And a big surprise:
"Dozens of dealers have been suspended or fired for sharing confidential information about client orders and coordinating trades to make money from a foreign exchange benchmark used by asset managers and corporate treasurers to value their holdings in the latest scandal to hit the financial industry."
You may ask why. Well, read the article. There is a trail of e-mails by wrongdoing dealers. Even bankers, when there is clear evidence against them, get penalized.
But if you read the article carefully, another picture emerges as well. There were complaints for some time about currency rigging. The banks did not follow up. Here is a quote: "The bank said it regretted not responding more quickly to the complaints. The other banks were similarly apologetic."
It seems bank management that failed to supervise brokers did not suffer.
What is interesting is that this was a joint investigation of US and British authorities. Finally, they are recognizing that banking became international, and national supervision may not be enough.
And about your belief that bankers suffer penalties when they misbehave, shown by your answer to question 55 on the macro exam and question 53 on the money and banking exam:
Benefit: "“He’s sat back in his chair … announcing to desk …that’s why I got the bonus pool,” said one trader to a rival after they colluded on a rate, earning, according to regulators, a profit of $513,000 on the trade."
Penalty: "nor were any traders or executives charged with wrongdoing."
The details of how it worked are here.
In case you cannot access NYT:
The fix is the rate set over 60 seconds at 4pm in London
"The F.C.A. and C.F.T.C. claim that the traders at different banks met in online chat rooms and colluded on trading strategies, particularly in the moments before a fix was determined, so that their own banks could profit.
By making a large number of bids, or orders, ahead of the fixing time, traders could potentially send the price of a currency up or down. They then could profit from the difference in the fix price and the average price they paid for euros or other currencies throughout the trading day."
Why this should not be done:
"Regulators say that making trades to manage a bank’s risk of holding too much of one currency is permissible. But the activity uncovered in this inquiry was strictly to amass outsize profits and not in the interest of bank clients."
"In one instance, the British regulator said a trader at Citigroup made a $99,000 profit based on trades executed in a 33-second period ahead of the E.C.B. fix after colluding with traders at four other firms."
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