RBS fined $85 million for fixing benchmark swap rates

The CFTC found traders at RBS joked about manipulating the USD ISDAFIX benchmark.

The Royal Bank of Scotland (RBS) has been fined $85 million by US authorities for attempting to manipulate US dollar ISDAFIX benchmark swap rates over a five-year period.

The US Commodity Futures Trading Commission (CFTC) said RBS made bids, offers and executed transactions in targeted interest rate products, including swap spreads and US Treasuries with the intent of affecting the benchmark.

“RBS attempted to manipulate USD ISDAFIX through its trading at the 11:00 am fixing in order to benefit cash-settled swaptions held by RBS that were priced or valued against the USD ISDAFIX benchmark,” the CFTC said.

Traders at the bank allegedly joked about their attempts to manipulate USD ISDAFIX, sending news of the lawsuit to RBS’s swap broker employees.

The CFTC said: “One noted that ‘we like tried to f*ck’ a bank counterparty on a cash settlement; another noted that they had had a big cash settle with a bank counterparty and had ‘skrood [sic.] them big time.’”

Another RBS trader noted that RBS did not “actually have that many interbank cash settles and when we do, on average we tend to do badly.”

However, he added that “with clients we do okay but they have no idea that it’s off,” referring to the fact that RBS’s non-bank counterparties were unaware that RBS was attempting to move USD ISDAFIX settings to their detriment.

The CFTC has now imposed over $5.2 billion in penalties in 19 actions against banks and brokers in its investigation of manipulation of global benchmark rates.