Southern Times Writer
Harare - The Competition and Tariffs Commission (CTC) has warned Zimbabwe’s financial institutions against conducting illegal colluding activities in the new currency era.
Following the promulgation of Statutory Instrument 142 of 2019, which marked the end of the multicurrency regime where Zimbabwe used a basket of currencies, including the United States dollar, South African rand, Botswana pula and Chinese yuan, the commission welcomed efforts by the Ministry of Finance and Economic Development and the Reserve Bank of Zimbabwe to ensure that they retain full control of efforts to attain economic development of Zimbabwe.
Of interest to the commission are measures taken to ensure the efficient operation of the interbank foreign exchange market.
“Collusive agreements and bid rigging are outrightly prohibited by the Competition Act. Therefore, in light of the new policy measure introduced by Government, and in line with the commission's mandate of promoting and maintaining competition in markets, it would like to warn financial institutions to act independently in determining daily foreign exchange rates.
“The commission will closely watch the behaviour financial institutions to detect any anti-competitive practices and take necessary steps where such anti-competitive conducts are observed,” stated the commission in their half yearly report.
An assessment of three cases shows that collusion was facilitated by individual traders in charge of foreign currency spots on behalf of their relevant banks.
“They then exchanged sensitive information and trading plans and occasionally coordinated their trading strategies. Sensitive information that was exchanged included the following: outstanding customers' orders (i.e. the amount that a client wanted to exchange and the specific currencies involved, as well as indications on which client was involved in a transaction), bid-ask spreads (i.e. prices) applicable to specific transactions, their open risk positions (the currency they needed to sell or buy in order to convert their portfolios into their bank's currency), and other details of current or planned trading activities,” said the commission.