aA
In two settlement decisions, the European Commission has fined five banks for taking part in two cartels in the Spot Foreign Exchange market for 11 currencies - Euro, British Pound, Japanese Yen, Swiss Franc, US, Canadian, New Zealand and Australian Dollars, and Danish, Swedish and Norwegian crowns.
Trading currencies
Trading currencies
© Forex trading

The first decision (so-called “Forex - Three Way Banana Split” cartel) imposes a total fine of €811 197 000 on Barclays, The Royal Bank of Scotland (RBS), Citigroup and JPMorgan.

The second decision (so-called “Forex- Essex Express” cartel) imposes a total fine of €257 682 000 on Barclays, RBS and MUFG Bank (formerly Bank of Tokyo-Mitsubishi).

UBS is an addressee of both decisions, but was not fined as it revealed the existence of the cartels to the Commission.

Commissioner Margrethe Vestager, in charge of competition policy said:“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. Today we have fined Barclays, The Royal Bank of Scotland, Citigroup, JPMorgan and MUFG Bank and these cartel decisions send a clear message that the Commission will not tolerate collusive behaviour in any sector of the financial markets. The behaviour of these banks undermined the integrity of the sector at the expense of the European economy and consumers”.

Foreign Exchange, or “Forex”, refers to the trading of currencies. When companies exchange large amounts of a certain currency against another, they usually do so through a Forex trader. The main customers of Forex traders include asset managers, pension funds, hedge funds, major companies and other banks.

Forex spot order transactions are meant to be executed on the same day at the prevailing exchange rate. The most liquid and traded currencies worldwide (five of which are used in the European Economic Area) are the Euro, British Pound, Japanese Yen, Swiss Franc, US, Canadian, New Zealand and Australian Dollars, and Danish, Swedish and Norwegian crowns.

The Commission's investigation revealed that some individual traders in charge of Forex spot trading of these currencies on behalf of the relevant banks exchanged sensitive information and trading plans, and occasionally coordinated their trading strategies through various online professional chatrooms.

The information exchanges, following the tacit understanding reached by the participating traders, enabled them to make informed market decisions on whether to sell or buy the currencies they had in their portfolios and when.

Occasionally, these information exchanges also allowed the traders to identify opportunities for coordination, for example through a practice called “standing down” (whereby some traders would temporarily refrain from trading activity to avoid interfering with another trader within the chatroom).

Most of the traders participating in the chatrooms knew each other on a personal basis - for example, one chatroom was called Essex Express ‘n the Jimmy because all the traders but “James” lived in Essex and met on a train to London. 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 traders, who were direct competitors, typically logged in to multilateral chatrooms on Bloomberg terminals for the whole working day, and had extensive conversations about a variety of subjects, including recurring updates on their trading activities.

DELFI EN
It is forbidden to copy the text of this publication without a written permission from DELFI.
|Populiariausi straipsniai ir video

Avia Solutions Group to sel Baltic Ground Services Poland

Avia Solutions Group , the largest aerospace business group from Central & Eastern Europe, has...

Paysera has new vice president for development abroad

Starting June 1, Marius Pareščius , IT expert, businessman, and innovator, will be responsible for...

Palanga airport set to reopen with 1st flight since lockdown

Hungary's Wizz Air is on Tuesday relaunching its regular service between Palanga and Dortmund,...

Pandemic threats: how lockdown affected startups

The COVID-19 pandemic faced by the world paralyzed a significant number of businesses ....

Lithuania could apply for EUR 6.3 billion from EU recovery fund

The European Commission has proposed that Lithuania could apply for 6.3 billion euros from the new...

Top news

CEO of Kauno Tiltai detained as part of corruption probe (1)

Aldas Rusevicius , board chairman and CEO of construction company Kauno Tiltai , was on Tuesday...

Lithuania gives nod to relaunch flights to 3 more countries

The government on Wednesday gave the green light for airlines to relaunch regular flights from...

Only 2 new coronavirus cases in Lithuania

On Tuesday, Lithuania has recorded only 2 new coronavirus cases in the country. Overall, there have...

Head of banking body released after being detained as part of corruption case

Mantas Zalatorius , president of the Association of Lithuanian Banks , who was on Tuesday detained...

Paysera has new vice president for development abroad

Starting June 1, Marius Pareščius , IT expert, businessman, and innovator, will be responsible for...

|Maža didelių žinių kaina