Hitting them where it hurts – big banks withhold bonuses for forex traders

Barclays, Citi and RBS have frozen bonuses across their FX trading teams, pending outcome of 4pm fix investigations.

Temporary suspensions are one thing, but if you really want to hurt traders, take away their bonuses…. The Financial Times has reported that several leading global banks including Barclays (NYSE:BCS), Citi (NYSE:C) and Royal Bank of Scotland (NYSE:RBS) have frozen bonuses across their FX trading teams, pending both internal and regulator investigations into the manipulation of FX rates, in particular the 4pm fix.

The bonus suspensions, covering both cash and share payments, involve the wider FX teams at these banks, rather than just the traders under investigation, according to FT.

Bonuses can reach up to $2 million for top forex traders. The bonus freeze crosses international boundaries, affecting traders in London, New York and elsewhere. It also stretches beyond spot trading desks to derivative trading units.

A number of big banks have suspended, fired, or put on ‘temporary leave’ many senior FX personnel, as the investigation into the benchmark 4pm London fix continues. Many if not most of the world’s leading financial regulators on several continents are involved and cooperating in the investigation, alongside police units such as the FBI. Given the complexity of the investigation, the number of parties involved and the number of entities and people being investigated, it is expected that the investigation will continue well into 2014 and possibly even 2015 before conclusions are reached and action is taken.

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

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