So how did they do it?
Theobald explains that traders probably used something called the “Reuters fix”, more formally known as the “WM/Reuters Benchmark Rates”. At 16:00 London time every day, the value of currency is marked. It’s necessary to have this because currency markets never close, unlike the regular stock exchange. It’s important because when contracts are drawn up, they will refer to the Reuters fix as the current value of foreign exchange. Theobald speculates that this instrument is what the traders were manipulating.
Still not with you.
“If you are a trader, and you know that your mining company client is selling a million dollars today, and another client is doing likewise, you can kind of keep those orders in your back pocket until just before 4pm, when the Reuters fix is set,” Theobald explains. “So you can save up all your dollars, and hit the market at once. That will cause a minor disruption in the dollar to rand market, which will move the price. If you tell other traders, they can co-ordinate with you. So you can put a slab of liquidity into the market and move the price together.” The Reuters platform was decommissioned in 2013, which is potentially why the dodgy activity stopped there.
