BusinessInsider reports that Switzerland's competition authority is investigating UBS, Credit Suisse, and ten other financial institutions on charges the companies manipulated the London Interbank Offered Rate (LIBOR), which is used as an index for $350 trillion of swaps and $10 trillion of loans.
The Swiss authority, COMCO, said member institutions colluded on their submissions to the British Banking Authority, to move rates at their discretion and possibly sell products with that knowledge.
"They tried to coordinate submissions," Head of Unit Financial Services at COMCO, Thomas Nybegger, told Business Insider. "This coordination can go in both directions, so you can try to coordinate that way, that LIBOR will rise, and you can also collaborate in the opposite direction.
LIBOR is the primary benchmark rate for most short term interest rates, as well as longer term rates for mortgages and corporate loans. The benchmark is set every morning at 11 a.m. when the British Banking Authority asks member banks to submit the rate they perceive they would receive if they went to another dealer seeking funds. Banks are not supposed to see other contributor estimates.
Read more: http://www.businessinsider.com/12-banks-are-being-investigated-for-allegedly-manipulating-rates-tied-to-360-trillion-worth-of-securities-2012-2
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