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A Glimpse Inside The FX "Cartel's" Chat Rooms
First it was Libor, then gold, then dark pools, now for those who want a glimpse into just how for years bank FX traders, whether belonging to "The Cartel" or "The Bandits Club" or otherwise, colluded on trades around the daily fix, breached fiduciary duty, and generally engaged in illegal rigging of the world's largest market by volume, Bloomberg News had received a transcript of the instant-messages by various FX traders currently being investgated for FX rigging.
As Bloomberg news reports, it has "reviewed the transcript of a conversation that spanned about 40 minutes on the condition that neither the traders nor clients named in them would be identified. Another dealer from Barclays and two from Zurich-based UBS AG were logged onto the thread at various points during the chat. The exchanges are the sort of discussions banks are trying to end by banning group chats involving employees at other companies."
Here is glimpse into how yet another market was, and still is, rigged on a daily basis.
“Any fix quid?” a currency trader at Barclays Plc asked a counterpart at HSBC Holdings at 2:25 p.m. on June 23, 2011. “Get 50 cable on fix,” he said as he tried to sell British pounds.
“Nothing as of yet mate,” replied the HSBC trader, according to a transcript of the “Sterling Lads” instant-message group provided to Bloomberg News by a person with knowledge of a global investigation into alleged currency-rate rigging. “I hope not either, as everything I touched today has cost me money. I just lost 10k there typing.”
A minute after the Barclays trader’s request to sell 50 million pounds ($81 million) in exchange for dollars, the HSBC trader typed, “I can match. 50 quid.”
The Barclays trader came right back with “Ta,” an informal way to say thanks.
“Rhx in about 50 quid at the fix,” the HSBC trader responded, probably a typo for rhs, or right-hand side, a term meaning he would buy the pounds at the 4 p.m. WM/Reuters rate. The benchmark is based on trades in a minute-long period starting 30 seconds before 4 p.m. in London.
“I let u know if i get any more,” the Barclays employee typed. “Can do 58 all day.”
After his counterpart said he’d do it, the Barclays trader wrote “actually 59 if ok,” indicating he wanted to sell as much as 59 million pounds.
“Fook off,” the HSBC trader wrote back.
“59 done thks u helm,” the Barclays trader said, signing off with a slangy British epithet.
And that is how FX is "traded" these days.
More can be found here, but the real question we have is how many, if not all, of the abovementioned anonymous "traders" were part of the alleged, if legendary, Sage Kelly "Defendant's Drug Cohorts."
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No biggie. NSA can override that anytime it gets an order from central command
ok, ok, I surrender. for years I have been defending the EUR on this blog. but a little glimpse of this article about the Bandit's Room that cares about FX...
we in the eurozone desperately need again many, many small and medium sized currencies for those poor, poor fellows to "trade" with
I'd say instead of reverting back to 18 currencies we have to double that amount. think about how much FX trading this allows! Think about the derivatives you can buy and sell on the various crosses! Save Banker Bonuses, I'd say /S
When FX is rigged, real trade gets confused and winds down slowly, since there is no pricing mechanism.
World trade is slowing down drastically due to rigging of computers
it is not possible to control the world from computers. They eventually learn the trick and move on.
But this guy says it's not rigged. And he's, like, got his own sell-side asset management company.
http://www.cnbc.com/id/102125181?trknav=homestack:topnews:10
In the Mafia its not rigging, its good business.
Surely we can computerise barter. Surely.
You have never played games like Farmville and Civilisation?
:-)
Isn't Freegold an answer to eliminating this particular form of manipulation?
After moving through the learning curve of real estate and metals I've found myself playing catchup at FOFOA
freegold is an interesting concept. it's based on a neutrality of central banks versus gold. without getting into it's merits, the answer to your question tends to be: no. because this kind of FX manipulation in the article is more a market "fraud". it's based on collusion among banks
a collusion among powerful, big market participants has a name: oligopoly (or cartel). this is what market freedom fundamentalists often ignore: if enough Big Boyz in any market collude... then the market is neither free, nor fair, nor transparent
just think of GDP increase merely by buying all those crosses there and back again and again
Hey Ghordius, I know you're being sarcastic and all, but isn't an appeal to extremes a bit cheap?
Why does it have to be a Hobson's Choice? What's wrong with splitting into only a few currencies. Even just two currencies - say a "northern" and "southern" euro - would alleviate a lot of the stress due to national imbalances.
