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INDEX
ABN Amro Bank, 59
Accenture, ‘rogue trading’ definition, 249
Accept, Breaker album, 110–11
ACI (Association Cambiste Internationale/Forex), 174, 181; ‘Dealing Certificates’, 216; Model Code, 227
actual funding rates, public knowledge, 97
Adoboli, Kweku, 250
Agius, Marcus, 77, 284
Almunia, Joaquín, 221
American Psycho, 239–40, 250
Aragon, 25
arbitarge, 31; opportunities, 27
Aros, 25
Asian financial crisis 1997, 260
ATM queues, image of, 109
average opinions, expectation of, 102
Bäckström, Urban, 117
Bailey, Andrew, 280
‘banging the close’, 209
Bank of America, 2, 11, 153, 164, 188, 191, 223; Merrill Lynch rescue/takeover, 49, 67, 161–3, 193; rescue of, 10
Bank of England, 38, 55, 222; Exchange Joint Standing Committee, 179; inflation target, 39
Bank of Japan, 33, 81, 175–6
Bank of Tokyo-Mitsubishi, 153, 223
banking, competitive deregulation, 114; incentive structures literature, 252; post 2008 reforms, 254; risk taking essence, 281; staff ‘cost centres’, 95; see also, central banks; financial markets; money markets
banks: access to money indicators, 96; cash hoarding, 45; change attempts post-scandals, 283; credit departments, 253; derivatives main users, 121; Eurodollar market made, 117, 125; fines, 236; LIBOR hiding, 105; LIBOR perceptions, 79; LIBOR quotes, 99; markets abuse, 14; profit maximizing, 80; public trust need, 284; reputational damage, 168; ‘special’ sector, 173; risk management systems, 46
Banque pour l’Europe du Nord, 113
Barclays Bank, 59, 98, 105, 153, 192–3, 210, 220, 223; Capital securities unit, 98; interest rate derivatives traders, 77; 2012 fines, 76; US dollar LIBOR trial, 139
Basel Accord 1988, 137; perverse effect, 138
BBA, banking lobby, 180, 183; BBAIRS creation, 118; big banks dominated, 107; -LIBOR trademark, 181
Bear Stearns, 49, 105, 272
‘beating the market’, 267
Becker, Gary, 254
behavioural finance, study of, 196, 200–1, 255; ‘disruption effect’ concept, 258
benchmarks: financial instruments, 122; manipulation of, 14; manipulation criminalised, 282
Berlin Radio Show, 111
bid-offer spreads, 42–3, 62, 112, 132, 139, 146, 219, 223, 228–9; collusive practices, 223; FX market, 192; prices tight, 201; round figures, 218; secretly agreed, 220
BIS (Bank for International Settlements), 130
blame, individualised, 236; shifting, 68
Bloomberg, 50, 86, 88, 98, 151, 195, 283; indicative prices, 62
BNP Paribas, 193, 223; investment funds freeze redemptions, 50
Böll, Heinrich, 235
bonds selling, 21; trading desks, 215
bonuses, 164, 273; curbing partial solution, 280; stricter rules on, 280
‘book’, traders, 26
Borough Market, London, 7, 101, 245
borrowing rates, low-balling, 99
bribes, forms of, 91
brokers, 143; best guess, 88; false information transmission, 89; role of, 141; traders pressure on, 90; -traders relation, 86–7, 89; use of, 132
Buffett, Warren, 15, 251
bulls/bears, early experiences formed, 31
Bush, George W., 45
buy and sell orders, 208
‘call-outs’, 24; symptom assessing, 25
‘Can do More’, 144
Canada: dollar, 33; Foreign Exchange Committee, 179
Canary Wharf, London, 6
Cantor Fitzgerald, London office, 264
capital controls, abolishment, 133
Carr Futures, World Trade Centre office, 264
cash markets, importance loss, 139
cash squeezes, year-end, 44
cash-settled derivatives; benchmark need, 122–3; made market, 133
cassettes, history of, 110–11
