Australia’s competition regulator has taken the ANZ and Macquarie banks to court, claiming traders at the institutions colluded in attempts to manipulate the exchange rate for the Malaysian ringgit.
The banks have admitted the attempted cartel trading and agreed to pay fines of $15 million. The Federal Court now decides the final amount of the fines.
The ACCC (Australian Competition and Consumer Commission) says a trader at Macquarie, traders at ANZ and a number of other banks in Singapore used private online chatrooms to discuss the benchmark rate for the Malaysian ringgit.
“On various dates in 2011, traders employed by ANZ and the Macquarie trader attempted to make arrangements with other banks that particular submitting banks would make high or low submissions to the ABS in relation to the ABS (Association of Banks in Singapore) MYR Fixing Rate,” the ACCC says.
The ACCC says the banks sought to influence the fixing rate published on that day in breach of the cartel provisions of the Competition and Consumer Act 2010.
The matter was previously investigated by the Monetary Authority of Singapore which completed a review and supervisory action in 2013 involving 20 banks operating in Singapore.
Three of the four major banks — NAB, ANZ and Westpac — also face action by ASIC (Australian Securities and Investments Commission) for allegedly manipulating the bank bill swap rate in Australia.
ACCC Chairman Rod Sims says the latest proceedings are a reminder that cartel laws apply to financial markets, and capture cartel conduct by firms that carry on business in Australia, regardless of where that conduct occurred.
“The ACCC recognises the integrity of foreign exchange markets plays a fundamental role in our market economy,” he says.
ANZ has admitted to 10 instances of attempted cartel conduct and Macquarie to eight.
The ANZ has agreed to $9 million penalty plus costs. Macquarie has agreed to $6 million.
ANZ chief risk officer Nigel Williams said: “We have an obligation to ensure our people, both here in Australia and overseas, comply with the law at all times.
“While there is no evidence that FX benchmarks in Singapore were successfully influenced, we accept responsibility and apologise for the actions of our former employees. We have made significant improvements to our compliance, training and monitoring systems to ensure this does not happen again.”
Macquarie says the ACCC acknowledges that no Macquarie senior management, or any other Macquarie employees, were involved in or aware of the conduct of the former junior employee.
That individual’s employment was terminated in 2012.
“Macquarie notes the ACCC does not allege, nor does Macquarie make an admission, that it engaged in any conduct affecting the benchmark or that Macquarie obtained any benefit from the attempted behaviour,” the bank said.
“Since Macquarie became aware of the matter and as the ACCC notes, it has significantly strengthened its e-communication surveillance globally, improved trade monitoring and intensified training for its front office staff.”
The ACCC estimates that the annual turnover of MYR non-deliverable forward contracts in Australia in 2011 was $9 billion to $10 billion.