Banks fined for 'free for all culture' that 'allowed' Forex rigging

This morning regulators on both sides of the Atlantic have imposed fines totalling £2 billion of five major banks for failing to prevent their staff from rigging the foreign exchange markets.

The Financial Conduct Authority identified a "free for all culture" between 2008 and 2013 on the trading floors of Royal Bank of Scotland, HSBC, the US banks JP Morgan and Citibank and the Swiss bank UBS.

Barclays is still in discussion with the regulator regarding a settlement.

£3 trillion of currency is exchanged around the world everyday, 40% of it in London.

Some of it is speculative, but much of it is to meet the essential trading needs of companies and large city institution like pension funds.

Individual transactions can be colossal, sometime hundreds of millions of pounds, large enough to move currency prices.

When a company seek to exchanged such sums - from pounds to dollars for example - it usually asks a bank to do so on its behalf.

The allegation is that traders who received large orders from clients shared information about it and attempted to sort to exploit the opportunity it to make money for the bank often at the expense of their client.

The FCA says traders at different Banks formed "tight knit groups" in which knowledge was shared about client activity. Code names were used to identify clients without naming them. The groups had names like “the players”, “the 3 musketeers”, “1 team, 1 dream”, “a co-operative” and “the A-team”.

The chancellor, George Osborne said "Today we take tough action to clean up corruption by a few so that we have a financial system that works for everyone. It’s part of a long term plan that is fixing what went wrong in Britain’s banks and our economy.”

The chief executive of Royal Bank of Scotland, Ross McEwan, told journalists this morning that the results of the investigation was "gut-wretching" and that he was "angry and disappointed" and that this was a "setback in the effort to regain the trust of customers".

The RBS Chairman, Sir Philip Hampton, admitted the executive had "had trouble controlling aspects of our investment bank" and that there had been "more instances of rogue trading, some public, some not".

More: Osborne: UK taking tough action to clean up corruption