FX Case Update (April 2018): Can Non-U.S. Domiciled Institutions Submit their FOREX Trades?

Mike Lange, Securities Litigation Counsel, Financial Recovery Technologies

Following Morrison, the eligibility requirements for all US securities and antitrust settlements include the need for a ‘nexus’ or connection between the US and a claimant or their transaction.  The $3 billion FOREX settlement is no exception.  Given the absence of recovery monies elsewhere, FRT has been receiving many questions from non-U.S. domiciled institutions – lacking the claimant connection – asking if their FOREX trades are eligible and should be submitted.

Can A Non-U.S. Domiciled Institutions Participate in the FOREX settlement?

A non-U.S. domiciled claimant is eligible to participate in the FOREX settlement if it entered into an FX Instrument during the January 1, 2003 to December 15, 2015 Class Period and that transaction was (a) on a US Exchange, (b) directly with a Defendant including the Non-Settling one; or (c) through an electronic communication network (ECN).

  • Traded on a U.S. Exchange: If the non-U.S. domiciled claimant traded on a US Exchange, their full trade volumes are eligible without discount.
  • Traded directly with a Defendant: If the non-U.S. domiciled claimant traded directly with a Defendant, to be eligible its transaction must have been “in the U.S.”  Since Defendants’ foreign exchange trading operations are in different countries, including the U.S., under the Settlement Distribution Plan, each Defendant is given a Location Factor to reflect the probability a trade with them occurred in the U.S. The claimant’s trading volumes will be multiplied or discounted by the Defendant Location Factors which, unfortunately, are not disclosed in the Settlement Plan of Distribution.
  • Traded through an ECN: If the non-U.S. domiciled claimant traded through an ECN, its trading volumes would be multiplied by .156 to reflect the probability that they were with a Defendant, and then multiplied by the Defendant Location Factors to account for the probability those trades were in the U.S. It’s unclear what Location Factor(s) will be applied in this situation.


In sum, non-U.S. domiciled institutions should file claims in the FOREX settlement if their transactions fall into categories (a), (b) or (ca) above.  If on a U.S. Exchange, volumes will be accepted in full.  If directly with a Defendant, only 15.6% of their volumes will be eligible.  If through an ECN, their trade volumes will be reduced to 15.6% and then further discounted by a Location Factor.

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