Press release by Elisa Ferreira, Pervenche Berès and Anneliese Dodds
Mardi 20 octobre 2015

Europeans could be put at risk of a second financial sector rate-fixing scandal, leading MEPs Elisa Ferreira, Pervenche Berès and Anneliese Dodds said today in a joint statement.

The MEPs were commenting on the emergence of new messaging platforms such as Symphony Communications, an instant messaging system for the financial markets.

Symphony’s own website had long stated that its system « guarantees that data deletion is permanent, » while promising that use of Symphony will help address the risk of « billions of dollars of fines ». Those claims were downplayed after the New York State Department of Financial Services (DFS) and Senator Elizabeth Warren launched separate investigations to explore whether the Symphony system could be used to evade law enforcement. Ultimately, the New York State authorities mandated that Symphony fundamentally change its business model to insure record-keeping rules are not evaded when Symphony serves banks within DFS’s jurisdiction.

Symphony’s investors include search-engine giant Google, together with Goldman Sachs, Bank of America, Credit Suisse, Natixis, Société Générale, Deutsche Bank, HSBC, Morgan Stanley and JPMorgan.

S&D Group spokeswoman on economic and monetary affairs Elisa Ferreira said:

“I am very worried about the possible consequences of these practices.

“I have already started formally enquiring the European supervisors and regulators on their awareness of the situation and planned actions to guarantee that any possible legal loophole will be swiftly corrected.”

Pervenche Berès, former chair of the Parliament’s Economic and Monetary Affairs committee and current head of the French Socialist Delegation in the European Parliament, said:

“We are seriously concerned that messaging platforms like Symphony could lead to EU laws on transparency in the financial markets being undermined.

“Their reach will be global, so EU regulators need to ensure that the records of these platforms do not fall into a digital black hole.”

Over a dozen banks are believed to have been involved in manipulating Libor between 2005 and 2009, the interest rate at which banks lend to each other, leading to fines totalling more than $9 billion.
Email evidence of conversations between traders was critical to uncovering the scandal.
For her part, Anneliese Dodds, the European Parliament’s spokesperson on the EU’s Market Abuse legislation, said:

“The Commission acted quickly when the Libor scandal first broke, and the EU now has some of the highest regulatory standards in the world on market abuse and manipulation.

“The implications of these messaging services, which could encourage banks to avoid the scrutiny of regulators, must be examined by the EU. They could affect all kinds of financial activity, not just rate fixing.”

“Without Commission action, European consumers risk becoming victims of a second Libor scandal, at the hands of a group of banks who appear to have learnt nothing,” the MEPs concluded.

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Note to Editors

Under the EU’s Market Abuse 2003 legislation, revised in 2014 in response to the Libor scandal, traders caught manipulating the markets face a four year prison sentence, and two years for unlawful disclosure of information.

Record-keeping to keep track of potential abuse and manipulation of the markets is mandatory under the EU’s Market in Financial Services directive (MiFID).