Exclusive: FX chatrooms show traders shared order, price details - sources

Thu Jun 19, 2014 11:03am EDT
 
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By Jamie McGeever

LONDON (Reuters) - British investigators are examining millions of electronic messages which include fresh evidence of possible collusion by a small group of top currency traders, sources say.

The investigators have been handed chatroom transcripts showing senior dealers at the big banks that dominate the largely unregulated foreign exchange market routinely sharing intelligence on orders they were about to place for clients.

The traders pooled order details from hedge funds and discussed the prices they should be offered, said the sources, who have seen some of the messages at the center of an international probe into alleged collusion in world foreign exchange markets.

In a chatroom transcript from April 2012, two traders discussed the "spread" that should be given to a certain hedge fund. The fund wanted a spread of five basis points on its foreign exchange order, but the first trader offered a spread of six.

A wider spread is effectively a less advantageous price to the customer, in this case the hedge fund, and a more attractive price to the market-making bank.

    "I don't like this guy, as he's asking two or three banks at the same time," said the second trader in the chat, according to a person familiar with the contents of the transcript.

    "I'd show 6 to good guys but guys like that I'm going to show 7 in future," the trader added.

    The first trader then decided to quote a spread of 7 basis points, said the person familiar with the transcript.       Continued...

 
United States dollar banknotes are seen at the Museum of American Finance in New York October 15, 2010.   REUTERS/Shannon Stapleton