The logos of three of South Africa's biggest banks - Absa, Standard Bank and First National Bank - adorn buildings in Cape Town. Picture: Mike Hutchings
STANDARD Bank, Investec and the other banks accused earlier this year by the Competition Commission of colluding in foreign exchange (Forex) trading have launched a push-back against the commission, calling the complaint against them “vague” and lacking merit.

The commission had earlier this year referred 18 banks, including three South African banks, Investec, Standard Bank and Barclays Africa, to the Competition Tribunal for prosecution for colluding to short-changing clients in the lucrative forex trading business.

However, with the exception of Barclays Africa and Citibank, who admitted guilt and committed to co-operate with the commission in the prosecution of the other banks, the rest of the banks have been quiet on the matter until now. The commission recommended a R69.5million fine against Citibank for its role in the collusion, a fine which was later endorsed by the tribunal.

Investec, in its exception application lodged with the tribunal, refuted all allegations against it, saying they lacked merit.

The bank said the referral affidavit lodged with the tribunal by the commission failed to set out the material facts on which it based its referral and fell short of meeting the requirements of Tribunal Rule (15.2).

“Given this deficiency, Investec is not able, as required under the Tribunal Rule 16, to respond to each material fact on which the commission relies. The referral affidavit is therefore vague and embarrassing. Investec seek an order upholding the exception and dismissing the referral,” the bank said in its application.

In February, the commissions said that it had requested the tribunal to take 10percent of the 14 of the 17 implicated banks' annual turnover as punishment, with the exception of Barclays, which it preferred no financial penalty against.

The commission had gone to great lengths in its founding affidavit to put forward what it said was evidence of the banks' wrongdoing.

In its affidavit, the commission alleged that since at least 2007 to at least 2013 the implicated banks entered into an agreement to directly or indirectly fix prices and divided markets by allocating customers in relation to bids, offers and bid-offer spreads in respect of spot trades in the dollar and the rand.

The lucrative forex trading market is estimated to be worth $5trillion a day and the commission said currency trading involving the dollar and rand currency pair accounts for $51billion of the global daily trades.

The commission further accused the banks of having agreed to fix bids and offers on trading platforms by engaging in collusive posting of fictitious bids and offers in the Reuters' trading platform and dealers' owned platforms to manipulate prices.

However, Standard Bank, in its papers, poured cold water over the claim that it had been involved in using chat rooms to take part in the alleged co-ordination.

“Not a single fact is stated in relation to the allegation that chat rooms and telephone conversation were used to co-ordinate activities in a manner that contravened the Competition Act,” the bank said.

“Overall, the commission provides no particulars on when, where and how often Standard Bank’s alleged participation in collusive activities is said to have occurred, rendering it impossible for Standard Bank to respond meaningfully, including to make an assessment of the impact of applicable regulatory regime,” Standard Bank said.

The two South African banks were joined in dismissing the collusion by the other 12 international banks implicated.

The banks included American giants JP Morgan Chase and Bank of America Merrill Lynch. The tribunal said the commission had until the end of the month to file answers to the exception applications brought by the banks.