ICAP probed by US regulators on fiddle claim

Tim Wallace
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SHARES in top brokerage ICAP plunged yesterday morning before recovering over a volatile day after it was forced to deny allegations it is embroiled in a market-rigging investigation with US regulators.

The Commodity Futures Trading Commission (CFTC) is investigating possible wrongdoing related to ISDAfix, a key swaps benchmark.

Trillions of dollars-worth of swaps are priced from the index, and the authorities are thought to be investigating claims that brokers manipulated the rates.

The CFTC issued subpoenas to ICAP as well as most of the 16 global banks involved in setting the rate, looking for more information according to Bloomberg.

But ICAP defended itself against the claims yesterday.

“ICAP does not make submissions to ISDAfix. ICAP is involved in the administration of part of the ISDAfix process, and is cooperating with the CFTC’s wider inquiry into this area. ICAP maintains policies that prohibit any of the behaviour that has been alleged in the media,” the brokerage said in a statement. ICAP had no knowledge of the allegations prior to the media speculation, and is investigating them. Until those investigations are complete we will not make any further comment.”

Sixteen of the world’s biggest banks submit rates for the benchmark, including British banks Barclays, RBS, HSBC, American lender JP Morgan and German giant Deutsche Bank.

They enter prices for given swaps each day to determine the index’s level, and rival brokerages claim traders and brokers could have colluded to adjust rates for their own gain, as with Libor. All of the banks contacted by City A.M. declined to comment. The CFTC declined to give more details. ICAP’s shares ended the day up 1.09 per cent.