Hayley McDowell, 17 November 2017
Credit Suisse’s foreign exchange (FX) business has been fined $135 million after regulators found traders manipulated prices, shared customer information and engaged in front running client orders.
The New York State Department of Financial Services (DFS) carried out an investigation and found that from at least 2008 to 2015 the investment bank failed to control its FX trading activities. Traders were found to have used a multi-party chat room with code names to discreetly share confidential information on clients and worked together to manipulate currency prices and benchmarks.
Financial Services Superintendent Maria Vullo explained certain executives within the business had deliberately failed to implement controls in the FX trading business. Furthermore, the investigation found Credit Suisse had an algorithm in place specifically designed to front-run client limit and stop-loss orders. Traders used this information to enter the market, knowing the market might move if the stop-loss or limit order was triggered by the algo.
Between April 2010 and June 2013, Credit Suisse executed 31,000 limit orders and 41,000 stop-loss orders that may be been profited on through front running.
“DFS will not tolerate any violations of law that threaten the integrity of our markets and undermine customer confidence,” Vullo said.
Credit Suisse has agreed to pay the $135 million fine and will submit a written progress report to the DFS on its efforts to rectify the failures.