes of money for the companies. The Bank of England also sacked their senior Forex dealer, but today the Governor of the BoE refuted claims that it had anything to do with Forex fixing scandal. All seems a little too coincidental to me, the senior Forex Dealer of the BoE is sacked and at the same time traders at six banks are being investigated for manipulating the Forex market. Spot the connection. I’m not surprised about the details of this story one bit, I’m actually surprised that the story came to light. I’m sure the City traders have lots more tricks up their sleeves. The West likes to look down on the developing world for the amount of blatant corruption going on in those countries, but theses western banking institutions make those developing countries look like amateurs when it comes to fraud and corruption.

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