NY financial regulator subpoenas banks in forex probe: sources

New York's financial regulator has sent subpoenas to Goldman Sachs, Credit Suisse, BNP Paribas and Societe Generale, expanding its probe into the possible rigging of foreign exchange rates through computer programs, people familiar with the matter said. 

PHOTO: BLOOMBERG

11 Feb7:12 AM

[NEW YORK] New York's financial regulator has sent subpoenas to Goldman Sachs, Credit Suisse, BNP Paribas and Societe Generale, expanding its probe into the possible rigging of foreign exchange rates through computer programs, people familiar with the matter said.

The state's Department of Financial Services, overseen by superintendent Benjamin Lawsky, is looking at whether algorithms in the banks' electronic trading platforms have been used to front-run or otherwise take advantage of clients, the sources said.

The department is already probing Barclays and Deutsche Bank over their trading platforms and installed monitors in the two banks for a closer look at what's going on.

International authorities have been investigating whether banks rigged the US$5.3 trillion-a-day currency markets for more than a year.

In November, UK and US regulators fined six banks a total of US$4.3 billion after a global investigation of their failure to stop traders from trying to manipulate the foreign exchange market.

Barclays did not join the settlement, Reuters reported, because of complications with the New York regulator. The US Department of Justice is now pushing four major banks to plead guilty to criminal charges for alleged manipulation, the New York Times reported Monday.

The New York regulator's subpoenas to Credit Suisse, Goldman Sachs, Societe Generale and BNP Paribas were sent in December, according to one person familiar with the matter. They seek information relating to discretionary actions by the banks in implementing algorithms to accept or reject trades.

The banks started to produce information in response in late January, and have met with officials handling the investigation, sources said.

At issue is a latency period between the time an offer is floated and accepted, sources say, and whether the banks are gaming their clients during that time. At least one bank claims the pause in the programs is designed to protect it from high-frequency traders, one person said.

But others familiar with the practice say the time lag is a way for banks to manipulate the rates so they favor them.

Transcripts of traders in online chat rooms that led to the settlements in November show them working together to move rates.

There also are transcripts in which they discuss the manipulation of algorithms, one source said.

Ironically, just released industry guidelines warn banks not to abuse "last look" rights that allow them a final chance to reject deals on foreign exchange platforms.

Representatives of Goldman Sachs, Credit Suisse, BNP Paribas, and Societe Generale declined comment or could not be reached.

REUTERS

      

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OPEC producers cut oil prices to Asia in battle for share

PUBLISHED ON FEB 11, 2015 1:48 PM

DUBAI (Bloomberg) - Iraq and Iran joined Saudi Arabia in cutting their March crude prices for Asia to the lowest level in more than a decade, signaling the battle for a share of OPEC's largest market is intensifying.

Iraq's Basrah Light crude will sell at US$4.10 a barrel below Middle East benchmarks, the lowest since at least August 2003, the Oil Marketing Co. said Tuesday. National Iranian Oil Co. lowered its official selling price for March Light crude sales to a discount of US$2.10 a barrel, the lowest since at least March 2000, according to a company official who asked not to be identified because of corporate policy.

The cuts come after Saudi Arabia, the largest crude exporter, reduced pricing to Asia last week to the lowest in at least 14 years. The Organization of Petroleum Exporting Countries left its members' output targets unchanged at a November meeting, choosing to compete for market share against U.S. shale producers rather than support prices. Iraq is the second-biggest producer in OPEC and Iran is fourth.

"This is an effort by some producers to protect market share," Sarah Emerson, managing principal of ESAI Energy Inc., a consulting company in Wakefield, Massachusetts, said by phone Tuesday. "It's really straightforward; cutting prices is how you keep your foot in the door."

Chinese economy more sustainable now: China central bank

China's economy is now more sustainable and domestic consumption is steadily rising, Chinese Central Bank Vice Governor Yi Gang told a G20 meeting of finance officials earlier this week. 

PHOTO: BLOOMBERG

11 Feb10:08 AM

[BEIJING] China's economy is now more sustainable and domestic consumption is steadily rising, Chinese Central Bank Vice Governor Yi Gang told a G20 meeting of finance officials earlier this week.