CDOs (collateralised debt obligations), 11
central bank, 151; -banks unique relationship, 173; foreign exchange interventions, 233; inflation rate target, 70; LIBOR key variable, 53, 151; LIBOR use, 152; money pumping, 50; power, 174; power overestimated, 49, 54; price stability goal, 51; repos, 175; tips, 176; transparency, 40, 166–7; unexpected interest rate moves, 41; weakening of, 114
Channel 4 News, 11
Chase Manhattan, 131
Chemical Bank (JPMorgan Chase), 30
CIBOR (Copenhagen Interbank Offered Rate), 28, 78–9
Citibank, 29, 30, 58, 101, 153, 155, 182, 188, 193, 220, 223; benchmark manipulation fine, 160; ‘Scandi’ desk, 33; Tokyo dealing room, 196
CME (Chicago Mercantile Exchange), 123, 1288; Eurodollar futures, 126
collateral types, central banks lowering, 50
competition law, UK and EU, 222
complex structured products, valuation inability, 50
compliance departments banks, 253; post-scandals increase, 283
Cooke, Mr Justice, 282
copycat behaviour, market making, 202–3
Cosmopolis, 250
counterparties, confirmations, 18
Countrywide, 49
CPI, Inflation index, 149
credit: default swap market, 99; officers, 95; rating agencies, 96; risk, 137; risk measure for, 55
Crédit Agricole Indosuez, 37, 44, 58–9, 134, 1
55
Crédit Suisse, 153, 193, 221, 223; First Boston, 127
creditworthiness: ‘image problem’, 51; judgments on, 225; signals, 98, 99
cross-currency basis swap, LIBOR-indexed, 62
CRSs, 129
Darin, Roger, 115
dealing relationships, informal reciprocal, 227
dealing rooms, internal monitoring increase, 283
deceptive behaviour, LIBOR banks, 105; quotes post-crisis pressure, 106
Del Missier, Jerry, 77
Den Danske bank, 178
derivatives, ‘abstract’, 123–4; benchmark use, 150; borrowing and lending idea, 138; concrete type, 121; growing market, 79; interest rates, 30; LIBOR-indexed, 28, 71, 80, 104, 129; new instruments, 18; textbook explanation, 119–20; trade tickets, 141’usefulness’ of, 131
derivatives market: benchmark need, 119; LIBOR importance, 37; Scandanavia, 27
Deutsche Bank, 153, 193, 223; LIBOR controls deceptions, 183; LIBOR fine, 83
Diamond, Bob, 77
Dillon Read, 49
‘discount windows’ lowering, 50
‘dishonesty’, 249
Donohue, Craig, 128
dot-com bubble, 104
downgrades, credit rating agencies, 96
Dresdner Bank, 17, 155, 197
Duffy, Terry, 128
Easton Ellis, Bret, American Psycho, 236
economic data releases, examples of, 38
efficient market hypothesis, 195, 200–1; unrealistic assumption, 196
‘emerging markets’, trading desks, 37
ERM (European Exchange Rate Mechanism) crisis, 31–2
Ermotti, Sergio, 213
EURIBOR (Euro Interbank Offered Rate), 14, 76–8, 126, 130; derivatives, 145; new unpredictability, 62; pre-Euro, 148
euro, the: Eurozone crisis, 109; launch of, 36
eurocurrency market, 113; central bank weakening, 111; deregulated, 114; Eurodollars, see below; fast growth of, 112; LIBOR derivatives replaced, 134
Eurodollar market, 113, 133, 152; advantages, 112; banks made, 117, 125; contracts standard maturity dates, 126; financial deregulation prompt, 116; futures, see below; gradual reduction of, 136; history of, 111; LIBOR rate making, 117, 129; rapid growth of, 115
Eurodollar futures, 125, 128, 265; bets on, 146; rationale for, 129; success of, 127
Euromoney, 135
European Banking Federation, 180
European Central Bank (ECB), 50, 109, 145
European Commission, 221
Euroyen LIBOR futures contract, 127
‘Events’ central bank meetings, 40
