Four global banks—Citi, HSBC, Morgan Stanley, and Royal Bank of Canada—have been fined a combined total of more than £100mn by the UK’s Competition and Markets Authority (CMA) following an investigation into the exchange of sensitive information about gilt trading.
The regulator found that between 2008 and 2013, a small number of traders at the banks participated in private Bloomberg chat rooms where they shared confidential details regarding the buying and selling of UK government bonds.
Deutsche Bank was also included in the investigation, which began in 2018, but escaped financial penalties after voluntarily disclosing its involvement to the authorities.
The CMA did not find any evidence of direct market impact from the misconduct but stressed that such practices undermine competition and market integrity.
Fines and leniency for early settlements
The fines varied based on the banks’ level of cooperation with the regulator.
Royal Bank of Canada received the largest penalty of £34.2mn, while Morgan Stanley was fined £29.7mn and HSBC £23.4mn.
Citi was handed the smallest fine of £17.2mn after receiving a 35% leniency discount and a further 20% reduction for settling early, before the CMA issued its formal statement of objections.
Three of the banks—HSBC, Morgan Stanley, and RBC—were granted a 10% reduction in penalties for agreeing to settle after the CMA had raised concerns about their actions.
The regulator stated that the fines would have been significantly higher had the banks not taken substantial steps to strengthen their internal compliance programs.
Agency determined to uphold competition rules in financial sector: CMA
Juliette Enser, executive director of competition enforcement at the CMA, emphasized that the penalties reflect the agency’s determination to uphold competition rules in the financial sector.
“The financial services sector is an integral part of the UK economy, contributing billions every year, and it’s essential that it functions effectively,” she said.
“Only through healthy and competitive markets can we ensure businesses and investors have confidence to invest and grow—for the benefit of all in the UK.”
She added that while the banks had taken steps to prevent future breaches, the CMA remains committed to tackling anti-competitive behavior.
Banks respond, highlight industry-wide changes
The banks involved have since introduced enhanced compliance measures to prevent similar incidents.
Morgan Stanley, in its response, stated that it had chosen to settle to put an end to the long-running investigation, noting that the misconduct involved a single former employee from approximately 15 years ago.
“The CMA has made no findings regarding impact on the market or of financial benefit to the firm,” the bank said.
“Since the time in question, the whole industry, including Morgan Stanley, has undergone significant changes, including enhanced supervision and compliance controls.”
The CMA’s investigation underscores the importance of strict adherence to competition laws in financial markets, particularly in sectors that play a vital role in the economy.
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