April 9, 2013 / 12:27 AM / in 5 years

UPDATE 1-U.S. watchdog subpoenas swaps association over benchmark

By Douwe Miedema

WASHINGTON, April 8 (Reuters) - The top U.S. derivatives regulator is probing a widely used benchmark for swaps, the trade body overseeing the rate said, dealing a further blow to the market after the sprawling Libor probe.

The Commodity Futures Trading Commission (CFTC) has subpoenaed the International Swaps and Derivatives Association (ISDA) over its ISDAfix benchmark, widely used to anchor market rates, a spokeswoman for ISDA said.

Bloomberg reported on Monday that the CFTC was investigating derivatives broker ICAP Plc and as many as 15 banks in a probe into the possible manipulation of the benchmark.

The CFTC, which oversees the $640 trillion derivatives market, wants to know if ICAP’s staff were colluding with the banks, who stand to profit from inaccurate quotes, Bloomberg said, quoting people familiar with the matter.

ICAP said in a statement it had no knowledge of the allegations prior to the Bloomberg report. The broker is cooperating with the CFTC’s wider probe into the area, it said.

The CFTC did not immediately return a request for comment.

The CFTC’s probe came about as it was working with European regulators in the scandal surrounding the Libor interbank rate benchmark, Bloomberg said, which has lead to have fines for UBS AG, Royal Bank of Scotland Group Plc and Barclays Plc.

The fixings are based on a survey of panel banks for the different currencies, according to the ISDA website. ICAP collects these contributions and sends them on to Thomson Reuters Corp, which calculates the fixing.

A spokeswoman for Thomson Reuters had no immediate comment.

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