Citi was fined $425 million for rate manipulation — here are the secret trader transcripts by Oscar Williams-Grut on May 26, 2016, 4:59 AM Advertisement
 The US Commodity Futures Trading Commission (CFTC) fined Citibank a combined $425 million (£288.5 million) on Wednesday to settle various rate-fixing allegations between 2007 and 2012. The allegations centre around the manipulation of LIBOR, a measure of rates banks will lend to other banks at, and ISDAFIX, a measure used to set interest rates on swaps. While you might not have heard of these measures, the two benchmarks are used to set the price of products worth millions, if not billions, each day. In other words, they have a huge effect on the economy. The CFTC says Citi: "on multiple occasions attempted to manipulate, and made false reports" about the Isdafix. The bank is also: "charged with attempting to manipulate Yen LIBOR and Euroyen TIBOR, and CJL [Citigroup Japan Ltd] with false reporting of Euroyen TIBOR, to benefit derivatives trading positions that were priced based on Yen LIBOR or Euroyen TIBOR. "Separately, Citi is charged with the false reporting of U.S. Dollar LIBOR at times to avoid generating negative media attention and to protect its reputation during the financial crisis from the spring of 2008 through the summer of 2009." That's quite a rap sheet. Alongside the ruling, the CFTC published evidence taken from chat logs and phone transcripts pointing to the manipulation. We've picked out some of the most eye-catching parts below: SEE ALSO: Jailed Libor trader Tom Hayes is crowdfunding to raise £150,000 to appeal his conviction SEE ALSO: 'What's it worth?': Read the Bloomberg chats that got a former RBS Libor trader banned for life "... moved the screen btw"  The CFTC says: "Citibank, by and through certain of its traders, attempted to manipulate and made false reports concerning USD ISDAFIX by skewing the Bank’s USD ISDAFIX submissions, in the Bank’s role as a panel bank in the USD ISDAFIX setting process, in order to benefit the Bank’s trading positions at the expense of its derivatives counterparties." In short, traders leaned on bankers at Citi who set ISDAFIX to move it in a way favourable to them. They also planned the timing of trades to make sure they influenced the ISDAFIX. The CFTC says: "In addition, Citibank, through its traders, bid, offered, and executed trades in targeted interest rate products, including swap spreads and U.S. Treasuries, in a manner designed – including in timing and pricing – to influence the published USD ISDAFIX to benefit the Bank in its derivatives positions, according to the Order."
"... you think we can push the 2y spread lower before 11?"  The CFTC says Citi cooperated with its investigation but initially made incorrect claims about its fixing. The regulator says: "According to the Order, Citibank’s cooperation improved after the Division said that it expected the Bank to make productions more expeditiously, after which Citibank discovered and produced evidence showing that its initial statements about certain misconduct were incorrect."
"[I]s it easy to push these days?"  Aitan Goelman, the CFTC’s Director of Enforcement, says in the statement on the settlement: "The CFTC’s order demonstrates that we will vigorously continue to investigate any efforts to manipulate financial benchmarks, and we will take action where possible to protect the integrity of these benchmarks." The CFTC has fined 17 banks and brokers a collective $5.08 billion for fixing LIBOR, ISDAFIX, and manipulating FX rates.
See the rest of the story at Business Insider
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