Broker ICAP in FSA Libor-fixing investigation - FT

LONDON Wed Jan 23, 2013 8:19pm EST

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LONDON Jan 24 (Reuters) - Inter-dealer broker ICAP has been drawn into an investigation by Britain's financial watchdog into the rigging of interest rates, the Financial Times reported on Thursday.

The Financial Services Authority (FSA) was looking into possible breaches of market conduct rules involving the London-listed company, the newspaper said, citing an internal FSA memo from March 2012 it had seen.

The memo showed that the watchdog was looking into whether a subsidiary of ICAP, one of the biggest inter-dealer brokers, broke rules by "directly or indirectly inappropriately influencing or attempting to influence submissions used to compile the London Interbank Offered Rate... Japanese yen and possibly US dollars," the newspaper said.

Inter-dealer brokers, who as middlemen match buyers and sellers of financial securities, have already been implicated in the manipulation of benchmark Libor interest rates.

UBS admitted in December that its traders paid bribes to brokers in return for their help in rigging rates.

Of the first three arrests by Britain's Serious Fraud Office in connection with the scandal, two worked for an inter-dealer broker, namely RP Martin, a source told Reuters. The Canadian Competition Bureau has said a trader at a "cooperating party" - named by Reuters sources as UBS - worked with a broker at ICAP.

ICAP suspended one employee and put three others on administrative leave in connection with the Libor probe, two sources close to the firm told Reuters in December.

ICAP declined to comment on the memo to the FT, but was quoted as saying it believed it had "made appropriate disclosures having taken advice from our external advisers."

A spokesman for the FSA declined to comment. ICAP was not immediately available for comment.

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