excessive lending, inflationary fears, 114
exclusivity, self-perception, 269
expectations, games of, 103; overpriced stock, 104
‘expert judgments’, banks LIBOR quotes, 278
Fama, Eugene, 195
‘fat fingers’ errors, 253
FBI, USA, 192–3
FCA (Financial Conduct Authority), 183–4, 188, 219, 282; Fair and Effective Markets Review, 222; prohibited individuals list, 285
fear, rumours of, 266
Federal Reserve, see USA
FIBOR (Frankfurt Interbank Offered Rate), 19, 127
financial crisis, Asia 1997, 36
financial crisis 2007–8; decent culture erosion explanation, 279; familiar analysis of, 114; financial market illuminating, 275; -LIBOR implications, 52, 111; money markets freeze, 109
financial markets: cartels, 222; deregulation 115–16; instruments liquidity, 43; misconceptions, 236; self-regulated, 113, 171; see also, money markets
Finers Stephens Innocent, 3
Finland: USSR collapse impact, 20; USSR Winter War, 65
‘firm policy’, interbank spread choosing, 229
fixed exchange rates, sustainability, 32
flat switch, 92–5
flow traders, 143
Forex, 1995 exam, 223; reciprocity endorsed, 227
FRAs (forward rate agreements), 28, 75, 91, 129–30; growth of, 148
Friday dress policy, 135
FSA (Financial Services Authority), UK, 1–2, 67, 77, 98, 105, 124, 163, 180, 243; prohibition orders, 4; suspension, 5
‘Full Amount’ call, weakness indicator, 143
funding costs:, averages, 104; LIBOR signalling, 97; -market liquidity relation, 44
futures contracts: agricultural, 120; cash-settled, 125; transparent exchanges, 63
FX (foreign exchange) market, 172, 196, 245; bank price influence, 212; big banks domination/market concentration, 193, 195, 210, 212, 223, 234; ‘clear the decks’, 210; ‘community’, 190; ethical problem, 213; global banks 2014 fines, 188; interbank spread survey, 228; interest rate markets joining, 31; Japanese banks borrowing, 33; London ‘banging the close’; 209; non-public information grey zone, 224; order books, 7; reciprocity, 224; scale of significance, 126, 192, 232; spot market desk, 214, 217; standardised norms, 194; swap market, see below; ‘The Cartel’, 220; traders, see below; turnover scale, 212
FX swap market, 134, 137, 145, 146; interest rate speculation, 133; Japanese traders, 34; lower credit risk, 137, 144; 9/11 trading, 265; spot-prices, 31, 227
FX traders, 191; club mentality, 269; desks, 30; respect among, 269; secret code us, 219; ‘techniques’, 204; varied backgrounds, 216
Gelboim, Ellen, 153
gentlemen’s agreements, 141
‘getting married to your position’, trading attitude, 257–8
global merchandise exports, growth, 112
Goldman Sachs, 49, 140, 193, 223, 272
Goodhart, Charles, 173
Greece, 2015 ATM queues, 109
Greenspan, Alan, 15, 51, 173–4
Greenwald, Bruce, 225
guilt, feelings of, 78, 169, 243, 259
Häyhä, Simo (‘White Death’), 65
‘Hambros’, 194
Harley, Dean, 231
Hayes, Tom, 8, 13, 72, 92–3, 115, 238; prison sentence, 12
HBOS, 183
headhunters, 160
HELIBOR (Helsinki Interbank Offered Rate), 28
Hester, Stephen, 284
Hintz, Brad, 10
HSBC, bank, 27, 153, 155, 188, 193, 208, 213, 223; FCA fine, 219; FX trading, 116, 187; Group Management Training College, 187; Stockholm, 31
Hull, John, 150
Hunger Games series, 255
Hyogo Bank default, 33
ICAP, 86, 101, 175; LIBOR fine, 85
ICMA (International Capital Market Association), 174
IKB bank, 50; rollover problems, 49
illiquidity, temporary, 43
Indonesia, financial crisis, 36
Industrial Bank of Japan, 34
