South Africa watchdog seeks penalty against banks for FX rigging

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South Africa's competition watchdog has accused 17 local and global banks of conspiring to fix the price of the rand over the past 10 years, and recommends fining them 10 percent of their annual in-country turnover, Newsweek reported.

The commission said it found that from at least 2007, the respondents 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 United States dollar / rand currency pair.

South Africa's efforts to better regulate foreign-exchange trading follows a price-rigging scandal in which some of the world's largest banks agreed to pay fines and plead guilty to conspiring to manipulate markets after being accused of using online chat rooms to collude.

The Commission recommended that South Africa's Competition Tribunal prosecute the banks and fine them 10 percent of their annual in-country turnover.

Bank of America, JPMorgan, Standard Chartered, Commerzbank, Macquarie Group, Australia & New Zealand Banking Corp, Standard Bank Group, HSBC and BNP declined to comment when contacted by Bloomberg.

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The Competition Commission on Wednesday said banks including Investec Ltd. "These acts of corruption have crudely exposed the ethical crisis in the South African banking sector", the party said in a statement. "Without a doubt, it further raises a question of the extent to which the currency was manipulated with politically motivated intentions", spokesperson Zizi Kodwa said.

The commission said traders of the respondents primarily used trading platforms such as the Reuters currency trading platform to carry out their collusive activities.

When delivering his SONA, Zuma acknowledged that South Africa's competition authorities have done excellent work to uncover cartels and punish them for breaking the law.

The opposition Economic Freedom Fighters is calling for the banks to have their operating licences immediately revoked. Zuma has suggested that Standard Bank, Barclays Africa Group Ltd., FirstRand Ltd. and Nedbank Group Ltd. may have colluded when they closed accounts operated by companies controlled by members of the Gupta family, who are his friends and are in business with his son.

He called on the government and all state institutions to disassociate themselves from the banks that are involved in collusion.

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