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Barclays fined £1.5bn over forex failings

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Barclays fined £1.5bn over forex failings

Barclays has been fined £1.5 billion by UK and US regulators over foreign exchange (forex) failings.

The £1.5 billion fine includes a £284 million fine by the Financial Conduct Authority (FCA), which is the largest financial penalty ever imposed by the FCA, or its predecessor the Financial Services Authority (FSA).

US regulator the Commodities Futures Trading Commission has fined Barclays $400 million (£257 million), the New York State Department of Financial Services $485 million (£311 million) and the U.S. Department of Justice (DOJ) $710 million (£456 million).   

Barclays is one of five institutions including Royal Bank of Scotland, JPMorgan Chase , UBS and Citigroup that have been fined a total of almost £4 billion over the manipulation of foreign exchange rates.

The FCA said that Barclays’ failure to adequately to control its forex business was particularly serious in light of its potential impact on the systemically important spot forex market.

Georgina Philippou, FCA acting director of enforcement and market oversight, said: 'This is another example of a firm allowing unacceptable practices to flourish on the trading floor. Instead of addressing the obvious risks associated with its business Barclays allowed a culture to develop which put the firm’s interests ahead of those of its clients and which undermined the reputation and integrity of the UK financial system.'

The FCA found that between 1 January 2008 and 15 October 2013, Barclays’ systems and controls over its forex business were inadequate.

It said these failings gave traders the opportunity to engage in behaviours that put Barclays’ interests ahead of those of its clients, other market participants and the wider UK financial system.

These behaviours included inappropriately sharing information about clients’ activities and attempting to manipulate spot forex currency rates, said the FCA.  

The FCA said that Barclays was among other banks already participating in an industry-wide remediation programme, which included senior management at Barclays taking responsibility for delivering the necessary changes.

Barclays chief executive Antony Jenkins said the misconduct at the core of the failings is ‘wholly incompatible with Barclays' purpose and values and we deeply regret that it occurred. ‘

He added that dealing with these issues and appropriate disciplinary action was a ‘key priority’ in its plan to transform Barclays.

Jenkins said: ‘This demonstrates again the importance of our continuing work to build a values-based culture and strengthen our control environment. We remain completely committed to that effort. I share the frustration of shareholders and colleagues that some individuals have once more brought our company and industry into disrepute.’

In November 2014 the FCA, alongside US and Swiss regulators, fined five banks – Citibank, HSBC, JP Morgan Chase and UBS – a combined £2.1 billion over forex failings.

The fines related to the five banks' G10 currencies spot forex trading operations.

In April, Barclays set aside an additional £800 million for provisions for its involvement in the forex scandal, bringing its total provisions over the rate-rigging probe to £2 billion.

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