Barclays Settles ISDAFIX Manipulation Charges for $115M - Analyst Blog

An image of a person pointing to part of a graph Credit: Shutterstock photo

Barclays PLCBCS is set to pay a penalty of £74.2 million ($115 million) to the U.S. Commodity Futures Trading Commission (CFTC) to settle charges of manipulating U.S. Dollar International Swaps and Derivatives Association Fix (USD ISDAFIX). Notably, the UK-based bank became the first to be hit with a penalty regarding manipulation of the USD ISDAFIX.

Per a CFTC release, in the period between Jan 2007 and Jun 2012, Barclays "attempted on many occasions to manipulate and made false reports" relating to the USD ISDAFIX.

Apart from payment of the penalty, Barclays is also required to cease and desist from further violations as charged, and undertake remedial actions as specified and to improve internal controls.

USD ISDAFIX is a global benchmark, used for setting values of interest rate swaps, and used as a valuation tool for a number of financial products. CFTC's finding stated that during the aforementioned period Barclays was engaged in executing interest rate swap spread transactions in such a manner so as to influence the published USD ISDAFIX and derive benefits in its derivatives positions. Further, the UK based banking giant tried to manipulate USD ISDAFIX through its employees by providing false and misleading USD ISDAFIX submissions.

Also, Barclays announced the settlement over the prolonged industry-wide probe into the foreign exchange market manipulation. The regulators involved were CFTC, the New York State Department of Financial Services, the U.S. Department of Justice, the Board of Governors of the Federal Reserve System and the UK Financial Conduct Authority. The company pleaded guilty for violating an US anti-trust law.

Separately, per a Bloomberg report, Barclays failed in its attempt to dismiss a lawsuit by U.S. regulators for alleged manipulation of trades on electricity contracts. Per the court ruling, "the Federal Energy Regulatory Commission (FERC) has alleged both a sufficient factual and legal basis to support its claim of manipulation." The lawsuit claims $488 million in fines.

Bottom Line

We remain encouraged by Barclays' efforts in gradually resolving its legal issues. Also, the recent settlements are not likely to impact its financials in the upcoming quarters as these are covered by the company's existing provisions.

Currently, Barclays sports a Zacks Rank #2 (Buy). Other top-ranked stocks in the foreign banks space include BBVA Banco Francés S.A. BFR , HSBC Holdings plc HSBC and UBS Group AG UBS . All these stocks sport a Zacks Rank # 1 (Strong Buy).

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

BARCLAY PLC-ADR (BCS): Free Stock Analysis Report

UBS GROUP AG (UBS): Get Free Report

BANCO FRANC-ADR (BFR): Free Stock Analysis Report

HSBC HOLDINGS (HSBC): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

More Related Articles

Info icon

This data feed is not available at this time.

Sign up for the TradeTalks newsletter to receive your weekly dose of trading news, trends and education. Delivered Wednesdays.