Barclays, Citigroup, JP Morgan, MUFG, and Royal Bank of Scotland were fined a combined €1.07 billion (US$1.2 billion) by the European Union on Thursday, May 16, for rigging the multi-trillion dollar foreign exchange market, reported Reuters.
Banks have been hit with billions of dollars in penalties worldwide over the last decade for the rigging of benchmarks used in many day-to-day financial transactions, further damaging the industry’s fragile reputation after the financial crisis.
The European Commission stated that individual traders at the banks involved formed two cartels to manipulate the spot foreign exchange market for 11 currencies, including the dollar, the euro, and the pound.
“These cartel decisions send a clear message that the Commission will not tolerate collusive behavior in any sector of the financial markets,” European Competition Commissioner Margrethe Vestager said in a statement.
Citigroup was hit with the highest fine of €311 million, while Swiss bank UBS was not fined as it had alerted the two cartels to the European Commission.
The EU competition enforcer said most of the traders knew each other on a personal basis and set up chatrooms such as “Essex Express ‘n the Jimmy”, which was given this name because all of them except “James” lived in Essex, to the east of London, and met on their train commute to the British capital.
The five-year investigation found nine traders spread across the banks exchanged sensitive information and trading plans in the chatrooms and occasionally co-ordinated trading strategies.
“The traders, who were direct competitors, typically logged in to multilateral chatrooms … and had extensive conversations about a variety of subjects, including recurring updates on their trading activities,” the Commission said in a statement.