Caught Rigging Gold And Dark Pools, Barclays Begs To At Least Keep FX Manipulation

Tyler Durden's picture

2014 has not been kind to Barclays: first, the UK bank proved countless goldbugs right when it was first caught rigging the gold market (the first documented case, not the last) and a few short weeks later, the New York Attorney General crucified the bank for misleading its Dark Pool clients, and letting their order flow be, quite lucratively, front run by "aggressive" predatory algos - something it explicitly had stated it won't allow. So with one after another revenue stream crashing before its eyes, what is the Chairman of the scrambling bank to do? Why beg to at least keep the FX manipulation going.

What follows is not from The Onion. It is from FT:

The foreign exchange market needs “fine tuning” rather than heavy handed reform, the chairman of Barclays argued on Thursday, as he unveiled a new compliance academy aimed at raising standards within the bank.

 

Sir David Walker said that while the forex market was “vulnerable to taint” it had worked well for a very long time and that the focus now should be on ensuring better conduct by traders.

Translation: it may be rigged, but it's rigged in a way that makes the riggers money. As for everyone else, if only the regulators had kept their mouth shut, nobody would have been the wiser and we could just blame those fringe blogs accusing banks of manipulating various assets of being "conspriacy theorists." Which reminds us: we need to send some more Christmas stocking "stuffers" to the FSA...

“There is some very intelligent, sensitive fine-tuning needed, but we should be wary of throwing the baby out with the bathwater,” he said.

Translation: let's pretend to "fix" the rigging, slap the banks with a few thousand pound fine, and we can all go back to normal. After all, with all our HFT frontrunning revenue and kickbacks about to go down the drain, we need to make money somehow! Because if we go down... well, as Hank Paulson explained so clearly, the entire nation will follow.

Sir David said he wanted it to become a “world centre in excellence”, acting as a benchmark for compliance and leading to the creation of a new certificate in compliance.  Training of Barclays’ 2,100 compliance officers would take them beyond the job of policing fellow employees and encourage them to “mentor” colleagues on their behaviour. Barclays spends £300m a year on its compliance function.

Translation: now that all our market manipulation has been revealed for the whole world to see, it probably is a good idea to at least give lip service to complying with the laws and regulations. So we will just hire a few thousands chimps, dress them in business suits, and give them a banana: that way they can pass for "compliance" officers.

Sir David said it was “wholly appropriate” that regulators now look at the forex market and that some oversight may be needed, but that it was important not to “spoil” a market that worked effectively for most clients. George Osborne, the UK Chancellor, last month announced powers to regulate Libor would be extended to other benchmarks including forex.

Translation: those clients who were part of the rigging were very happy, and they also made tons of money, just like us, by taking advantage of everyone else who thought it was a fair, efficient and regulated market. If you continue pursuing this line of inquiry we will have to spill the beans about them too, and you don't want to see the names we will be forced to reveal. Who knows, it may go all the way up to Threadneedle Streeet.

And the conclusion:

[Sir David] acknowledged that the “animus” against banks was not going to go away soon, arguing that the current environment meant that banks were being treated as guilty until they proved themselves innocent. “I’m sorry to say that there will be accidents from time to time,” Sir David said at an event to announce the compliance academy. “They are not evidence of the failure of what we are rolling out. They are indicative that it takes time. We always have been very clear some of this stuff will take 5-10 years.”

Translation: Sir David, whose bank was just busted in the two biggest market manipulation scandals since the Libor scandal, where, oh snap, Barclays was one of the most guilty parties too, is confused why banks are treated as "guilty until proven innocent." And yes: when you are manipulating every single market you participate in, well, you will get caught now and then and yes "accidents will happen."

But so much for that: let's all just sit back, take a third mortgage on the house, use the proceeds to buy GoPro, and look forward to Monday and the regularly scheduled upward melting market diversion produced and directed to make everyone forget just how rigged everything truly is.