In June 2013, Bloomberg News published an investigation that exposed a long‑standing scheme to rig the world’s foreign‑exchange market, which handles roughly $4.7 trillion each day. The report identified a coordinated effort by several of the largest banks to manipulate the daily WM/Reuters benchmark rates – the reference points relied upon by corporations, pension funds and central banks to value currency positions.
According to the investigation, traders turned the 60‑second “fix” window into a private betting arena. They allegedly front‑ran client orders, used chat rooms titled “The Cartel” to coordinate trades, and pushed through transactions before or during the brief period when rates were set. This behaviour persisted for at least ten years, making daily manipulation a routine practice.
HSBC was among the institutions singled out. Regulatory bodies in Asia, Switzerland, the United Kingdom and the United States opened parallel investigations. The U.S. Department of Justice and the Commodity Futures Trading Commission ultimately imposed penalties exceeding $600 million on HSBC. The bank entered into a deferred‑prosecution agreement and a monitorship, though the precise terms have not been disclosed publicly. The size of the fines reflected the seriousness of the misconduct.
The scandal revealed a broader culture of collusion on major currency‑trading floors. Traders were reported to swap client order flow, agree on prices ahead of the benchmark, and manipulate the fix to benefit their own positions at the expense of clients. The fallout extended beyond monetary penalties. Regulators demanded structural reforms, requiring banks to separate forex trading desks from client‑facing units, expand compliance teams, and overhaul surveillance technology. Unmonitored chat rooms and informal coordination were effectively barred.
In response, HSBC asserted that it had taken “significant steps” to prevent a repeat. The bank invested heavily in compliance and risk‑management infrastructure, introduced new policies and procedures, and increased employee training. Ongoing monitoring by appointed overseers continues to assess whether these measures are sufficient.
The repercussions of the 2013 revelations reshaped how the WM/Reuters rates are calculated. The fix window was widened, making it harder to influence the benchmark, and the pool of contributing banks was expanded to improve transparency. Although the same benchmark continues to be used for valuing trillions of dollars in assets and liabilities, the process now faces greater scrutiny.
Critics note that the underlying incentives for collusion—profit pressure, bonus structures tied to short‑term gains, and a close‑knit trading culture—did not disappear instantly. HSBC’s penalty represented only a fraction of its annual profit at the time, and total industry fines climbed into the billions. Yet the forex market remains the world’s largest financial market, with daily volumes now exceeding $7 trillion.
Ten years after Bloomberg’s exposé, the episode is viewed not as an isolated incident but as a systemic failure rooted in a market that operated for decades with limited oversight. The reforms that followed were substantive, but the episode serves as a reminder that when market participants shape the rules, the risk of manipulation rises.
