Cape Town – South Africa’s standing as a respected exporter and importer is founded on a free-floating currency and cannot be compromised by interference in the market, Business Leadership South Africa (BLSA) said in a statement, following the Competition Commission’s investigation into the manipulation of currency trades by 17 banks.
The BLSA on Friday said it is against anti-competitive and collusive behaviour. “We support the ongoing investigation and believe that the law should follow its course.”
On Wednesday the commission declared it has been investigating a case of price-fixing and market allocation in the trading of foreign currency pairs involving the rand since April 2015. It has now referred the case to the tribunal for prosecution.
Banks implicated include local players Absa, Investec and Standard Bank as well as big international players such as HSBC, Standard Chartered and Nomura International.
The commission is seeking an order from the tribunal affirming that the respondents have contravened the Competition Act and is also seeking an order declaring that the banks are liable for the payment of an administrative penalty equal to 10% of their annual turnover.
BLSA further said it notes that the South African Reserve Bank (SARB) is in the process of tightening regulations to improve market conduct in this regard.
“We support the principles of that work and we hope the Reserve Bank will work with the banking sector to achieve safeguards for the public and the economy that do not unduly restrict the functioning of the sector.”
According to the Competition Commission, it found that from at least 2007, the said banks had a “general agreement to collude on prices for bids, offers and bid-offer spreads for the spot trades” in relation to currency trading involving US dollar/rand currency pair.
In addition, it found that the respondents manipulated the price of bids and offers through agreements to refrain from trading and creating fictitious bids and offers at particular times.
National Treasury has added its voice of concern saying it views the claims in a very serious light. "We welcome any steps taken against wrong-doing by any financial institutions, and will respect whatever outcome of this process at the Competition Tribunal," it said in a statement.
ABSA, Standard Banks and Investec said they will work with authorities relating to the matter.
Investec on Friday said the case against it is confined to the conduct of a single trader.
"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."Read Fin24's top stories trending on Twitter: Fin24’s top stories