US stock market daily report (January 15, 2014, Wednesday)
January 16, 2014, Thursday, 05:40 GMT | 00:40 EST | 10:10 IST | 12:40 SGT
Deutsche Bank reported on Wednesday that, several New York currency traders have been suspended. The suspensions come as part of an internal probe by Deutsche with an international investigation into alleged manipulation of the global currency markets. Deutsche Bank is the largest bank in Germany. Investigations into communications across a number of currencies are affecting numerous traders located in New York and potentially other parts of the country as well.
In a statement from Deutsche Bank, "Deutsche Bank has received requests for information from regulatory authorities that are investigating trading in the foreign exchange market. The Bank is cooperating with those investigations, and will take disciplinary action with regards to individuals if merited."
For nine years running, Deutsche Bank has been the largest FX trader in the world, seeing 15.18% of global daily turnover during 2013.
During 2013, a formal investigation into possible manipulation in the $5.3 trillion-a-day global FX market was launched by Britain's Financial Conduct Authority. An active investigation into possible manipulation of the FX market is also underway from the U.S. Justice Department.
Used to price trillions of dollars worth of investments and deals, benchmark foreign exchange rates are a cornerstone of global financial markets and relied upon by companies, investors and central banks. Benchmark foreign exchange rates are determined by trades executed in a minute-long period called “the fix” at 4 pm in London each day. Traders can push the rate up or down by concentrating orders in the moments before and during the 60-second window. In the Forex industry, this process is known as “banging the close.”
Reports out today imply that one Deutsche Bank trader in New York who traded Argentine pesos had been suspended. Reportedly, emails were found that led to suspicion that rates had possibly been manipulated.
On January 1, 2014, Deutsche Bank extended a ban on the use of multi-dealer online chat rooms to all its corporate banking and securities business. Regulators have maintained a focus on chat rooms during their investigation into the manipulation of benchmark interest rates as well as possible rigging in the FX market. Traders at banks and financial institutions frequently communicate with each other online via third-party services and chat rooms including Bloomberg LP and Thomson Reuters.