The affected banks are BNP Paribas and its subsidiary BNP Paribas South Africa, Citigroup Inc and their SA unit Citigroup Global Markets, Barclays Bank Plc, including Barclays Africa Group Ltd which houses Absa, JP Morgan Chase & Co and JP Morgan South Africa, Investec Ltd, Standard New York Securities Inc, a division of Standard Bank, and Standard Chartered Bank.
The commission alleges that the banks have “been directly or indirectly fixing prices in relation to bids, offers and bid-offer spreads” related to currency trades. This would be in contravention of the Competition Act of 1998, as amended in 2009.
“The alleged collusion (in rand denominated trade) was carried out through electronic messaging platforms used for currency trading, which enabled the respondents to co-ordinate their trading activities when quoting customers who buy or sell currencies,” the commission said in a statement, adding that such co-ordination had the effect of eliminating competition among banks by enabling them to charge an agreed price for a specific amount of currency to be traded.
The commission said the conduct was not unique to South Africa and had been probed by regulatory authorities in other countries.
“Conduct of this nature distorts the price of foreign exchange and artificially inflates the cost of trading in foreign currency paired with the South African rand,” Competition Commissioner Tembinkosi Bonakele said in a statement noting the commission’s determination “to pursue cartels affecting South Africa wherever they take place”.
After the rand fell to record levels against the dollar in 2002, former president Thabo Mbeki established the Myburgh commission to probe the causes. While exchange controls were found to have been flouted and currency swaps set up for South African companies found to be risky and questionable, none were found to be the cause of the currency’s crash.