Regulator issues two interest rate fixing warnings
The Financial Conduct Authority (FCA) has issued two warning notice statements today to individuals who were knowingly involved in the manipulation of interest rate benchmarks.
Details of the banks the individuals work at have not been disclosed.
The first warning is in relation to an individual working as a submitter at a particular bank who, over a period of more than two years:
Made interest rate benchmark submissions which took into account requests
made by traders to benefit their positions;
- Colluded with an interdealer broker acting on behalf of a trader from another bank, by making interest rate benchmark submissions which took into account a request made by that broker;
- Colluded directly with traders at another panel bank, both by making interest rate benchmark submissions which took into account requests made by them, and by making requests to that other panel bank on behalf of traders at his bank, in an attempt to influence their interest rate benchmark submissions; and
- Took into account the interest rate derivative positions on the trading book for which the individual was responsible when making interest rate benchmark submissions.
The second is regarding a manager at a bank who, over a period of more than three years:
Was personally aware of and condoned:
- traders making requests to submitters to manipulate interest rate benchmark submissions, and
- submitters, who reported to the individual, making submissions which took those requests into account.
- Was responsible for the oversight and supervision of the bank’s submitters and some of the bank’s traders and failed to manage appropriately the business area for which he was responsible. He instead facilitated others’ attempts to manipulate interest rate benchmark submissions;
- Was aware of the absence of systems, controls or policies governing the procedure for making interest rate benchmark submissions at the bank, and took no steps to address this; and
- Was aware of the conflict of interest in certain submitters also trading derivative products referenced to an interest rate benchmark. The individual allowed this to continue and took no steps to mitigate the risks that it posed.
There are several stages of referral, which allow the individuals in question to make representation in light of the warnings, before the FCA decide whether or not to take further action.