The US Federal Reserve has fined Deutsche Bank $156.6m for violating foreign exchange rules and breaching the Volcker Rule. The US unit was fined for "unsafe and unsound practices" in the foreign-exchange markets, the Fed said in a statement. The firm "failed to detect and address that its traders used electronic chatrooms to communicate with competitors about their trading positions," the central bank added.
Central bank officials are "requiring the firm to co-operate in any investigation of the individuals involved in the conduct underlying the FX enforcement," according to the statement.
The Fed also imposed a $19.7 million fine on the firm for failure to maintain an adequate compliance program for the Volcker rule, whichprohibits banks from making certain kinds of investments with their own accounts.
The foreign exchange violations were discovered during a four-year-old review of dealings at the bank, the Fed said in a consent order reached with Deutsche Bank.
The bank agreed to improve its oversight of foreign exchange trades as part of the agreement with the Fed. Under the consent order with the Fed, the institute will be required to improve senior management oversight and controls related to its Volcker compliance programme.
Deutsche still faces a probe by New York’s Department of Financial Services into whether its automated trading platform was programmed to manipulate foreign exchange rates, a person familiar with the matter said.
The New York regulator has been investigating whether the bank used algorithms on trading platforms to front-run or otherwise take advantage of clients.
Deutsche was not sanctioned in earlier global probes of foreign exchange manipulation. It was among a handful of banks that settled with Brazil's antitrust watchdog Cade in December.
But the U.S. Department of Justice, UK's Financial Conduct Authority and the Commodity Futures Trading Commission all declined to bring actions against Deutsche, while other banks were hammered for failing to stop traders on the spot market from trying to rig foreign exchange rates.
Seven banks have paid authorities in the United States and Europe a total of more than $10 billion, and some pleaded guilty to criminal charges.
Only a little more than half a year is remaining until implementation of PRIIPs and MiFID II, and th
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