Eliminating inefficiences and cutting out the financial parasite middlemen in intra-European trade is indeed one of the great things about the Euro (a point I freely concede to Euro supporters), but that benefit must be balanced against the costs of artificially causing sovereign yield convergence [chart: http://upload.wikimedia.org/wikipedia/commons/e/ea/Long-term_interest_ra... ] and of requiring fiscal policy homogenization that is only weakly supported throughout the EU. Even if fiscal harmony could be achieved, there's the issue of meshing that onto, er, shall we say, diverse compliance cultures.
Sure, I know a nation like Greece is free to leave any time it wants (though let's define who comprises "it" exactly and be realistic about it), it's Greece's choice, but do you really believe this beyond the theory of it?
There are powerful, well-organized, well-connected and well-positioned parties that have a lot to lose should the Euro be split, be it into 2 or 18. Meanwhile, the disempowered, fragmented, distracted, and financially unenlightened masses are in no position to push for a split even though it likely would benefit some nations, though this is a point of contention given that the entrenched powers are unlikely to go down without a fight.
TARGET2 has to respect state sovereignty (unlike the domestic Fed system in the USA), so the ECB books Euro rebalancing flows against opposing debts, collateralized by the sovereign debt of the receiving nation (ignoring the credit rating I might add!!): who fills the black hole left in the ECBs books if any nation leaves the Euro with a defaulted TARGET2 debt? Who else but Germany has a surplus?
Much of the risk of defaults is supposedly covered by CDSs against weaker eurozone nations. If a nation leaves the euro, the ISDA must surely call a default event. Even if there's some rapid wrangling to convert euro-denominated debt to the new denomination, a default is sure to soon follow as the currency is devalued: who pays out on the CDSs? Deutschebank and BNP Paribas would definitely be in trouble, likely triggering a shadow-bank run.
The way I see it, nations can leave the euro only on paper. Any actual attempt to leave will be met with strong resistance by TPTB with a successful exit likely to trigger a major financial crisis. Nations are stuck with the euro, whether they like it or not.
I know you favor the model of a Club of European Sovereigns forming voluntary agreements, but I just don't think this is going to work over the longer term. Instead I think it's likely to fail with international violence and an ugly return to Authoritarian Nationalism. I know you resist the concept of a United States of Europe, but that's the only place I see the EU and Euro heading if the project is to ultimately work. Californians don't think twice about "bailing out" North Carolinians, in fact, they don't even know that they do.
Maybe I'm wrong and Continentals can continue to talk their way through the crises that will continually arise (they've certainly managed it so far against my expectations), but it's not going to be a pleasant process for the man on the street (who does eventually have a breaking point), particularly not with USUK meddling away as they do and the BRICs going hostile. A lot of people on the street will be recalling the old times fondly (with many currencies), many already are.
Mediocritas, appeals to extremes are cheap, and I was feeling cheap. I don't happen often to be one of the first comment posters, and when I do, I know by now that it has to be funny and/or short, as per "mores" of the place. so yes, you are right, a cheap, simple shot
and yet, besides feeling good... it is one of the things that convinced me in the late 80's / early 90's that the EUR was necessary. the size thing more then the "many FX crosses to manipulate", but it did come second
the nEURo / sEURo discussion is, imho, just plain academic. Either you want a national currency or you are willing to have a shared, common international one. and then it's again a question of... size
the discussion about why southerners should have a weaker, softer one and northerners should have a stronger, harder one borders on this kind of "soft racism" or "culturalism" that paints two different culture groups having two different moneatary "hardness" preferences. as an amateur historian, I find this explanation utter bogus. Example: when the EUR was introduced, the Dutch were among those who had the biggest problems with coins, while of course the Germans would have preferred to have a five-EUR coin instead of banknotes. monetary culture changes, and quickly. it's political culture that lags, but that changes, too. note that it's the Dutch that have a vastly overvalued and overleveraged RE landscape
