Image Credit:www.solvencyiiwire.comNov 18, 2015  NYC, Barclays bank was fined $150 million US Dollars by the New York Department of Financial Services for delaying Forex trades that were not beneficial to the bank.  The Forex Market has a volume of approximately $5.3 trillion US Dollars a day.  Electronic trading at the speed of light is common these days on wall street and computers do most of the trading.  The delay of a few milliseconds in a trade can make a huge difference.  When some spots a move in the market that the Banks have not yet seen they can take advantage of that gap and open and close trades as the marketing move. To protect themselves from what some traders refer to theses “toxic orders” Barcley added software filtering in their system to slow the order fulfillment giving the Bank time to catch up.  Barcleys has a system they call Last look and it would fail to acknowledge a trade in a timely manner if the trade was moving against the position that Barcleys themselves had taken. This impacted not just the individual traders but also large sophisticated traders lie hedge funds.

The investigation covered a period of time from 2009 through 2014.  At lease seven percent of Barclays Forex trading platforms had a filter that would delay the trade acknowledgment, there fore giving Barclays the opportunity to get out of the trade prior to their customers.  Large financial institutions are market makers in the Forex Markets, that is a single trade can move the currency in one direction or another

It is reported that by August of 2015 all of the trading platforms that had this filter in the software had been updated to remove this filter.  The cynic in me wonders if this one was caught and fixed, what replaced it?

Within Barclays there were people who knew this filter was in place and directed there teams not to discuss the filter with it’s own sales people giving the sales people plausible deniability.

This is not the first time Barclays has been fined for its Forex policies and Trading.  To date Barclays, that is based in London England, and has paid Six Hundred and Thirty Five Million US Dollars in fines to New York regulators for alleged misconduct and market manipulations.

The lack of regulation and oversight on the Forex Market and Forex Brokers makes trading the Forex by the average individual investor challenging to say the least…. and just when you thought it was safe to go back in the water.