Citbank, JPMorgan investigated for alleged FX swap bid rigging
By Kim Jae-won
The antitrust agency is widening an investigation into Citibank, JPMorgan & Chase and other foreign banks for allegedly colluding on foreign exchange (FX) swap bids, officials said Thursday.
This follows the imposition of fines on HSBC and Deutsche Bank last month for similar activities.
The Fair Trade Commission (FTC) is conducting a probe into more than 10 foreign banks to ascertain whether they were also involved in rigging the bid process for FX swap transactions, said bank officials familiar with the matter on condition of anonymity.
The list includes Citibank Korea, JPMorgan & Chase, Barclays, Standard Chartered Bank Korea and BNP Paribas, they said.
“The FTC is widening its investigation to other foreign banks after they uncovered wrongdoing at HSBC and Deutsche Bank,” said a director at a U.S. bank in Seoul, also on condition of anonymity.
The investigation came one month after the FTC slapped a fine of 46 million won on HSBC and a 13 million won on Deutsche Bank after it was found they colluded in four bidding processes for FX swap transactions that took place between January 2011 and February 2012.
The FTC declined to comment on the investigation.
Citibank Korea confirmed that the lender is preparing documents on FX bidding swap deals as requested by the agency.
“KFTC requested us information, and we are co-operating with the relevant requests for information,” said the lender in a statement.
A spokeswoman at BNP Paribas confirmed that the French lender is being audited, but declined to elaborate.
A JPMorgan & Chase spokeswoman said that she had no comment about the issue. A PR representative of Barclays said he would check the matter out.
Standard Chartered Bank declined to comment.
An FX swap is a derivative that simultaneously trades for the same amount of one currency for another under two different value dates. It is used by financial institutions and investors to hedge against their foreign exchange positions.
This is the first time that the antitrust agency caught an offense in foreign exchange derivatives trading. The FTC said that it will tighten monitoring of the financial and foreign currency markets to root out other such trading and illegal activities.
The incidents are the latest examples of foreign lenders engaging in wrong doing while conducting business. In January, a Seoul district court sentenced a Deutsche Bank director surnamed Park to five years in prison for stock manipulation in order to avoid losses on derivatives. The lender was fined 43.7 billion won.