The broker had facilitated six of the seven cartels in the sector

Yen

Last week, the European Commission fined the UK-based broker ICAP €14.9m for breaching EU antitrust rules by facilitating several cartels in the sector of Yen interest rate derivatives (YIRD). In December 2013, the Commission already fined several major banks that had decided to settle the case.

The total fines amounted to €669,719000 on the banks UBS, RBS, Deutsche Bank, Citigroup, JPMorgan and on the broker RP Martin in December 2013. These companies had admitted their involvement in one or more cartels in the YIRD sector, which meant the cases could be setted.

In the YIRD sector, seven distinct bilateral infringements had been discovered lasting between one and 10 months between 2007 to 2010. The anticompetitive conduct concerned discussions between traders of the participating banks on certain JPY LIBOR submissions. The traders involved also exchanged, on occasions, commercially sensitive information relating to trading positions or to future JPY LIBOR submissions.

ICAP chose not to settle the case and proceedings against it therefore continued. The investigation uncovered that ICAP had facilitated six of the seven cartels in the YIRD sector through various actions that contributed to the anticompetitive objectives pursued by the cartelists.

Commissioner Margrethe Vestager in charge of competition policy said: “The decision to fine ICAP sends a strong signal that assisting companies in their cartel activities has severe consequences. It marks the successful completion of our antitrust investigation in the Yen interest rate derivatives sector – but not the end to our efforts to fight anticompetitive practices in financial markets.”

Interest rate derivatives (for example, forward rate agreements, swaps, futures, options) are financial products used by banks or companies for managing the risk of interest rate fluctuations. These products are traded worldwide and play a key role in the global economy. They derive their value from the level of a benchmark interest rate, such as the London interbank offered rate – which is used for various currencies including the Japanese Yen. This benchmark reflects an average of the quotes submitted daily by a number of banks that are members of a panel. It is intended to reflect the cost of interbank lending in Japanese Yen and serves as a basis for various financial derivatives. The level of the benchmark rate may affect either the cash flows that a bank receives from a counterparty, or the cash flow it needs to pay to the counterparty under interest rate derivatives contracts.

Any person or firm affected by anti-competitive behaviour as described in this case may bring the matter before the courts of the member states and seek damages.