Barclays Forks Over Another $50m For FX Damages in Rigging Settlement

As the worldwide banking industry looks to turn the page on its currency rigging scandals, the fines still have not abated, culminating in the latest $50 million settlement by Barclays Plc to settle a US lawsuit, according to a recent Reuters report.

The fine is the first foreign Exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term (FX) related settlement paid in the New Year by Barclays, following a $150 million fine for manipulating forex markets via its electronic trading platform back in November 2015. The civil penalty, imposed by the New York Department of Financial Services, was related to failures regarding certain internal systems and controls.

In its latest settlement, Barclays paid a $50 million settlement for rejecting client orders that would be unprofitable for the UK bank. The agreement followed after a preliminary, all-cash settlement with investors that was spearheaded by Axiom Investment Advisors LLC via the US District Court in Manhattan – the disclosure still requires a judge's approval despite a formal agreement and settlement by both parties.

The lawsuit originally stemmed from 'Last Look Last Look Last look is defined as the process where liquidity providers (LP) are rendered the chance to reject trades within a specific period. Generally, this practice by brokers is used to mitigate risk while rendering more favorable terms to the LP. This is due to significant risk that can arise from poorly concocted price quotes that can be used as an advantage by latency arbitragers. Not all last look settings are the same.Last look settings tend to vary by client, trading platform, a client’s connec Last look is defined as the process where liquidity providers (LP) are rendered the chance to reject trades within a specific period. Generally, this practice by brokers is used to mitigate risk while rendering more favorable terms to the LP. This is due to significant risk that can arise from poorly concocted price quotes that can be used as an advantage by latency arbitragers. Not all last look settings are the same.Last look settings tend to vary by client, trading platform, a client’s connec Read this Term' practices from Barclays, which effectively means that traders are stymied from executing trades via small delays – in some instances lasting only milliseconds – that disrupt the flow of information and trades within the broader marketplace. In this specific instance, Barclays used this mechanism to filter out unprofitable trades, without proper authorization or explanation to clients.

Consequently, Axiom stipulated that Barclays’ policy resulted in significant damages for clients, as well as a flagrant breach of contract in its trading methodology. However, since 2014, Barclays has since revised its ‘last look’ policy, such that it would reject trades deemed ‘sufficiently unprofitable’ for both customers and the bank, not just for the bank as was previously the case during the period in question, according to the US District Court in Manhattan.