The European Commission’s €1 billion fine on FX collusion: what it means for banks and businesses
Today the European Commission issued two settlement decisions and fined Barclays, RBS, Citigroup, JPMorgan and MUFG a combined €1.07 billion for participating in a cartel in respect of the foreign exchange spot trading market. Whistle-blower UBS is an addressee of both decisions, but was not fined.
The decision highlights two cartels for 11 currencies - Euro, British Pound, Japanese Yen, Swiss Franc, US, Canadian, New Zealand and Australian Dollars, and Danish, Swedish and Norwegian crowns.
These are very significant fines which underline the egregious nature of the banks’ conduct. Traders at the banks were exchanging commercially sensitive information including in relation to customer orders, often through participation in internet chatrooms. Moreover, this is likely to be merely the tip of the iceberg. Credit Suisse has so far failed to cooperate with the regulatory investigations and we expect further decisions involving wider ranging conduct to be handed down in due course, perhaps with even bigger fines.
Who will this impact?
Foreign exchange spot trading is one of the biggest financial markets in the world and to have colluded in this way undermined the integrity of the markets and will have caused customers of the banks, such as large corporates, asset managers, pension funds and hedge funds to have suffered loss, in some cases very significant sums.
Shareholders of the banks concerned will no doubt also have many questions.
Our US offices are co-lead counsel in a US group action lawsuit alleging violation of US antitrust laws against some of the world’s largest banks arising from their manipulation of bid / ask spreads and key global FX benchmark rates. To date, the court has granted final approval for settlements totalling $2.3 billion – reached with 15 out of 16 banks.
It is clear that the path now lies open to those customers of the banks who were unable to claim in the US, to bring claims or secure settlements in Europe seeking damages for the losses they have suffered.