Following a long investigation by the Competition and Markets Authority (CMA), on 21 February 2025 four major banks agreed to pay fines in relation to instances in which their traders shared competitively sensitive information about UK government bond auctions. The settlement concludes a long line of (unconnected) investigations into financial trading markets, across a range of asset classes.

Citigroup, HSBC, Morgan Stanley and the Royal Bank of Canada were fined a total of more than £100m for their involvement in the conduct, which breached the Chapter I prohibition of the Competition Act 1998 (CA98). Deutsche Bank were exempted from a fine under the CMA’s leniency policy since they alerted the CMA to their involvement in the information-sharing. 

At over six years in length (from the opening of the formal investigation), the investigation is the longest conducted by the CMA under the CA98 (excluding cases involving remittal decisions following successful appeals). It has also resulted in the second largest collective imposition of fines by the CMA.

The investigation

The investigation first became public knowledge in November 2018, with the CMA announcing only that it was looking into “suspected anticompetitive arrangements in the financial services sector”. 

The CMA’s announcement was followed by announcements by the European Commission in December 2018 and January 2019 that it had issued Statements of Objections against groups of banks in separate investigations into collusion in relation to the trading of sovereign, supra-sovereign and agency (SSA) bonds and European government bonds (EGBs), respectively (on which see further below). Despite speculation that the CMA was – in anticipation of the UK leaving the EU – conducting a parallel investigation into the UK aspects of the same conduct, the Commission’s cases proved to be unconnected to the CMA’s.

The investigation was the CMA’s first in the financial services sector (or, at least, the first formally to be opened). However, with the opening of the investigation coming a little over three years after the UK’s chief financial regulator – the Financial Conduct Authority (FCA) – gained its concurrent CA98 enforcement powers, it was notable that the CMA opted to pursue the investigation instead of the dedicated sectoral regulator. No explanation for this approach was given at the time. Under the UK’s concurrent competition enforcement regulations, the CMA is, in case of dispute, able to make the final decision as to which enforcer will investigate a particular case, but – ostensibly at least – the case allocation decision in this case was agreed between the CMA and FCA.

In May 2023, the CMA issued a Statement of Objections provisionally concluding that the five banks had broken competition law. At that stage, three of the banks contested the CMA’s allegations – it took a further 21 months for the CMA to agree settlements with each of them.

The decisions

The CMA found that traders at each of the banks (none of whom remain employed by the relevant banks) shared sensitive information about the buying and selling of UK government bonds (also known as gilts) during the period 2009-2013. 

The traders shared sensitive information in separate bilateral chatrooms, concerning three stages of gilt trading: (i) the sale of gilts to banks (so-called “Gilt-edged Market Makers”) by the UK Debt Management Office via auctions on behalf of HM Treasury; (ii) the subsequent trading of gilts and gilt asset swaps on the secondary market; and (iii) the sale of gilts back to the Bank of England (buy-back auctions). Not all banks exchanged information in relation to all three of these stages – the contacts between Deutsche Bank and HSBC did not involve any conduct in relation to buy-back auctions.  

The CMA issued five separate settlement decisions. In each decision, the CMA identified a single, repeated 'by object' infringement, such that there was no need to assess the effects of the conduct.

The four banks received the following fines: 

• Citi: £17,160,000 – incorporating a 35% leniency discount and a 20% reduction for settling before the CMA issued its Statement of Objections;
• HSBC: £23,400,000 – incorporating a 10% reduction for settling after the CMA issued its Statement of Objections;
• Morgan Stanley: £29,700,000 – incorporating a 10% reduction for settling after the CMA issued its Statement of Objections; and
• Royal Bank of Canada: £34,200,000 – incorporating a 10% reduction for settling after the CMA issued its Statement of Objections.

The CMA noted that the fines would have been higher had the banks not already taken “unusually extensive” steps (some of which were in place before the start of the CMA’s investigation) to improve their compliance efforts in order to avoid repeat of the conduct. These changes in compliance practices and culture were prompted by other major investigations and infringement decisions by the European Commission (as well as other global enforcers) in relation to anticompetitive arrangements between trading desks at competing financial institutions.

