* European Commission investigation focuses on yen Libor
* Says ICAP may have been involved in cartels as facilitator
* ICAP vows to defend itself vigorously
(Adds detail, comments)
By John O'Donnell and Kirstin Ridley
BRUSSELS/LONDON, June 10 The European Commission
has told Britain's ICAP it might have broken antitrust
rules by taking part in cartels that helped rig benchmark
interest rates, the European Union's antitrust enforcer said on
The EU probe of ICAP is part of a global investigation into
the manipulation of Libor and Euribor, central cogs in the
financial system used to help price loans and swaps worldwide.
Authorities have already fined 10 banks and brokerages $6.0
billion and charged 16 people.
By warning ICAP, the world's largest interdealer broker,
that it might have fallen foul of antitrust rules, the European
Commission is offering it a last chance to mount its legal
defence in what could be one of the final chapters of the wider
"The Commission has concerns that ICAP may have been
involved in cartels concerning yen interest rate derivatives as
a facilitator," it said in a statement.
ICAP, which has already been fined $87 million by U.S. and
UK regulators and had three former brokers charged over
allegations it helped fix yen Libor, denied it had breached EU
competition law and vowed to defend itself.
It said the European Commission's so-called "Statement of
Objections" alleged the brokerage had acted as a facilitator to
help certain banks breach EU competition law in relation to yen
Libor for "isolated periods" between 2007 and 2010.
"ICAP does not believe that it has breached any applicable
EU competition law, and will defend itself against these
allegations vigorously," it said in a statement.
The brokerage, run by London businessman and former
Conservative Party treasurer Michael Spencer, has called the
former staff charged over the scandal "rotten apples" and
promised to improve systems to ensure compliance with
EU antitrust regulators have already charged institutions
over benchmark rigging. Earlier this year, five banks and one
brokerage, including Europe's biggest bank HSBC, U.S.
peer JPMorgan and France's Credit Agricole,
admitted to setting up cartels that rigged yen-denominated
ICAP, which refused to settle the European case in December,
could face penalties of up to 10 percent of its global turnover
if found guilty.
The company, which posted annual revenues of just under 1.4
billion pounds ($2.35 billion) in its last financial year, has
said it has not set aside any funds for possible further fines.
Libor (London interbank offered rate) and its euro
equivalent, Euribor, is used as a benchmark against which
hundreds of trillions of dollars worth of products, from complex
derivatives to personal mortgages, are priced worldwide.
Based on a survey of what banks would charge each other for
short-term, unsecured loans, authorities allege traders colluded
on answers that could nudge the reported rates by amounts that
were tiny but translated into big profits.
Brokerages are paid for matching buyers and sellers of
securities such as bonds, currencies and derivatives. But
authorities have painted a picture of brokers passing
information - and misinformation - between banks to help key
trading clients influence rate calculations.
ICAP was the first brokerage sanctioned in the affair,
although regulators have since fined smaller London based peer
($1 = 0.7345 Euros)
($1 = 0.5956 British Pounds)
(editing by Robin Emmott and Tom Pfeiffer)