REGULATION

HSBC fined $175m as traders use chatrooms for illicit gains

FX traders allegedly used electronic chatrooms to manipulate benchmarks and fix market prices.

By Hayley McDowell hayley.mcdowell@strategic-i.com October 02, 2017 12:20 PM GMT

HSBC has been fined more than $175 million in the US after its FX traders used electronic chatrooms and misused confidential customer information.

The traders - who were buying and selling US dollars and other foreign currencies for the firm’s own accounts and for customers - allegedly used chatrooms to speak with competitors about its customers trading positions.

Authorities found HSBC failed to detect and address the traders misusing the information, and the chatrooms used by those involved were not monitored.

The chatrooms were used to discuss trading strategies and coordinate activity in a manner designed to manipulate benchmarks and market prices.

The Federal Reserve Board in New York described HSBC’s practices in foreign exchange as “unsafe and unsound” and ordered the bank to improve is controls and compliance risk management.

“HSBC has made and must continue to implement additional improvements in its oversight, internal controls, compliance, risk management and audit programs for designated market activities,” the Federal Reserve Board said.