Barclays and the LIBOR scandal
ADMN-2306 Sec: 825
Assignment #2
1) There were many individuals that benefitted from the manipulation of LIBOR. The Barclays derivatives traders, Money Market Desk, Bob Diamond and senior management and other banks all had some sort of gain from the LIBOR scandal.Let’s start with the people that had the most monetary gain - the Barclays derivative traders. It is said that LIBOR has been manipulated since the early 90s. Since then, there has been trillions of money made by derivate traders as they influence LIBOR. The traders communicated with the Money Market Desk, the individuals who submitted LIBOR rates, in order to manipulate the rate to their favour. In fact, the investigation found the derivate traders were not at all quiet about their discussions to the Desk regarding the manipulation of LIBOR. One conversation between a trader and a submitter went public and the submitter basically ensured the trader he would submit one less basis point from what he should actually submit.i A calculation derived from Galen Burghardt’s The Eurodollar Futures and Options Handbook shows that a manipulation of one basis point for a low 3-month fix can earn the trader over $2million dollars from an $80 billion deal. For a deal that is often settled, the derivative traders made their fair share of money by manipulating LIBOR. According to the Barclays and the LIBOR Scandal article, the derivative traders and the Desk was located on the same trading floor, which if you asked me, says a lot about Barclays internal control regarding LIBOR rate submissions in itself. The Desk benefitted from manipulating LIBOR in my opinion although nothing has been published. This is because nobody will do anything for someone unless they receive something in return. And the fact that submitting altered rates can earn a trader millions of dollars. In my opinion, the submitters received sums of money from the traders they ‘helped’. Bob Diamond and Barclays senior management
Assignment #2
1) There were many individuals that benefitted from the manipulation of LIBOR. The Barclays derivatives traders, Money Market Desk, Bob Diamond and senior management and other banks all had some sort of gain from the LIBOR scandal.Let’s start with the people that had the most monetary gain - the Barclays derivative traders. It is said that LIBOR has been manipulated since the early 90s. Since then, there has been trillions of money made by derivate traders as they influence LIBOR. The traders communicated with the Money Market Desk, the individuals who submitted LIBOR rates, in order to manipulate the rate to their favour. In fact, the investigation found the derivate traders were not at all quiet about their discussions to the Desk regarding the manipulation of LIBOR. One conversation between a trader and a submitter went public and the submitter basically ensured the trader he would submit one less basis point from what he should actually submit.i A calculation derived from Galen Burghardt’s The Eurodollar Futures and Options Handbook shows that a manipulation of one basis point for a low 3-month fix can earn the trader over $2million dollars from an $80 billion deal. For a deal that is often settled, the derivative traders made their fair share of money by manipulating LIBOR. According to the Barclays and the LIBOR Scandal article, the derivative traders and the Desk was located on the same trading floor, which if you asked me, says a lot about Barclays internal control regarding LIBOR rate submissions in itself. The Desk benefitted from manipulating LIBOR in my opinion although nothing has been published. This is because nobody will do anything for someone unless they receive something in return. And the fact that submitting altered rates can earn a trader millions of dollars. In my opinion, the submitters received sums of money from the traders they ‘helped’. Bob Diamond and Barclays senior management