The bigger picture

CMA following in the Commission’s footsteps

As noted above, the CMA’s UK government bonds investigation comes in the wake of a long line of antitrust investigations and fines by the European Commission in respect of conduct in the financial trading markets, covering a broad range of asset classes:

• Yen interest rate derivatives (2013 and 2015) – in which the Commission imposed fines of approximately €670m in relation to attempts to manipulate the Yen LIBOR benchmark interest rate, across the period 2007-2010.
• Euro interest rate derivatives (2013) – in which the Commission imposed fines of approximately €1bn in relation to attempts to manipulate the EURIBOR benchmark interest rate, across the period 2005-2008.
• Swiss Franc interest rate derivatives (2014) – in which the Commission imposed fines of approximately €93m for two separate cartels: (i) attempts to manipulate Swiss Franc LIBOR during 2008-2009; and (ii) an agreement in 2007 to quote wider bid-ask spreads on over-the-counter Swiss Franc derivatives.
• Foreign Exchange (2019 and 2021) – in which the Commission imposed fines exceeding €1.1bn across three separate decisions in respect of conduct effected through multilateral chatrooms in the period 2009-2012.
• EGBs (2021) – in which the Commission imposed fines of approximately €370m for conduct relating to both the primary and secondary markets in the period 2007-2011.
• SSA bonds (2021) – in which the Commission imposed fines of €28m for conduct in the secondary markets in the period 2010-2015.
• Euro-denominated SSA bonds and Government Guaranteed bonds (2023) – in which the Commission imposed fines of over €26m for conduct in the secondary markets in the period 2006-2016.

Comparing and contrasting approaches

A public version of the CMA’s decision is yet to be released, and the CMA’s press release contains only relatively limited details. According to the CMA’s public statements to date, however, only one of the infringements involved the coordination of trading strategies amongst the participants; all the others were comprised solely of unlawful exchanges of information, whether in relation to secondary trading, auctions, buy-backs, or some combination of the three. This can be compared to the Commission’s cases, where in relation to each of the infringements the Commission made a finding that the parties had agreed to coordinate their trading/pricing strategies or had pursued a common aim (i.e. the manipulation of benchmark rates), in addition to sharing commercially sensitive information.

Further, in most of these cases, the Commission was able to establish that multiple bilateral/multilateral chatrooms, and/or series of bilateral messages, emails and telephone calls, amounted to a “single continuous infringement” amongst their various participants. On the other hand, the CMA identified multiple bilateral infringements – each relating to one or more bilateral communications/arrangements – rather than linking them into an overarching unlawful concerted practice between the relevant banks (N.B. the Commission did the same in Yen interest rate derivatives, and found three separate multilateral infringements in Foreign Exchange). 

Lessons learned?

Like the European Commission cases listed above, the CMA’s UK government bonds investigation related to historic conduct which ended over a decade ago. 

With major changes in corporate culture, market practice, and compliance frameworks having been implemented since the investigations were carried out, major financial institutions will hope that conduct issues of this sort are a thing of the past.

Nevertheless, the present decision serves as a reminder and illustration of the fact that the sharing of non-public information between competitors in the financial markets can, on its own, readily lead to findings of infringement (e.g. the infringement to which Citigroup and Morgan Stanley were party involved exchanges of information on only three dates between December 2011 and February 2012). Last year’s EU Court of Justice decision in Banco BPM (on which see our previous article) emphasised the same. Whilst a number of the above Commission decisions have been challenged, the appellants’ substantive arguments have broadly been rejected (although some appellants have secured reductions in fines on procedural grounds – including in the very recent General Court judgment in EGBs).

Competition law risks around information exchange are therefore likely to remain a material consideration for financial trading market participants, who should ensure they maintain appropriate compliance frameworks and staff awareness as institutional memory of these cases fades.