British multi-national bank Standard Chartered has admitted to its role in manipulating the dollar-rand exchange rate and has agreed to pay an administrative penalty of R42.7m, ending roughly eight years of litigation with SA’s competition authorities.

Fin24 report says this comes after the London-headquartered lender reached a settlement with the Competition Commission and admitted its role in fixing bid, offers, bid-offer spreads as well as other activities aimed at manipulating the dollar-rand exchange rate.

The commission said in a statement that Standard Chartered had also participated in dividing markets by allocating customers in terms of which one trader withholds or pulls an existing bid or offer from the market to allow another trader to execute and complete a separate trade.

‘The commission welcomes Standard Chartered’s decision to reach a settlement on this matter and encourages other respondent banks to consider settling the complaint against them,’ Competition Commissioner Doris Tshepe said in the statement.

‘This settlement affirms the commission’s pursuit of allegations related to the manipulation of the USD/ZAR currency pair, given the ultimate impact of the currency manipulation on the value of the SA rand.’

Standard Chartered’s admission of guilt comes amid hearings at the Competition Appeal Court (CAC) in which 28 local and international banks are challenging allegations that they were part of an overarching conspiracy to manipulate the rand’s value by colluding using messaging platforms on Bloomberg, Reuters and other platforms. 

The CAC hearings, which are being chaired by Judge Dennis Davis this week, have seen legal representatives from the accused banks argue against the merits of the case against them.

They are also questioning it on jurisdictional grounds given that much of the forex trading that impacts the rand takes place offshore.

Standard Chartered, which was among the 28 banks implicated in the Competition Commission’s foreign exchange rigging case, has seen its settlement agreement filed with the Competition Tribunal for confirmation.

The Competition Commission first lodged a complaint in April 2015 against various financial entities, including Barclays Bank, Barclays Africa Group, BNP Paribas, BNP Paribas SA, Citigroup, Citigroup Global Markets, JP Morgan Chase & Co, JP Morgan SA, Investec, Standard New York Securities and Standard Chartered Bank. 

The complaint centred on allegations that the companies had been involved in a concerted effort to manipulate the rand exchange rate in violation of the Competition Act.

In August 2016, the Competition Commission amended the complaint to add Absa, Barclays Capital, Credit Suisse Group, Commerzbank, Bank of America Merrill Lynch, HSBC Bank, ANZ, Citibank, JP Morgan, Nomura International, Macquarie Group, and JP Morgan Chase Bank.

The amendment included allegations of market allocation, an anti-competitive practice that involves dividing up customers amongst participants, as well as claims the respondent banks had assisted each other by allowing a trader with a significant open risk position to complete trades before others and by manipulating market liquidity.

On 15 February 2017, the commission referred the matter to the tribunal for adjudication, reports Fin24.

Though Citibank settled with the commission in 2017, due to various legal challenges against competition authorities from other respondents, the matter has ended up in the CAC. 

While Standard Chartered's settlement finalises the case against it, the agreement with competition authorities could have implications for the adjudication process against the remaining respondents.

Full Fin24 report

See also full Business Day report