Former RBS Libor submitter Paul White was banned from “any regulated financial activity” by the UK’s markets watchdog for attempting to manipulate the Libor rate to benefit traders.
White avoided being slapped with a £250,000 ($358,000) fine on Tuesday due to his “serious financial hardship.”
White was the main RBS submitter for Japanese Yen and Swiss franc Libor — benchmarks that tracks how much it costs banks to borrow from one another in different currencies — between 2007 and 2010.
He received “68 documented requests” from traders to alter his submissions to benefit their trading positions, according to the FCA.
Mark Steward, director of enforcement and market oversight at the FCA said: “By allowing his submissions to be set, in effect, by those with collateral financial interests in the outcome, Mr White recklessly disregarded the risk — the obvious risk – that his LIBOR submission might corrupt LIBOR’s integrity.”
While a lot of the requests were spoke because he sat next to a Swiss franc trader for a time, some made it onto the Bloomberg messaging system and were used as evidence by the FCA to support the ban.
Here is a choice selection.
White 'routinely took the trading positions of derivatives traders into account when making CHF and JPY LIBOR submissions,' according to the FCA. This example occurred at 10:33:19 on 4 December 2008:
The mysterious 'Trader A' made a lot of the requests because he would 'generally benefit from a narrowing of the gap between three month CHF LIBOR and six month CHF LIBOR.' At 10:13:50 on 17 March 2009, the following exchange took place:
At 07:44:16 on 15 September 2009, the following Bloomberg exchange took place between Derivatives Trader B and White:
It wasn't just for the benefit of RBS traders. In this exchange, White 'knew that Broker B's JPY LIBOR requests were made on behalf of External Trader A,' who worked at UBS. This one happened in March 2010:
The FCA said it's 'clear that Mr White had concerns about his behaviour.' For example at 08:08:00 on 24 November 2010, the following Bloomberg exchange took place between Mr White and Derivatives Trader C:
The FCA said that 'immediately following this exchange, Mr White called Derivatives Trader C and said 'It's alright we're just not allowed to have those conversations on Mindalign' (laughing). Derivatives Trader C then responded, 'Oh sorry about that, I didn't know' and asked (with a laugh) whether it was 'because of the BBA thing.' Mr White then said 'Yes exactly, leave it with me and it won't be a problem…'