U.S. Federal Reserve fines Deutsche Bank $156.6 million for violating forex rules

Transcript of traders communicating in online chat rooms, which had led Deutsche Bank to settle in an earlier probe by Brazil’s antitrust watchdog Cade in December, show that banks had worked together to manipulate  forex rates.

The U.S. Federal Reserve has fined Deutsche Bank AG of $156.6 million for violating the Volcker Rule and foreign exchange rules.

In its statement the Federal Reserve stated the German bank failed to detect and halt its traders from using chat rooms to communicate with competitors.

According to its statements, central bank officials are “requiring the firm to cooperate in any investigation of the individuals involved in the conduct underlying the FX enforcement”.

In a response Deutsche Bank said, “we are pleased to resolve these civil enforcement matters with the Federal Reserve.”

The fine is in response to the Fed finding gaps in Deutsche Bank’s compliance with the Volcker Rule, which prohibits government-protected banks from engaging in proprietary trading.

The violations were discovered during a four year old review of dealings at Deutsche Bank, said the Fed in a consent order reached with Deutsche Bank.

Deutsche Bank has agreed to improve its oversight on foreign exchange trades as part of the agreement with the U.S. Federal Reserve.

However, the bank is still being probed by New York’s Department of Financial Services into whether it used automated trading, including algorithms, on its platform, to manipulate foreign exchange rates, said a person familiar with the matter at hand.

Renee Calabro, a spokeswoman for Deutsche, declined to comment on the status of the New York probe.


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