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Thu Jan 24, 2013, 12:10 PM

Court forces Barclays to reveal staff on Libor list

(Reuters) - A British judge forced Barclays (BARC.L) to identify top executives alongside traders linked to a probe into rate fixing, naming ex CEOs Bob Diamond and John Varley and current Finance Director Chris Lucas on Thursday despite requests for anonymity.

The names were unveiled in a preliminary hearing for a case brought against Barclays by a residential care home operator which alleges it was mis-sold interest rate hedging products, which were based on Libor rates.

Barclays was the first bank to be punished over the Libor scandal, in which global lenders colluded to manipulate benchmark interest rates. It agreed to a fine of $453 million from U.S. and UK authorities and its then chief executive Bob Diamond left the bank following the controversy.

In the first British claim for damages, Guardian Care Homes is suing Barclays for 37 million pounds. It is seen as a test case for interest rate swaps misselling, and is also set to shine a light on people involved in the bank's manipulation of Libor and how the rate setting process was conducted.

http://uk.reuters.com/article/2013/01/24/uk-barclays-libor-lawsuit-idUKBRE90N0GB20130124

As far as I'm aware interest rate hedging products were unique to the UK.

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Reply Court forces Barclays to reveal staff on Libor list (Original post)
dipsydoodle Jan 2013 OP
Lucky Luciano Jan 2013 #1
dipsydoodle Jan 2013 #2
Lucky Luciano Jan 2013 #3

Response to dipsydoodle (Original post)

Thu Jan 24, 2013, 11:59 PM

1. If by interest rate hedging, you mean interest rate swaps and swaptions,

...then those are pretty much the most liquid tradeable instruments in the world. They are most liquid in the US by far, but they are traded a lot in Euro rates and Sterling (GBP) as well.

You can think of IR swaps as borrowing money at a floating rate (e.g. LIBOR) in order to buy a fixed coupon bond or vice versa. If you receive the fixed coupon, then you want rates to go down so that your floating rate that you pay goes down while you pocket the difference. Like being long a bond with full financing.

A swaption is an option on a swap. Super liquid. Billions in notional trade every day. Probably low 12-13 figures in notional trade per day.

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Response to Lucky Luciano (Reply #1)

Fri Jan 25, 2013, 03:36 AM

2. Nope

These were similar to CDS's to insure against rate adverse upward rate change. In the event, libor rigging artificially lowered rates by small amounts. The court cases are based on product mis-selling.

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Response to dipsydoodle (Reply #2)

Fri Jan 25, 2013, 11:00 AM

3. That is what IR swaps are for. Straight up, they are fantastic

...for hedging and/or speculating on rate movements.

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