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I'm surprised that no one has made any attempt to write about yesterday's big story, which is the constant manipulation of the FX market that has been exposed once again by the FCA. I guess this comes as no surprise as the dealers and the banks have always kept track of people’s positions and routinely trade against them. Even in the old days, the floor brokers gunned for stops and shared that info with the big players it seems old practice die hard, but as long as the market is a zero sum game this manipulations will go on.
Let's face it, if you have been long enough in this business you know that sh*t stink quite badly in the FX world.
When I've talked in the past about stop hunting people where laughing now you have your evidence from the big almighty FCA. Without any further comments I'll provide you with some links to read and I want to share some quotes that seems relevant to me:
Crime Pays: How An FX Rigger Made "Most Peoples Year” In One Trade
How To Rig FX Like A Pro "Bandit", And Make Millions In The Process
Traders’ forex chatroom banter exposed
The FCA used an example of RBS attempting to manipulate the WMR GBP/USD fix on a day when it had net client sell orders at the fix and would benefit if it was able to manipulate the WMR fix rate lower.
Ahead of the fix, RBS shared information with other traders in the chatroom causing two of them to “net off” their buying and selling orders. Another firm responds by netting off part of its sell order with two other parties outside the chatroom.
The FCA said this practice was known as “clearing the decks” as traders netted off their orders with third parties outside the chatroom reducing the volume of orders that might otherwise be transacted at the fix in the opposite direction.
In a separate chatroom, RBS told three other traders: “We getting a lot Betty at fix” which the FCA said was trader slang for sterling/dollar, coming from “Betty Grable” which rhymes with “cable”.
In the period leading up to the 4pm fix, RBS built the volume of currency it sold to £399m which the FCA said “was designed to take advantage of the expected downwards movement in the fix rate following the discussions within the chatroom”.
The FCA said that RBS made $615,000 profit on this trade.
Ahead of the fix, RBS shared information with other traders in the chatroom causing two of them to “net off” their buying and selling orders. Another firm responds by netting off part of its sell order with two other parties outside the chatroom.
The FCA said this practice was known as “clearing the decks” as traders netted off their orders with third parties outside the chatroom reducing the volume of orders that might otherwise be transacted at the fix in the opposite direction.
In a separate chatroom, RBS told three other traders: “We getting a lot Betty at fix” which the FCA said was trader slang for sterling/dollar, coming from “Betty Grable” which rhymes with “cable”.
In the period leading up to the 4pm fix, RBS built the volume of currency it sold to £399m which the FCA said “was designed to take advantage of the expected downwards movement in the fix rate following the discussions within the chatroom”.
The FCA said that RBS made $615,000 profit on this trade.
For example, an HSBC trader in a chat room referred to “going to go for broke at this stop… it is either going to end in massive glory or tears”. On another occasion, the same trader refers in a chat room to the fact he is “just about to slam some stops”. When asked by a colleague whether a particular client’s stop loss orders were “a pain for you guys”, another HSBC trader replied “nah love them … free money” and “we love the orders … always make money on them”.
Because a stop-loss muppet is born every minute.
Because a stop-loss muppet is born every minute.
This behaviour was reflected in language used by G10 spot FX traders at Citi in chat rooms. For example, a Citi trader referred in a chat room to the fact he “had to launch into the 50 offer to get me stop done”. On another occasion, a trader at Citi described in a chat room how he “went for a stop”.
Best is to read the whole story from those links because each story is relevant and speaks a lot about this market.
Best Regards,
Daytrader21
