Release Number 6930-14

May 15, 2014

CFTC Charges RP Martin Holdings Limited and Its Subsidiary, Martin Brokers (UK) Limited, with Manipulation and Attempted Manipulation of Yen Libor

RP Martin Accepted over $400,000 for Unlawful Manipulative Assistance to Traders

CFTC Orders RP Martin to Pay a $1.2 Million Civil Monetary Penalty

Washington, DC - The U.S. Commodity Futures Trading Commission (CFTC) today issued an Order against RP Martin Holdings Limited, and its subsidiary, Martin Brokers (UK) Limited (collectively, RP Martin), an interdealer broker, filing and settling charges of manipulation, attempted manipulation, false reporting, and aiding and abetting derivatives traders’ acts of manipulation and attempted manipulation of the London Interbank Offered Rate (LIBOR) for Yen, a leading interest rate benchmark used to price trillions of dollars of transactions.

The CFTC Order finds that, from at least September 2008 through at least August 2009, RP Martin brokers on its Yen desk at times knowingly disseminated false and misleading information concerning Yen borrowing rates to market participants in attempts to manipulate, at times successfully, the official fixing of the daily Yen LIBOR. RP Martin brokers did so primarily to aid and abet a senior Yen derivatives trader (Senior Yen Trader) employed at UBS Securities Japan Co., Ltd. (UBS) and later at another bank, who was attempting to manipulate Yen LIBOR to benefit his derivatives trading positions tied to this benchmark. In exchange for their unlawful assistance, RP Martin brokers accepted payments totaling more than $400,000, through the form of wash trades that were designed solely to generate commissions for RP Martin, according to the Order. (Excerpts of broker communications follow this release.)

The CFTC Order requires RP Martin, among other things, to pay a $1.2 million civil monetary penalty. RP Martin also agrees to take specified steps to ensure the integrity and reliability of benchmark interest rate-related market information disseminated by RP Martin.

“Today’s action is part of our on-going efforts to ensure that the LIBOR rate is free of fraud and manipulation. Further, this action reflects the Commission’s unwavering commitment to hold those who seek to undermine the integrity of the U.S. financial markets responsible for their actions,” said Gretchen Lowe, Acting Director of the CFTC’s Division of Enforcement. “I thank the hardworking staff of the CFTC and our colleagues in the U.K. for their continued dedication and vigilance to protect market integrity.”

Yen LIBOR is fixed daily based on rates contributed by panel banks that are supposed to reflect each bank’s assessment of costs of borrowing unsecured funds in the London interbank market. RP Martin, as an interdealer broker, intermediates cash and LIBOR-based derivatives transactions between banks and other institutions. As a service to clients and to solicit and maintain business, RP Martin, like other interdealer brokers, also provides banks with market insight, including assessments of where LIBOR is likely to fix. In providing this market information, interdealer brokers are implicitly representing that such market information reflects their third-party unbiased assessment of borrowing costs and market pricing based on objective, observable data, some of which they uniquely possessed.

The CFTC Order finds that RP Martin used multiple means to assist the UBS Senior Yen Trader in his efforts to manipulate Yen LIBOR. First, RP Martin brokers provided misleading recommendations to Yen LIBOR submitters regarding where they should set certain Yen LIBOR tenors, rather than providing their unbiased evaluations of Yen borrowing costs. Second, RP Martin brokers contacted certain Yen LIBOR submitters and asked them directly to move their Yen LIBOR submissions in a manner that would benefit the Senior Yen Trader. Lastly, RP Martin brokers occasionally offered nonexistent cash bids, also known as “spoof” bids, to their clients, including Yen LIBOR submitters, in the hopes that such bids might influence Yen LIBOR submissions to the benefit of the Senior Yen Trader.

The Order further finds that this unlawful conduct occurred in part because RP Martin’s supervision, internal controls, policies and procedures were inadequate. For example, RP Martin never audited the Yen desk, and failed to question the wash trading activity, even after an RP Martin manager who monitored back-office brokerage activity raised the issue with RP Martin management.

