$115m settlement

After Forex Rigging, CFTC Targets Isdafix Manipulation

Barclays is the first financial institution to get slapped with a fine for manipulating U.S. interest swap contracts prices

Aside from the much bigger fines related to the foreign exchange market fixings manipulation, the U.S. Commodities and Futures Trading Commission (CFTC) has also imposed an additional fine on Barclays. The bank was fined for manipulating the global derivatives benchmark known as Isdafix.

The rate is used to determine the interest rates on U.S. interest rates swap contracts.

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The U.K. bank has become the first one to get under the radar of major financial regulators in relation to the Isdafix.

The fine imposed by the CFTC totaled $115 million. The bank, which at the time was owned by the International Swaps and Derivatives Association (ISDA), has allegedly been doctored in the five years ending in 2012.

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The benchmark was founded in 1998 by the ISDA and has since grown to be the leading industry benchmark.

In a typical fixing fashion, the rate has been determined based on the submissions from a panel of 16 major banks. After each submitted its average rate of bids and offers for a $50 million contract, a process of elimination of the four highest and four lowest bids concluded the auction with an average price for the remaining bids and offers.

According to the CFTC Barclays traders have been manipulating the rate by submitting false data.

The effort led by global regulatory bodies started in 2013, when subpoenas were issued to a number of banks and inter-dealer broker ICAP.

Starting from 2014, the management of Isdafix has been handed to the Intercontinental Exchange. It has committed to changing the way the rate is calculated, aiming to put more weight on quotes that are tradable on the market.

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