More Than $150m Worth of Fines over Forex Trading to Barclay by the NYC Regulator

The Department of Financial Services in New York discovers the “Last Look” system of Barclays discriminated alongside unsuccessful trades.

On Wednesday, as the US regulator compelled a $150mn fine on Barclay due to the kind of treatment it gave to its foreign exchange clients.

The New York Department of Financial Services (NYDFS) discharge emails cache to back up its finding over the Barclays, which include one in which a managing director says to the staff to “confuse and stonewall” if currency trades related questions were asked.

The punishment, which also necessitates Barclays to sack an unnamed senior person who is involved in its electronic global foreign exchange trading industry, is associated to a computer system devised by the bank to decline customers’ orders that wouldn’t be beneficial.

The “Last Look” system, managed by launching a hold period in between received customer order and it being carried out by Barclays. It permitted the bank to wipe out trades where the rate had shifted against them, usually in just milliseconds.

Clients – who were refined users like of hedge fund – would get messages saying “NACK” (not recognized). A client questioned the 300 messages receipt on a single day in December 2010 but didn’t get a response.

The regulator’s acting superintendent of financial services, Anthony Albanese said – “this case emphasizes the need for wider omission and action to aid in preventing the mistreatment of electronic, automated dealing platforms on Wall Street that is a greater industry problem that needs serious additional inspection.”

The fine serves as a reminder of the reputational problems that the bank is still facing in the stir of 2012 find for rigging Libor, which ignited a wave of accusations against the Barclays and the whole industry. Moreover, it comes just 2 weeks before the new chief executive of the bank, Jes Staley, gets on his £8m/year role. As his appointment was declared last month, Staley who is a US banker said – “I feel eagerly that we must keep on strengthening trust in Barclays.”

This is the second fine that Barclays received from NYDFS for foreign-exchange-related subject of this year and gets the overall paid by the bank to the NYC regulator to $635 million.  The initial one was part of a  £1.5bn fine on Barclays proclaimed last May, as UK and US regulators declared record-breaking fines for controlling foreign exchange markets.

The perils of banks’ ongoing fines was increased by ratings agency Moody’s in this week’s report that place HSBC, Royal Bank of Scotland and the Barclays at great risk of getting bigger penalties.  Based on Moody’s calculation, 15 major banks had prepared £144bn in paying legal charge and clear up compensation and fines since the start of the banking crisis in 2008.

Barclay acknowledged that it faced additional penalties. It said it “persists to assist with other continuing investigations and to deal associated litigation risk as revealed previously”.

According to the NYDFS, the issue about Last Look happened on specific occasions in between 2009 and 2014. The regulator also added that there were changes on the system made by the Barclays in September and October 2014 as an outcome of the wide investigations into the foreign exchange market rigging, yet that 7% of the activity forced through the platform trading had persisted to give Barclay the advantage until August of this year.

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