London (BBN)-Five banks have been collectively fined £2bn by UK and US regulators for failing to control business practices in foreign exchange trading operations.
HSBC, Royal Bank of Scotland, Swiss bank UBS and US banks JP Morgan Chase and Citibank have all been fined, reports BBC.
A separate probe into Barclays is continuing.
The fines have come from the UK’s Financial Conduct Authority (FCA) and the US regulator, the Commodity Futures Trading Commission (CFTC).
The Swiss regulator, FINMA, has separately penalised UBS 134m Swiss francs.
The FCA fined the five banks £1.1bn, saying the failings “undermine confidence in the UK financial system and put its integrity at risk”.
The US regulator, the Commodity Futures Trading Commission, has fined the same banks $1.4bn.
The FCA said it had worked closely with the other regulators.
“Today’s fine marks the gravity of the failings we found and firms need to take responsibility for putting it right. They must make sure their traders do not game the system to boost profits or leave the ethics of their conduct to compliance to worry about,” said FCA chief executive Martin Wheatley.
The failings occurred between 1 January 2008 and 15 October 2013, the FCA found.
The FCA said the banks had not “exercised adequate and effective control” over their foreign exchange trading businesses, training was “insufficient” and that the “right values and cultures” were not sufficiently embedded in the banks’ foreign exchange businesses.
It found traders at different banks had formed “tight knit groups” to share information about client activity, using code names such as “the 3 musketeers”, “the A-team” and “1 team, 1 dream” to describe the clients.
The fines follow a year-long investigation by the FCA into claims that the foreign exchange market – in which banks and other financial firms buy and sell currencies between one another, was being rigged.
The massive market, in which $5.3 trillion worth of currencies are traded daily, dwarfs the stock and bond markets.
About 40% of the world’s dealing is estimated to go through trading rooms in London.
The FCA’s investigation focused on electronic communications between traders, including instant messaging systems and online chat rooms.
Chancellor George Osborne said the fines were part of a “long term plan that is fixing what went wrong in Britain’s banks and our economy”.
“All of this action means the world can have confidence in the integrity of Britain’s financial markets,” he added.
Earlier this year, FCA chief executive Martin Wheatley said that the currency rigging scandal was “every bit as bad” as the manipulation of Libor, the key global interest rate used to price loans, mortgages and set returns on investment products.
Several senior traders have already been put on leave and the Serious Fraud Office is in the process of preparing potential criminal charges against those alleged to have masterminded the scheme.
BBN/SS-12Nov14-1:30pm (BST)