The foreign exchange (FX) market is one of the highest-volume markets in the financial world; annualized FX trading equates to an astounding 13 times global GDP. Multinational corporations are, necessarily, major participants in the FX market. In order to hedge their currency risk, these companies trade large volumes of FX-based derivatives. However, the playing field for these trades is often tilted in favor of their banking partners.

Multinational corporations usually obtain FX derivatives from banks through over-the-counter (OTC) trading. The unregulated OTC derivatives market generally offers companies the best selection of instruments, but a series of scandals in which banks have been caught gaming various OTC markets indicates that caution is appropriate.

In 2011, the Bank of New York Mellon was sued by both the New York attorney general and the United States attorney general in Manhattan for routinely overcharging customers in the processing of FX transactions. The AGs claimed that the bank defrauded clients of more than $2 billion. In the same year, State Street Bank was sued by several state pension funds and investigated by the SEC for similar allegations. A year later, it was determined that many of the largest banks were gaming LIBOR (the London Interbank Offered Rate), which underpins $350 trillion in derivatives. Some were found guilty and fined, including Barclays ($200 million) and UBS ($1.5 billion).