BNP Fined $246MM After Its Traders Were Found To Still Use Chat Rooms To Rig FX Trading

Tyler Durden's picture

Two months after the Fed fined Deutsche Bank a paltry $157 million for manipulating currency markets after the German bank's traders were found to be using "chat rooms" to rig FX trading, we learn that there was more gambling going on here, and on Monday the Fed announced that it will fine French BNP Paribas $246 million "for the firm's unsafe and unsound practices in the foreign exchange (FX) markets."

According to the press release, the Board levied the fine "after finding deficiencies in BNP Paribas's oversight of, and internal controls over, FX traders who buy and sell U.S. dollars and foreign currencies for the firm's own accounts and for customers." And, not surprisingly we once again find that FX rigging was confined chat rooms:

"The firm failed to detect and address that its traders used electronic chatrooms to communicate with competitors about their trading positions. The Board's order requires BNP Paribas to improve its senior management oversight and controls relating to the firm's FX trading."

Perhaps one day the Fed will realize that as long as its keep settling for paltry amounts that are a fraction of how much the banks make by violating the rules (and yes, participating in chat rooms), this type of behavior will never end. That day won't be today.

In its complaint, the Fed notes that during the Review Period:

  • BNPP and BNPP Securities lacked adequate governance, risk management,
    compliance, and audit policies and procedures to ensure that BNPP’s Covered FX Activities
    complied with safe and sound banking practices and applicable internal policies;
  • Certain FX traders in the spot market at BNPP, including BNPP Securities routinely communicated with FX traders at other financial institutions through chatrooms on
    electronic messaging platforms accessible by traders at multiple institutions
  • BNPP’s deficient policies and procedures prevented it from detecting and
    addressing unsafe and unsound conduct by certain FX traders, including in communications by
    traders in multibank chatrooms, consisting of:
    • (i) disclosures of trading positions and discussions of coordinated trading
      strategies with traders of other institutions;
    • (ii) discussions about anticipated FX benchmark fix-related trading and
      submissions with traders of other institutions;
    • (iii) disclosures to traders of other institutions of confidential customer
      information of BNPP;
    • (iv) discussions regarding bid/offer spreads offered to FX customers with
      traders of other institutions; and
    • (v) discussions of trading in a manner to trigger or defend certain FX barrier
      options within BNPP, in order to benefit BNPP.

Today's action is a follow up to the Fed's previous injunection from January 2017 in which the "regulator" permanently prohibited former BNP Paribas trader Jason Katz from participating in the banking industry for his manipulation of FX prices. Here is a blurb from Katz' admission in early Januar, courtesy of Bloomberg

Jason Katz, a former Barclays Plc currency trader, admitted conspiring to fix prices in the foreign-exchange market, the third individual to be charged and the first to plead guilty in a long-running U.S. criminal investigation into the rigging of currency rates.


Katz appeared in Manhattan federal court Wednesday, where he admitted to participating in a conspiracy with other bankers to manipulate emerging-market currency trades while working at three different financial institutions from 2007 to 2013. Separately, the Federal Reserve Board said it banned Katz from the banking industry.


Katz was released on a $150,000 bond to be secured by property in New York’s Delaware County. His travel is limited to New York, Connecticut and London until April 1 when he is to turn over his passport and remain in the U.S.

Before BNP, Katz spent a year as director of emerging markets-foreign exchange trading at Barclays beginning in 2010, according to regulatory filings and his previous LinkedIn profile; his current one has been duly scrubbed. Katz joined BNP Paribas in September 2011 as its director of emerging markets-foreign exchange trading, before leaving for Australia & New Zealand Banking Group Ltd. two years later, the documents show. Before joining Barclays, Katz spent more than nine years at Standard Bank, where he was head of foreign exchange, according to his LinkedIn profile.

While the Fed said that BNP has agreed to assist the Board of Governors in the supervision of
this Order, it is becoming obvious even to lay people that as long as the Fed keeps its penalties at the "laughable" level, nothing ever will change in the FX market. Adding to the irony, today's penalty comes one day after RBA Deputy Governor Guy Debelle said in an interview with The Australian that "banks that don’t sign up to a new global code of conduct for the foreign exchange market will be barred from dealing with central banks and other signatories to the code."

"Certainly they will need to sign up within 12 months, otherwise we, as central banks, will stop dealing with them," Debelle says adding that there are positive signs that banks are already improving their behavior.

Today's settlement is hardly evidence of that.

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hedgeless_horseman's picture


Perhaps one day the Fed will realize that as long as its keep settling for paltry amounts that are a fraction of how much the banks make by violating the rules (and yes, participating in chat rooms), this type of behavior will never end. 

Realize it?  It is by design.

The Board of Governors of the Federal Reserve System has supervisory and regulatory authority over a wide range of financial institutions, including state-chartered banks that are members of the Federal Reserve System (state member banks), bank holding companies, thrift holding companies and foreign banking organizations that have a branch, agency, a commercial lending company subsidiary or a bank subsidiary in the United States. While the Board establishes supervisory policies, the Board delegates day-to-day supervision to the Reserve Banks.


3)  What is your position on the Federal Reserve Banks being responsible for regulating and supervising the very same banks that own them?


Conflict of Interest


A term used to describe the situation in which a public official or fiduciary who, contrary to the obligation and absolute duty to act for the benefit of the public or a designated individual, exploits the relationship for personal benefit, typically pecuniary.


