In a landmark decision, South Africa’s Court of Appeal ruled that a formally recognized cartel exists in the foreign exchange market. This ruling has opened the door for an unprecedented regulatory probe targeting major financial institutions, including JPMorgan Chase & Co. and HSBC Holdings Plc. Regulators warned the banks could face substantial penalties for facilitating or benefiting from a collusive price‑fixing scheme that distorted foreign currency trading.
Under the new investigation, prosecutors will examine whether these banks coordinated trading volumes or prices, potentially inflating gains for themselves and their clients. The inquiry follows a series of complaints by investors alleging that the sector has been manipulated for decades, leaving consumers with higher costs and limited market choice.
Both JPMorgan and HSBC have already begun cooperating with the South African Financial Sector Conduct Authority. They claim to have internal controls in place that prevent any document or actions related to cartel conduct.
Regulatory scrutiny is expected to extend beyond these two institutions as authorities assess the broader industry. Existing competition laws and the country’s foreign exchange policy will be evaluated for compliance with the court’s order, with potential sanctions aimed at restoring market integrity and protecting consumers.