Mr Yi's remarks came after China posted its slowest economic growth in 24 years in 2014, with a cooling housing market, slowing investment and recent underwhelming exports expected to weigh further on domestic demand this year.

To stoke growth and bank lending, China's central bank last week reduced the amount of cash that banks have to hold as reserves for the first time in over two years. That was after it had unexpected cut interest rates in November.

Finance officials from the Group of 20 leading economies sketched an uncertain outlook for global growth on Tuesday and vowed to use monetary and fiscal policy if needed to stem any risk of stagnation.

Mr Yi also was quoted on the central bank's website on Wednesday as saying that the central bank was closely monitoring China's property market and shadow banking sector, and increasing the transparency of the nation's local government debt.

China's shadow banking business, which includes investment trusts and bill acceptances, ballooned to 45 trillion yuan (US$7.21 trillion) at the end of 2014, according to estimates by ratings agency Moody's Investors Service.

That amounted to 71 per cent of China's economy, compared to 66 per cent at the end of 2013, Moody's said.

REUTERS

      

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Canada's immigration policies hurt bottom line, China says

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Jeff Lewis and Carrie Tait, The Globe and Mail
6:52 AM, E.T. | November 17, 2014
Energy & Resources

 

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China’s state-controlled energy firms are struggling to turn a profit in Canada in part because of the federal government’s immigration laws, a senior Chinese diplomat says.Wang Xinping, China’s consul general based in Calgary, said his country’s energy companies want to bring in their own employees to reduce costs. But Ottawa has been stingy in issuing work permits, he said, making it harder for Chinese companies to develop their projects.
“Overall, for the Chinese investors, they are not making a profit,” he said in an interview at the Chinese consulate.
China sank $30-billion into Canada’s energy sector between 2005 and 2012 snapping up assets. Wang concedes some of these projects are not as good as Sinopec Corp. (SHI.N 1.6%), CNOOC Ltd. (CEO.N -1.25%), and PetroChina Co. Ltd. (PTR.N), once believed. With oil prices down 30 percent since June, the companies want Ottawa to open the borders to help ease its troubles.
“It is very, very, difficult to get the necessary work permits for the operation and the running management of the Chinese enterprises invested here,” Wang said. Alberta’s market for technical experts like engineers and mid-level managers “is so expensive,” he said, “and that adds to the financial burden of the companies.”
Sinopec paid $4.65-billion (U.S.) to buy 9 percent of Syncrude Canada Ltd. in 2010. A year later, it bought Calgary oil producer Daylight Energy Ltd. in a $2.1-billion deal. Despite spending billions, Ottawa has only granted Sinopec 15 working visas, according to Wenran Jiang, an expert on China and special adviser to the Alberta government’s department of energy.
This number could not be verified because the federal department of Citizen and Immigration does not release such information, according to spokeswoman Sonia Lesage.
The department prohibits companies operating in Canada from hiring foreigners if there is a qualified Canadian able to the job.
“Work permit applications are considered on a case-by-case basis on the specific facts presented by the applicant in each case,” she said.
China’s request for immigration concessions come as it acknowledges it made some mistakes in its rush to buy assets in northern Alberta.
Nexen Inc.’s Long Lake oil sands project is well k1nown for its technological and geological troubles, and Syncrude has been underperforming for years.
“When you are making an acquisition, you suppose what you are getting is good,” Wang said.
“When the situation is something like that, they think they had good assets. But sometimes – sometimes – they did not get what they thought they should get. That’s also one of the difficulties the companies can have.”
Wang declined to give an example.
“It is not a matter of [being] upset,” he said.
“You just try to swallow the fruit. If it’s sweet, it’s good. If it’s bitter, you have also to swallow.”
China remains concerned about regulations limiting its ability to invest in the energy patch. CNOOC’s $15.1-billion (U.S.) takeover of Nexen in 2012 prompted Prime Minister Stephen Harper to clamp down on investments in Canada from certain state-owned enterprises. He effectively blocked these companies from owning entire oil sands projects.
Alberta officials are now urging their federal counterparts to revisit the restrictions, which have been blamed for the sharp drop-off in foreign investment in the province’s energy sector.
China has long argued its state-controlled companies adhere to free-market principles rather than Beijing’s demands.
“That’s why I say the SOE restriction is not wise,” Wang said. “It is not right.”