In certain relationships, individuals or the general public place their trust and confidence in someone to act in their best interests. When an individual has the responsibility to represent another person—whether as administrator, attorney, executor, government official, or trustee—a clash between professional obligations and personal interests arises if the individual tries to perform that duty while at the same time trying to achieve personal gain. The appearance of a conflict of interest is present if there is a potential for the personal interests of an individual to clash with fiduciary duties, such as when a client has his or her attorney commence an action against a company in which the attorney is the majority stockholder.


Incompatibility of professional duties and personal interests has led Congress and many state legislatures to enact statutes defining conduct that constitutes a conflict of interest and specifying the sanctions for violations. A member of a profession who has been involved in a conflict of interest might be subject to disciplinary proceedings before the body that granted permission to practice that profession.

DocBerg's picture

All true, so where are the handcuffs?  If you rob a conveniece store in most places, you are arrested, tried, and sentenced to jail.  Most of the time these sorts of crimes are paltry in comparison to white collar crimes like these. 

hedgeless_horseman's picture


Where are the handcuffs?  

You mean for breaking the law?

"Give me control of a nation's money and I care not who makes it's laws."


— Mayer Amschel Bauer Rothschild

Four chan's picture

all the bank fines are never paid, its just an assessment for the

media to report. no checks are ever written or jail sentences imposed.

hedgeless_horseman's picture


Bank fines, paid with fiat currency that banks can either borrow at 0%, or even negative interest rates (earning a return), or they can simply create money from thin air via fractional reserve banking.

Please, please, Briar Fox, do anything you want, but please don't throw me in the briar patch!

Macavity's picture

HH--you're a shining example. And so, I might share may understanding of the nature of banking reality. Both (1) fractional reserving and (2) the credit creation theory of money apply in reality. Fractional reserving applies to deposits, assets and the like. See India's push to encourage privately held gold (jewelry) into banks via the Gold Monetization Scheme. Fractional reserving is obvious in the case of gold. The credit creation theory of money applies to all other money-out-of-thin-air loans made by banks. I came across a wonderful paper aiming to settle the dispute, then applied some Hazlitt philosophy to realise multiple theories of money apply in reality. Link coming...

Eeyores Enigma's picture

I up voted you for the Br'er Rabbit ref.

Take the amount of the fine and multiply by 10 and you will have a clue as to how much the Bank made.

FatTony7915726's picture

Katz sounds like a typical Jumanji player

Yog Soggoth's picture

The briars as an allegory would be the family connected lawyers, union, politicians, senators and many others ending in the lesser sentence. Same story, house wins.

Yog Soggoth's picture

The briars as an allegory would be the family connected lawyers, union, politicians, senators and many others ending in the lesser sentence. Same story, house wins.

junction's picture

As I recall, BNP Paribas was among the first in 2007 to publicly say that it couldn't value the MBS derivatives it had on its books. The NWO has never forgiven BNP Paribas for blowing the whistle too soon, cutting the even greater profits its hedge funds would have made from misselling fraudulent derivatives.  

FatTony7915726's picture

Merde vous a la BNP, allez vous cesser de faire les imbeciles!!!

Bill of Rights's picture

Hence the reason we have Plebes who don't know any better, and Betters who feel are above the laws and get away with it...That simple.

small axe's picture

Thieves, each and every one. It's a job requirement.

order66's picture

I would too if I could make $2 billion illegally and then only pay 15% as a fine and get away with it.

e_goldstein's picture

Yes, but cryptos are a scam.


Too-Big-to-Bail's picture

$246 million a bargain -- They definitely made ten times that employing the collusion and insider trading -- for them it's just the cost of doing business.

Racer's picture

And same old same old will keep re-occurring until they face criminal procedures

Joebloinvestor's picture

A ban or suspension of FX trades, disgorgement of any profits and SALARIES and bonuses should put a crimp in it.

Forget anyone going to jail.

Greed is King's picture

Seeing as the root of all financial evil resides on Wall St, am I the only ZH`er who thinks it somewhat strange that it`s always a European Bank that gets fined ?, have any American banks been fined that I`ve not heard about ?, or are the American banks as I suspect "Protected".

Macavity's picture

It's a game of empire, but invisible to most people. Consider USD hegemony, USD vassals. But this still cloaks reality. They're on the same side, paltry fines make for good publicity or plausible deniability of complicity. The nature of money confounds 100 - epsilon % of people.

PleasedToMeatYou's picture

American banks don't engage in such improprieties.  They do God's work, 

shizzledizzle's picture

All in a days work. The FED and the ECB probably have a slush fund to cover the legal liabilities of institutions fixing PM prices.

"We'll pay your fines now get back to work and try a little harder NOT to get caught."

ali-ali-al-qomfri's picture

slush fund, you mean; Control-P,

if not wait for the next QE.

Rick Cerone's picture

Jenet Yellen is on Jasmine pimping Fed policy.

Felix da Kat's picture

Further vindication for Jerome Kerviel.

bigsexy's picture

This is like asking Arabs to pay fines with sand.  Until people are sent to jail for life, none of this matters.

silverer's picture

Totally honest, ethical, and in the best interest of your children. Democrat approved (if democrats do it). Republican approved (if republicans do it).

PleasedToMeatYou's picture

I'm just relieved that nobody is going to jail.  Otherwise, the petty criminals might learn how to make some real money. 

Bill_Brasky_69er's picture

"That should stop them from ever breaking the law again" authorities said.

NoWayJose's picture

And chatting to whom?

Bopper09's picture

When Brady was caught cheating, he was banned from playing for 4 games.  How about ban these fucking criminals from trading for 4 months?  Or just throw them in jail, but we all know there is no law in this land.

Horse Pizzle's picture

Yellen takes a cut.