Forex investigation fallout – limits on bank traders betting own money

Trading on personal accounts is getting quite unpopular, can it be stopped?

According to an FT article that was just published yesterday we have a new nuance to the FX fix manipulation. Major banks including Deutsche Bank, Royal Bank of Scotland and UBS are vigilantly reviewing internal rules on their employees trading on personal accounts according to sources close to the matter. The lenders are aiming to limit access of their staff to ways to profit from possible manipulation of forex rates.

The field is murky, since foreign exchange markets are generally used one way or another by a pretty big chunk of the population worldwide. Nobody can forbid you to buy some Russian rubles if you have decided to visit the Sochi Olympics event, right? A common practice is to require traders to declare their personal accounts, while an automatic email message is sent to the bank when a trade is conducted.

Sources cited in the article claim that Deutsche is looking to limit how much money each trader will be allowed to trade in each currency. The practice is already used at Lloyds, while JPMorgan has outright banned personal trading in instruments in which a trader has significant involvement during his working hours at the bank.

As the paper has already revealed last year, the UK’s FCA is investigating personal accounts of forex traders in relation to the probe. However in our view it is virtually impossible to track whether traders have used their knowledge to realize personal gains. All one needs is to ask a trustworthy friend to open an account for him and send him a message or two once in a while. Who can really trace this? (Aside from the NSA…)

For the full article cited above visit the Financial Times’ website.

For more on the global Forex industry see the LeapRate-Dow Jones Forex Industry Report.

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