Market Rigging widespread in the City

[BlasterBates]

'A cesspit': Libor scandal may be going on elsewhere - Telegraph

[MrMark]

Personally, I'm shocked.

[doodab]

Surely it would be quicker to identify the markets that weren't overrun with thieving villains....

[Lockhouse]

I've worked at a consensus derivative pricing firm, in fact I wrote the system that allowed clients to send in their figures so that a consensus could be reached.

Everyone in the quorum sends in an estimated price for a range of derivatives, these are then averaged and the averages sent back to the clients (in this case fund houses and banks) so they can see if their prices are low or high relative to the other fund houses and banks in the quorum. If some institutions had sent in figures that were obviously outlying they would get a friendly phone call asking them if they wanted to look again at their figures as they may be incorrect.

All perfectly legitimate, but just goes to show that one man's rigged market is another man's benchmark.

[BrilloPad]

Surely it would be quicker to identify the markets that weren't overrun with thieving villains....

Can I guess at how many there are in round numbers? Well in a round number actually.

Everyone just gets the figures and accepts them. In early 90s BoE announced that interest swap market size had increased tenfold in a year. About a year later a friend of mine fessed - he had been at an IB and was responsible for collating their figures. He had f**ked up his code - and he reported 100 times too much! No-one at the bank or BoE questioned the outlandish figures.....

[Mich the Tester]

Shocking, but certainly not surprising.

[doomage]

Can I guess at how many there are in round numbers? Well in a round number actually.

Everyone just gets the figures and accepts them. In early 90s BoE announced that interest swap market size had increased tenfold in a year. I had f**ked up the code - and it reported 100 times too much! No-one at the bank or BoE questioned the outlandish figures.....

ftfy

[AtW]

Surely job of regulators was to check actual records in banks related to such lending and borrowing and it would have been easy to spot that Bank A lends to Bank B at rate of x% but Bank B reports it's lower?

I mean surely whoever was responsible for aggregating data from all banks for LIBOR purposes did not employ cretins who just took simple Libor rate every day and instead insisted on complete list of transactions that would be spot checked?

[Moscow Mule]

Surely job of regulators was to check actual records in banks related to such lending and borrowing and it would have been easy to spot that Bank A lends to Bank B at rate of x% but Bank B reports it's lower?

I mean surely whoever was responsible for aggregating data from all banks for LIBOR purposes did not employ cretins who just took simple Libor rate every day and instead insisted on complete list of transactions that would be spot checked?

I believe that's how they found out it was being fiddled?

[centurian]

I mean surely whoever was responsible for aggregating data from all banks for LIBOR purposes did not employ cretins who just took simple Libor rate every day and instead insisted on complete list of transactions that would be spot checked?

LIBOR is produced by the British Bankers Association - basically the trade union for all the big banks accused of said fiddling.

It's the equivalent of the TUC being in charge of producing official statistics on workers productivity.