Posts Tagged ‘libor’
See ya later Gary. After serving as Commodity Futures Trading Commission (CFTC) chairman since May of 2009, Gensler is leaving after his appointment ends in December. Some have reported that the White House asked him to stay on a second term, but he declined.
Gensler presided over the implementation of Dodd-Frank, the 2010 bill that gave the CFTC regulatory authority over the derivatives market, partially shared with the Securities Exchange Commission (SEC) on security based “swaps.” Gensler’s highest point came with the LIBOR interest rate scandal that garnered regulators with large fines from investment banks–0ver 200 million by the CFTC alone.
And the revolving door continues. What do you think, will Gensler retire? Or move back to the private sector? Back to Goldman Sachs perhaps.
Profits are good, but how you get there in the financial world is often the focus for regulators. Five former traders at the world’s largest financial institutions confirmed that traders are front-running client orders and rigging WM/Reuters rates by pushing through trades before and during the 60-second windows when the benchmarks are set.
Traders are “banging the close” by pushing rates higher or lower and profiting from the difference between the reference rate and the price of the their own products. Even so, experts say that because of the size of the foreign exchange market (4.7 trillion daily), traders would have a hard time manipulating currency rates. And some fund managers prefer the WM/Reuters rates even if it is rigged because it’s more convenient and cheaper than quotes from individual banks.
Don’t jump the gun, this doesn’t scream “more regulation,” but merely an opportunity for increased awareness and compliance. This news comes after after three lenders were fined about $2.5 billion for rigging the London interbank offered rate, or Libor, last year.