Matt Levine, Columnist

Banks Manipulated Foreign Exchange in Ways You Can't Teach

The way you push an FX fixing up is, you buy a lot at the fixing, or sell a lot, or do neither. One of those should work. Maybe.

November 13, 2014 at 12:15 AM UTC

By Matt Levine

Matt Levine is a Bloomberg Opinion columnist. A former investment banker at Goldman Sachs, he was a mergers and acquisitions lawyer at Wachtell, Lipton, Rosen & Katz; a clerk for the U.S. Court of Appeals for the 3rd Circuit; and an editor of Dealbreaker.

Provide news feedback or report an error

Site feedback:

Take our Survey

"The FX market, in which traders are able to buy, sell, exchange and speculate on currencies, is one of the world's largest and most actively traded financial markets," with trading averaging $5.3 trillion a day.1 And six of the biggest banks in that market just settled charges of manipulating it, paying a total of about $4.3 billion to a bunch of regulatory agencies, with a bunch more regulators (and Barclays!) still to come.2 So that seems like a big deal. Bigger than Libor, even, though still a speck next to the Everest that is Bank of America's pile of mortgage settlements.

I guess you could ask, well, OK, but how much money did those banks make manipulating that $5.3 trillion foreign exchange market? I don't know! No one seems to care. The U.K. Financial Conduct Authority says "that it is not practicable to quantify the financial benefit"3 that each bank got from its manipulations; the U.S. Commodity Futures Trading Commission and Office of the Comptroller of the Currency don't even acknowledge that the question might be interesting.