Here are some more details on today's headline news: the banks' wholesale settlement to put FX-rigging in the rearview mirror. First example: if you ever saw your stops taken out from beneath your feet, thank your broker, JPM, which acted against its own clients to crush their stops.

From the FCA's JPM notice:

JPMorgan’s failings in this regard allowed the following behaviours to occur in its G10 spot FX trading business: Attempts to manipulate the WMR and the ECB fix rates, alone or in collusion with traders at other firms, for JPMorgan’s own benefit and to the potential detriment of certain of its clients and/or other market participants; Attempts to trigger clients’ stop loss orders for JPMorgan’s own benefit and to the potential detriment of those clients and/or other market participants; and Inappropriate sharing of confidential information with traders at other firms, including specific client identities and, as part of (1) and (2) above, information about clients’ orders.

From Reuters:

Dozens of dealers have been suspended or fired for sharing confidential information about client orders and coordinating trades to make money from a foreign exchange benchmark used by asset managers and corporate treasurers to value their holdings in the latest scandal to hit the financial industry. They used code names to identify clients without naming them and created online chatrooms with pseudonyms such as "the players", “the 3 musketeers” and “1 team, 1 dream” in which to swap information. Those not involved were belittled.

Here is what they did in these chat rooms:

Traders in a chat room with net orders in the opposite direction to the desired movement at the fix sought before the fix to transact or “net off” their orders with third parties outside the chat room, rather than with other traders in the chat room. This maintained the volume of orders in the desired direction held by traders in the chat room and avoided orders being transacted in the opposite direction at the fix. Traders within the market have referred to this process as “leaving you with the ammo” or similar. Traders in a chat room with net orders in the same direction as the desired rate movement at the fix sought before the fix to do one or more of the following: Net off these orders with third parties outside the chat room, thereby reducing the volume of orders held by third parties that might otherwise be transacted at the fix in the opposite direction. Traders within the market have referred to this process as “taking out the filth” or “clearing the decks” or similar;

Transfer these orders to a single trader in the chat room, thereby consolidating these orders in the hands of one trader. This potentially increased the likelihood of successfully manipulating the fix rate since that trader could exercise greater control over his trading strategy during the fix than a number of traders acting separately. Traders within the market have referred to this as “giving you the ammo” or similar; and/or

Transact with third parties outside the chat room in order to increase the volume of orders held by them in the desired direction. This potentially increased the influence of the trader(s) at the fix by allowing them to control a larger proportion of the overall volume traded at the fix than they would otherwise have and/or to adopt particular trading strategies, such as trading a large volume of a currency pair aggressively. This process was known as “building”. Traders increased the volume traded by them at the fix in the desired direction in excess of the volume necessary to manage the risk associated with firms’ net buy or sell orders at the fix. Traders within the market have referred to this process as “overbuying” or “overselling”.

There are many more details and we will break them out shortly, but cutting to the chase, here is the punishment:

FINMA has also instructed UBS to limit bonuses for traders of foreign exchange and precious metals to 200 percent of their base salary for two years.

Which means that clearly nobody is going to jail, however the punishment is far more harsh: riggers will have a bonus of ONLY 200% their base salary for two years to look forward to!

The horror, the horror.

Which naturally means that base salaries across the rigging banks are about to soar to offset the tempoyrary bonus cap to the "keep the talent" happy. After all someone has to keep on rigging markets and generate bank revenue.