The European Commission has opted to impose a heavy fine on banking giants Barclays, The Royal Bank of Scotland (RBS), Citigroup, JPMorgan, and Mitsubishi UFJ Financial Group for their participation in spot FX trading cartels.
In two separate settlement decisions, the EU executive that found the banks took part in two cartels in the Spot Foreign Exchange market for 11 currencies that included euros, British pounds, Japanese yen, Swiss francs, US dollars, Canadian dollars, New Zealand dollars, Australian dollars, as well as Danish, Swedish, and Norwegian kronas.
The first so-called “Three Way Banana Split” cartel of Barclays, RBS, Citigroup, and JPMorgan, was fined €811.2 million by the European Commission, while a second cartel, “the Forex-Essex Express” that included Barclays, RBS, and Mitsubishi UFJ Financial Group was slapped with a €257.7 million fine.
According to the Commission fundings, the former was involved in internal communications involving insider trading that included traders from UBS, Barclays, RBS, Citigroup, and JPMorgan.
The Essex Express case involves two online chatrooms used by traders from UBS, Barclays, RBS and Bank of Tokyo-Mitsubishi (now MUFG Bank) where they routinely exchanged sensitive information and trading plans, and occasionally coordinated their trading strategies.
The information exchanged was usually related to outstanding customers’ orders, with indications as to which of their clients were involved in a transaction. In some cases, the information exchanged also allowed traders to identify opportunities for coordination through a practice called “standing down” where traders temporarily abstain from trading activity to avoid interfering with another trader.