JP Morgan Chase Slammed With $65m Fine Over Benchmark Rigging

Photo by Ben Sutherland from Flickr

Today, JP Morgan Chase, the banking giant in the United States of America, was slammed with a fine amounting to $65m (£49m) by the regulators in the United States because of the attempted manipulation of the bank of the ISDAfix benchmark.

The Commodity Futures Trading Commission (CFTC) said that the bank released false reports and tried to manipulate the US Dollar International Swaps and Derivatives Association Fix in order to benefit its derivatives positions during the period between 2007 and 2012.

The ISDAfix rates are utilised to help in valuing the cash settlement of options on interest rate swaps and some other products. Local governments and pension funds usually depend on products that are priced off the said benchmark rate to help in hedging against future changes in interest rates.

The said benchmark swap rates and spreads are published daily. It indicates the prevailing mid-market rate, during a specific time of day, for the set leg of a standard fixed-for-floating interest rate swap.

The CFTC director of enforcement, James McDonald, stated: “This matter is one in a series of CFTC actions that clearly demonstrates the commission’s unrelenting commitment to root out manipulation from our markets and to protect those who rely on the integrity of critical financial benchmarks.”

A JP Morgan spokesperson stated: “We’re pleased to have this matter behind us.”

The bank is the most recent firm to be hit by a long-running probe into rate-rigging in the $300tn interest-rate swaps market.

The CFTC has disclosed that JPMorgan has already taken some steps to strengthen the internal controls of the company and provided “substantial co-operation” during the investigation.

Some other major banks including Barclays, Citigroup, and Goldman Sachs had to settle similar charges that relate to the ISDAfix benchmark case with the regulator in 2015 and 2016.