ICAP to pay out £55m for manipulation of benchmark interest rate

Broker-dealer ICAP will pay out $65m (£40m) to settle a civil probe by the US CFTC into its alleged role in manipulation of a key interest rate (release). That brings the total payout to £55m with the UK FCA pay out included.

Earlier this year ICAP said none of its senior management were ever aware of, or involved in, the attempted manipulation.

The CFTC’s Order finds that for more than four years, from at least October 2006 through at least January 2011, ICAP brokers on its Yen derivatives and cash desks knowingly disseminated false and misleading information concerning Yen borrowing rates to market participants in attempts to manipulate, at times successfully, the official fixing of the daily Yen LIBOR.

The settlement is the result of the fourth investigation into rigging of the London interbank offered rate (Libor) and other benchmarks. Trillions of dollars of loans are based on those benchmark rates.

Communications between brokers involved in attempted manipulations below:

October 23, 2006:
Derivatives Broker 1: Morning Lad [Cash Broker 1 ], On the scrounge again, if possible keep 3m the same and get 6mos as high as you can. My guy has an enormous fix on Wednesday in 6mos and will want it as high as possible. Waiting for my credit card to get returned to me from a drunken night out bowling, but will be supplying you with copious amounts of curry on it's imminent return. Cheers

December 7, 2007 (emphasis supplied):

Derivatives Broker 1: Hi [Cash Broker 1], Thanks again for all your efforts, ...Can you do your best to drive these libors higher,especially 3 mos if you can and it is still well bid .... UBS had to stagger their move up but will definitely be in the count today .... p.s Bubbly on its way with [Senior Yen Trader].

February 29, 2008 (via text message to personal mobile phone) (emphasis supplied):
Derivatives Broker 1: Ifu can pls move 3m up more than 6m wud be much appreciated :-P
Cash Broker 1: What happens if they go down. 3m looked higher yesterday pm and 6m no change
Derivatives Broker 1: Make 6m go lower! They r going up. [Senior Yen Trader] will buy you a ferrari next yr if you move 3m up and no change 6m
Cash Broker 1: Not bad isuppose 9625 against 01625

Senior Yen Trader: lm libor worries me i need it back under 70
Derivatives Broker 1: [Cash Broker 1] is fully aware of the importance of Mondays libors, I'll call him again this evening before I 13 head off, but as he said last night (he called me at home) its like the Dutch guy standing with his finger in the hole of the dam.

August 23, 2007 (emphasis supplied):
Derivatives Broker 1: [Derivatives Broker 3] does [RBS 10 Yen LIB OR Back-Up Submitter] have any influence over their libor sets ... if he does ask him to do us a favour and edge 6m up please ..... think [BankE Yen Trader] was chasing [Cash Broker 1] for a high fix as well ,so should do us all a favour ... thanks
Derivatives Broker 3: [RBS Yen LIBOR Back-Up Submitter] is doing them this wek , he wants 6's up so will be marking them up anyway
Derivatives Broker 1: brooliant!! they are malting fortunes with these high fixings!!! :-) thats UBS,RBS and [BankE]+ M'Lord should be old!