Banking & financial disputes & Competition & antitrust

Major banks fined over €1bn for FX spot trading cartel

The European Commission (the “Commission”) has imposed a fine of €1.07 billion on Barclays, RBS, Citigroup, JPMorgan and MUFG for their participation in two cartels in the Spot Foreign Exchange market for 11 currencies. UBS was not fined as it revealed the existence of the cartels to the Commission.



The Commission started its investigations in the FX market as early as September 2013 and has only now made findings of anticompetitive behaviour in two settlement decisions. Interestingly, the Commission said that they will continue with other ongoing procedures concerning past conduct in the FX market. So it seems that this is not the last word, and the banks still have to cooperate with the Commission.

The currencies affected were: Euro, British Pound, Japanese Yen, Swiss Franc, US, Canadian, New Zealand and Australian dollars, and Danish, Swedish and Norwegian crowns.

At the centre of the two cartels were individual traders at the banks, in charge of FX spot trading of the affected currencies on behalf of the relevant banks, who exchanged commercially sensitive information and trading plans, as well as occasionally coordinating their trading strategies through various online professional chatrooms.

The individual traders were found to have participated in two separate infringements concerning FX spot trading. The Commission has characterised the two cartels as follows:

  • The Three Way Banana Split – which involved communications in three different chatrooms among traders from UBS, Barclays, RBS, Citigroup and JPMorgan. The infringement took place between 18 December 2007 and 31 January 2013.
  • The Essex Express – which involved communications in two chatrooms among traders from UBS, Barclays, RBS and Bank of Tokyo- Mitsubishi (now MUFG Bank). The infringement took place between 14 December 2009 and 31 July 2012.

The commercially sensitive information exchanged in these chatrooms related to:

  • outstanding customers’ orders (i.e. names of clients, currencies and amounts involved);
  • bid-ask spreads (i.e. prices) applicable to specific transactions;
  • their open risk positions; and
  • other details of current or planned trading activities.

The information exchanges enabled the traders to make informed market decisions on whether to sell or buy the currencies they had in their portfolios and when, including, on some occasions, refraining from trading activity so as to avoid interfering with the activity of another trader within the chatroom.

At present, the FX settlement decisions are not publicly available due to confidentiality issues. Although settlement decisions speed up the procedure for adoption of a cartel decision, they often result in a short form decision providing very little detail in relation to the workings of the cartel in question.

Notwithstanding the lack of detail in settlement decisions, those who may have been impacted by these cartels (i.e. institutions/companies involved in the exchange of large amounts of currencies and/or invested in products affected by FX) will be able to sue the banks for damages. The Commission has already established liability, leaving only issues of causation and quantum to be determined by national courts.

Indeed, the Commission’s enforcement of competition rules against financial institutions reflects its continuing focus to ensure that there is fair competition in the financial sector, the same as any other sector of the economy. Margrethe Vestager, the Competition Commissioner in charge of competition policy in Europe, said the banks’ behaviour “…undermined the integrity of the sector at the expense of the European economy and consumers”.

The Commission is currently carrying out investigations in relation to potential breaches of European competition rules in the European government bonds’ market and supra-sovereign, sovereign and agency bonds denominated in US Dollars. At the centre of these investigations is the conduct of certain traders at banks, therefore, we can expect to see some more hefty fines, and perhaps recidivist cartelists.




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Robin Henry

Partner - Head of Dispute Resolution Services



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