S.Korea warns Barclays’ local unit on FX trades

SEOUL, Dec 14 (BestGrowthStock) – South Korean financial
regulators have issued a warning to the local branch of
British bank Barclays Plc and reprimanded three bank
officials for breaching banking and currency trade regulations.

The Financial Supervisory Service (FSS) said on Tuesday it
had also asked JPMorgan Chase & Co to reprimand an
official involved in improper currency derivatives trading.

In a report published on its website, the FSS said
Barclays did not employ proper risk control steps for its
currency options trades worth $1.2 billion with three firms
between 2006 and 2007.

The regulator said Barclays also failed to fully inform
trading counterparts of related risks, and in 2009 did not
inform the financial authorities of its decision to transfer
some of its trading losses to new contracts.

Financial firms operating in Korea can face severe
sanctions including business suspension if they continue to
receive warnings on the affected operations.

A senior Barclays official in Seoul said the company had
received a warning and was discussing follow-up measures with
the FSS. The official did not want to be named due to the
sensitivity of the matter.

The FSS said JPMorgan’s branch had made high-risk currency
options trades with six firms in 2007, despite being aware
they were seeking less risky tools to hedge currency risk.

JP Morgan declined comment on the report.
(Reporting by Miyoung Kim; Additional reporting by Hyunjoo
Jin: Editing by Chris Lewis and Anshuman Daga)

S.Korea warns Barclays’ local unit on FX trades