According to the EC investigation, few Forex traders acting on behalf of the fined banks, have indulged in spot trading of G10 currencies
The European Commission (EC) has fined five banks, including UBS, Barclays, RBS, HSBC and Credit Suisse, over their involvement in Foreign Exchange (Forex) spot trading cartel.
It has imposed a total fine of €261m on UBS, Barclays, RBS and HSBC, which agreed to settle the case and €83m on Credit Suisse as per the ordinary procedure.
UBS has avoided around €94m fine, for cooperating with the EU authorities, by initially confirming the existence of cartels, under the commission’s 2006 Leniency Notice.
Barclays, RBS, HSBC also have received a 10% reduction on their fines by cooperating with the EC investigation, under the commission’s 2008 Settlement Notice.
Credit Suisse did not cooperate under the settlement procedures and has not received any benefit from any reductions granted within those frameworks.
However, the commission has granted a 4% reduction on its fine, underlining that Credit Suisse alone is not responsible for all aspects in the case.
EC said that it has considered the sales value for the products in question, nature of the infringement, its geographic scope and its duration, in setting the fines.
EC Commissioner and competition policy in charge Margrethe Vestager 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.”
Forex traders serve asset managers, pension funds, hedge funds, major companies and banks, by exchanging large amounts of different currencies.
According to the EC investigation, few Forex traders acting on behalf of the fined banks have indulged in spot trading of G10 currencies.
G10 currencies are considered as the most liquid and traded currencies worldwide.
The traders communicated through an online professional chatroom, dubbed Sterling Lads, to exchange sensitive information, trading plans, and coordinate their trading strategies.
With the exchanged information, the traders were enabled to make informed market decisions on selling or buying the currencies in their portfolios.
Also, the practice allowed the traders to coordinate in certain situations, where few of them would temporarily refrain from trading to avoid interfering with another trader.
In May 2019, EC imposed €1.07bn (£935m) in fines to Barclays, RBS, Citigroup, JPMorgan and MUFG for antitrust offences related to Forex spot trading.