Banks Rig $4.7 Trillion A Day Currency Markets To Profit Off Clients

Tyler Durden's picture

From GoldCore

Banks Rig $4.7 Trillion A Day Currency Markets To Profit Off Clients

The world’s biggest banks have been manipulating benchmark foreign-exchange rates used to set the value of trillions of dollars of investments, according to a Bloomberg investigation.

Employees have been front-running client orders and rigging WM/Reuters rates by pushing through trades before and during the 60-second windows when the benchmarks are set, said five current and former traders, who requested anonymity because the practice is controversial. 

Dealers colluded with counterparts to boost chances of moving the rates, said two of the people, who worked in the industry for a total of more than 20 years.

The behavior occurred daily in the spot foreign-exchange market and has been going on for at least a decade, affecting the value of funds and derivatives and all investments. 

The Financial Conduct Authority, Britain’s markets supervisor, is considering opening a probe into potential manipulation of the rates, according to a person briefed on the matter.

Informed observers have long warned that the global $4.7-trillion-a-day foreign exchange market, the biggest in the financial system has all the hallmarks of a casino.

The inherent conflict banks face between executing client orders and profiting from their own trades is exacerbated because most currency trading takes place away from exchanges.

Gold in Euros, 3 Year – (Bloomberg)

The FCA already is working with regulators worldwide to review the integrity of benchmarks, including those used in valuing derivatives and commodities, after three lenders were fined about $2.5 billion for rigging the London interbank offered rate, or Libor. Regulators also are investigating benchmarks for the crude-oil and swaps markets.

“The price mechanism is the anchor of our entire economic system,” said Tom Kirchmaier, a fellow in the financial-markets group at the London School of Economics. “Any rigging of the price mechanism leads to a misallocation of capital and is extremely costly to society.”

The benchmarks are based on actual trades or quotes, rather than the bank estimates used to calculate Libor. Still, they’re susceptible to rigging, according to the five traders, who said they had engaged in or witnessed the practice.

The traders interviewed by Bloomberg News declined to identify which banks engaged in manipulative practices and didn’t specifically allege that any of the top four firms were involved. Spokesmen for Deutsche Bank, Citigroup, Barclays and UBS declined to comment.

It is becoming increasingly evident that many key financial markets are being rigged and manipulated by banks and central banks today. Some of the manipulation is overt, some is covert.

The world's largest banks are fixing prices in many key markets and benchmarks which is affecting the value of money itself and will ultimately leading to the value of money in your pocket becoming worth much less. 

It is distorting markets and leading to a false sense of security and unwarranted and dangerous risk appetite.

It leads to a heightened risk of market dislocations, market crashes and monetary crisis. It could also lead to the much anticipated default on the COMEX as more and more nervous investors, individual and institutional, opt to take delivery of physical bullion.

This makes owning physical gold in your possession or in a vault that you can ship from at will more vitally important than ever before.

Gold In British Pounds, 3 Year – (Bloomberg)

Comex, Nymex Gold Delivery Issues, Stops for June 11
The following is a table detailing daily issues and stops related to deliveries of gold against expiring contracts traded on the Comex or the New York Mercantile Exchange for June 11, according to CME Group Inc.

The notices reflect the movement of metals to offset each long or short futures position with supplies held in exchange-monitored warehouses. Issuers are making deliveries, and stoppers are taking deliveries.


                         June 11    June 10      June 7   June 6     June 5    June 4

                            2013         2013        2013       2013       2013      2013


                 -------------------------- Gold ----------------------------

Issues/stops           18        195               132        318        826       333

 Month to date      7,871      7,853           7,658      7,526      7,208     6,382

Settlement        1,377.0    1,386.2        1,383.0    1,415.7    1,398.4   1,397.1

Delivery date    06/13/13   06/12/13   06/11/13   06/10/13   06/07/13  06/06/13

Contract        June 2013  June 2013  June 2013  June 2013  June 2013 June 2013


                June 11    June 10     June 7     June 6     June 5    June 4

                 2013       2013       2013       2013       2013      2013

SOURCE: CME Group Inc. via Bloomberg

Comex Issues and Stops of Silver by Firm for June 11 (Table)
The following is a table detailing daily issues and stops by company related to deliveries of silver against expiring contracts traded on the Comex, according to CME Group Inc.

The notices reflect the movement of silver to offset each long or short futures position with supplies held in exchange-monitored warehouses. Issuers are making deliveries, and stoppers are taking deliveries.


