The European Commission on Thursday fined Barclays, RBS, HSBC, UBS and Credit Suisse 344 million euros for setting up a cartel in the spot market for currencies (known as Forex). Thus, Brussels has imposed a total fine of 261 million to the four banks that decided to reach an agreement –UBS, Barclays, RBS and HSBC – and, in addition, to Credit Suisse, with 83 million under the ordinary procedure.
The European Commissioner for Competition, Margrethe Vestager, said: “Today we concluded our sixth cartel investigation in the financial sector since 2013, and the third stage of our investigation on the foreign exchange spot market. The fine on UBS, Barclays, RBS, HSBC and Credit Suisse sends a clear message that the Commission remains committed to ensuring a strong and competitive financial sector essential for investment and growth. Forex spot trading activities are one of the largest financial markets in the world. The collusive behavior of the five banks undermined the integrity of the financial sector, at the expense of the economy and consumers. ”
The Commission’s investigation focused on the trading of G10 currencies, the most liquid and traded currencies worldwide: dollars, euro, British pound, Japanese yen, Australian dollar, New Zealand dollar, Canadian dollar, Swiss franc, crown. norway and swedish krona.
When companies exchange large amounts of different currencies, they usually do so through a Forex trader, Brussels explains: “The main clients of Forex traders include asset managers, pension funds, hedge funds, large companies and others. banks”.
Thus, the European Commission investigation revealed that some operators in charge of the G10 spot currency trading, acting on behalf of the fined banks, exchanged confidential information, business plans and coordinated their business strategies through an online chat called sterling lads (the boys of the pound).
These information exchanges allowed agents to make informed market decisions about when to sell or buy the currencies they had in their portfolios, as opposed to a situation in which brokers who act independently of one another take an inherent risk in making these decisions. decisions.
On occasions, these exchanges of information also allowed agents to identify moments in which to coordinate through a practice called “withdrawing”, by which some of them would temporarily refrain from negotiating to avoid interfering with another agent, reports the Community Executive .
The fines have been established according to the value of sales in the European Economic Area (EEA) achieved by the participants in the cartel, the products in question, the seriousness of the infringement, its geographical scope and its duration.
Under the 2006 Commission notice, UBS received full immunity for disclosing the existence of the cartels, thus avoiding a total fine of approximately € 94 million.
Likewise, Barclays, RBS, HSBC benefited from reductions in their fines for cooperating with the Commission’s investigation. The reductions reflect the timing of their cooperation and the extent to which the evidence they provided helped prove the existence of the cartel in which they participated.
Furthermore, under the Commission’s 2008 conciliation notice, Brussels applied a 10% reduction to the fines imposed on Barclays, HSBC, RBS and UBS, in view of its acknowledgment of participation in the cartel and its liability to it. respect.
As Credit Suisse did not cooperate under the leniency or liquidation procedures, it did not benefit from any reduction granted within those frameworks. However, the Commission has granted a total reduction of 4% to reflect the fact that Credit Suisse is not responsible for all aspects of the case.