European Commission
Antitrust - Commission fines investment banks for cartel participation - 20 May 2021
The European Commission has announced that it has found Bank of America, Nomura, RBS (now NatWest), UBS, UniCredit and WestLB (now Portigon) in breach of Article 101(1) Treaty on the Functioning of the European Union (TFEU) for their participation, between 2007 – 2011, in a cartel in the primary and secondary market for European Government Bonds (EGB).
The Commission found that the investment banks participated in the cartel through a group of traders working on their EGB desks who were in regular contact with each other, mainly in multilateral chatrooms on Bloomberg terminals. The traders exchanged commercially sensitive information and in particular, they:
- informed and updated each other on their prices and volumes offered in the run up to auctions and the prices shown to their customers or the market in general;
- discussed and provided each other with recurring updates on their bidding strategy when issuing Euro denominated bonds on the primary market; and
- discussed and provided information on trading parameters on the secondary market.
The Commission imposed fines totalling EUR371 million on Nomura, UBS and UniCredit. In setting the level of fines, the Commission took account of the EGB sales value achieved by the cartel participants; the seriousness of the infringement, including that the cartel related to a Euro-based financial product on the primary and secondary market; the infringement’s geographic scope across the EEA; and the respective duration of the banks’ participation in the cartel.
NatWest received full immunity under the Leniency Notice for revealing the cartel. Portigon’s fine was reduced to zero because it did not generate any net turnover in the last business year used to calculate the fine. No fines were imposed on the Bank of America or Natixis as their involvement in the cartel ended more than five years before the Commission began its investigation and, therefore, fell outside the limitation period.
Press Release: Commission fines investment banks EUR371 million for participating in a European Government Bonds trading cartel
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Financial Conduct Authority
Oversight of appointed representatives - FCA publishes first supervisory notice to Marshall Sterling Investment Management Ltd - 24 May 2021
The FCA has published a first supervisory notice issued to Marshall Sterling Investment Management Ltd (MSIM), imposing a number of requirements in relation to its appointed representatives (ARs). Marshall Sterling acts as principal for three appointed representatives and the FCA is concerned that the firm is not meeting, or is likely not to meet, the following threshold conditions:
- appropriate resources: the firm does not have appropriate non-financial resources to monitor and enforce the ARs’ compliance with requirements applying to their regulated activities, and has failed to assess adequately the ARs’ business in order to identify and mitigate sufficiently the risks that their activities pose to consumers; and
- suitability: the firm’s systems and controls relating to the onboarding and ongoing monitoring of ARs are inadequate and mean the firm is failing to identify, assess and mitigate the risks arising from these processes.
As a result, the FCA has required MSIM to terminate its current AR agreements and can only appoint additional ARs with the FCA’s prior written consent.
First supervisory notice: Marshall Sterling Investment Management Limited
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Contracts for differences - FCA publishes First Supervisory Notice to EverFX - 26 May 2021
The FCA has published a First Supervisory Notice to Cypriot-based firm, ICC Intercertus Capital Ltd, and other members of its group which trade as EverFX, stopping them from offering high risk contracts for differences (CFDs) to UK investors. The EverFX Group used the fact that ICC Intercertus was regulated in the UK to convey legitimacy. However, many consumers were induced to transact with overseas members of the EverFX Group, which had no authorisation to provide regulated services in the UK, meaning that consumers lacked the same level of protection.
The FCA identified serious concerns with the sales and marketing practices of the Group, including the use of misleading financial promotions, failing to inform consumers about the nature of risks of CFDs, applying pressure to invest additional funds, instructing clients on which trades to make and failing to allow customers to withdraw funds. Some consumers consequently lost very large sums of money.
The FCA has stopped ICC Intercertus Capital Ltd from conducting any regulated or marketing activities in the UK and has directed it to take all reasonable steps to stop other members of the EverFX Group doing the same. The Group has also been ordered to close all trading positions and return the money to customers.
ICC Intercertus was operating the UK under the Temporary Permissions Regime, put in place for firms who used to operate in the UK under the EEA passporting regime and who wished to continue doing so following Brexit.
Press release: FCA stops EverFX offering contracts for differences to UK customers
First Supervisory Notice: ICC Intercertus Capital Limited
