Swap Dealer Settles Charges over ISDAFIX Manipulation

A swap dealer agreed to pay $65 million to settle CFTC charges of attempted manipulation of the U.S. Dollar ISDAFIX ("USD ISDAFIX").

According to the Order, certain traders at the swap dealer JPMorgan Chase Bank, N.A. attempted to increase and decrease USD ISDAFIX through manipulative trading and through the submission of false or inaccurate rates. The CFTC alleged that traders would bid, offer and execute transactions in targeted interest rate products at or near the time of day when USD ISDAFIX was set (11:00 a.m. Eastern Time) in order to "muscle" prevailing prices. This activity either increased or decreased their reference rates and influenced the final published USD ISDAFIX. The CFTC also alleged that the traders submitted rates that were "false, misleading or knowingly inaccurate" in order to move the final published USD ISDAFIX higher or lower and benefit positions held by the Bank.

The firm has since taken steps to "ensure the integrity of benchmarks" by, among other things, enhancing its policies, procedures and controls with regard to participation in benchmarks. In recognition of the firm's "significant cooperation during the investigation," the CFTC has reportedly reduced the civil monetary penalty substantially.

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