The ISDAFix scandal: injured investors

Author: | Published: 13 Jun 2014

It’s been a rough few years for benchmark rates. While scandals concerning the London Interbank Offered Rate (Libor) and currency benchmarks have attracted the most attention, they should not overshadow similar problems faced by the so-called ISDAFix, which provides swap rates for transactions in the world’s biggest financial markets.

Big cities, major corporations, governments, insurers and pension funds are just a few of the institutions that use interest rate swaps to manage their exposure to interest rates. The annual volume of interest rate swaps is about 100 times bigger than the US federal budget.

So it was a shock when, around a year ago, that crusading financial market publication Rolling Stone Magazine reported that the Libor scandal had a double. Regulators on both sides of the Atlantic...