Local and foreign banks implicated in alleged collusion of foreign exchange trading have asked the Competition Tribunal to dismiss the case against them as they claim that the Competition Commission has not accumulated sufficient evidence against them. Photographer: Nadine Hutton/Bloomberg
Local and foreign banks implicated in alleged collusion of foreign exchange trading have asked the Competition Tribunal to dismiss the case against them as they claim that the Competition Commission has not accumulated sufficient evidence against them. Photographer: Nadine Hutton/Bloomberg

Competition Commission does not have evidence of collusion on forex trading, says banks

By Edward West Time of article published Dec 2, 2021

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LOCAL and foreign banks implicated in alleged collusion of foreign exchange trading have asked the Competition Tribunal to dismiss the case against them as they claim that the Competition Commission has not accumulated sufficient evidence against them.

The Competition Commission has alleged, in a case initiated in 2015, that the Bank of America, Merrill Lynch International, BNP Paribas, JP Morgan Chase, Australia and New Zealand Banking Group, Standard York Securities, Investec, Standard Bank, Nomura International, Standard Chartered Bank, Credit Suisse Group, Commerbank AG, MacQaire Bank, HSBC Bank, CitiBank, Absa Bank, Barclays Capital and Barclays Bank and Standard Americas Inc. participated in a “single overarching collusion”.

The banks allegedly did this by participating in chat rooms where information on their trading in the rand-dollar exchange rate was exchanged. The commission accused the banks of manipulating the foreign exchange market by “fixing” the price of the rand for periods between 2007 and 2013.

Advocate Greta Englebrecht, appearing yesterday before the Tribunal on behalf of Standard Americas, questioned why the Commission had only included the bank among those implicated three years after the case was first referred to the Tribunal.

Standard Americas was added to the list of respondents by the Commission in 2020.

After a case was referred to the Tribunal by the Commission, she said, the Tribunal only allowed the Commission to investigate specific allegations, which evidence should be directed by the Tribunal.

She said it could not be expected that the Tribunal be presented with a case by the Commission that had insufficient evidence, in the hope that the respondent’s evidence would build up their case at a later stage.

She argued that if the Commission’s referral to the Tribunal brought insufficient evidence the Commission should bear the cost of the dismissal of the referral.

She said prior to the referral the Commission was an investigative body, but once it presented its evidence to the Tribunal it was a prosecutor. She said the Commission, however, could not, in fairness, be both investigator and prosecutor at the same time.

“There has to be a cut-off point. We argue that it is at the referral stage,” she said.

Meanwhile, legal counsel arguing on behalf of Nomura said the allegations against the bank should also be dismissed because the Commission had presented “no pleaded facts” that showed that it had participated in the alleged collusion.

She said the Commission had presented three instances of evidence of brief conversation by two Nomura employees and other traders, twice in 2012 and once in 2010, with only two instances being in chat rooms.

She said the evidence showed that the communication was not frequent, not over extended periods, and did not indicate how the traders had traded in the rand. She said this evidence failed to show how Nomura participated in the alleged “single overarching collusion”.

She said the Commission had presented no objective facts indicating that the firm was a participant in the alleged collusion.

The Commission launched the investigation into the alleged manipulation in 2015, but after years of pursuing the case the Competition Appeal Court ruled in 2019 that the Commission had to file a new charge sheet against the banks.

After failed attempts by the banks to dismiss the Commission's case against them, the authority filed its new charge sheet in June 2020, adding new banks to the mix and including parent companies to its case.

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BUSINESS REPORT ONLINE

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