The Financial Conduct Authority’s (FCA) just announced that it’s fined interdealer Martin Brokers £630,000 for “significant” failings in relation to Libor.
Between January 2007 and December 2010, Martins colluded with a trader at UBS to manipulate the Japanese yen Libor for his own benefit.
Over the period, at least 600 requests were made to Martins in an attempt to manipulate the published rate.
Most requests were made direct to a Broker A but some were made to others on the Japanese yen desk.
Martins didn’t always accommodate the requests, usually when it thought they were so unreasonable that no Libor Panel Bank would follow such suggestions.
We’ve sifted through the regulator’s final notice of the fine - excerpts of incriminating conversations are below. Emphasis is our own.
It’s worth noting that Martins’ fine would have been £3.6m, but it demonstrated to the FCA that it’s unable to pay that, in addition to the other regulatory fines its facing in relation to Libor failings.
“just trying to think who you might be able to ****ing lean on a bit today…it’s really important to get the threes down for me…”. (25 February 2009)
Broker A: Can I ask you a small favour?
Trader-Submitter B: Yeah.
Broker A: What are you going to set in your LIBOR 3s
Trader-Submitter B: Ah, same, 65.
Broker A: Is there any way you might be able to set
them down a pip ‘cause I’m getting a big
trade out of it?
Trader-Submitter B: Sorry?
Broker A: I’m getting someone do me a big trade if
they said if I help them sort of get LIBORs
down a tick today.
Trader-Submitter B: Yeah, okay.
(25 February 2009)
Is there any way you might be able to set them a little bit lower today just to return the favour? It was a ****ing big, big, big giant stuffing that I got out of there. (25 February 2009)
Broker E: “All right listen. I need you mate. … I need your money. I ... oh, you’ll be looked after in Vegas. I promise you. It’s only a month away. Is there any chance you’ll be able to wash this switch through today?” (19 September 2009)
Broker A told Trader A: “we always fight your side but yesterday we did make a ****ing extra big effort, mate. Really did. I mean and we…we did sort of take the piss out of it a bit as well and it worked so it’s ****ing good work…We had a word with a few people so it’s happy days, mate. (19 September 2008)
Trader A: Right, okay. Listen what I need – this is what I need, I need 1’s to come off the most because if they are off 20 for 1’s which is what they [unclear].
Broker A: Right, yes. That’s the one that’s ****ing up at the moment as well, isn’t it, so you need definitely.
Trader A: Alright mate, if you could sort this out for me, if you can get 1’s down - if you could get like a staggered downward move like that then we’ll do a ****ing massive ticket next week.
(31 October 2008)
“if you keep 6s [i.e. the six month JPY LIBOR rate] unchanged today … I will ****ing do one humongous deal with you … Like a 50,000 buck deal, whatever … I need you to keep it as low as possible … if you do that …. I’ll pay you, you know, 50,000 dollars, 100,000 dollars … whatever you want … I’m a man of my word”. (18 September 2008)
"mate you think 3s can come lower by 1bp tonight?...i may get a bit hurt if not". (2 December 2009)
“Has [Trader A] been asking you to put LIBORs up today?” Broker E replied: “He wants ones and threes a little bit lower and sixes probably about the same as where they are now. He wants them to stay the same.” Trader B stated, “I want them lower…”. Broker E replied, “Alright, well, alright, alright, we’ll work on it.” (2 December 2009)