The UK’s Competition and Markets Authority (CMA) has reached an agreement with four major banks to settle separate cases related to UK government bonds, also known as gilts.
The regulator has fined Citi, HSBC, Morgan Stanley and Royal Bank of Canada (RBC) a total of £104.5m ($132.4m) for sharing sensitive information related to gilts.
Deutsche Bank, which alerted the CMA to its involvement in these activities, has been exempted from financial penalties under the authority’s leniency policy.
Citi also applied for leniency during the investigation, which resulted in a reduced fine.
CMA competition enforcement executive director Juliette Enser said: “Following constructive engagement between the banks and the CMA, we are pleased that we have been able to settle these 5 cases involving the past sharing of competitively sensitive information about pricing.
“The financial services sector is an integral part of the UK economy, contributing billions every year, and it’s essential that it functions effectively. Only through healthy and competitive markets can we ensure businesses and investors have the confidence to invest and grow – for the benefit of all in the UK.
“The fines imposed today reflect the CMA’s commitment to dealing with competition law breaches and deterring anti-competitive conduct. 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.”
Gilts are issued by HM Treasury through the UK Debt Management Office (DMO), sold at auction to gilt-edged market makers (GEMMs) and actively traded in the financial markets.
In November 2018, CMA opened an investigation and issued five separate infringement decisions on suspected anti-competitive arrangements in relation to UK government bonds.
The investigation found that traders from the banks participated in private one-to-one Bloomberg chatrooms, where they exchanged sensitive information about buying and selling gilts on specific dates.
The misconduct occurred on various dates between 2009 and 2013, with the last exchanges for HSBC in 2010, Morgan Stanley in 2012, and Citi, Deutsche Bank, and RBC in 2013.
Since then, the banks have implemented extensive compliance measures to ensure that the misconduct will not repeat in future, said the UK competition watchdog.
