Major banks shared sensitive bonds information in online chats, CMA finds

theguardian.com:

The UK’s competition watchdog has provisionally found that five major banks broke competition law by unlawfully exchanging sensitive information about British government bond trading in online chatrooms.In an investigation, the Competition and Markets Authority has found that the banks – Citi, Deutsche Bank, HSBC, Morgan Stanley and Royal Bank of Canada – shared competitively sensitive information on pricing and aspects of their trading strategies through multiple one-to-one online chats.These discussions could have prevented taxpayers, savers and other financial institutions from getting the full benefit of competition for these products, according to the CMA.In the aftermath of the global financial crisis, and at varying times between 2009 and 2013, a small number of traders working at the banks exchanged information in chatrooms on Bloomberg terminals relating to the buying and selling of UK government bonds, commonly referred to as gilts, according to the CMA.The CMA found that traders discussed details of the pricing of gilts and gilt asset swaps, and also shared information about parts of their trading strategies.The watchdog said some of the discussions took place around the context of British government bonds sold on behalf of the Treasury by the UK’s Debt Management Office – which sells gilts by auction – and the subsequent purchase and sale of gilts and gilt asset swaps, as well as so-called buyback auctions, where the Bank of England bought gilts as part of its quantitative easing programme.The CMA found that the chats held between Deutsche Bank and HSBC did not involve any conduct about buyback auctions.The watchdog found that the five banks involved in these conversations could have “denied the full benefits