On Thursday 2 December the European Commission ended its investigation into a cartel in the spot foreign exchange (‘Forex’) market by fining five banks.
The Commission imposed a total fine of €261 million on the four banks that opted for the settlement route (UBS, Barclays, RBS and HSBC). Credit Suisse was fined €83 million (ordinary procedure).
Commission Vice-President Margrethe Vestager, responsible for Competition Policy, said: “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’s investigation focused on trading in G10 currencies, the most liquid and widely traded currencies in the world. When companies exchange large amounts of different currencies, they usually do so through a Forex trader. The 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 traders temporarily refrained from activity to avoid interfering with another trader (see EUROPE 12256/2).
UBS received full immunity for disclosing the cartels and thus avoided a fine totalling some €94 million.
Barclays, RBS and HSBC received a reduction in their fines for cooperating with the Commission’s investigation.
The Commission reduced the fines imposed on Barclays, HSBC, RBS and UBS by 10% after the banks acknowledged their participation in the cartels and their liability in this respect.
As Credit Suisse did not cooperate under the leniency or settlement procedures, it did not benefit from any of the reductions provided for in these procedures.
However, the Commission granted a total reduction of 4% to take account of the fact that Credit Suisse is not held liable for all aspects of the case.
Link to the case: https://bit.ly/3pD7FX5 (Original version in French by Lionel Changeur)