National Treasury Expresses Concern Over Standard Chartered Bank’s Admission of Currency Trading Misconduct

The National Treasury has raised concerns following Standard Chartered Bank’s admission of misconduct related to the trading of the Rands/US Dollars currency pair. The South African Competition Tribunal, in its settlement agreement (Case No: CR212Feb17/SA128Nov23) on November 15, 2023, confirmed that Standard Chartered Bank fixed prices and bid-offer spreads between 2007 and 2013.

The Tribunal revealed that the bank’s traders engaged in questionable practices, including coordinating trades through instant messaging platforms and manipulating liquidity to favor specific traders. In response to these findings, Standard Chartered Bank has agreed to pay an administrative penalty of R42,715,880.

National Treasury views this matter seriously and supports the ongoing legal processes. While Standard Chartered Bank admitted fault, other banks implicated in the Competition Commission investigation deny any wrongdoing, emphasizing the need for impartial legal proceedings.

The Treasury underscores the importance of fair market conduct, reflecting the objectives set in the Financial Sector Regulation Act (FSRA) of 2011. The FSRA aimed to establish ethical standards and ensure fair treatment of customers, leading to the creation of a market conduct regulator.

Recent regulatory efforts include the submission of regulations to prevent unfair practices in setting reference rates. Additionally, the National Treasury plans to introduce the Conduct of Financial Institutions (COFI) Bill in 2024 to further enhance transparency and integrity in South African financial markets.

The ongoing reforms address the issues highlighted by Standard Chartered’s misconduct between 2007 and 2013. However, the Treasury clarifies that these incidents did not contribute to the subsequent depreciation of the currency, attributing it to broader economic changes.

The proposed Financial Market Act Bill (FMAB) aims to extend regulations to foreign currency and bring providers of Over the Counter (OTC) securities under the FSRA. These measures align with the government’s commitment to ensuring fair, transparent, and efficient financial markets.

As the legal processes unfold, the National Treasury emphasizes its commitment to rooting out misconduct and fostering a financial environment that safeguards the interests of all stakeholders.