Citigroup, Royal Bank of Scotland and JP Morgan Chase are among five banks that have agreed to pay European Union fines totaling 1.07 billion euros ($ 1.2 billion) for collusion on trading strategies of currencies.
Citigroup was hit the hardest with a fine of 310.8 million euros, followed by fines of 249.2 million euros and 228.8 million euros respectively for RBS and JP Morgan, the European Commission in a press release. Barclays has been fined 210.3 million euros and Mitsubishi UFJ Financial Group is due to pay nearly 70 million euros as part of the settlement with the EU antitrust regulator.
Traders ran two cartels on online chat rooms, exchanging sensitive information and trading plans that enabled them to make informed decisions on whether to buy or sell currencies, the regulator said. Many of them knew each other, calling a chat room on the Bloomberg terminal the “Essex Express n ‘the Jimmy” because all but one of the traders met on a suburban train from Essex to London. Other names for the rooms were “Three Way Banana Split” and “Semi Grumpy Old Men”.
“The spot currency trading business is one of the largest markets in the world, representing billions of euros every day,” said EU Competition Commissioner Margrethe Vestager. “These cartel decisions send a clear message that the commission will not tolerate collusive behavior in any area of ââthe financial markets.”
Although relatively large, cartel fines are less than a â¬ 1.3 billion fine for banks for Euribor rate rigging and less than a record fine of â¬ 3.8 billion for collusion between truck manufacturers .
The UBS Group escaped a fine for being the first to notify regulators of the collusion. The other five banks have obtained reduced penalties by reaching a deal with the commission that will not allow them to challenge the EU’s findings. Last year, Credit Suisse Group was indicted separately by the EU for collusion in currency trading. This case involves another online chat room and banks may be fined at a later date.
The manipulation of benchmark exchange rates by traders was exposed in Bloomberg articles in 2013, triggering regulatory investigations in the US, UK and Switzerland. More than a dozen financial institutions have paid around $ 11.8 billion in fines and penalties around the world, and an additional $ 2.3 billion has been spent to compensate customers and investors. Former United States Attorney General Loretta Lynch said in 2015 that banks had engaged in a “brazen display of collusion” in gambling markets.
“Today’s fine reminds us of how far the bank has strayed in the past and we absolutely condemn the behavior of those responsible,” RBS said in an emailed statement. âThis kind of behavior has no place in the bank that we are today; our culture and controls have fundamentally changed over the past 10 years.
JP Morgan said the bank was “happy to resolve this historic issue, which involves the conduct of a former employee” and has now “made significant improvements in oversight.”
MUFG is “committed to ensuring integrity and compliance with regulatory authorities in every jurisdiction in which we operate, and has taken a number of steps to prevent this from happening again,” the bank said in a statement. communicated. Citigroup and Barclays declined to comment.
The fines for Barclays and RBS are covered by the existing arrangements of the two UK banks and in line with expectations, according to Edward Firth, an analyst at Keefe, Bruyette & Woods in London.
Traders exchanged information on pending customer orders, bid-ask spreads, their open risk positions, and details of ongoing or planned trading activities. They would sometimes agree to âopt outâ or stop a trading activity to avoid interfering with another trader in the group. They traded 11 currencies, including the euro, US dollar, British pound, and Japanese yen.
As the United States won guilty pleas against JP Morgan, Citigroup, RBS and Barclays, three British traders from a group known as “The Cartel” were acquitted last year in a US federal court. for using a chat room to coordinate transactions and manipulate prices in the market. spot exchange rate for euros and US dollars.
The EU continues to investigate banks for possible violations of EU antitrust rules.
Deutsche Bank, Credit Suisse and CrÃ©dit Agricole are targeted by EU investigation into suspected cartel for trading in US dollar supra-sovereign, sovereign and agency bonds via online discussion forums from 2009 to 2015 .
Eight banks are the subject of another EU investigation into euro area sovereign bond trading from 2007 to 2012. UniCredit said it risked a fine from the euro area investigation . RBS is also one of the banks surveyed, one person said in February.
The EU regulator is also looking at “potential coordination of options trading” in the forex market, HSBC Holdings said in its annual report in February. HSBC said it received questions from regulators in October and the investigation is at an early stage.