A group of global banks that include, JP Morgan Chase, Citibank, UBS and HSBC have been fined heavily by the UK, US and Swiss regulators after they were found guilty of manipulating the foreign-exchange currency market.
The UK's Financial Conduct Authority (FCA) announced on Wednesday that it has imposed a $371 million penalty on UBS, $352 million on JP Morgan Chase, $358 million on Citibank, $343 million on HSBC and $344 million on the Royal Bank of Scotland.
Meanwhile, the Commodity Futures Trading Commission of the US declared a $310 million penalty each for Citibank and JPMorgan, $290 million each for UBS and RBS and $275 million fine for HSBC. Swiss regulator FINMA has asked UBS to cough up $139 million in fines.
Barclays PLC was also supposed to settle with the regulators but pulled out at the last minute, according to The Wall Street Journal. The Bank had almost reached a settlement on "closely similar terms" but decided to seek a "more general coordinated settlement" after consulting other regulators.
The fines are perhaps the largest the Financial Services Authority or its predecessors have ever imposed.
"Countless individuals and companies around the world rely on these rates to settle financial contracts, and this reliance is premised on faith in the fundamental integrity of these benchmarks. The market only works if people have confidence that the process of setting these benchmarks is fair, not corrupted by manipulation by some of the biggest banks in the world," Aitan Goelman, CFTC's director of enforcement was quoted as saying by USA Today.
Regulators started a probe on the largely unregulated foreign exchange currency market in mid-2013 after they found that these banks failed to monitor foreign currency traders effectively between Jan 2008 and Oct 2013. The traders manipulated the currency market to help their banks make huge profits. These banks were partly blamed for triggering off the global financial crisis.
More than 30 traders involved in the issue were either suspended or fired, as a part of the probe.
"Today we take tough action to clean up corruption by a few so that we have a financial system that works for everyone. It's part of a long term plan that is fixing what went wrong in Britain's banks and our economy," George Osborne, finance minister of the UK was quoted as saying by Reuters.
"Today's announcements from global regulators mark a significant moment for the FX industry. In highlighting major failures of control and conduct, the FCA and other regulators clearly identify key areas where standards have not been met," James Kemp, managing director of the Global Financial Markets Association told the agency.
"It is completely unacceptable ... for firms to engage in attempts at manipulation for their own benefit and to the potential detriment of certain clients and other market participants," The FCA was quoted as saying by The Associated Press.