Barclays and RBS slapped with slice of £930m fine by EU watchdog for rigging foreign currency markets – and the ‘Essex Express’ chatroom is exposed
- Traders involved in the rigging occasionally coordinated trading strategies through online chatrooms
- Citigroup, JPMorgan and MUFG Bank also hit with fines
The European Commission’s investigation revealed that some individual traders in charge of foreign exchange spot trading for 11 currencies on behalf of their banks exchanged sensitive information and trading plans.
Traders involved in the rigging occasionally coordinated trading strategies through online chatrooms, the Commission said.
Most of the traders involved in the chatrooms knew each other on a personal basis, with one chatroom called ‘Essex Express ‘n the Jimmy’ because all the traders except one called ‘James’ lived in Essex and met on a train to London.
Fined: Barclays and Royal Bank of Scotland are among five banks to have been slapped with a slice of a £930million fine for rigging foreign exchange markets
The competition regulators fined Barclays, RBS, Citigroup, JP Morgan and MUFG Bank, while UBS was not fined as it revealed the existence of the rigging.
In its first decision, related to what was dubbed the ‘Three way banana split cartel’, the Commission levied a €811million, or around £708million, fine on Barclays, RBS, Citigroup and JP Morgan.
For its second decision, comprising the ‘Essex express cartel’, the regulator imposed a €257million, or around £224million, fine on Barclays, RBS and MUFG Bank.
Forex Exchange explained
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.
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 first infringement ran from December 2007 to January 2013, while the second ran from December 2009 to July 2012.
Commissioner Margrethe Vestager 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.’
Many of the banks involved had their total fines reduced. The Commissioned said: ‘The reductions reflect the timing of their cooperation and the extent to which the evidence they provided helped the Commission to prove the existence of the cartels in which they were involved.’
Shares in Barclays are down 0.24 per cent or 0.39p to 159.61p, while RBS’ share price is down 11.11 per cent or 2.55p to 227.65p.
‘Essex express’: One banking chatroom involved was called ‘Essex Express ‘n the Jimmy’ because all the traders except one called ‘James’ lived in Essex and met on a train to London
Reductions: Many of the banks involved had their total fines reduced