Nomura rounds up markets’ biggest misses in 2016

Forecasting markets a year in advance is never easy, but with “year-ahead investment themes” season well underway, Nomura has provided a handy reminder of quite how difficult it is, with an overview of markets’ biggest hits and misses (OK, mostly misses) from the start of 2016. The biggest miss among analysts, according to Nomura’s Sam […]

Continue Reading


Spanish construction rebuilds after market collapse

Property developer Olivier Crambade founded Therus Invest in Madrid in 2004 to build offices and retail space. For five years business went quite well, and Therus developed and sold more than €300m of properties. Then Spain’s economy imploded, taking property with it, and Mr Crambade spent six years tending to Dhamma Energy, a solar energy […]

Continue Reading


Euro suffers worst month against the pound since financial crisis

Political risks are still all the rage in the currency markets. The euro has suffered its worst slump against the pound since 2009 in November, as investors hone in on a series of looming battles between eurosceptic populists and establishment parties at the ballot box. The single currency has shed 4.5 per cent against sterling […]

Continue Reading


RBS falls 2% after failing BoE stress test

Royal Bank of Scotland shares have slipped 2 per cent in early trading this morning, after the state-controlled lender emerged as the biggest loser in the Bank of England’s latest round of annual stress tests. The lender has now given regulators a plan to bulk up its capital levels by cutting costs and selling assets, […]

Continue Reading


China capital curbs reflect buyer’s remorse over market reforms

Last year the reformist head of China’s central bank convinced his Communist party bosses to give market forces a bigger say in setting the renminbi’s daily “reference rate” against the US dollar. In return, Zhou Xiaochuan assured his more conservative party colleagues that the redback would finally secure coveted recognition as an official reserve currency […]

Continue Reading

Categorized | Banks

Spotlight swings to interdealer brokers

Posted on December 19, 2012

The UBS Libor settlement swings the spotlight on to the role of interdealer brokers in the burgeoning scandal, alleging that employees at these institutions actively “colluded” with rate-fixing efforts – and were handsomely rewarded for it.

According to the final notice published by the UK Financial Services Authority, four UBS traders worked through the brokers to try to influence the Japanese yen Libor submissions at other banks. The watchdog says the traders made more than 1,000 requests to 11 employees at six interdealer broker firms.

    UBS then paid brokers through wash trades that had no purpose other than to generate fees, and at one point the bank was paying £15,000 a quarter to the brokers for a period of 18 months, the FSA said.

    Interdealer brokers act as conduits in the market for large and illiquid trades, talking to a range of bank traders, both by phone and electronically, every day. They do not participate in the daily Libor rate-setting process, in which a group of panel banks submit their estimates of the interest rate they would have to pay to borrow that day and the results are then averaged to set the official benchmark.

    The FSA alleges that UBS traders used the middlemen to pass on requests for specific rates to traders at other banks. They also asked the brokers to place false bids and offers – known as “spoofs” – and asked them to manipulate the rates shown on their trading screens to skew market perceptions of the rates and indirectly influence other banks’ submissions to the Libor rate-setting process.

    In one particularly dramatic example, the FSA notice quotes a UBS trader saying: “if you keep 6s [the six-month yen Libor rate] unchanged today … I will [expletive] 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”.

    Up to now, only three interdealer brokers – Icap, RP Martin and Tullett Prebon – had acknowledged receiving information requests from authorities in connection with the global investigation into Libor. Icap and RP Martin have suspended employees or put them on leave in connection with the investigation, but Tullett Prebon said as recently as last week it had not. All three firms have said their institutions were not under investigation.

    Two employees of RP Martin and a UBS trader were arrested last week as part of the UK Serious Fraud Office’s Libor probe. They were bailed without charge pending further investigation.

    The Swiss regulator Finma said in its UBS settlement documents that a single trader, dubbed Trader A, made several hundred requests to different brokers asking them to help influence the rate. The watchdog said Trader A promised brokers additional business and conducted wash trades as a reward for their help.

    Its settlement document describes an email exchange between that trader and a broker in August 2008, in which the trader says, “obvious could do with low 6m tonight” and the broker replied, “:-) yep with you mate, low everything” and went on to ask if the trader thinks the broker “is your best broker in terms of value added :-)”?

    Trader A responded with a reassuring “yeah, I reckon I owe him a lot more”.