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New immigration rules risk leaving international students behind

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Simona Chase, The Globe and Mail
8:00 AM, E.T. | February 10, 2015
Canadian

 

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Changes to immigration regulations have made it more difficult for international students who have recently graduated from Canadian universities to qualify for permanent residence.
On Jan. 1, new federal rules came into effect that no longer give international students with Canadian work experience an automatic leg-up when they apply to stay in Canada permanently.
Now, Canada may find it difficult to continue successfully recruiting international students. Almost 300,000 international students were enrolled in Canadian postsecondary institutions last year, drawn partly by one of the most open systems of residence after graduation.
“Institutions want to paint a very clear accurate picture for incoming students,” said Jennifer Humphries, vice-president at the Canadian Bureau of International Education. “Immigrants who’ve integrated and adapted would seem tailor made for the Canadian labour force.”
Under the new rules, international students with a degree or diploma from a Canadian institution are placed with other groups of skilled workers in a “pool” from which Citizenship and Immigration draws invites for permanent residence. Before, international students did not have to compete with other skilled workers.
The government has promised that the pool, known as Express Entry, will lead to shorter application times and better connections between employers and potential immigrant employees.
So far, only two cohorts of applicants have been “invited” by the ministry. Invitations are based on a scoring system: A positive Labour Market Impact Assessment, showing there is no Canadian worker available to do the job, is worth 600 points. Another 600 points are available for things like education and age. The cutoff for the first two invited cohorts was above 800. Without an LMIA, students would not be able to reach that number.
“Students are the worst done by in this Express Entry system because, how do you prove for someone with [little] work experience that there is no Canadian to do the job?” said Evan Green, a partner and immigration lawyer at Green and Spiegel LLP in Toronto.
Students are still able to apply for permanent residence through other avenues, such as provincial nominee programs (PNP), which prioritize applications from international students with Canadian postsecondary credentials and professional work experience. The majority of Ontario’s 2,500 PNP spots are filled by international students, for example.
But tens of thousands of students have stayed in Canada as a result of the federal program, and those spots cannot be transferred to the provinces without negotiations.
The changes to how applications from those eligible under the Canadian Experience Class would be processed were announced last winter but the exact details were only released by Citizenship and Immigration Minister Chris Alexander in early December.
“This is a radical move that is devastating to international students that relied on policies that were put into place by this government to help post-graduate international students transition to permanent residence, based on their findings that these were the best people to adapt to life in Canada,” said Robin Seligman, a Toronto-based lawyer who has international student clients.
Recent graduates tried to beat the Jan. 1, 2015 deadline by getting their application in during the fall. As late as December, Citizenship and Immigration had said on its website that thousands of spots were still available under the old regulations.
In the last week, however, many of these fall applicants have received their applications back and been told that the 8,000 cap for Canadian Experience Class was reached on Oct. 20, 2014.
Sarmad Chowdhury, a graduate of the University of Toronto Scarborough, applied in November but had his application returned and will have to try again under the new rules.
Mr. Chowdhury, who works 50 to 60 hours a week as an assistant manager, and majored in economics and financial studies, is anxious about his prospects under the new regulations. “If they had told us to apply under the new rules it would be one thing, but now they say ‘oops,’” he said.
His mother, who came from Bangladesh for his graduation, is devastated, he added.
“She was in tears,” said Mr. Chowdhury, who estimates his education cost $120,000. “She told me: our whole hope was of you going to Canada, and we used every part of our savings so that you would flourish.”
Sources say that the criticisms of how the Express Entry program is functioning a month after its introduction could well lead to further changes, or to recent graduates requiring a lower number of points to be selected in the future.
Meanwhile, Mr. Chowdhury is hoping he picked the right country.
“A lot of my friends went to Australia, the U.K. and United States. I was looking for countries that gave me scope to qualify for residence after I graduated,” Mr. Chowdhury said.

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