‘industry’, financial, 154–5
information: LIBOR delays problem, 49, 54; big banks superior, 210
instincts, 226
interbank money market, 38; central bank influence, 39; efficiency estimate change, 109; lending fall, 111; LIBOR, see below
interest rate(s): benchmarks, 14; central banks forecasts, 166; changes impact of, 38; derivatives, 17, 174; hedging, 128; movement, 42; short-term, 28, 133; swaps sizes, 142
International Code of Conduct and Practice for the, 216
International Monetary Market (IMM), 72; contracts conventions, 126; LIBOR fixings, 73–4
investment banks, risk takers, 272
Ireland, Financial Regulator, 4, 168, 281
IRS, interest rate swap, 129–30; short-term, 140
ISDA (International Swaps and Derivatives Association), 174; fix, 14
Japan: bank sector/system: crisis, 47, 81; dollars difficulty period, 34; fear premium, 36; Financial Services Agency, 101; FX market concentration, 193; FX ‘premium’, 35–6; safe perception change, 33; unique derivatives market, 36; yen market, 8, 45
JP Morgan/JP Morgan Chase, 92, 105, 153, 178, 188, 192–3, 220–3
Kahneman, Daniel, 255
Kerviel, Jérôme, 250
Keynes, J.M., General Theory of Employm
ent, 102
Kipling, Rudyard, 127
KLIBOR (Kuala Lumpur), 37
Knight, Angela, 107
Lapavitsas, Costas, 6–7
layering, 204
Leeson, Nick, 250
‘legacy issues’, 236
Lehman Brothers, 2, 10, 48–9, 59, 105, 162, 272; bankruptcy filing, 160; collapse of aftermath, 96
Lewis, Ken, 164
LIBOR, 19, 28, 76–7, 104, 127, 130, 147, 209, 234, 265; anti-competitive process, 186; banking lobby regulated, 180–1; ‘barometer of fear’, 96; benchmark significance, 192, 225; central banks perfection assumption, 49; controls deception, 184; crisis-induced ‘stickiness’, 106; crucial price, 13; daily individual quotes, 97; derivatives, see below; ‘Eurodollar futures’ origin, 126; FCA regulated, 282; ‘fear’ index, 15; fixing panels, see below; future direction of, 38; inaccuracy possibilities, 74; interbank money market gauge, 39; jurisdiction issue, 115; manipulation, 7, 12, 14, 78; manipulation impossibility assumption, 81; market-determined perception, 88, 149; mechanism, 104; minute change importance, 73; new unpredictability, 62; 1980s invention, 111; objective process ‘evidence’, 148; perception of, 119; players as referees, 80; post 2007 interest, 53; pre-2013 unregulated, 118; predicting difficulty, 70; regulatory oversight lack, 179; retail credit impact, 277; sanctioned secrecy, 181–2; savings and borrowings dominance, 107; scandal breaking, 81; state measure use, 151; three-months, 71; ‘too big to fail’, 279; use of limited post-scandal, 278
LIBOR derivatives market, 8, 45, 137–8, 232; autonomous development of, 111; banks made, 125; ‘community’, 190; -FX connected, 189; imaginary money market, 148; increased abstraction of, 144–6
LIBOR panel banks, 74–5, 79, 98, 118, 172, 282; -LIBOR implications, 52 big banks dominated, 173, 179–80; fixing process, 75; membership criteria, 184–5; punishment idea, 108; post-scandal membership, 186
LIBOR scandal, 77, 152, 167, 245; correctness attempts, 277; post- definition unchanged, 278; breaking of, 81; Wall Street Journal on, 238
LIBOR-OIS spread(s), 51, 54–5, 99, 151
LIFFE, 126–7
liquidity: and credit crunch 2008, 2; credit issues, 45; informal norms need, 284; provision ‘duty’ 229; risk, 42–3, 55, 70
Lloyds Bank, 153, 183; LIBOR fine, 83
long/short positions, 26
Barometer of Fear Page 29