‘Nice work gents’: FCA transcripts show forex traders’ back-slapping culture

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Traders using private chat rooms and calling themselves “the players”, “the 3 musketeers”, “1 team, 1 dream”, “a co-operative” and “the A-team” were uncovered during the regulatory investigation into foreign exchange rigging.

Hundreds of pages of documents released by the Financial Conduct Authority (FCA) and the Commodity Futures and Trading Commission show the way that traders tried to manipulate a crucial foreign exchange price – known as the “4pm fix” – to make profits.

At the end of one such effort, traders in chat rooms congratulated themselves:

“nice work gents...I don my hat”
“Hooray nice team work”
“bravo...cudnt been better”
“have that my son...v nice mate”
“dont mess with our ccy [currency]”

The 4pm fix is used by fund managers and other major investors to get a price for a range of currencies and it’s based on trading activity 30 seconds before and after 4pm.

One of the traders quipped: “there you go ... go early, move it, hold it, push it.” HSBC, one of the five banks fined on Wednesday, stated: “loved that mate... worked lovely... pity we couldn’t get it below the 00” and “we need a few more of those for me to get back on track this month”.

So what are they talking about? The “00” is a reference to the sterling dollar rate – in this instance 1.6000. The FCA provides an example of the trading activity that took place in the period between 3.32pm and 4.01pm and which allowed HSBC to generate profits of $160,000.

Between 3.32pm and the start of the fixing window – 30 seconds before 4pm – the pound dollar rate fell from 1.6044 to 1.6009.

The FCA said HSBC sold £70m in advance of this 4pm fix to take advantage of the expected downward movement in the fix rate because of the chat that had taken place beforehand when traders had discussed the orders they had received. One trader said they intended to “bash the fck out of it”.

In the first five seconds of the fix window, HSBC then entered nine orders to sell £101m, and the rate fell from 1.6009 to 1.600. HSBC sold £311m in total during the fix window and the rate was finally published at 1.6003.

One RBS trader described the information discussed in the chat rooms as “a 3 way relationship built on immense trust” and, thanking a trader at another firm, wrote: “cheers for saying you were the same way helped me go early.”

Traders trying to remove orders that might have moved the market against them talked about “taking out the filth” and “clearing the decks”.

One transcript shows traders at three banks discussing whether to invite a fourth into their chat room. One trader urges caution, as they don’t want “other numpty’s in the market” to know what they’re up to. The trader adds:

“but not only that
“is he gonna protect us
“like we protect each other against our own branches”

Other transcripts show traders discussing “cable”, the word used in the City to describe the exchange rate between dollar and sterling, which is also known as “betty”. One trader says at 2.50pm: “early days but im a seller cable at fix.” At 3.35pm another says: “get lumpy cable at the fix ok.” Another says: “yeah baby.”

After the fix closes they say:

“nice job mate”

“haha”

“i sold a lot up there

“sweet nice job”

“bravo”

Powered by Guardian.co.ukThis article was written by Jill Treanor, for The Guardian on Wednesday 12th November 2014 10.24 Europe/London

guardian.co.uk © Guardian News and Media Limited 2010

 

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