Rarely are we speechless, but this occasion, when UBS made $513,000 from just one fix, as the FCA's complaint against the criminal Swiss bank reveals, is the rare exception.
The information disclosed between UBS and Firms A, B and C, regarding their order flows was used to determine their trading strategies. The consequent “building” by UBS and its trading in relation to that increased quantity at the fix were designed to decrease the ECB fix rate to UBS’s benefit. UBS undertook the selling of Euros prior to the 1:15pm ECB fix in anticipation that the fix rate at which it would buy Euros would be lower than the average rate at which it had sold. The placing of a large sell order by UBS immediately prior to 1:15pm was designed to achieve this outcome. UBS’s trading in EUR/USD in this example generated a profit of USD513,000.
In the immediate aftermath of the ECB fix, UBS was congratulated on the success of its trading by Firms A, B and C (“hes sat back in his chaoir [sic]…feet on desk…announcing to desk…thats why i got the bonus pool” and “yeah made most peoples year”).
And of course, moments ago, UBS' CEO Ermotti is quick to promise that "there is no place at UBS for those who don't engage in the right behavior." The right behavior, of course, is: NEVER GET CAUGHT!
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