European Commission exposes stock market cartels: fines imposed

Posted 16 May, 2019

The key antitrust authority in the EU – European Commission – reportedly fined the leading global banks Barclays, RBS, Citigroup, JP Morgan Chase and Mitsubishi UFJ Financial Group Inc for two cartel agreements in the spot foreign exchange market. The total penalty amount is EUR 1.07 billion.

According to the v unveiled on the official website of the authority, the decisions covered two agreements for 11 European currencies – US dollar, euro, pound, yen, franc, Canadian dollar, New Zealand dollar and Australian dollar, Danish crown, Swiss crown and Norway crown.

Following the investigation, the European Commission discovered that some traders of the subject banks shared confidential data, including currency exchanges, bid/offer prices as well as planned operations and moves... Moreover, it was also detected in some cases when they coordinated their actions via different messaging services. 

The total fine consists of two parts. As the document reads, the first case called “Forex – Three Way Banana Split cartel” involves the fine of EUR 811.2 million on Barclays, RBS, Citigroup and JPMorgan Chase. At the same time, the second case “Forex – Essex Express cartel” supposes a total fine of EUR 257.7 million on Barclays, RBS and MUFG Bank.

Under the second case, traders are said to know each other personally. One of the chat groups was called Essex Express ‘n the Jimmy since it was joined by the members of the banks that lived in Essex County and went to work at one train to London but for the trader James.

“Some of the traders created the chatrooms and then invited one another to join, based on their trading activities and personal affinities, creating closed circles of trust,” the authority stated.

Notably, another defendant in the case was Swiss-based UBS bank. However, it managed to avoid the fine as it reported about the cartels to the authority.

“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...the Commission will not tolerate collusive behaviour in any sector of the financial markets,” noted Commissioner Margrethe Vestager, in charge of competition policy.

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