Rand manipulation: Nedbank, HSBC and Bank of America fight back against Comp Commission's case

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The Commission wants to add nine more banks into its case, which dates back to April 2015.
The Commission wants to add nine more banks into its case, which dates back to April 2015.
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  • Banks are fighting the Competition Commission's attempt to add them to its long-standing currency manipulation case.
  • The commission wants more banks to be included in the case, even banks that were not part of its initial investigation or took part in the chatrooms where the alleged collusion occurred.
  • The commission says it has analysed their forex trading patterns and found that they were part of a "single overarching conspiracy".


Banks are fighting the Competition Commission's attempt to add them to its long-standing currency manipulation case.

The commission wants to add nine more institutions into its case, which dates back to April 2015. These include HSBC Bank USA, Merrill Lynch Pierce Fenner and Smith, Bank of America, Credit Suisse Securities (US), Nedbank, FirstRand, as well as Standard Americas.

The commission already included 19 banks in the case, including Absa, Standard Bank, Barclays and Investec. On Monday, it pleaded its case to the Competition Tribunal, asking it to allow nine more banks in the case.  

The commission is accusing the banks of colluding on forex deals and thus manipulating the foreign exchange market by "fixing" the price of the rand for several seconds and even minutes several times between 2007 and until at least September 2013.

The commission said upon analysing more evidence to its disposal, it became apparent that more banks were implicated in the "single overarching conspiracy" to manipulate the rand. It also wants the parent companies of implicated banks to answer, so it has now added FirstRand to the new cohort.

Rand Merchant Bank, which is part of the FirstRand group, was included in the case in June 2020.

How banks allegedly manipulated the rand

Representing the commission, advocate Tembeka Ngcukaitobi said some of the banks were part of two invite-only chatrooms on the Bloomberg trading terminal.

It said the traders used multiple other media channels to communicate beyond the Bloomberg chatroom, including telephone discussions and meetings.

Ngcukaitobi said when the commission analysed trading data of banks that were not part of these chatrooms – including RMB and Nedbank - it found conduct that mirrored what banks in the chatrooms were doing. He said they "coordinated their conduct", repeatedly matching their ask and bid price quotes in many instances. In other instances, they'd allow one bank to dominate the trade of the rand while others withheld their bids.

"By posting the same ask and bid quotes, these banks fixed the spread … What you see is that there is a clear linkage between the conversations taking place at the chatroom and the actual conduct," said Ngcukaitobi.

At one point in March 2012, the banks managed to fix the exchange rate at a constant level for 30 seconds, he said. Again, on 19 September 2012, several banks managed to set the rand at various levels for nearly eight minutes using their ask and bid quotes.

"So, you have in these examples a linkage between what happens in the chatrooms and the actual conduct of traders. You also have a clear impact between the conduct of the traders and the exchange rate," said Ngcukaitobi.

Ngcukaitobi said the effect of that alleged collusion was substantial as nine out of 25 authorised forex dealers in SA were implicated.  

But banks fight back 

The commission launched the investigation into the alleged manipulation in 2015. But after years of pursuing the case, the commission was sent to the drawing board when the Competition Appeal Court ruled in 2019 that it had to file a new charge sheet against the banks.

After failed attempts by the banks to dismiss the commission's case against them, the authority filed its new charge sheet in June 2020, adding new banks to the mix and including parent companies to its case.

HSBC’s legal representative Alfred Cockrell said South Africa does not have the necessary legislation that allows the Tribunal to assert jurisdiction over a company based in another country.

The legal representative of the Bank of America said that the commission had also not made any prima facie case against her clients. She added that there was no evidence at all that any arm of the Bank of America group interacted with any SA bank. Its traders named in the Commission's papers was never alleged to have been in any chatroom that had a member of any SA bank. 

Nedbank’s representative Anthony Gotz said the group only heard that they might be implicated in May 2020, five years after the initial complaint against the other banks. He said he could not understand how the Nedbank Group got dragged into this since it is not a registered bank and is not authorised to deal with forex in SA.

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