3 ms·

It's really increadible. 3% of one year profits, for multiple year huge scale robery. Not surprising, given the industry track record, but still mind blowing wh

It's really increadible. 3% of one year profits, for multiple year huge scale robery. Not surprising, given the industry track record, but still mind blowing when you think about the big picture.

alfiedotwtf 11y ago
It's operational cost, already factored in, and paid for by clients.
evanpw 11y ago
That's because banks do a lot of things other than FX trading. It's a much bigger chunk if you use a more relevant denominator: http://www.bloombergview.com/articles/2015-05-20/bank-fine-scorecard-follow-along-at-home- http://www.bloombergview.com/articles/2015-05-20/bank-fine-s...
cm2187 11y ago
Did you read the report? http://im.ft-static.com/content/images/ee8b6f40-fef5-11e4-84b2-00144feabdc0.pdf http://im.ft-static.com/content/images/ee8b6f40-fef5-11e4-84... The sort of profits the regulator mentions is $16,000, $14,270, $59,000. Even if they did that every day for 10 years, it is still pocket money compared to the fine.
- TheAlchemist 11y ago
  That are the sums that can be directly priced. The report also points to tens of cases when the client/industry prejudice cannot be directly priced - for example: "FX traders involved in the USD/Brazilian Real market colluded together to manipulate markets in a more straightforward manner—by agreeing to boycott local brokers to drive down competition. On October 28, 2009, an RBC trader wrote “everybody is in agreement in not accepting a local player as a broker?” A Barclays FX trader responded “yes, the less competition the better." Those benefits, while impossible to calculate, where an order of magnitude bigger than the direct ones. Also, don't forget that those banks have huge privilegies (gov backing, FED money, gov bonds dealership etc) in exchange for which they provide a fair market and services. For instance, in theory those banks should have a lot of their privilegies removed as the result of this case. I can assure you that they are extremely happy to pay only the ~$6bn to keep those safe.
Sven7 11y ago
Which is why the BRIC's want their own bank. If robbery is happening the playing field should be level.
stygiansonic 11y ago
This is probably not a fair comparison because the illegal gains obtained from their bad behaviour was likely a very small fraction of their overall revenue. From the link I posted [0] in my other comment: "The CFTC and OCC orders for Citi have no profit figures at all. So we have one case of Citi making $99,000. The FCA order covers conduct over a six-year period, though that might be a bit generous. Figure 250 trading days a year and you get $150 million of profits for Citi if every single day was as "impressive" and "lovely" as the day singled out by the FCA as, one assumes, a particularly egregious example of manipulation. That's not the case: The CFTC order, for instance, recounts a fixing in which "the Citibank trader reported that he was 'hosed.'" The manipulation was not foolproof, and fools abounded. But take $150 million as an upper bound, and Citi paid about an order of magnitude more in fines than it made in manipulative profits." 0. http://www.bloombergview.com/articles/2014-11-12/banks-manipulated-foreign-exchange-in-ways-you-can-t-teach http://www.bloombergview.com/articles/2014-11-12/banks-manip...
RockyMcNuts 11y ago
The banks have paid $235b in penalties for various misdeeds. http://graphics.thomsonreuters.com/15/bankfines/index.html http://graphics.thomsonreuters.com/15/bankfines/index.html

It's really increadible. 3% of one year profits, for multiple year huge scale robery. Not surprising, given the industry track record, but still mind blowing when you think about the big picture.

alfiedotwtf 11y ago

It's operational cost, already factored in, and paid for by clients.

evanpw 11y ago

That's because banks do a lot of things other than FX trading. It's a much bigger chunk if you use a more relevant denominator: http://www.bloombergview.com/articles/2015-05-20/bank-fine-scorecard-follow-along-at-home- http://www.bloombergview.com/articles/2015-05-20/bank-fine-s...

cm2187 11y ago

Did you read the report? http://im.ft-static.com/content/images/ee8b6f40-fef5-11e4-84b2-00144feabdc0.pdf http://im.ft-static.com/content/images/ee8b6f40-fef5-11e4-84... The sort of profits the regulator mentions is $16,000, $14,270, $59,000. Even if they did that every day for 10 years, it is still pocket money compared to the fine.

TheAlchemist 11y ago
That are the sums that can be directly priced. The report also points to tens of cases when the client/industry prejudice cannot be directly priced - for example: "FX traders involved in the USD/Brazilian Real market colluded together to manipulate markets in a more straightforward manner—by agreeing to boycott local brokers to drive down competition. On October 28, 2009, an RBC trader wrote “everybody is in agreement in not accepting a local player as a broker?” A Barclays FX trader responded “yes, the less competition the better." Those benefits, while impossible to calculate, where an order of magnitude bigger than the direct ones. Also, don't forget that those banks have huge privilegies (gov backing, FED money, gov bonds dealership etc) in exchange for which they provide a fair market and services. For instance, in theory those banks should have a lot of their privilegies removed as the result of this case. I can assure you that they are extremely happy to pay only the ~$6bn to keep those safe.

Sven7 11y ago

Which is why the BRIC's want their own bank. If robbery is happening the playing field should be level.

stygiansonic 11y ago

This is probably not a fair comparison because the illegal gains obtained from their bad behaviour was likely a very small fraction of their overall revenue. From the link I posted [0] in my other comment: "The CFTC and OCC orders for Citi have no profit figures at all. So we have one case of Citi making $99,000. The FCA order covers conduct over a six-year period, though that might be a bit generous. Figure 250 trading days a year and you get $150 million of profits for Citi if every single day was as "impressive" and "lovely" as the day singled out by the FCA as, one assumes, a particularly egregious example of manipulation. That's not the case: The CFTC order, for instance, recounts a fixing in which "the Citibank trader reported that he was 'hosed.'" The manipulation was not foolproof, and fools abounded. But take $150 million as an upper bound, and Citi paid about an order of magnitude more in fines than it made in manipulative profits." 0. http://www.bloombergview.com/articles/2014-11-12/banks-manipulated-foreign-exchange-in-ways-you-can-t-teach http://www.bloombergview.com/articles/2014-11-12/banks-manip...

RockyMcNuts 11y ago

The banks have paid $235b in penalties for various misdeeds. http://graphics.thomsonreuters.com/15/bankfines/index.html http://graphics.thomsonreuters.com/15/bankfines/index.html