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Saturday, June 22nd, 2013

Traders Said to Rig Currency Rates to Profit Off Clients

Author:     LIAM VAUGHAN, GAVIN FINCH and AMBEREEN CHOUDHURY
Source:     Bloomberg
Publication Date:     Jun 12, 2013 11:06 AM PT
 Link: Traders Said to Rig Currency Rates to Profit Off Clients
Stephan:   The nearly utter failure of the Obama Administration Justice Department to effectively deal with the corruption of the financial sector, is a decision which I believe history will rank as one of the pivotal failures creating the decline of America. And because it has not been dealt with, of course, it just goes on. Here is the latest. It is at once despicable, and completely familiar, if not in its details, in its existence due to the failure of proper regulation.

Traders at some of the world’s biggest banks manipulated benchmark foreign-exchange rates used to set the value of trillions of dollars of investments, according to five dealers with knowledge of the practice.
Enlarge image Traders Said to Manipulate Currency Rates to Profit From Clients

A boy adjusts number tiles displaying the exchange rate on a currency exchange board at night in Bishkek, Kyrgyzstan. Photographer: Noriko Hayashi/Bloomberg
Enlarge image Traders Said to Manipulate Currency Rates to Profit From Clients

It may be difficult to prosecute traders for market manipulation, as spot foreign exchange, the trading of one currency with another at the current price for delivery within two days, isn’t classified as a financial instrument by regulators, said Arun Srivastava. Photographer: Jin Lee/Bloomberg

Employees have been front-running client orders and rigging WM/Reuters rates by pushing through trades before and during the 60-second windows when the benchmarks are set, said the current and former traders, who requested anonymity because the practice is controversial. Dealers colluded with counterparts to boost chances of moving the rates, said two of the people, who worked in the industry for a total of more than 20 years.

The behavior occurred daily in the spot foreign-exchange market and has been going on […]

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