Barclays Reports FICC Revenues Down 44% in 3Q 2013, Cooperating with International FX Investigation

The major British bank, Barclays, announced its Q3 results in an interim management statement on 30 October, 2013, showing a considerable decline in both profits and revenues in its Investment Bank Fixed Income, Currency and Commodities (FICC) business. Additionally in the interim statement, Barclays disclosed that it had received enquiries from certain regulatory authorities investigating possible attempts to manipulate certain benchmark currency exchange rates, and that it is cooperating with those regulators.

Barclays operates as an institutional market maker in currency exchange trading, providing Liquidity Liquidity The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash.The most liquid asset of all is cash itself.· In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. · Nothing is more liquid than cash, while other assets represent The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash.The most liquid asset of all is cash itself.· In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. · Nothing is more liquid than cash, while other assets represent Read this Term to FX brokers. Overall company profits slumped to £1.39 billion from £1.87 billion , a 26% decrease compared to Q3 2012. Income in its FICC unit dropped by 44% to £940 million, from £1.68 billion in Q3 2012. In the statement, the bank explains these "significant" decreases as mainly reflecting lower activity in currency bonds, driven by "a decrease in client flow" across the FICC businesses, due to the impact of market uncertainty around central banks lessening of quantitative easing programs. The bank though, didn't note FX trading as cause for the FICC division weakness, and additionally emphasized that its Asia business benefitted from improved currency income.

As Forex Forex Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Read this Term Magnates reported at the start of the month, an international investigation is underway since the Swiss financial watchdog FINMA announced it is looking into allegations of FX manipulations by multiple financial actors. More recently, regulators like the UK's Financial Conduct Authority and legal authorities like the American Federal Bureau of Investigation started their own investigations into the matter. UBS, Deutsche Bank and RBS have all already commented on the investigation. The investigation seems to have been initially focused on a chat group, where dealers sent instant messages over their Bloomberg terminals for a period of three years.

In the bank's interim management statement, Barclays confirmed it was aware that various regulatory and enforcement authorities are investigating FX trading, including "possible attempts to manipulate certain benchmark currency exchange rates." Barclays says it has received enquiries from some of these authorities and is reviewing its FX trading practice covering the last several years, and cooperating with the relevant authorities.

In the statement, Barclays claimed it is not possible at this stage to predict the impact of these investigations on it. Barclays stock price reacted by going up following the announcement as, despite this particular issue, its earnings beat analysts' expectations.