Macaskill on markets: New rules for the trading road
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Macaskill on markets: New rules for the trading road

The conviction of former HSBC trader Mark Johnson for front-running a customer FX order could transform the way dealers hedge client trades – and how they communicate with each other.


In October, Johnson was found guilty by a New York jury of nine out of 10 charges of fraud and conspiracy relating to a $3.5 billion foreign exchange transaction handled by HSBC for its client Cairn Energy.

The offending dealing took place in December 2011 when Johnson was the London-based global head of FX cash trading for HSBC, but he was not arrested until last July, when he was in New York to take up a new role with the bank.

The first lesson for any trader concerned about the legitimacy of current or historical deals that profit from customer orders may be to stay clear of the US.

There is irony in the emergence of the US as the arbiter of what is permissible in the global wholesale financial markets just as president Donald Trump challenges existing international agreements in the name of an ‘America first’ policy.

But that irony may be lost on Johnson, as he mounts a legal appeal against a conviction that could bring a prison sentence of up to 20 years.

The fact that Johnson directed trades for a European bank as it converted funds on behalf of a British client from the sale of an Indian subsidiary had little bearing with a New York jury that seems to have been swayed chiefly by the evidence of taped phone calls.

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