US regulators have reportedly been handed evidence that traders at some of the
world’s biggest banks manipulated a key rate for derivatives, pocketing
millions at the expense of pension funds in the process.
By
James Titcomb: The Commodity Futures Trading Commission (CFTC) is probing 15 banks over
allegations that they instructed brokers to carry out trades that would move
ISDAfix, the leading benchmark rate for interest rate swaps.
Pension funds and companies who invest in interest rate derivatives often deal
with banks to insure against big movements in the ISDAfix rate or to
speculate on changes to interest rate swaps
ISDAfix is published each morning after banks submit bids for swaps via Icap,
the inter-dealer broker, in a number of currencies. The CFTC has been
investigating suggestions that the banks deliberately moved the rate in
order to profit on these deals.
Given the hundreds of trillions of dollars worth of interest rate derivatives
trades that occur annually, even the slightest manipulation can have a
substantial effect. The CFTC, which started to investigate ISDAfix after
last summer’s Libor scandal has now been handed emails and phone call
recordings that show the rate was deliberately moved,
according to Bloomberg.
according to Bloomberg.
Barclays has reportedly handed the CFTC information, while employees at Icap
and Citigroup have also been questioned. In its interim results statement
yesterday, Royal Bank of Scotland also said it was co-operating with
authorities regarding the investigation.
“Icap is cooperating with the CFTC’s wider inquiry into this area and due to
its pending nature, we will not be commenting further,” a spokesman for the
broker said, while Barclays, Citigroup and the CFTC did not comment.
The regulator began investigating ISDAfix last year after probes into the London interbank offered rate were extended into other benchmark rates.
So far, banks have been fined more than £1.5bn between them over Libor fixing.
The regulator began investigating ISDAfix last year after probes into the London interbank offered rate were extended into other benchmark rates.
So far, banks have been fined more than £1.5bn between them over Libor fixing.
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