Article: Deutsche Bank Ordered to Pay $70 Million for Manipulation of USD Swap Rates

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Deutsche Bank Ordered to Pay $70 Million for Manipulation of USD Swap Rates

Finance Magnates Staff, 02 February 2018

The Commodity Futures Trading Commission (CFTC) issued an order directed at Deutsche Bank Securities Inc. (DBSI), to pay a $70 million civil monetary penalty over charges of attempted manipulation of the ISDAFIX benchmark, between 2007 and 2012.

The US Dollar International Swaps and Derivatives Association Fix is a global benchmark, used in the settlement of various interest rate products, including cash settlement of options on interest rate swaps. The allegations indicate that Deutsche Bank and some of its traders intentionally attempted to manipulate the benchmark, in an effort to benefit the bank’s positions. The specific USD ISDAFIX rates and spreads that the bank attempted to alter are the ones issued at 11:00 a.m. Eastern Time each day, and act as a mid-market rate to accommodate settlements across various financial markets.

The serious allegations show that the bank’s traders would attempt to execute transactions in interest rate products, including swap spreads and US Treasuries at or adjacent to the 11:00 am fixing time, in order to affect the levels to benefit their existing positions. The accusations stem from recorded conversations between DBSI traders and the swaps broker, which indicated a direct communication of their intentions, showing that both sides were aware of the intended results and their respective motives. The report further exemplifies the violations by specifying that on more than one occasion, the swaps broker would ask DBSI’s traders how much “ammo” was at the disposal of certain traders, in order to “move the screen at 11:00 am.”

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