Account       Firm                               Issued    Stopped


              ----------------------  June 11  -----------------------

              Daily Total                               55         55

              Month to Date                                     90


House         Nova Scotia                       0         21

Customer      JP Morgan                     36          0

House         JP Morgan                        19          0

Customer      ABN Amro                        0         34


Account       Firm                               Issued    Stopped


              ----------------------  June 10  -----------------------

              Daily Total                                  2          2

              Month to Date                                      35


House         Nova Scotia                        0          2

Customer      JP Morgan                       2          0

              ----------------------  June 5  -----------------------

              Daily Total                               11         11

              Month to Date                                       33


House         Nova Scotia                         0          8

Customer      JP Morgan                        0          3

Customer      ABN Amro                      11          0

              ----------------------  May 31  -----------------------

              Daily Total                                  2          2

              Month to Date                                      22


House         Nova Scotia                       0          2


Account       Firm                               Issued    Stopped


Customer      PTG Div. Newedge          2          0

              ----------------------  May 30  -----------------------

              Daily Total                                  20         20

              Month to Date                                         20


Customer      Merrill                                  5          0

House         Nova Scotia                          0         13

Customer      JP Morgan                          0          5

House         JP Morgan                           15          0

Customer      PTG Div. Newedge           0          2

SOURCE: CME Group Inc. via Bloomberg


Bloomberg News Investigation Finds Big Banks Manipulate Currency Markets - Bloomberg

Japan To Adopt 'Bail-Ins' - Yahoo

Gold extends declines into 2nd day on stimulus worries - Reuters

Gold Near Two-Week Low as Investors Weigh Global Stimulus Curbs - Bloomberg


Smart Wealthy Want Physical - "Rather Own A Gold Bric" - CNBC

JPM Vault Gold Drops By 28.4% Overnight, Slides To Fresh Record Low As Withdrawals Accelerate – Zero Hedge

Explosive Positioning In Gold Futures – You Tube

When Bond Bubble Bursts, Investors Will Get Hurt – The Telegraph

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TeamDepends's picture

So ready for the paper charades to end....

Badabing's picture

A  revelation?, epiphany?, Give me a break, this shit has been going on since 1913.

fucking Banks!

francis_sawyer's picture

I think we should make them stand there & eat cheese bagels while the rest of the platoon does pushups for punishment...

smlbizman's picture

they need to stop comparing these fucks to casinos.....

bania's picture

thank god they don't manipulate gold.

hungarianboy's picture

I don't understand all this. can somebody explain in normal words? They hunting for stops or WTF?

RockyRacoon's picture

... considering opening a probe into potential manipulation of the rates...

Well now, that's comforting to hear.

ParkAveFlasher's picture

FOREX needs a real Bart Chilton-type to, you know, scare these guys with letters to blogs, and stuff.

madcows's picture

Don't get Muppet-ed!

Time to go Galt, or McMansion squating, or somehow "off the grid self reliant and sufficient and free of collusion, corruption and the Orwellian Stasi-State."

Headbanger's picture

Muppets is as muppets does

Racer's picture

They get a feather slap of $2.5billion fine for generating how many billions of profit for themselves?

They laughed so loud all the way to the bank that their sides must have been splitting


GetZeeGold's picture



Reminds me of the OJ SImpson trial.


The judge hits them with contempt....and the lawyer pulls out the predesignated envelope.

kridkrid's picture

Rogue agents doing this... no reason to punish the whole firm... I'm sure that they are as shocked as we are... - shocked I tell you.

mattdubz86's picture

i see this happening every day.

El Hosel's picture

... Can I please speak to the head Rigger In Charge? Inhale to the chief.

also see:

toadold's picture

"I'm shocked I tell you? Shocked!"  

"Liars, Hookers, and Crooks, Oh My"

"The only thing we have to fear, is damn near evertything."

"Have I ever lied to you the last two seconds??"

falak pema's picture

I'll take two of the third and put them up on the hooks of Captain Cook; like hanging meat out to be flailed by butcher's knife. 

I'll take two of the first and put them head first into the perfumed grottos of the second, singing "in for a penny in for a pound".

Stifling ain't it when you get your lying faces filled with lulabies...

fijisailor's picture

 “Any rigging of the price mechanism leads to a misallocation of capital and is extremely costly to society.”


Yea no shit sherlock.

Dr. Engali's picture

The banks are crooked and try to profit off their clients? They manipulate the markets? No fucking shit! Nothing will become of this just like every other crime they commit. Grease a few palms, provide some hookers , and it all disappears. The muppets... well they will continue to play the game because they are addicted.

fonzannoon's picture

Dear Diary,

Today started off like every other day......

