Foreign exchange rate fines – In context

It has today been announced that five banks have been fined a total of £2 billion following an investigation into the manipulation and fixing of the foreign exchange rates (known as forex within the industry).

Of the £2 billion fine, £1.1 billion has been handed out by the UK Financial Conduct Authority (FCA), with the remaining £900 million given by the US regulator.

The fine handed out by the FCA is the largest ever, but will it really serve as a deterrent?

Fine put into context

The forex market is worth £3 trillion a day! Yes, that’s three million million million, or 3,332**,000,000,000.

That figure doesn’t even fit on my calculator!

To put the fine into context, it equates to 0.067% of the amount traded each day.

Let’s put these figures into every day terms, and base it on an average UK salary of £27,000.

Firstly we need to divide £27,000 by the 365 days of the year to get a daily amount, which is £73.97.

Based on that figure of an average UK persons income, a 0.067% fine would be 5 pence!!!!!!!

Hardly a deterrent or punishment when you consider the astronomical profits that have been generated by the banks involved by manipulating forex.

Which banks have been fined

It will come as no surprise that the likes of Royal Bank of Scotland, HSBC, Citi and Barclays have been caught cheating AGAIN.

With HSBC, RBS and Citi holding their hands up, the fate and fine for Barclays still awaits.

Surely there cannot be many more ways that these toxic, morally devoid banks can manipulate and cheat people, businesses and the global markets in order to line their own filthy pockets?

Giving the burglar the key

How can these banks possibly have manipulated the markets?

Surely the markets are set by independent bodies, separate from the banks?

Nope!!!

The banks set the rates every day so manipulation appears to be straight forward.

It’s almost akin to handing a burglar the key to your house.

We cannot be surprised anymore that scandals such as this occur when we simply hand control to the thieves themselves.

Proper controls and governance

For far too long the banks have cheated, from rigging LIBOR and Forex, to the more personal scandals that affect UK consumers directly such as mis-selling PPI and Packaged Bank Accounts.

They cannot be trusted, simple.

An independent worldwide body must be set up to set the rates by which we are affected every day, whether directly or not.

If any bank, or employee of a bank, breaks the rules, real justice and fines must be handed out that serve as a true deterrent.

Until that day comes, if it ever will, we will unfortunately continue to hear about scandals and our ever decreasing trust in our once loved banks will disappear, probably never to return.

Foreign Exchange Rate Fines