CMA Exposes Secret Gilt Chats as Banks Settle for More Than £100 Million in Fines

Key Takeaways

• Significant Fines: Citi, HSBC, Morgan Stanley, and Royal Bank of Canada will pay over £100 million in fines for sharing sensitive pricing information on UK government bonds (gilts).
• Secret Conversations: Traders at these banks engaged in private, one-to-one Bloomberg chatroom exchanges about gilt transactions between 2009 and 2013.
• Deutsche Bank’s Immunity: Deutsche Bank received immunity under the leniency policy for self-reporting its conduct during the same period.

Deep Dive

The Competition and Markets Authority (CMA) has reached a settlement with several major banks over the unlawful exchange of competitively sensitive information. The settlement centers on the secretive sharing of details related to UK government bonds—commonly known as gilts—which play a crucial role in financing public spending.

Between 2009 and 2013, individual traders at Citi, HSBC, Morgan Stanley, and Royal Bank of Canada took part in discreet one-to-one conversations via Bloomberg chatrooms. These chats, held in bilateral settings, saw participants swapping information about the pricing of gilts and related asset swaps on specific dates. This covert behavior not only compromised the independence of pricing decisions but also risked undermining fair competition in a market that thrives on transparency.

Deutsche Bank, while involved in similar conversations, managed to secure immunity by promptly alerting the CMA under its leniency policy—a move that highlights the importance of self-reporting in regulatory investigations.

After a thorough investigation, the CMA and the banks have agreed to settle the cases. The fines have been carefully calibrated to reflect both the severity of the breaches and the extensive compliance measures the banks have since implemented. The penalties, which include reductions for early settlement and leniency where applicable, are as follows:

• Citi: £17,160,000 (including a 35% leniency discount and a further 20% reduction)
• HSBC: £23,400,000 (with a 10% reduction for prompt settlement)
• Morgan Stanley: £29,700,000 (with a 10% reduction for prompt settlement)
• Royal Bank of Canada: £34,200,000 (with a 10% reduction for prompt settlement)

These fines, totaling over £104 million, bring a close to a chapter that has long raised concerns about anti-competitive behavior in the UK financial services sector.

Healthy competition is the bedrock of innovation and growth in financial markets. By ensuring that banks set their prices and strategies independently, the CMA aims to safeguard investor confidence and promote a level playing field. The settlement serves as a clear message that breaches of competition law will be met with substantial penalties—even when the offending behavior occurred years ago.

While the settlement marks the end of this investigation, it also reinforces the need for ongoing vigilance and robust compliance within the financial sector. The CMA’s proactive stance demonstrates its commitment to curbing anti-competitive practices and preserving the integrity of markets that are critical to the UK economy.

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