09:55 GMT +330 March 2017
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    A view of Barclay's headquarter at London's Canary Wharf financial district

    Barclays and Deutsche Bank in Further Rate-Rigging Probe

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    Britain's Serious Fraud Office is calling former traders of Barclays and Deutsche Bank for interviews as part of its investigation into whether the EURIBOR benchmark interest rate was rigged, according to the Financial Times.

    With the help of special government funding, the Serious Fraud Office is examining if the euro interbank offered rate, x, was manipulated for individual trading benefit, the newspaper said. UK regulators are also investigating traders from other banks, the newspaper said, citing sources.

    Barclays, which set aside 750 million pounds for fines arising from allegations of manipulation in currency markets, last week said it hopes to settle these investigations as soon as possible.

    Deutsche, for its part, is gearing up to pay almost 1 billion euros for fines related to the settlement of allegations related to the manipulation of LIBOR. The SFO followed dual strands of EURIBOR and dollar LIBOR for investigation, the newspaper said.

    Barclays, UBS, Deutsche and a few other banks and brokerages were fined about $6 billion by US and European regulators last year for alleged LIBOR and EURIBOR rigging.

    Barclays, Deutsche and the SFO could not be reached immediately for comment.

    What are EURIBOR and LIBOR?

    Interest rate derivatives — which are forward rate agreements, swaps, futures and options — are financial products used by banks or companies for managing the risk of interest rate fluctuations. They derive their value from the level of a benchmark interest rate, such as the London interbank offered rate (LIBOR) or the Euro Interbank Offered Rate (EURIBOR), for the euro.

    These benchmarks reflect an average of the quotes submitted daily by a number of banks who are members of a panel (panel banks). They are meant to reflect the cost of interbank lending in a given currency and serve as a basis for various financial derivatives. Investment banks compete with each other in the trading of these derivatives. 

    The levels of these benchmark rates may affect either the cash flows that a bank receives from a counterparty, or the cash flow it needs to pay to the counterparty under interest rate derivatives contracts.

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    Tags:
    United Kingdom, fraud, banking, euro, bank, interest rate, economy, UBS, Libor, Deutsche Bank AG, Barclays Bank Plc, Britain
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