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EU Regulators Fine Five Banks For Forex Spot Trading Cartels

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European Union regulators on Thursday fined five global banks a total of 1.07 billion euros, or $1.2 billion, for participating in foreign exchange spot trading cartels and manipulating the foreign-exchange currency market.

The five banks are Barclays plc (BCS,BARC.L), Royal Bank of Scotland Group Plc (RBS,RBS.L), Citigroup Inc. (C), JPMorgan Chase & Co. (JPM) and Japan's MUFG Bank, formerly known as Bank of Tokyo-Mitsubishi. The banks will pay fines ranging between 69.7 million euros and 310.8 million euros, with Citibank handed the biggest fine.

Swiss bank UBS Group AG (UBS) was exempted from a fine of about 285 million euros as the bank in 2013 revealed the existence of the cartels to the Commission. UBS received full immunity for revealing the existence of the cartels.

The European Commission said that in two settlement decisions, it has fined the five banks for taking part in two cartels in the spot foreign exchange market that involved eleven currencies that are the most liquidated and traded currencies worldwide.

Under the first settlement decision for the so-called "Forex - Three Way Banana Split" cartel, the European Commission imposed a total fine of 811.20 million euros on Barclays, RBS, Citigroup and JPMorgan. The Three Way Banana Split infringement started on December 18, 2007 and ended on January 31, 2013.

For the so-called "Forex- Essex Express" cartel, the European Commission imposed a total fine of 257.68 million euros on Barclays, RBS and MUFG Bank. The Essex Express infringement started on December 14, 2009 and ended on July 31, 2012.

Commissioner Margrethe Vestager, in charge of competition policy said, "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 Commission said its investigation found that some individual traders in charge of forex spot trading of these currencies on behalf of these five banks exchanged sensitive information and trading plans as well as coordinated trading strategies through various online professional chat rooms.

"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," the Commission said.

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