Britain’s Competition and Markets Authority (CMA) has imposed fines totaling £104.5 million ($132.4 million) on four major banks—Citi, HSBC, Morgan Stanley, and the Royal Bank of Canada
(RBC)—for exchanging sensitive information about UK government bonds.
Announced on Friday, the fines follow a settlement agreement with the banks over improper data-sharing practices that took place between 2009 and 2013. The CMA found that traders at these institutions engaged in one-on-one discussions via Bloomberg chatrooms, sharing competitively sensitive information related to the pricing of UK government bonds, known as gilts.
CMA investigation and Deutsche Bank's role
The investigation, which began in 2018, concluded in May 2023, revealing that these four banks, along with Deutsche Bank, had violated competition laws. However, Deutsche Bank, which—alongside Citi—admitted to anti-competitive conduct, avoided financial penalties by alerting the CMA to the issue and cooperating with the probe.
During the period in question, the UK government significantly increased its debt issuance following the global financial crisis. The Bank of England (BoE) also intervened by purchasing government bonds in regular auctions to stabilize the economy and financial markets. The CMA found that individual traders exchanged confidential information about these auctions, the buying and selling of gilts, and gilt asset swaps.
Bank responses
Each bank responded to the ruling, emphasizing their commitment to compliance and improvements in regulatory controls:
Citi stated that it fully cooperated with the CMA and remains committed to ensuring regulatory compliance.
Morgan Stanley noted that the CMA's findings focused on the actions of a former employee and highlighted significant industry-wide improvements, including enhanced supervision and compliance measures.
HSBC clarified that the case involved a limited number of communications between its traders and Deutsche Bank between 2009 and 2010. The bank said it had since strengthened its compliance framework, which the CMA acknowledged as robust.
Deutsche Bank emphasized that it proactively reported the issue and fully cooperated with the investigation.
RBC stated that it had significantly improved its compliance procedures over the past decade. The two employees involved in the misconduct are no longer with the bank.
Penalties and reductions
The fines imposed by the CMA varied, with RBC receiving the highest penalty at £34.2 million, followed by Morgan Stanley (£29.7 million) and HSBC (£23.4 million). All three received a 10% reduction for settling after the CMA’s Statement of Objections.
Citi was fined £17.16 million, benefiting from a 35% leniency discount and an additional 20% reduction for settling before the CMA’s formal statement.
Regulator’s stance
Juliette Enser, Executive Director of Competition Enforcement at the CMA, reaffirmed the authority’s commitment to addressing breaches of competition law and discouraging anti-competitive behavior.
“These fines demonstrate the CMA’s determination to tackle misconduct in financial markets. The penalties would have been significantly higher if the banks had not taken extensive steps to prevent future violations,” she said. Photo by Andre Engels, Wikimedia commons.
