FINMA bans UBS traders over FX manipulation

18 December,, Lagos – The long running probe into the alleged manipulation of the $5 trillion dollar currency market has resulted in further chastisement. This time upon traders rather than banks, as FINMA bans UBS traders over FX manipulation. The Swiss Financial Market Supervisory Authority (FINMA) has deemed if fit to issue industry bans on these UBS traders of between one and five years against six managers and traders.

These individuals are ex employees of UBS foreign exchange and precious metals department. Following an extended investigation, FINMA bans UBS traders having concluded that these individuals were directly responsible for the serious breaches of regulation at UBS, based on findings in 2014.

Negligence of managers

The Swiss regulator initially opened 10 proceedings, but dropped four enforcement proceedings in August 2015. Hence, FINMA bans UBS traders for the continuing six alleged individuals. The conclusion reached is that the concerned individuals bore significant responsibility for the serious organisational shortcomings and improper conduct at UBS. This has resulted in the industry bans against the then responsible heads of global foreign exchange trading and global foreign exchange spot trading, prohibiting them from holding senior management positions at institutions supervised by FINMA for periods of four and  five years respectively. Four foreign exchange and precious metals traders who worked on the spot trading desk in Opfikon were also hit with bans of at least one year. There is still an ongoing proceeding against one UBS employee.

The Swiss regulators discovered that the heads of the management of foreign exchange trading tolerated, and at times encouraged, behavior which was improper and against the interests of clients. Investigation showed that the managers were aware of the fact that traders were able to use chat groups to share information. But the ignored the risks involve, even though they fully understood the extent. Hence, the failed to implement adequate systems and controls and to consistently monitor compliance with internal and external rules. This negligence encouraged the sharing of confidential client information, sometimes revealing the identity of clients to third parties, deliberately triggered stop-loss orders and engaged in front running. They also repeatedly attempted to manipulate foreign exchange benchmarks.

These findings brought FINMA to the conclusion that these persons are individually responsible for the serious breaches of regulation in foreign exchange and precious metals trading at UBS.

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