EC fines five banks €1bn over forex trading cartels - economia

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Danny McCance 17 May 2019 10:15am

The European Commission (EC) has fined five banks – Barclays, RBS, Citigroup, JPMorgan and MUFG – a total of €1.07bn (£0.9bn) for participating in two foreign exchange spot trading cartels

Two settlement decisions were reached in regards to two cartels, the “Forex –Three Way Banana Split cartel” and the “Forex – Essex Express cartel”.

The EC found that some spot traders, on behalf of the banks involved, had been exchanging sensitive information in relation to the trade of currencies, coordinating trading strategies through online chatrooms.

Foreign exchange spot trades involve the exchange of currencies and are intended to be executed on the same day at the prevailing exchange rate.

In the first decision Barclays, RBS, Citigroup and JPMorgan were fined a total of €0.81bn over the Three Way Banana Split Cartel.

In the second decision Barclays, RBS and MUFG (formerly the Bank of Tokyo-Mitsubishi) were fined €257m in total over the Essex Express cartel.

“The behaviour of these banks undermined the integrity of the sector at the expense of the European economy and consumers,” said Margrethe Vestager, EU competition commissioner.

She said that the fines and the EC’s cartel decisions, “send a clear message that the commission will not tolerate collusive behaviour in any sector of the financial markets”.

The commission found that the infringements in the Three Way Banana Split begun in December 2007 and ended January 2013, while those in the Essex Express did so between 2009 and 2012.

UBS was an addressee in both decisions, but as it revealed the cartels to the EC, it did not receive any fines.

The cartels were involved in the spot foreign exchange market for 11 currencies including the euro, British Pound, Australian, Canadian, New Zealand and US dollars, Danish, Norwegian and Swedish crowns and the Japanese yen.

All banks involved in the Three Way Banana Split received reduced fines for cooperation, while only MUFG did not apply for leniency and receive reduced fines in the Essex Express decision.

In 2014, the Financial Conduct Authority fined five banks – Citibank, HSBC, RBS, JPMorgan Chase and UBS – a record £1.1bn for manipulating foreign exchange markets.

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