Watchdog says five banks broke competition law on UK government bonds

Five of the world’s biggest banks broke UK competition law by sharing sensitive information when trading British government bonds in the five years following the global financial crisis, according to the country’s competition regulator.

A small number of traders from Citigroup, Deutsche Bank, HSBC, Morgan Stanley and Royal Bank of Canada illegally shared sensitive information including pricing and strategies in chatrooms on Bloomberg Terminals, according to a provisional finding published by the Competition and Markets Authority. According. Wednesday.

As a result, the regulator said, banks could “deny the full benefits of competition” to those they were doing business with, including pension funds and the UK’s Debt Management Office.

The alleged sharing of sensitive information took place between 2009 and 2013, the CMA said, adding that traders exchanged information in the context of the sale of government bonds by the DMO and the buyback of gilts by the Bank of England.

Michael Grenfell, director of enforcement at the CMA, said: “Our provisional decision has found that following the global financial crisis, five global banks broke competition law.”

“A well-functioning, competitive bond market benefits hundreds of millions of taxpayers and pension savers as well as being central to the UK’s reputation as a global financial centre. Therefore these alleged activities are very serious and warrant a detailed investigation by us.”

The regulator said that if it finds that at least two banks have engaged in anti-competitive behaviour, it can issue penalties.

The competition watchdog said it had been alerted to Deutsche Bank’s behavior and that Germany’s biggest bank had admitted its involvement in “anti-competitive” activity. Deutsche will therefore not be subject to any penalties, if CMA imposes them.

Citigroup has also admitted involvement and has entered into a settlement agreement with the CMA. The regulator said the Wall Street bank will get a waiver of the penalty if it is fined.

The CMA said there was no wrongdoing by HSBC, Morgan Stanley and Royal Bank of Canada and that the investigation is ongoing.