TARGET2 is a misunderstood number. My personal example: I bought assets in Greece, leveraged with Greek bank credit. When I sold them, interestingly the buyer leveraged them with French bank credit. It's still Greek land so a "Greek" asset. My bank account had so my initial "seed money" which originally came from Spain, but I converted to Drachmas for the deal, and the gains I had in my Greek venture. When I transferred the account's funds to Germany, the TARGET2 balance for Greece became negative for the same amount (perhaps minus the initial seed, but I don't think so). Now imagine Greece exiting the eurozone. Does it mean my EUR on the German account has to become... Drachmas? I already shifted that somewhere else! You see, T2 is an accounting exercise that gives you a hint about flows in the eurozone... and nothing else. In theory, it shows where credit was (originally) created, meaning in which national banking originally an asset was used as collateral. But is in no way a number where the BuBa could ask a Greek National Bank to cough up a difference! It's a which nation's banks created this credit... originally... statistic
as such, T2 is not even a reason to balance those flows. it's bank-created credit... based on collateral. never forget that. as such... the Greek National Bank has very little to do about it, except being responsible in monitoring that banks don't use pig farts as assets to collateralize
in order to highlight how misunderstood T2 is: imagine the BuBa saying: "give me back the money". the answer would be.... "how? it's in your banking system, now", followed by a "you know what? you give me back this credit that originated in my banking system but is now in yours"
I am often in both the eurozone's north and south. I do speak to Greeks, Portugese, Spaniards and Italians. And they, generally, prefer a hard currency... while loving to moan about it. Why? Because they are know very well what really happens when their own nations monetize for domestic political reasons. "Been there, done that". Further, when they have money, they hold quite an interesting chunk of it either in cash and/or... in the northern banks. When a Portuguese holds EUR in a French bank... is it in theory French or Portuguese money?
damn CDS. first, they should be... forbidden. second... remember CDSs on Greek national and bank defaults? You know who (at least originally) wrote most of them? The Greek banks
the truth is that nations can leave the EUR. it's a political decision. but the truth is too that in case of Greece, for example, it would be the equivalent of a "soft default" through devaluation. sure, there are powerful interests against exit. but there are also powerful interests for exit. in fact... for the same amount of the bets on them. it's two sides of the same coin/trade
the damn difficult truth to swallow is that every Greek poll (since we are keeping with the Greek example) shows that 65% of Greeks want to keep the EUR
meanwhile, "Germany Inc" is not owned by Germans... only. whenever I'm in the south, I have often to answer questions about which German or French stock would be better to hold (and I'm the last person to ask about)
so yes, Greece ought to "restructure" it's debt, some day, for example. You and I know that it's too a kind of default. The Greek people clearly prefer the hard (or harder) default way instead of the soft-through-devaluation... or, better, kicking the can further. Meanwhile, many southerners got what they asked all the time along: a meshing of national and international politics in those affairs... to keep their own national politicians honest. Or at least at the "honesty standards of the North", which are not very high, but yet... higher
The Seen And The Unseen: if there was no EUR, we would have had a great devalue-moar-then-your-neighbour feast, the very intra-european currency war that convinced me that the EUR was necessary. Can I prove it? No. And yet, again, what would be the reason for southerners to depart? In order to devalue. And for northerners? In order to appreciate their currency
what is the ultimate result of a somewhat hard currency: defaults. what is the ultimate result of a somewhat soft currency: devaluation
an USE is neither necessary nor even possible without a common army and navy (funded through common debt held upright through common taxes). it took Americans 200 years to get there, around 1880-90. and the reason was... grabbing land. Like Cuba, Panama, the Philippines. I think we can agree that european sovereigns have "been there, and done that", too
more Authoritarian Nationalism? Possible. And yet... look at Putin. What does he moan about? Sovereigns not keeping promises, pacts and treaties of the Old World Order, and so he rips in demonstration a few pages out of various treaties, and annexes Crimea, and cries... "Order! Order! But not the New World Order!"
Nationalism does not preclude sovereigns forming or keeping voluntary agreements. It just tries to define better what the national interests... are
the sovereing yield convergence theory does not convince me. the whole monetary world is still dominated by the USD. all currencies feel this gravitational pull. when USTs get lower yields... all the others get them, too, ceteris paribus. remember when the ECB had half a percentage more on deposits? dollars rushed in
the EUR is now big enough not to be yanked around by the USD's vagaries. and it currently brings... price stability. it can't do more. it should not do more
of course it is still pulled and pushed around. and it does not solve the problems caused by this immense global credit creation. that's the short of it
Yep, and the heads of trading desks and their CEO bosses knew nothing about it.
