FX Cartel: EU Antitrust Agency Fines Four Banks $390 Million

The European Commission has slapped a total fine of €344 million (around $390 million) on four banks, including UBS, Barclays, NatWest (previously RBS), HSBC and Credit Suisse, for their involvement in a forex Forex Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Read this Term cartel, the EU antitrust regulator announced on Thursday.

The hefty penalty came as the banks agreed to settle the case. The banks discussed and shared sensitive information and trading plans in a chatroom named ‘Sterling Lads’ for spot trading with G-10 currencies.

HSBC faces the largest penalty at €174.3 million, while Barclays has to pay €54.3 million. NatWest, which rebranded from RBS last year, is facing €32.5 million in fines, whereas Credit Suisse should cough up a total of €83 million.

However, UBS avoided the penalty with ‘full immunity' as it blew the whistle on the scandal.

Barclays, RBS and HSBC received a 10 percent discount on the original penalty amount as they admitted their involvement with the forex cartel, but Credit Suisse did not receive any reduction as it did not cooperate with the authorities in the investigation.

Cracking Down on Financial Cartels

“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,” said Margrethe Vestager, Europe’s Competition Chief.

“Foreign exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term 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.”

Furthermore, she highlighted that this was the sixth cartel investigation by the European regulators since 2013.

NatWest said in a statement: “We are pleased to have reached this settlement regarding serious misconduct that took place in a single chatroom, and that involved a former employee of the bank, around a decade ago.”