RP Martin Must Strengthen Internal Controls to Ensure Integrity and Reliability of Benchmark Interest Rate-Related Market Information

The CFTC Order further requires RP Martin to implement and strengthen its internal controls, policies and procedures governing benchmark interest rate-related market information that RP Martin sends to market participants. Among other things, the Order requires RP Martin to:

    • Base written benchmark interest rate-related predictions on certain factors;

    • Document and retain basis for market publications;

    • Require certain disclosures, including that certain market information reflects the opinions of the author, sources of information or data upon which opinion is based, and use of any models, correlated markets or related trading instruments;

    • Review certain electronic and audio communications;

    • Implement auditing, monitoring and training measures;

    • Report to the CFTC on its compliance with the terms of the Order; and

    • Continue to cooperate with the CFTC.

The CFTC Order also recognizes the cooperation of RP Martin in the final stages of the Division of Enforcement’s investigation and the resolution of this matter.

In a related action, the United Kingdom Financial Conduct Authority (FCA) issued a Final Notice regarding its enforcement action against Martin Brokers (UK) Limited and imposed a penalty of £630,000, the equivalent of approximately $1 million.

The CFTC acknowledges the valuable assistance of the FCA, the U.S. Department of Justice, and the Washington Field Office of the Federal Bureau of Investigation.

* * * * * * * * * * *

With this Order, the CFTC has now brought a total of 6 actions and imposed penalties of $1.766 billion on entities for manipulative conduct with respect to LIBOR submissions and other benchmark interest rates. In these actions, the CFTC also orders each institution to undertake specific steps to ensure the integrity and reliability of benchmark interest rate submissions. See In re Cooperatieve Centrale RaiffeisenBoerenleenbank B.A., Order Instituting Proceedings Pursuant To Sections 6(c) And 6(d) Of The Commodity Exchange Act, Making Findings And Imposing Remedial Sanctions (October 29, 2013) ($475 million penalty) (CFTC Press Release 6752-13), In re ICAP Europe Limited, CFTC Docket No. 13-38 (September 25, 2013) ($65 Million penalty) (CFTC Press Release 6708-13); In re The Royal Bank of Scotland plc and RBS Securities Japan Limited, CFTC Docket No. 13-14 (February 6, 2013) ($325 Million penalty) (CFTC Press Release 6510-13); In re UBS AG and UBS Securities Japan Co., Ltd., CFTC Docket No. 13-09 (December 19, 2012) ($700 Million penalty) (CFTC Press Release 6472-12); and In re Barclays PLC, Barclays Bank PLC, and Barclays Capital Inc., CFTC Docket No. 12-25 (June 27, 2012) ($200 million penalty) (CFTC Press Release 6289-12).

CFTC Division of Enforcement staff members responsible for this case are Aimée Latimer-Zayets, Anne M. Termine, Maura M. Viehmeyer, James A. Garcia, Boaz Green, Kassra Goudarzi, Rishi K. Gupta, Jonathan K. Huth, Timothy M. Kirby, Terry Mayo, Elizabeth Padgett, Philip P. Tumminio, and Jason T. Wright.

Examples of Misconduct From Written Communications

Examples of Skewed LIBOR Suggestions Made for UBS Senior Yen Trader:

July 18, 2008:

1st Telephone Call:

Senior Yen Trader: 1m mate *** whats it looking like need ity lower

Yen Broker 1: lower

Senior Yen Trader: rabo moved UP to 71 they are offered at 49!

Yen Broker 1: ill have a work with rabo agn then

Senior Yen Trader: please have a word that is wrong


Senior Yen Trader: [Yen Broker 1] have you spoken to rabo re his 1m fix its a joke i need your help on 1m icap are suggesting 63 today pls do the same

Yen Broker 1: ok mate il. do tyeh same i did iyt yesterday too


Senior Yen Trader: thx its killing me mate i am losing so much cash then i can't pay you

Yen Broker 1: thats is not gonna help anyone [Yen Broker 2] is trying to pull a favour with rabo now

Senior Yen Trader: ta

2nd Telephone Call:

Rabobank Submitter: I don't know what do you reckon?

Yen Broker 2: 65?


