US authorities probe brokers over FX manipulation


24 November, AtoZForex.com, Lagos – The investigation into whether some of the world’s largest banks connived to manipulate the $ 5 trillion a day currency markets has already led to levies tops of $ 10 billion dollars upon banks globally. Interestingly, a new case is brewing in relation to another market manipulation effort on the FX markets.

FX spoofing probe

This time, the probe targets brokers. The new investigation by the New York attorney general is looking into whether fake bids and offers in FX options were posted on the electronic trading platforms hosted by the interdealer brokers, in order to spike up interest from options traders in largely illiquid emerging-market currencies. This technique is popularly referred to as spoofing or ghosting as they deceptively aim at creating the impression of activity where there is no real value.

Eric Schneiderman, the current New York Attorney General has been particularly active in cracking down on the activities of unfair market practices in the U.S. stock market over the past year. The latest spoofing investigation in the FX market has prompted the issue of subpoenas for records to interdealer brokers including TFS-ICAP, Tullett Prebon Plc, BGC Partners Inc. and GFI Group Inc., A person with knowledge of the matter said.

Shares dip

Although, the investigation into the  FX manipulation case is still at an infant stage, share prices of ICAP dropped 1 percent after the news was made public, while Tullett Prebon lost 1.1 percent. BGC slumped 5.6 percent, the largest one-day decline since March 2014. Cie. Financiere Tradition rose 0.6 percent.

Back in 2013, ICAP was fined $88 million in 2013 by U.S. and British officials for allegedly helping banks rig Libor. Also, some traders at firms including ICAP and Tullett Prebon are on trial now for allegedly aiding and abetting ex-Citigroup Inc. trader Tom Hayes manipulate Libor.

Already, the global inquiry into the Libor manipulation case has led to authorities around the world levying heavy fines on some of the world’s most powerful banks and brokerages, aggregating about $9 billion. Also, 21 men have been charged with wrong doing so far in connection with the case.

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