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The ‘cartel’ at centre of forex rigging probe

A recorded chatroom conversation has shown how top foreign exchange traders manipulated rates Keystone

There were probably more imaginative names to choose. Of all monikers, the powerful network of senior foreign exchange traders at the centre of a UK and US regulatory probe into alleged collusion called itself “the Cartel”. 

In an electronic messaging conversation on December 20 2011, the group of three senior traders at Citigroup, JPMorgan Chase and UBS debated whether allowing a fourth trader into the chatroom would “add huge value to this cartell [sic]”. 

The transcript, revealed in documents by the US Commodity Futures Trading Commission, gives an insight into the mindset of a mighty chatroom connection at the centre of a regulatory probe into alleged forex manipulation that ended its first chapter this week with a $4.3bn penalty handed out to six banks. The chatroom went on in different guises over several years and was used by various London and Zurich-based traders at four of the top 10 forex dealers – Citigroup, JPMorgan Chase, UBS and Barclays. 

The chat rooms “were the kind of vehicles through which certain [Citibank, JPMorgan and UBS] FX traders and traders at other banks co-ordinated attempts to manipulate certain FX benchmark rates, including the WM/R 4 p.m. fix,” the CFTC said in its settlement documents with Citi, JPMorgan and UBS. “Certain chatroom participants used code words to evade detection by their banks’ compliance monitoring systems.” 


Also known as “the Mafia”, the bantering chat group brought together some of the best-known forex traders at banks whose combined market power at times amounted to more than 40 per cent of global forex trading. Citi, Barclays and UBS are among the top five in currency trading, the largest financial market. JPMorgan ranked sixth in 2013. 

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Jail time demanded for bad bankers

This content was published on The latest scandal to hit the banking world has led to renewed calls for the authorities to finally clamp down on malpractice by jailing traders for forex rigging.

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The group was respected in the forex trading community and had an almost mythical reputation among more junior traders who aspired to become part of it, people familiar with the situation said. 

Yet the settlement documents shine a much more sobering light on it. 


In the discussion three years ago, Rohan Ramchandani, Citi’s then European head of spot trading, and Richard Usher, JPMorgan’s chief currency dealer in London at the time, debated with Matt Gardiner from UBS if they could trust a former colleague from the latter’s time at Barclays to come on board. 

“you know him,” Mr Usher said. “will he tell rest of desk stuff . . . or god forbin [sic] his nyk . . .” in a reference to Barclays’ New York desk. 

“yes,” Mr Ramchandani said. “that’s really imp[ortant] q[uestion] . . . dont want other numpty’s in mkt to know . . . but not only that . . . is he gonna protect us like we protect each other against our own branches,” he asked. 

“what concerns me is that i know he’ll never tell us when at risk,” Mr Gardiner replied. 

In the end, the trio agreed to invite the trader in question into the chatroom for a “1 month trial”, though Mr Ramchandani warned him – “presumably facetiously”, as the CFTC’s findings have it – “mess this up and sleep with one eye open at night”. 

The trader, Chris Ashton, eventually joined but ceased to be a member only seven months later in August 2012, not long after Barclays’ £290m fine over alleged Libor interbank lending rate rigging sent shockwaves through London’s trading community. 

None of the traders mentioned has been accused of any wrongdoing or charged by any authorities. 

All of them declined to comment. 

‘Tight-knit groups’

The CFTC said in the settlement documents that traders at Citi, JPMorgan and UBS at times “exchanged the size and direction of the bank’s net orders with FX traders at other banks and used this information to attempt to co-ordinate trading strategies”. 

“Traders at times then used this information to enable one or more traders to attempt to manipulate the FX benchmark rates prior to and during the relevant fixing period.” 

By buying and selling a currency before the fix, a trader can try to influence the final fix price to profit from the range of client orders he is handling that day. When the fix is set, some clients will end up profiting in line with the trader while others will be worse off. 

In its settlement documents this week, the UK’s Financial Conduct Authority said traders in the spot forex market “formed close, tight-knit groups or one-to-one relationships based on mutual benefit and often with a focus on particular currency pairs. 

“Entry into some of these groups or relationships and the chat rooms used by them was closely controlled by the participants.” 

A key figure in the “Cartel” chatroom was Mr Usher, a former Royal Bank of Scotland trader who joined JPMorgan in 2010. 

He is said to have started the chatroom while at RBS, according to people familiar with the situation. When he moved to JPMorgan, the chatroom was restarted. 

Collusive behaviour

Mr Usher was suspended this year and has recently left the US bank. 

One of his counterparts at Citi was Mr Ramchandani, who was fired in January. The most junior member of the group was Mr Gardiner, a forex trader who joined Standard Chartered from UBS in autumn last year but was placed on leave a few weeks later. He left the bank a few months after that. 

Mr Ashton, head of voice spot trading at Barclays who is currently on leave, was only a member of the group for seven months and was not part of the well-acquainted trio of Mr Usher, Mr Ramchandani and Mr Gardiner. 

Mr Usher and Mr Ramchandani were members of the Bank of England’s foreign exchange joint standing committee’s chief dealer subgroup, the industry body where concerns over the practice of sharing aggregate information about traders’ positions had been discussed. 

Martin Mallett, the BoE former chief forex dealer who chaired the group, was absolved of involvement in improper conduct of traders this week but was criticised for failing to pass on concerns about a practice he thought could involve collusive behaviour. 

He was dismissed from the central bank earlier this week.

Copyright The Financial Times Limited 2014

Swiss prosecutors turn attention to individuals 

Swiss prosecutors have begun criminal investigations against several individuals in connection with alleged manipulation of the foreign exchange market, opening a new front in the latest scandal to hit banking. The Office of the Attorney-general of Switzerland said the investigations had been launched on suspicion of criminal mismanagement and breach of professional secrecy. 

The move comes a day after regulators in Switzerland, Britain and the US reached a $4.3 billion settlement with six banks – Citi, JPMorgan, UBS, Royal Bank of Scotland, HSBC and Bank of America – over alleged attempts to rig the $5.3 trillion-a-day forex market. The prosecutor’s office stressed that its investigations were directed against individuals, rather than banks, but declined to give any information on the number or identities of those involved.  It said that it had been in contact with and exchanged information relating to the case with Weko, the Swiss competition commission, and FINMA, the Swiss financial watchdog. 

As part of the broader settlement, FINMA on Wednesday forced UBS to disgorge CHF134 million ($139 million) in “illegally generated profits and avoided costs”, as well as imposing a string of other remedial measures on the bank.  The prosecutor’s involvement adds to that of US and UK authorities who are probing whether regulatory wrong-doing tipped into criminal conduct. 

By James Shotter and Caroline Binham 

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