LawsofPhysics's picture

it will be a dangerous world moving forward, full of opportunity for those who can delivery real value.  Fuck the paper-pushers and their useless puppets.

Downtoolong's picture

the practice is controversial

They must to be careful not to say illegal, otherwise someone might eventually have to admit wrongdoing instead of just paying a fine.

Next up, a Wall Street manager controversially murders underperforming trader in his office. 

orangegeek's picture

Macros are shit.  Games are endless.  The fix is on.  Yet markets keep moving higher.


Maybe they have these beast under control and we are headed for a new paradigm - new found prosperity.




Not bloody likely!!!

Peter Pan's picture

We seem to forget that Harry Markopolos ( of Madoff fame) had uncovered one particular bank booking foreign currency transactions in the books at one price but actually securing the currency at another price and pocketing the difference. This happened from memory in relation to a pension fund.

Bank of New York Mellon and State Street I beleve were the two banks.

So this is just more of the same.

Monedas's picture

We used to call that "skimming" .... back in the day .... now they call it "proprietary arbitrage" !

alfred b.'s picture


The banksters rule over the gov''s that simple!


LawsofPhysics's picture

Color me shocked.  Paperpushers playing paper games, adding no real value.

Just more fraud accelarating the death of fiat.  Fucking bring it!

firstdivision's picture

If I worked at the NSA, I'd be all over GS Prop Traders emails, texts, and phone calls, front-running the shit out of them.

roadhazard's picture

Highest quality insider information... for sale.


911 !! 911 !!   what a joke.


But we need to get that Snowden guy for sure.

WTFUD's picture

@ firstdivision
your too fucking honest and wouldn't last 10 minutes in this game!

wstrub's picture

Please say it ain't so!!!!!!

OpTwoMistic's picture

Time to load all the guns. This thing is going down whether you ever get to vote again.

falak pema's picture

so much for free markets; how do you stop this from happening?

If there is no regulation.

Autoregulation is the hallmark of Oligarchy scam in a FOREX market of 5 T dimension. 


CustomersMan's picture

CFTC Update:


Gary Gensler Gets the Axe




"The ouster comes in the midst of controversy over a proposed CFTF rule, strongly supported by Gensler, that would extend U.S. regulation to swaps–a kind of derivative exhange–involving firms founded or doing business in the United States. This means that foreign banks and hedge funds would face the same regulations as U.S. ones when trading in swaps with U.S. parties.   

Wall Street fiercely opposes this regulation on the grounds that it discourages trade. Yet, supporters insist the regulation is necessary to give a modicum of oversight to vast swaths of the derivatives market marred by the same lack of regulation that paved the way for the 2008 economic collapse."

Oldwood's picture

How were the mobs able to corrupt the police? By paying better than the government. These corrupt "public servants" will never allow their corrupt "business people" to fail. They are the mob and they pay far too well. If the media was doing its job much of this would not be happening, but again, the mob pays better and ultimately we are unable to protect people who are just doing the right thing. To do the right thing is to stand alone.

SAT 800's picture

Well; that answers that question. Party like it's 2007. Whee.

Joebloinvestor's picture

Pure Bull Shit and a smokescreen.

Gensler was complicit in helping Corzine.

Some call it "the axe", I call it a reward.

If they threw the jackass in jail and prosecuted him for the Corzine shit, he probably would blow the whistle on everyone else.

MeelionDollerBogus's picture

hm. So do we figure that Gensler wasn't crooked in the end if he gets turfed for actually seeking real regulation, or do we see this as an excuse to get hired more quickly at a higher paying job at Goldman or perhaps JP Morgan?

Fox-Scully's picture

Gee--if we all had one global currency (akin to Europe's EURO), we wouldn't have this problem. :-)

MeelionDollerBogus's picture

another item for the to-do list along with changing the comment-voting system to +1 and -1 and +sarc

Oldwood's picture

For corruption to prosper everyone needs to get a little "taste" of the action. Granted it works better if it is not openly acknowledged, as that would be tacky, but grease is needed to keep those wheels rolling. The same problem we have with our liberty protecting surveillance "system". Everyone can agree that in some form or another we have no privacy, but until it is admitted to publicly, we can dismiss it as speculation. For communism to succeed in Russia and China, they had to prevent their polulation from seeing how other more relatively free societies existed. Cadillacs and color TVs could not coexist with their comparable poverty. People can live with just about any hardship as long as it is never pointed out how screwed they are. The blinders are slowly coming off, much to our leader's dismay. What full illumination brings us could be far worse than what we have today, living in the dark. We say we want the world to know, but do we really?  Be careful what we wish for? I'm not sure myself.