Yen Broker 2: 65 then. That's good. Well, got someone asking here.

Rabobank Submitter: Oh ok.

Yen Broker 2: If you can?

Rabobank Submitter: Do you want me to set 65?

Yen Broker 2: Yeah, or as low as possible basically.

Rabobank Submitter: Well, why didn't you say that then? *** Well, I'll set to 63 if you want.

Yen Broker 2: Yeah? Alright then. Cool.


Rabobank Submitter: Who’s that?

Yen Broker 2: It's a geezer at UBS, [Senior Yen Trader]

Rabobank Submitter: Alright well make sure he knows *** You know, scratch my back, yeah, and all.

February 25, 2009:

1st Telephone Call:

Yen Broker 1: anything cookjing i can try desperate for a decent trade gone pear shaped this month

Senior Yen Trader: we can switch 2yrs today i'll talk later in mean time low 1m and 3m we must keep 3m down and high 6m act 6m unchanged today try for low on all of em from tomorrrow need 6m high as a drug addict

Yen Broker 1: ok ill do my best for those tday hahahha like it ok

2nd Telephone Call:

Senior Yen Trader: I mean I'm just trying to think who you might be able to f*cking lean on a bit today.

Yen Broker 1: yes, go on give me some names.

Senior Yen Trader: it's really important to get the 3’s down for me.

Yen Broker 1: 3’s more than anything else.

Senior Yen Trader: Yes. Really, well, I mean today I need them all low but, I mean, 3's particularly. *** Right [Bank 5] put his at 64, mate. Can you get him down?

Yen Broker 1: 64 [Bank 5]. Okay, I'll have a word with him.

Senior Yen Trader: [inaudible] up to 65

Yen Broker 1: Who’s that? [Bank 2]?

Senior Yen Trader: Yes.

Yen Broker 1: Right, I’ll go and ask him for a – [Yen Broker 2] off today but I’ll go in and I’ll get a favor.

Senior Yen Trader: Yes, ask him if he can move it to 63 for the day or something. ***


Senior Yen Trader: RBS is 64 *** you don't talk to RBS, do you?

Yen Broker 1: No but the guy in the arbi does, I'll see if he can, sort of, see if he can have a word with him for us *** So [Bank 2], [Bank 5] and RBS, yes? See if I can get that down some, yes?

Senior Yen Trader: Yes, if you could mate. *** And you don't speak to [Bank 6], do you?

Yen Broker 1: He's on the arbi so I could have a word with the guy that speaks to him and see if he can have a word. See if he can drop his LIBOR a couple of pips today ...

Senior Yen Trader: He's at f*cking 68 dude *** if he went to 60 that would be f*cking massive.

Yen Broker 1: Okay, I'll have a word with that as well, mate, alright?

3rd Telephone Call:

Yen Broker 1: I need a favor.

Bank 1 Submitter: yes.

Yen Broker 1: *** basically I got stuffed in something earlier in an IRS and it would have cost me about 40,000 to get out of it, yes. Geezer [referring to the Senior Yen Trader] dug me out, as a favor back to him he's asked me, for one day today, he's got a couple of fixings coming. He wants to see if he can get LIBORs down a little bit. I’ve said I’ll try and do what I can. Is there any way you might be able to set them a little bit lower today just to return the favor? ***

Bank 1 Submitter: Yeah, well cash is a little bit easier, isn't it so I’ll

Yen Broker 1: Yes, if you could get them down a couple of ticks or something today that would be f*cking, like the 3’s *** I mean if you could do that for me mate that would be a personal favor to you.

Bank 1 Submitter: Yes, yes, but yes cash is easier so I'll fix a couple up.

4th Telephone Call:

Yen Broker 1: Can I ask you a small favor?

Bank 2 Submitter: Yeah.

Yen Broker 1: What are you going to set in your LIBOR 3’s today?

Bank 2 Submitter: Ah, same, 65.

Yen Broker 1: Is there any way you might be able to set them down a pip ‘cause I’m getting a big trade out of it?

Bank 2 Submitter: Sorry?

Yen Broker 1: I’m getting someone do me a big trade if they said if I help them sort of get LIBORs down a tick today.

