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Banking & finance
BusinessBanking & Finance

HSBC and 4 other banks broke UK competition law with bond-trading communications: regulator

  • UK’s Competition and Markets Authority has provisionally found that five big banks including HSBC shared ‘sensitive’ information about bond trades
  • Lenders could face fines in inquiry that has been ongoing since 2018

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The Bank of England in the City of London. The banks have the opportunity to respond to the provisional findings before the CMA makes its final decision in the matter. Photo: AP
Chad Brayin London
HSBC and four other large banks broke UK competition law by sharing “competitively sensitive information” in chat rooms while trading British government bonds, according to a provisional finding by the United Kingdom’s Competition and Markets Authority (CMA).
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Information was shared in one-to-one Bloomberg chat rooms between a small number of traders at Citigroup, Deutsche Bank, HSBC, Morgan Stanley and Royal Bank of Canada (RBC) between 2009 and 2013, including details on pricing and trading strategies for UK government bonds, known as gilts, and gilt asset swaps, according to the regulator.
“This [activity] could have denied taxpayers, pension savers and financial institutions the benefits of full competition for these products, including the minimisation of borrowing costs,” Michael Grenfell, the CMA’s executive director of enforcement, said in a statement.

The HSBC allegations refer specifically to a former HSBC trader sharing information with a Deutsche Bank trader regarding gilts between October 2009 and July 2010.

An HSBC branch in Hong Kong’s Pedder Street. Photo: Elson Li
An HSBC branch in Hong Kong’s Pedder Street. Photo: Elson Li

“HSBC refutes the CMA’s allegations,” a spokesperson for HSBC, the largest of Hong Kong’s three currency-issuing banks, said. “We will continue to make our case to the CMA as appropriate whilst we await a final decision.”

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Deutsche Bank alerted the CMA to the alleged unlawful activity and Citi applied for leniency during the inquiry, with both banks admitting to being involved in anticompetitive behaviour, the CMA said. The inquiry began in November 2018.

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