The US CFTC has ordered Citibank to pay a USD250 million civil monetary penalty to settle charges that it attempted to manipulate, and made false reports concerning, the US Dollar International Swaps and Derivatives Association Fix (USD ISDAFIX), a global benchmark for interest rate products.
In accition, Citibank is required take specified steps to implement and strengthen its internal controls and procedures, including measures to detect and deter trading potentially intended to manipulate swap rates such as USD ISDAFIX and to ensure the integrity of interest-rate swap benchmarks.
“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,” says Aitan Goelman, the CFTC’s Director of Enforcement. Mr. Goelman further commented, “The terms of this settlement are intended to reflect all aspects of Citibank’s response to the investigation, including the evolving nature of its cooperation.”
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 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.
