Barclays gets away with a slap on the wrist
The New York Department of Financial Services reached a deal with Barclays to pay $150 million fine due to its foreign exchange platform.
If you read two different stories on what they did, you get two very different versions.
Here's how Bloomberg framed it:
According to the settlement, one class of professional traders, armed with high speed trading systems, had the ability to exploit slight delays in Barclays' electronic foreign exchange trading platform by placing orders before the bank's systems caught up to the latest exchange rates. Such orders were known as "toxic order flow" or "toxic flow."
In order to protect itself from such manipulative trading, Barclays programmed its last look delay, which allowed the bank to reject trades that appeared to be part of the "toxic flow."
The Financial Times cast the settlement in a completely different light.
Barclays has been hit with a $150m penalty for allegedly using its foreign exchange electronic trading platform to automatically reject client orders that would have been unprofitable for the bank, and lying to those clients about why their transactions were turned down.
My thinking is that if you're lying to clients, you knowingly were doing something wrong. If that's the case, the punishment should be far more than a $150 million fine.
