Banks handed further fines in Switzerland for FX trading cartel

Swiss competition authority has fined Barclays, Citigroup, JP Morgan, RBS & MUFG a combined CHF 90 million for its role in rigging the FX spot market.

Major sell-side institutions have been handed fines worth CHF 90 million in Switzerland for rigging FX spot trading, weeks after the European Commission fined the banks more than €1 billion for related offences.

Switzerland’s Competition Commission (COMCO) said in a statement this week that traders at Barclays, Citigroup, JP Morgan, Royal Bank of Scotland (RBS), MUFG and UBS had colluded in two separate chatrooms, known as Essex express and the Three-way banana split, to rig G10 currencies through coordinated efforts.

The regulator added that the fines handed to the banks amount to CHF 25 million for Barclays, CHF 28.5 million for Citigroup, CHF 9.5 million for JPMorgan, CHF 1.5 million for MUFG Bank and CHF 22.5 million for RBS.

UBS was not fined because it had told the competition authority about the chatrooms once they were discovered, COMCO added, and an investigation into Credit Suisse’s possible involvement is ongoing.

Last month, the European Commission fined Barclays, Citigroup, JP Morgan, RBS and MUFG fines totalling €1.07 billion following an investigation into alleged manipulation of the FX spot market for 11 currencies. UBS was again involved in the misconduct, but the EU authority did not fine the bank as it revealed the existence of the cartels. UBS’ fine would have been €285 million.

The Commission said that traders at the banks involved in the scandal exchanged sensitive information to coordinate trading strategies via online chatrooms. The information exchanged online included outstanding client orders, bid-ask spreads, and their open risk positions.

“These cartel decisions send a clear message that the Commission will not tolerate collusive behaviour in any sector of the financial markets,” Margrethe Vestager, who heads up competition policy at the European Commission, said at the time of the announcement. “The behaviour of these banks undermined the integrity of the sector at the expense of the European economy and consumers.”

Settlement procedures for the FX cartels was started by the European Commission in June 2008, and when reaching a settlement, the banks acknowledge their participation in the cartel and their liability for it.