HSBC, Citi, Deutsche Bank, Morgan Stanley and RBC traders may have broken competition law, watchdog finds

By Sinead Cruise

LONDON (Reuters) -Britain’s Competition and Markets Authority said on Wednesday it had provisionally found five major global banks allegedly broke UK competition law by exchanging sensitive information on government bond trading activities in one-to-one online chats.

In a statement, the watchdog alleged Citi, Deutsche Bank (ETR:), HSBC, Morgan Stanley (NYSE:) and Royal Bank of Canada each unlawfully shared information by participating in one or more one-to-one conversations in Bloomberg chatrooms between a small number of traders at varying times between 2009 and 2013.

The conversations allegedly related to buying and selling of UK government bonds – specifically, gilts and gilt asset swaps – and included details on pricing and other aspects of their trading strategies, the watchdog said.

Deutsche Bank and Citi have admitted to involvement in anti-competitive activity, while HSBC, Morgan Stanley and Royal Bank of Canada have not admitted any wrongdoing.

At this stage, no assumption should be made that any of the banks have broken the law, the CMA said.

“A properly functioning, competitive bond market benefits tens of millions of taxpayers and pension savers as well as being at the heart of the UK’s reputation as a global financial hub,” Michael Grenfell, Executive Director of Enforcement at the CMA, said.

“These alleged activities are therefore very serious and warrant the detailed investigation we have undertaken. This could have denied taxpayers, pension savers and financial institutions the benefits of full competition for these products, including the minimisation of borrowing costs.”

The CMA said it would now consider further representations from the banks before reaching a final decision on next steps.