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A trader from HSBC visits multiple chatrooms in an attempt to manipulate the 4pm WMR fix, declaring he is a net seller in “cable” (a slang term for GBP/USD currency pairing).

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Nov 12,  · Forex traders plotted strategy in secret chats. Traders of major banks fined an estimated $ billion for foreign exchange market manipulation used electronic chat rooms to plot their moves.

But banks offering a fixing service guarantee their clients the market mid-rate at this point in time. Traders with big orders to process therefore risk losing a significant amount if the market moves against them in the run-up to the fix — and the incentive to collude and try to make the exchange rate move in their favour is strong.

The FCA detailed one example of how some traders at Citi were able to manipulate the 1. Furthermore, traders in a chatroom with net orders in the opposite direction to the desired movement at the fix sought to transact before the fix with traders outside the chatroom.

Having netted off its sell order with another party, one trader commented in the chatroom: In the 15 seconds before the ECB fix, Citi placed four buy orders of increasing size and price which were priced at a level above the prevailing offer price.

It allegedly colluded with traders from at least three other banks who, like it, were wanting to drive the rate lower. Reply from Firm A: The FCA said these early trades were designed to take advantage of the expected downwards movement in the fix rate following the discussions within the chatroom. In a chatroom conversation, it offers to transfer this order to Firm A. The FCA said these trades were designed to take advantage of the expected upwards movement in the fix rate following the discussions within the chatroom.

Between them they accounted for 41 per cent of the euro-dollar trade. Another firm responds by netting off part of its sell order with two other parties outside the chatroom. In a separate chatroom, RBS told three other traders: I agree to have my account email address added to the Free Trader Chat newsletter mailing list. I understand that I can unsubscribe at any time. All content found on this website belongs soley to the website owner.

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