Traders accused of ripping off taxpayers by colluding on UK bonds

·3 min read
City of London - mbbirdy/E+
City of London - mbbirdy/E+

Five of the world’s biggest banks have been accused of ripping off UK taxpayers after sharing sensitive information when trading government bonds.

The Competition and Markets Authority (CMA) said it provisionally found that traders at Citigroup, Deutsche Bank, HSBC, Morgan Stanley and RBC colluded in chatrooms to swap sensitive information about UK bonds in the wake of the financial crisis.

The regulator said the case relates to a small number of traders who were involved in the buying and selling of UK government bonds at the banks and who used one-to-one Bloomberg chat rooms to unlawfully share information on pricing and strategies.

Michael Grenfell, head of enforcement at the CMA, said: “Our provisional decision has found that, in the aftermath of the global financial crisis, five global banks broke competition law by taking part in a series of one-to-one online exchanges of competitively sensitive information on pricing and other aspects of their trading strategies on UK bonds.

“This could have denied taxpayers, pension savers and financial institutions the benefits of full competition for these products, including the minimisation of borrowing costs.”

The alleged sharing of the information took place between 2009 and 2013, the CMA said. It has been investigating the allegations since 2018.

Deutsche Bank blew the whistle on the case after discovering the activities at its own bank. As a result, Deutsche Bank won’t be fined under any final judgement.

Citigroup has admitted its involvement and will be handed a reduced fine in any resolution.

HSBC, Morgan Stanley, and Royal Bank of Canada have not admitted any wrongdoing.

Mr Grenfell added: “A properly functioning, competitive bond market benefits tens of millions of taxpayers and pension savers as well as being at the heart of the UK’s reputation as a global financial hub.

“These alleged activities are therefore very serious and warrant the detailed investigation we have undertaken.

“While both Deutsche Bank and Citi have admitted their involvement in anti-competitive conduct, we will now consider further representations from the parties before reaching a final decision.”

A spokesman for Morgan Stanley said: “Morgan Stanley has cooperated fully with the CMA during this investigation and will continue to constructively engage in the process. However, we disagree with the CMA’s provisional allegations and intend to contest them.”

A spokesman for RBC said: “While we are unable to comment on an ongoing regulatory matter, we have cooperated fully with the CMA during its investigation and take any allegation of employee misconduct very seriously.”

A spokesman for HSBC said: “HSBC refutes the CMA’s allegations. We will continue to make our case to the CMA as appropriate whilst we await a final decision.”

A spokesman for Citigroup said: “We have cooperated fully with the CMA on this matter and are pleased to put it behind us.”

A spokesman for Deutsche Bank said: “Deutsche Bank proactively reported the issue to the UK authority and has cooperated fully in the subsequent investigation which related to activity prior to 2014.

“As a result, we have been granted provisional immunity by the CMA and do not therefore expect to receive a financial penalty.”

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