Home ListingMay 25, 2016

Citi Fined $425M Over Benchmark Manipulation

The US Commodity Futures Trading Commission charged the bank and its Japanese branches with rigging interest-rate benchmarks.

Reported by Featured Author

Citibank will pay $425 million to settle charges that the bank and its Japanese affiliates manipulated numerous interest-rate benchmarks.

The US Commodity Futures Trading Commission (CFTC) said Citi attempted to manipulate and falsely reported on the US Dollar International Swaps and Derivatives Association Fix (USD ISDAFIX), a global benchmark for interest-rate products, beginning in January 2007 and continuing until 2012.

Furthermore it accused the bank, along with Citibank Japan and Citigroup Global Markets Japan, of similar abuses related to Libor and the Euroyen Toyko Interbank Offered Rate (Tibor).

“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,” said CFTC Director of Enforcement Aitan Goelman in a statement.

According to the Commission, Citi skewed its benchmark reporting to the benefit of its own trading positions. It also allegedly bid, offered, and executed trades in targeted interest-rate products, including swap spreads and US treasuries, in “a manner designed… to benefit the bank in its derivatives positions.”

Electronic communications showed Citi traders boasting about “pushing” the market, describing the USD ISDAFIX as being “easy to push,” and explaining how to best “influence the set.”

The CFTC also said Citi falsely reported the US dollar Libor to “avoid generating negative media attention and to protect its reputation during the financial crisis.”

“As evidenced by today’s actions,” Goelman said, “the CFTC’s vigilance includes holding a financial institution, like Citi, responsible each time it acts to undermine a benchmark for its personal profit or benefit.”