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The Fair Trade Commission (FTC) has fined four global banks operating in Korea for illegally sharing information and colluding in price bids to win foreign exchange derivatives contracts from five Korean companies, the antitrust regulator said Sunday.
Those companies or exporters launched the bids to tap investment banks that could help them hedge risks against currency swings and volatility through those contracts including currency swaps.
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| JP Morgan Chase CEO Jamie Dimon |
Deutsche Bank again faces a penalty of 212 million won, and Standard Chartered (SC) Bank Korea faces 5 million won in fines.
Altogether, they will have to pay 693 million won.
The FTC also has warned them of consequences should they conspire again.
The antitrust regulator said it expected the latest measures will bring the market back in order and "positively" affect companies in dealing with currency derivatives for risk management through fair competition.
This came as it has been investigating some foreign investment banks. The Financial Supervisory Service (FSS) has also been probing into a number of cases involving investment banks' price rigging of forex derivatives contracts separately.
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| HSBC CEO John Flint |
From March 2010 to February 2012, JP Morgan Chase, HSBC, Deutsche Bank and SC Bank conspired seven times to sell currency contracts to five corporate clients, according to the FTC.
It did not name the five companies.
The regulator said they rigged the prices of those contracts two ways.
Prior to companies looking to assign the banks to manage their contracts in equal volume, the banks offered the same price to avoid competition.
Also, the four had worked together in order for one of them to win contracts should their clients decide to choose only one bank for derivatives trading management. This would enable them to take turns in winning the bids.
The banks' sales employees shared price information via messenger and phone calls, the FTC noted.
This was not the first time Deutsche Bank and HSBC have been implicated and fined for forex rigging.
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.
