The UK’s Financial Conduct Authority (FCA) has confirmed a formal international probe into the alleged rigging of the multi-trillion dollar trade in interest rate derivatives.
"The regulator was investigating the potential manipulation of the ISDAfix that is used to price much of the US$379 trillion (£242trn) interest rate swap market," the Telegraph quoted Martin Wheatley, chief executive of the FCA as saying.
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The CFTC is going over 1 million e-mails and has taped phone calls as it examines whether ISDAfix, which helps determine everything from interest on annuities to borrowing costs on bonds linked to skyscrapers, was manipulated.
"We have asked for records, the CFTC have asked for records, and I think that one or two other others have as well," Wheatley said.
Wheatley added that it is too early in proceedings to state just how big a scandal this could turn out to be, explaining the probe is still at an early stage even though it has been given a formal status.
Wheatley’s confirmation came in response to questions from Andrew Tyrie MP, chairman of the Committee, who asked whether the FCA was investigating ISDAfix and Treasure Island, which is a New Jersey-based US interest rate swaps desk of ICAP.
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