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RBC and TD FX traders shared confidential client info: OSC

By The IJ Staff | August 27 2019 01:30PM

The Ontario Securities Commission (OSC) announced today that it is considering settlement agreements with both the Royal Bank of Canada and with the Toronto-Dominion Bank, concerning allegations that the bank’s foreign exchange (FX) traders improperly shared confidential customer information on a regular basis with FX traders from other firms.

In two separate notices issued today, the OSC, in each case said it identified “many hundreds of prohibited disclosures” during the material time – a period of at least three years, from 2011 to 2013.

In both instances the regulator says the banks shared confidential customer information with FX traders at other firms in electronic chatrooms and failed to establish and maintain an adequate compliance system that addressed inappropriate information sharing. It also says the banks did not sufficiently promote a culture of compliance in the FX trading business, which allowed FX traders to behave in a manner which put the banks’ economic interest ahead of the interests of its customers, other market participants and the integrity of the capital markets.

In its statement of allegations, the OSC says the prohibited disclosures included detailed information about customer orders such as trade sizes, timing, price and stop-loss levels. It says the prohibited disclosures allowed traders to gain a potential advantage in the market and over traders at other firms who did not have access to this information.

The OSC says these disclosures of confidential customer information put the customers at risk of economic loss. Although they also say the behaviour undermined market integrity they add that there is no evidence or indication that the banks were involved in any plan or collusion to attempt to manipulate benchmark rates.

Separate hearings to consider whether it is in the public interest to approve the settlement agreements will be conducted on Friday, August 30.

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