EU fines banks €344m for forex spot trading cartel

EU Commissioner Margrethe Vestager

By Mark McSherry

The European Commission announced it has fined UBS, Barclays, RBS, HSBC and Credit Suisse a total of €344 million “for participating in a foreign exchange spot trading cartel.”

HSBC received the largest fine at €174.3 million, followed by Credit Suisse at €83.3 million, Barclays at €54.3 million and RBS — now called NatWest — at €32.5 million.

UBS received full immunity for revealing the existence of the cartel, avoiding a fine of €94 million.

Commissioner Margrethe Vestager, in charge of competition policy, said: “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.

“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”.

The Commission said its investigation revealed that some traders in charge of the Forex spot trading of G10 currencies, acting on behalf of the fined banks, “exchanged sensitive information and trading plans, and occasionally coordinated their trading strategies through an online professional chatroom called Sterling Lads.”

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, 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.”

The Commission said it applied a reduction of 10% to the fines imposed on Barclays, HSBC, RBS and UBS “in view of their acknowledgment of participation in the cartel and of their liability in this respect.”

The Commission added: “Since Credit Suisse did not cooperate under the leniency or settlement procedures, it did not benefit from any reductions granted within those frameworks.

“The Commission has however granted a total reduction of 4% to reflect the fact that Credit Suisse is not held liable for all aspects of the case.”