The foreign-exchange market is losing a slew of traders from big banks as a probe into alleged manipulation of benchmark rates widens and pressure mounts on the industry to reduce costs.
More than 30 traders from 11 firms have been fired, suspended, taken leaves of absence or retired since October, when regulators said they were investigating the market, according to data compiled by Bloomberg. London-based Barclays Plc (BARC) and Zurich-based UBS AG (UBSN) have been the worst-hit, each suspending at least half a dozen employees, the data show.
“That’s a considerable percentage of the workforce,” said Brad Bechtel, managing director at Faros Trading LLC in Stamford, Connecticut, who estimated the world’s largest banks have 80 to 160 voice traders for spot rates in the currencies market. “That explains the lack of liquidity in the market, and why what would normally be considered a small trade can actually push the market around more than normal.”
Regulators around the world are investigating allegations traders colluded to rig key foreign-exchange benchmarks used by investors and companies by pushing through trades before and during the 60-second windows when the WM/Reuters rates are set. At the same time, banks are trying to fight shrinking margins by replacing humans with computers, accelerating a longer-term shift in trading onto electronic platforms.
About 200 traders at smaller firms focus on spot exchange rates, Bechtel estimated in an e-mail.
UBS gained less than 1 percent to 18.40 Swiss francs today in Zurich. Barclays rose 0.8 percent to 252.2 pence in London.
Authorities are examining whether bank traders communicated with dealers at other firms and timed trades to influence benchmarks and maximize profits. Some exchanged information on instant-message groups with names such as “The Cartel,” “The Bandits’ Club,” “One Team, One Dream” and “The Mafia.” No firms or traders have been accused of wrongdoing by government authorities.
Regulators from Bern, Switzerland, to Washington opened inquiries into the $5.3 trillion-a-day market after Bloomberg News reported in June that traders colluded to rig the WM/Reuters rates. No firms or traders have been accused of wrongdoing by government authorities.
Chris Ashton, global head of spot trading at Barclays, was suspended last year along with other spot traders at the bank in London and New York. New York-based Citigroup Inc. (C) said in January it fired its head of European spot trading, Rohan Ramchandani.
While many personnel moves were prompted by the probes, some people pointed to other motivations while stepping back.
Lloyds Banking Group Plc (LLOY)’s global head of spot foreign exchange, Darren Coote, resigned from the London-based firm for personal reasons, people with knowledge of the move said earlier this month.
James Pearson, Royal Bank of Scotland Group Plc’s head of trading for currencies in Europe, the Middle East and Africa, is taking a five-month sabbatical, also for personal reasons, the Edinburgh-based company said this week.
Deutsche Bank AG (DBK) said this week that its global head of foreign exchange, Kevin Rodgers, will retire in June. Rodgers, 52, plans to focus on academic and musical interests, according to the Frankfurt-based bank. His decision wasn’t prompted by the inquiries, according to a person briefed on his plans.