EU fines banks €261m over currency trading cartel

The European Commission has fined Barclays, HSBC, RBS, and UBS €261 million after an investigation uncovered collusion in the trading of foreign currencies.

All four banks decided to settle the case.

The commission also dished out a penalty of € 83 million to Credit Suisse under the ordinary procedure.

The investigation focused on the trading of the G10 currencies. When companies exchange large amounts of different currencies they generally do so via a Foreign Exchange, or 'Forex' trader.

According to the Commission, the probe revealed that some traders in charge of the Forex spot trading of these currencies, which acted on behalf of the five banks, exchanged sensitive information and trading plans, and occasionally coordinated their trading strategies through an online professional chatroom called 'Sterling Lads'.

The Commission said that these information exchanges enabled the traders to make informed market decisions on whether and when to sell or buy the currencies they had in their portfolios, as opposed to a situation where traders acting independently from each other take an inherent risk in taking these decisions.

Occasionally, it added, these information exchanges also allowed the traders to identify opportunities for coordination, for example through a practice called “standing down”, whereby some of them would temporarily refrain from trading to avoid interfering with another trader.

“Today we complete our sixth cartel investigation in the financial sector since 2013 and conclude the third leg of our investigation into the Foreign Exchange spot trading market,” said commissioner Margrethe Vestager, in charge of competition policy. “Our cartel decisions to fine UBS, Barclays, RBS, HSBC and Credit Suisse send a clear message that the Commission remains committed to ensure a sound and competitive financial sector that is essential for investment and growth.

“Foreign exchange spot trading activities are one of the largest financial markets in the world. The collusive behaviour of the five banks undermined the integrity of the financial sector at the expense of the European economy and consumers.”

UBS said in a statement: “This is a legacy matter where UBS was the first bank to disclose potential misconduct and we are pleased the matter is resolved."

Barclays, Credit Suisse, and HSBC declined to comment on the proceedings.

FStech has also reached out to RBS for comment.

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