The Central Bank, in an unprecedented move, has fined Barclays Bank a total of GH¢4.68million for making frivolous quotes –these are quotes which they have no intention of honoring and are designed merely to mislead market participants– on the Ghana Interbank Foreign Exchange Market.
In a move expected to send shock waves to the industry, the Central Bank, in a statement released yesterday, is seeking to draw a line when it comes to misleading actions by banks in the foreign exchange market which risk putting the entire FX market in danger.
Under the Ghana Interbank Forex Market Conduct, which was released in February, 2019, dealers and brokers are strictly prohibited from making frivolous quotes; these are quotes which they have no intention of honoring and are designed merely to mislead market participants.
“dealers and brokers should not engage in practices by which they may realize immediate gain (or avoid loss) but may compromise their clients, employers or their own reputation,” the guidelines said.
It further stated that dealers and brokers should immediately report to their management and to the Bank of Ghana whenever they spot other brokers or dealers acting in a way that jeopardizes the interests or reputation of the foreign exchange market.
“The management of the institution upon receipt of the report stated in shall report the incident to the Bank of Ghana within 24 hours,” the guidelines stated.
The Bank of Ghana stressed that it is committed to ensuring sanity, transparency and promoting best practices that serve to develop and deepen the FX market in Ghana. “In pursuit of the above goals, the Bank of Ghana will not hesitate to sanction any market participant whose actions contravene Ghana’s Interbank FX Market Conduct Rules.”
Under the penalties regime, the Central Bank has the authority to issue warning letters to the dealing officer and their Licensed Foreign Exchange Dealers (LFXDs) or FX Broker; suspend the LXFD, dealing officer, FX Broker and the publication of same in the newspapers; and revocation of FX dealing license, and the publication of same in the newspapers in addition to legal prosecution of fraudulent cases.
In addition, the Bank of Ghana will refer fraudulent cases to the law enforcement agents and the Attorney General for prosecution; exclusion from trading with the Bank of Ghana; and name and shame of recalcitrant market participants.