New York Regulator Said to Probe ISDAfix Derivatives Benchmark

New York’s main financial-services regulator has opened its own investigation into the global derivatives benchmark known as ISDAfix, broadening the watchdog’s hunt for manipulation beyond markets such as foreign exchange, according to a person briefed on the matter.

The New York Department of Financial Services sent major banks requests for information, but hasn’t yet issued subpoenas or narrowed its focus to any particular firm, said the person, asking not to be identified because inquiries are confidential.

The regulator, which has sometimes broken with U.S. counterparts to push for harsher terms when settling probes into banks that operate in the state, joins the Commodity Futures Trading Commission in looking for signs that traders sought to influence ISDAfix. The benchmark -- used by banks, corporate treasurers and money managers -- helps settle trades in the $381 trillion market for interest-rate swaps and the $44 trillion market for options on swaps.

Barclays Plc last month agreed to pay $115 million as it settled the CFTC’s first enforcement action focusing on ISDAfix. By trying to influence the measure, the London-based bank would have stood to profit on separate derivatives trades with clients who were seeking to hedge against moves in interest rates, the agency said at the time. Barclays didn’t admit or deny wrongdoing. It said it was resolving the case, part of an industrywide probe, amid a broader effort to overhaul the firm.

The New York regulator’s superintendent, Benjamin Lawsky, stepped down this month to open his own cybersecurity consulting firm. His top lieutenant, Anthony Albanese, has been named interim superintendent of the department. The Financial Times reported on the office’s look at ISDAfix on Sunday.

For more, read this QuickTake: Broken Benchmarks

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