Yep, and only foreign banks were involved, not the Morgan and the Goldman.
It's hard to feel sorry for any remaining little guys who after all these years of disclosure are still playing the rigged markets. Just get out and let these cock suckers take money back and forth from each other.
Ta is Arabic "Thank You" or Lebanese at least. ..
Shukren is thank you in arabic. Afwan is you're welcome.
I also remember door is bab and shubak is window and ketab is book.
Rust is very thorough.
And kebabs are delicious!
Shukren is thank you in arabic. Afwan is you're welcome.
I also remember door is bab and shubak is window and ketab is book.
Rust is very thorough.
I thought it was Strine.
You give me some money and I give you some money and we both make some profit.
Ta.
That sucked.
Where are the offers of champagne and Ferraris? The interest rate swaps fix guys had 'em.
PBR and Yugo's....
I don't see what the problem is.
That looks like a bid-ask squawk box to me.
Just looks like the market is not as liquid as they're making it out to be.
"There is a sucker born every minute and lots of real assets to steal boys, now fire up those presses and get out there..."
same as it ever was, until it isn't...
totally and absolutely rigged, ALL world financial system rigged
Earlier, I was trying to think of an area, any area of business that the Banks operate in - without commiting fraud and theft.
I drew blank.
I love the dialogue between these guys. It's fuck you and fuck off but no hard feelings. Anyone ever see the end of 'margin call'? Great flick.
needless to say if they fix all day while you and I are subject to an "efficient" market, fuck them.
Yes. And Margin Call was excellent.
Short answer; all of them. It's been like this since that 70's when this shit started trading at the CME. 1) find out who's on the wrong side, 2) move it against them with piles of money, 3) wait for them to puke [at the top or bottom], and 4) let them know that it was "fun" doing it to them. Same old shit, different day.
www.traderzoo.mobi
Jump you fuckers!
How high?
How low?
These talentless small dick idiots couldn't trade to save their lives. They walk around and call themselves traders, it's disgraceful to the profession. They aren't sht and couldn't surivive in the market without this rigging.
An Indulgance Fee of 1% of profits will be paid along with a couple of job offers to adminstrators. Nothing to see here! Ever read the editorial's Peter Orzag(citibank vice chairman of public investment banking) writes? About topics like school lunch and what colors houses should be painted. Do you suppose he got his job because he was in the Whitehouse? Or that they actually let him make ANY DECISIONS?
And his job pays very well.......
"But in 2010, the former Obama administration official left Washington for a job at Citigroup in New York. His salary shot up by 2,600 percent over his Cabinet-position salary — from about $145,000 in 2007 to $3.6 million in 2012 (he’s expected to earn $4 million in 2014). In 2012, Kennedy filed a petition to once again modify the couple’s child-support arrangement."
http://www.washingtonpost.com/blogs/reliable-source/wp/2014/07/10/child-...
So you can earn few million pounds for typing a few SMS messages?? I thought there is nothing to be good to be true. Obviously, I am wrong.
In the not too distant future, these human fuckers will not even be needed. The machines are taking over. Be afraid. Be very afraid.
I'm not understanding what was illegal here. One guy wanted to sell cable at the fix, the other obliged. I'm not familiar with FX speak (I traded bonds), but I don't see the issue.
You have exchange rate, but this guys take your money and switch them how they like it.
Ithink they are talking the RATE - not the quantity.
Perhaps 1.5750 is to be squeezed toward 1.580 and they agree to do that, then end with a joke to push for 1.59 which would be a stretch too far -- hence the jovial `fook off`
Not that this crap is shocking to people reading ZH. The thing that really bugs me is the media's complicity to continue on duping the masses despite the overwhelming evidence to the contrary.
That's why those MF'ers need to be hung first when the SHTF!
What is sickening is that most of the people went to IVY league schools where education was the pretense for criminal behavior
could anyone explain in simple way exactly what was being rigged and how?
Well when you own the Casino, one brother is the chief of poiice, another the lawyer and yet another is the judge - well, how do you feel about that?.....
Too bad for them .
It has already hit the fan .
The wrath of unintended consequences .
"Sheeple wear Wolfskin !"
See
https://www.academia.edu/9031355/The_Were-Sheeples_Almanac
http://andreswhy.blogspot.com/2014/10/were-sheeples-almanac.html