Bank 2 Submitter: Yeah, okay. ***

Yen Broker 1: Ah, mate, I appreciate that.

5th Telephone Call:

Yen Broker 1: Can you do me a favor?

Arbitrage Desk Head: Only if you tick the arbi box on that deal.

Yen Broker 1: We've got a f*cking, yes, we've got a f*cking huge deal but on the back of it he's asked me to do him a favor and see if I can have a word with a couple of people, see if LIBOR, see if I could get it down a pip. Would you - Bank 6 is setting his at 68 at the moment, do you reckon he might, ask him if he might be able to set it at 67 just today for us?


Arbitrage Desk Head: 3’s LIBOR at 67?

Yen Broker 1: Yes, instead of 68. It would be a big favor. ***

Arbitrage Desk Head: All right, all right.

6th Telephone Call:

Arbitrage Desk Head: Did he ask for [Bank 6] in particular?

Yen Broker 1: He’s just given me some names whose LIBORs are quite high at the moment to see if I can get them down a bit. No, not him, not that one bank, just a group of banks.

Arbitrage Desk Head: He thinks that I'll be - he thinks that he's out of the equation anyway.

Yen Broker 1: Right, okay. Well it just makes a difference if everyone's putting theirs down a bit because I've got a couple of people to put them ... [Bank 2]’s putting his down a pip; [Bank 1]’s putting his down a couple of pips. I mean, if there's a few people putting them down it should set the average better.

Arbitrage Desk Head: He's- I've asked him and he's said we'll see.

Yen Broker 1: Alright, that's fine.

Arbitrage Desk Head: If I set out on a line then f*cking

Yen Broker 1: Don't push it, no don't ever push it.

Arbitrage Desk Head: Not that, it's the old auditors as well.

Yen Broker 1: Absolutely, no problem mate, no problem at all.

Examples of Discussions Related to Wash Trades:

September 18, 2008:

1st Telephone Call:

Senior Yen Trader: Mate, right, listen. I don’t care right just get me any f*cking trade which pays you basically today, mate. If if you keep 6’s unchanged today, yeah. *** I will f*cking do one humongous deal with you. All right? *** Like a 50,000 buck deal, whatever. *** I need you to keep it as low as possible. All right? If you do that, then I’ll cross the spread and I’ll pay you, you know, $50,000, $100,000 whatever it whatever you want. All right?

Yen Broker 1: All right.

2nd Telephone Call:

Senior Yen Trader: *** have you got any mates, mate, who’ll do you like a net trade and I could like, you know, basically give you like f*cking, I don't know, a trillion 3-month LIBOR/TIBOR and take back a trillion 3-month LIBOR/TIBOR and, obviously, you’re net it with the other guy.

Yen Broker 1: Right.

Senior Yen Trader: *** what I’m saying is, look, that if you've got a mate who will like do a flat switch basically. *** I’d go in and out with him, yeah? So I’ll pay them in two years or whatever and I’ll receive from them in two years. The coupon’s the same. *** I’ll get charged bro both sides obviously.


Yen Broker 1: all right. That’s excellent.

3rd Telephone Call:

Yen Broker 1: *** if you could get 6’s a little lower today, I’ve got, um, someone that’s going to do a huge trade with me today if the if the 6’s don't go up too much. So if you

Bank 3 Submitter: We're going for 1% fix I think today. I think these are all going to edge up just marginally so *** what I’ll do is I’ll go 103 for 6’s it’s not too high but it’s going to be higher anyway so I can’t go too far away from there.

October 31, 2008:

Senior Yen Trader: Listen what I need - this is what I need, I need 1’s to come off the most because if they are off 20 for 1’s which is what they [inaudible]

Yen Broker 1: Right, yes. That’s the one thats f*cking up at the moment as well, isn’t it, so you need definitely.

Senior Yen Trader: Yes and then say 3’s are - I don't need it to come off quite so much, like, I don’t know down 13 or something.

Yen Broker 1: Right.

Senior Yen Trader: And then 6’s go well, there’s still term and you can’t get hold of it so say, like, down 8 or something.

