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EXCLUSIVEJP Morgan, Citibank under probe over alleged forex rigging

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The headquarters of JP Morgan Chase in New York / Yonhap
The headquarters of JP Morgan Chase in New York / Yonhap

By Park Hyong-ki

The country's financial regulators are investigating the alleged involvement of foreign investment banks in colluding to secure and rig foreign exchange swap contracts, according to government and industry sources, Monday.

They said that investment banks JPMorgan Chase and Citibank are being looked into as part of the Fair Trade Commission (FTC) and the Financial Supervisory Service's (FSS) ongoing probe into a number of cases since 2011.

The local investigation started amid a worldwide forex scandal that led global authorities to look into the implications of renowned investment banks colluding and fixing rates on currency derivatives.

Some cases have been closed here, while others are still being examined by the regulators, according to the FTC and the FSS.

The antitrust agency looks into whether involved parties have engaged in unfair competition, while the FSS's task is to uncover possible illicit financial dealings behind these unfair practices, an industry source said.

JPMorgan and Citibank are on the list of investment banks subject to the probe.

"Those two are included in the ongoing assessment of a long line of allegations that have yet to be resolved," an FTC official with knowledge of the situation said.

An FSS official said he could not offer any details, but indicated that the financial regulator has not yet finished its investigation, which is being conducted separately from the antitrust regulator.

So far, the FTC has fined and imposed disciplinary measures on Deutsch Bank, HSBC and BNP Paribas for conspiring to take turns to win bids for derivatives contracts from companies or exporters that were looking to hedge risks against currency swings and volatility.

Deutsche Bank was fined in 2016 and 2017 as the German investment bank colluded with HSBC in currency swap bids, and then with BNP Paribas, according to the FTC.

In 2016, Deutsche Bank and HSBC were found to have colluded in a bid for currency spot and forward contracts worth $88 million. The year after that, Deutsche Bank and BNP Paribas were discovered to have rigged bids 45 times from 2011 to 2014.

These banks, and JPMorgan Chase, have all been named co-conspirators in the widespread forex rigging scandal overseas.

After the authorities in the United States and Europe launched investigations and lawsuits, local regulators expanded the scope of their probe.

In 2017, the U.S. Department of Justice said these banks that colluded on bid rigging and price manipulation were part of a group named "the Cartel."

South Africa also fined Citibank and implicated others including JPMorgan Chase over currency trading collusion in 2017. The regulator there said Citibank had engaged in unfair practices with its competitors since 2007.

Citibank Korea and JPMorgan Chase Seoul declined to comment.

The daily trading volume in the global currency market averages $5 trillion, according to the Bank for International Settlements.


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