Washington, D.C. – On May 15, 2014, the U.S. Commodity Futures Trading Commission (CFTC) issued an order against RP Martin Holdings Limited and its subsidiary, Martin Brokers (UK) Limited (collectively, RP Martin), settling charges of manipulation, attempted manipulation, false reporting, and aiding and abetting derivatives traders in the manipulation of the London Interbank Offered Rate (LIBOR) for Yen.
The CFTC found that between September 2008 and August 2009, RP Martin brokers knowingly spread false information about Yen borrowing rates to manipulate the daily Yen LIBOR fixing. These actions were reportedly taken to assist a senior Yen derivatives trader at UBS Securities Japan Co., Ltd., and later at another bank, who was attempting to manipulate Yen LIBOR to profit from derivatives trading positions. In return for their assistance, RP Martin brokers received over $400,000 in payments through wash trades designed solely to generate commissions.
As part of the settlement, RP Martin is required to pay a $1.2 million civil monetary penalty and implement measures to ensure the integrity of benchmark interest rate-related market information it disseminates. The company, an interdealer broker, intermediates transactions between banks and provides market insight, including LIBOR assessments.
According to the CFTC, RP Martin brokers provided misleading recommendations to Yen LIBOR submitters, influencing where they set rates instead of providing unbiased evaluations of borrowing costs. They also directly asked submitters to move their rates, effectively manipulating the benchmark.
“Today’s action is part of our on-going efforts to ensure that the LIBOR rate is free of fraud and manipulation,” said Gretchen Lowe, Acting Director of the CFTC’s Division of Enforcement. “This action reflects the Commission’s unwavering commitment to hold those who seek to undermine the integrity of the U.S. financial markets responsible for their actions.”
Yen LIBOR is a critical benchmark used to price trillions of dollars in transactions. The CFTC’s investigation underscores its commitment to maintaining the integrity of financial markets and holding those who attempt to manipulate benchmarks accountable.
Source: CFTC.gov
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