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Screenshot of a breaking news alert e-mail from Q2 2017
British multi-asset interdealer broker ICAP plc (LON:IAP) is at the center of allegations by European Union officials that it facilitated cartels on yen-dominated inter-rate benchmarks as part of Brussels’ attempts to mitigate any market interference from further participants following rate-fixing probes that have been carried out during 2014.
ICAP, which is the largest interdealer broker in the world and owns subsidiaries including institutional electronic brokerage division EBS and pre trade risk and post trade processing solutions firm Traiana, vehemently refutes the allegations, and has refused to settle with the European Commission, making its case clear that it will appeal any fiscal penalty as wrong in fact and law.
According to a report today by the Financial Times, the decision by the European Commission is likely to be announced later this week, with any financial penalty likely to be less than 10 million euros.
Indeed, if ICAP proceeds to appeal, and the appeal is not successful, the company could be liable for legal costs and potential damages claims.
The Financial Times report continues to explaint that a charge-sheet served against ICAP in June accused the broker of enabling illegal arrangements between banks in markets for the yen-based London interbank offered rate and yen Tibor, the Tokyo interbank offered rate. The allegations covered periods between 2007 and 2010.
ICAP’s commercial position on the matter has been provided in the form of a corporate statement: “We will be very disappointed if the European Commission chooses to pursue this case. The European Commission has failed to put forward any evidence to show a competition violation. We remain of the view that these allegations are without any merit and we will take all steps available to defend ourselves.”
The recent yen LIBOR (London Interbank Offered Rate) fixing case against a number of large financial institutions, one of which was interdealer broker RP Martin, the others being large banks with high-volume interbank FX order flow, cost the collective firms $669 million, however it is clear that the European authorities are reluctant to consign this matter to the history books.