Two weeks ago, SA’s Competition Commission announced that it was investigating all these naughty International Banks for “rigging the Rand”. I wrote a bit about it here – but I’ve done more reading since, so I wanted to give a quick update.
Summary: the more I read, the more I think that this is all overreactive.
Sure, the Big Banks have done Bad Things in the past – but when it comes to the FX trading side of things, the logic involved seems to be:
- Banks do Bad Things;
- Look at this chat room!
- THE BANKS HAVE OBVIOUSLY DONE MORE BAD THINGS.
- GET MAD, PEOPLE.
I would write more, but that could take your time away from reading this article: “Oranges, Lemons and Forex“. Which you should read. Immediately. Bookmark it now. It’s one of the best things I’ve read in ages: explaining the forex fixing scandal in terms of a villager travelling down to the market square to buy oranges.
Don’t pause for thought. Just click the link. Here it is again: Oranges, Lemons and Forex. Read it!
- People-with-money demand that bankers do their forex exchange.
- People-with-money are outraged at having to pay bankers to do their forex exchange.
- People-with-money insist that the bankers do the forex exchange for almost no fee at all.
- People-with-money are then surprised that bankers don’t want to do stuff for free and end up having to organise their own fee without bothering the people-with-money with the details.
- Who are those people-with-money?
- Fund managers, mostly. Who are rather lazily trying to palm off their foreign currency exposure management to banks without having to sacrifice any of their Fund Management fees.
Rolling Alpha posts opinions on finance, economics, and the corporate life in general. Follow me on Twitter @RollingAlpha, and on Facebook at www.facebook.com/rollingalpha.