UK and US regulators have fined five banks including HSBC and Royal Bank of Scotland £2bn for their attempts to manipulate foreign exchange rates, following a year-long investigation.
The UK's Financial Conduct Authority (FCA) and the US regulator, the Commodity Futures Trading Commission (CFTC) also issued the fines to Morgan Chase, Citibank and UBS, with a separate probe still ongoing into the conduct of Barclays.
Barclays is expected to settle with a similar deal later, with the bank releasing a statement to this effect this morning: "After discussions with other regulators and authorities, we have concluded that it is in the interests of the company to seek a more general coordinated settlement."
The colossal fine represents the largest penalisation on record issued by the FCA or its predecessor the Financial Services Authority.
"At the heart of today's action is our finding that the failings at these banks undermine confidence in the UK financial system and put its integrity at risk," a statement from the organisation read.
The investigation found that the banks had not exercised adequate and effective control over their foreign exchange trading businesses and that training failed to enforce the right values and cultures.
It also criticised the banks for allowing their traders to form tight-knit groups who then shared information about client activities in order to undermine the forex market.
Chancellor George Osborne claimed that the fines represent a long-term plan that will eventually fix all that is wrong with the integrity of Britain's financial markets.
A number of senior traders have been put on leave while the Serious Fraud Office prepares potential criminal charges against those who are alleged to have masterminded the scheme.
The Bank of England, meanwhile, has published a separate report by Lord Grabiner that clears its officials of being involved, in the face of accusations to the contrary.
GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.