Yen Broker 1: Right, okay


Senior Yen Trader: Alright mate, if you could sort this out for me, if you can get 1’s down - if you could get like a staggered downward move like that then we’ll do a f*cking massive ticket next week.

Examples of RBS Involvement in Wash Trades:

September 19, 2008:

Yen Broker 3: Right, geez, can you do me a favor? You, um, what – you’re not going to get paid any bro for this and we’ll send you lunch around for the whole desk. Can you flat – can you switch, er, two years semi at 5 3/4, 100 yards, are you – between UBS. Just get – take it from UBS, give it back to UBS. He wants to pay some bro. We won’t bro you but he wants to put – he wants to give us some bro.

RBS Yen Trader: Yeah, Yeah.

Yen Broker 3: 100 yards, right?

RBS Yen Trader: Yeah. Yeah. UBS on UBS? Right.

Yen Broker 3: Yeah, Yeah. 100 yards – actually can you make it 150 and I’ll send lunch around for everybody?

RBS Yen Trader: Yeah.

March 26, 2009:

Yen Broker 3: All right listen. I need you, mate.

RBS Yen Trader: Yeah.

Yen Broker 3: I need your money. I – oh, you’ll be looked after in Vegas. I promise you. It’s only a month away. Is there any chance you’ll be able to wash this switch through today?

RBS Yen Trader: Yeah, but I can’t do that size. I have to [inaudible]

Yen Broker 3: Yeah that’s fine. Mate, listen. I’m – would be grateful mate. I’m – I’ll be grateful for anything, mate.

RBS Yen Trader: All right, I’ll do 80.

Yen Broker 3: Okay, mate, listen. That’s perfectly fine and er, I won’t – it’s not going to be f*cking every month occurrence. It’s – it’s just like it’s the end of our quarter now, so I won’t pester you with that every month, no way, I appreciate what you’re doing anyway, right? You’ll be looked after, mate. Don’t worry about that. All right. So, um, so do I just – we’ll do it today or tomorrow. I’ll do it – try and put it through today?

Yen Broker 3: Yeah, I’ll put [inaudible].


RBS Yen Trader: 80, yeah?

Yen Broker 3: Yeah, 80, yeah. Same rules as the last one, yeah?

RBS Yen Trader: Yeah.

Yen Broker 3: Oh, mate you’re a superstar. Cheers, dude, ta.

June 26, 2009:

RBS Yen Trader: Has [Senior Yen Trader] been asking you to put Libors up today?

Yen Broker 3: [speaking to someone else] What’s [Senior Yen Trader] want on Libors today? Is he fixing anything about Libors? What does he want? What way does he want it? [inaudible]


Yen Broker 3: He wants ones, ones and threes a little bit lower and sixes probably about the same where they are now. He wants them to stay the same.

RBS Yen Trader: I want them lower.

Yen Broker 3: You want them lower? What the sixes?

RBS Yen Trader: Yeah.

Yen Broker 3: Alright, well, alright, alright, we’ll work on it.

June 26, 2009:

Yen Broker 3: Hello mate, [RBS Yen Trader]? You all set?

RBS Yen Trader: Yeah.

Yen Broker 3: Right listen, we’ve had a couple words with them. You want them lower right?

RBS Yen Trader: Yeah.

Yen Broker 3: Alright okay, alright, no we’ve okay just confirming it. We've, so far we've spoke to [Bank 3]. We've spoke to a couple of people so we'll see where they come in alright. We've spoke, basically *** we spoke to [Bank 3], [Bank 8], [Bank 1], who else did I speak to? [Bank 9]. There's a couple of other people that the boys have a spoke to but as a team we've basically said we want a bit lower so we'll see where they come in alright?

RBS Yen Trader: Cheers.

Yen Broker 3: Cheers no worries mate.


Footnote from page 7 of the CFTC Order: The communications quoted in this Order are from telephone calls, emails, instant messages, and the like. Some contain shorthand trader language and typographical errors. The shorthand and errors are explained in brackets within the quotations only when necessary to understand the discussion.

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Dennis Holden

Last Updated: May 15, 2014