Foreign exchange antitrust investigation issues €1.07 billion fines

foreign exchange antitrust
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The European Commission has fined five banks a total of €1.07 billion over two foreign exchange spot trading cartels.

The Commission’s investigation found evidence of online chatrooms where currency traders at Barclays, Citigroup, JPMorgan, MUFG and the Royal Bank of Scotland shared sensitive information and occasionally coordinated their trading strategies in violation of the EU’s antitrust laws. The investigation focused on traders conducting foreign exchange spot trading, where currency trading transactions take place on the same day at the prevailing rate of exchange.

Two separate chatroom-based cartels were identified in the investigation:

  • The Three Way Banana Split group – subsequently renamed Two and a Half Men and Only Marge – featured traders from Barclays, Citigroup, JPMorgan, RBS and UBS; while
  • The Essex Express group, comprising the Essex Express ‘n’ Jimmy chatroom and the Semi Grumpy Old Men chatroom, involved traders from Barclays, RBS, Bank of Tokyo-Mitsubishi (now MUFG Bank) and UBS.

Commissioner Margrethe Vestager, in charge of competition policy, said: “Companies and people depend on banks to exchange money to carry out transactions in foreign countries. Foreign exchange spot trading activities are one of the largest markets in the world, worth billions of euros every day. 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. The behaviour of these banks undermined the integrity of the sector at the expense of the European economy and consumers.”

While UBS traders were involved in the foreign exchange antitrust cartels, UBS itself received full immunity from any financial penalty in recognition of the fact that it has made the Commission aware of the existence of the chatrooms, thereby avoiding an aggregate fine which would have totalled around €285 million.

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