Record fines hit banking giants over forex failings

HSBC, Royal Bank of Scotland, Swiss bank UBS and US banks JP Morgan Chase and Citibank have all been fined heavily by the Financial Conduct Authority for failing to control business practices in their foreign exchange trading operations.

Citibank N.A. was fined £225,575,000 ($358m), HSBC  £216,363,000 ($343m), JPMorgan Chase Bank N.A. £222,166,000 ($352m), The Royal Bank of Scotland Plc £217,000,000 ($344m) and UBS AG £233,814,000 ($371m).

A separate probe into Barclays is continuing.

The fines are the largest ever imposed by the FCA, or its predecessor the Financial Services Authority (FSA), and this is the first time the FCA has pursued a settlement with a group of banks in this way.

The regulator says that in addition to taking enforcement action against and investigating the six firms where it found the worst misconduct, it is now launching an industry-wide remediation programme to ensure firms address the root causes of these failings and drive up standards across the market. It will require senior management at firms to take responsibility for delivering the necessary changes and attest that this work has been completed.

The FCA statment read: "These failings allowed traders at those Banks to behave unacceptably. They shared information about clients' activities which they had been trusted to keep confidential and attempted to manipulate G10 spot FX currency rates, including in collusion with traders at other firms, in a way that could disadvantage those clients and the market."

Tracey McDermott, the FCA's director of enforcement and financial crime, commented: “Firms could have been in no doubt, especially after Libor, that failing to take steps to tackle the consequences of a free for all culture on their trading floors was unacceptable. This is not about having armies of compliance staff ticking boxes. It is about firms understanding, and managing, the risks their conduct might pose to markets. Where problems are identified we expect firms to deal with those quickly, decisively and effectively and to make sure they apply the lessons across their business. If they fail to do so they will continue to face significant regulatory and reputational costs.”