EU fines 5 major banks for foreign exchange rigging
16 May 2019, 21:49 ( 2 Months ago)
In two decisions, the European Commission on Thursday levied a combined fine of over 1 billion euros on five major banks for taking part in two cartels in the spot foreign exchange market for 11 currencies.
The first decision imposes a total fine of 811 million euros on Barclays, the Royal Bank of Scotland (RBS), Citigroup and JPMorgan. The second fine, totaling 258 million euros, was levied on Barclays, RBS and MUFG Bank. UBS is an addressee of both decisions, but was not fined as it had revealed the existence of the cartels to the Commission.
Foreign exchange, or "Forex" in Europe, refers to the trading of currencies. When companies exchange large amounts of a certain currency against another, they usually do so through a Forex trader.
The European Commission's investigation revealed that some individual traders in charge of Forex spot trading of these currencies on behalf of the relevant banks exchanged sensitive information and trading plans, and occasionally coordinated their trading strategies through various online professional chatrooms.
The information exchanges, following the tacit understanding reached by the participating traders, enabled them to make informed market decisions on whether to sell or buy the currencies they had in their portfolios and when.
"Today we have fined Barclays, the Royal Bank of Scotland, Citigroup, JPMorgan and MUFG Bank, and these cartel decisions send a clear message that the Commission will not tolerate collusive behaviour in any sector of the financial markets," said EU Competition Commissioner Margrethe Vestager.
"The behavior of these banks undermined the integrity of the sector at the expense of the European economy and consumers," she added.