FCA bans RBS trader over Libor

FCA bans RBS trader over Libor

The Financial Conduct Authority (FCA) has fined a former Royal Bank of Scotland interest rate derivatives trader for his role in manipulating the interbank lending rate Libor.

Neil Danziger has also been banned from holding any role related to a regulated financial activity, on top of his £250,000 fine.

It follows a string of high-profile scandals in which the Libor rate was manipulated by traders to boost their institutions’ profits.

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Mr Danziger traded products referenced to Japanese Yen Libor and occasionally made RBS’s JPY Libor submissions to the British Bankers Association when the bank's primary submitters were not available.

The FCA found that between 14 February 2007 and 22 November 2010, Mr Danziger routinely made requests to RBS’s primary submitters, intending to benefit the trading positions for which he and other traders were responsible.

He also took those trading positions into account when acting as a substitute submitter and, on two occasions, obtained a broker’s assistance to attempt to manipulate the JPY Libor submissions of other banks.

Mark Steward, executive director of enforcement and market oversight at the FCA, said: "Proper standards of market conduct reflect the interests of the whole community in the well-being of our financial markets.

"Mr Danziger’s reckless disregard of these standards has no place in the financial services industry.

"Market participants cannot turn a blind eye to what the community, through its laws and regulations, expects, nor apply their own, lower standards. This substantial fine and ban should reinforce that message."

The FCA also found that between 19 September 2008 and 25 August 2009 Mr Danziger entered into 28 wash trades – risk free trades, with the same party, in pairs that cancelled each other out and for which there was no legitimate commercial rationale.

A spokesman for Mr Danziger said: "Mr Danziger continues to dispute the FCA’s findings and feels strongly that he is being scapegoated for the systemic problems relating to Libor.    

"However, the last five years have been incredibly challenging. He is emotionally exhausted and financially drained. He leaves it to others, better resourced, to press the FCA for answers, hopeful that, one day, the real truth will come out."

Its investigation found the purpose of these wash trades was to make or facilitate brokerage payments to two firms of brokers in recognition of his receipt of personal hospitality.

Earlier this year FCA chief executive Andrew Bailey said Libor would be phased out by 2021 and replaced by a new benchmark following a transition period.