Four banks fined by UK regulator over gilt information sharing

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Four banks have agreed to pay fines totalling more than £100mn after an investigation by the UK’s competition watchdog found that employees used Bloomberg chat rooms to share sensitive information on gilt trading.

Citi, HSBC, Morgan Stanley and Royal Bank of Canada have agreed to settle separate cases with the Competition and Markets Authority on conduct that took place between 2009 and 2013.

A small number of traders from the banks were found to have participated in “unlawful” exchanges by sharing sensitive information in one-on-one Bloomberg chats about the pricing of UK government bonds

Deutsche Bank was also subject to the probe opened by the CMA in 2018 but received immunity for reporting its conduct, a common practice under the regulator’s leniency policy where “a business that has been involved in cartel activity” helps with an investigation.

The fines are the latest in a series of penalties handed to global banks for sharing sensitive information in the currency and bond markets. In 2021, the European Commission fined a group of banks €371mn for participating in a cartel in the primary and secondary market for European government bonds, sharing prices and other sensitive information in the run-up to debt auctions.

HSBC, Morgan Stanley and RBC were handed a 10 per cent reduction in penalties for settling after the CMA raised its objections while Citi received a 55 per cent discount, in part for settling before the regulator issued its objections.

“The fines imposed today reflect the CMA’s commitment to dealing with competition law breaches and deterring anti-competitive conduct,” Juliette Enser, executive director of competition enforcement at the CMA, said in a statement on Friday.

“The fines would have been substantially higher had the banks not already taken unusually extensive steps to make sure that this doesn’t happen again,” she added.

Citi, Deutsche, HSBC and Morgan Stanley each had one UK-based trader sharing information in bilateral Bloomberg chats, while RBC had two. None of the traders still work for the banks, the CMA has said.

Most of the information exchanged between the banks related to pricing in gilt auctions. Traders at Deutsche Bank and RBC also co-ordinated on trading strategies for gilts “on a limited number of occasions”, the CMA said.

Deutsche and RBC also had the highest volume of messages with traders at the banks exchanging information on 41 dates between November 2009 and April 2013.

Citi and Deutsche admitted their involvement before the CMA released its provisional findings in 2023 while HSBC, Morgan Stanley and RBC did not admit any wrongdoing. In statements sent to the Financial Times at the time, both RBC and Morgan Stanley said they disagreed with the regulator’s findings while HSBC has said it “refutes” the allegations.

Morgan Stanley said on Friday it had “taken the commercial decision to draw a line under this long-running CMA investigation”. A spokesperson for HSBC said the bank was “pleased to put this investigation behind us”. Citi and RBC both said they were pleased to have resolved the matter.

All of the banks said their compliance has significantly improved since the incidents took place.

The CMA did not say whether the exchanges restricted or distorted market competition.