U.S., British and Swiss regulators have fined five global banks $3.4 billion U.S. for attempting to manipulate foreign exchange markets — the latest penalties for an industry previously criticized for rigging interest rates and for their role in triggering the global financial crisis.
The U.S. Commodity Futures Trading Commission, the U.K. Financial Conduct Authority and the Swiss Financial Market Supervisory Authority said Wednesday that Citibank, JPMorgan Chase Bank, Royal Bank of Scotland, HSBC Bank and UBS had agreed to settlements totaling almost $3.4 billion U.S. The FCA said it is continuing to investigate Barclays Bank.
Some $5.3 trillion U.S. changes hands every day on the global foreign exchange market, with 40% of trades occurring in London. Currencies including dollars, pounds, euros and yen trade in the loosely regulated market dominated by a group of elite banks. But those trades have an even wider impact because companies around the world use market prices to value assets and manage currency risks.
The regulators found that between Jan. 1, 2008 and Oct. 15, 2013, the five banks failed to adequately train and supervise foreign currency traders. As a result, traders were able to form groups that shared information about client activity, using nicknames such as "the players, "the 3 musketeers" and "1team, 1 dream."
The traders tried to manipulate the market to ensure that their banks made a profit, the Financial Conduct Authority said.
Regulators in Britain, Switzerland, the U.S. and Asia have been investigating the banks' conduct for months, and negotiating settlements with the banks.
For their part, the banks already had factored in the prospect of heavy fines by putting money aside to cover the cost. Citigroup took a $600-million U.S. charge while JPMorgan Chase & Co. about $400 million U.S. Barclays, HSBC and Royal Bank of Scotland similarly set aside hundreds of millions of dollars.
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