Case Spotlight: ISDAfix antitrust class action another example of market rate manipulation







The antitrust litigation referred to as “ISDAfix” alleges that the defendants participated in anticompetitive behavior to set the interest rate for derivative products. This case is indicative of a trend of recent benchmark rate manipulation cases, like Libor and Euribor. To date, the ISDAfix class action has resulted in a $380.5 million partial settlement agreed upon by eight banks. Several defendants have yet to settle.

The original complaint, filed on September 4, 2014, alleges that the defendant banks conspired together with interdealer broker ICAP PLC, which was responsible for managing the daily setting of the U.S. dollar-rate version of the ISDAfix, to manipulate the ISDAfix to the financial detriment of those purchasing or selling ISDAfix referenced financial products.


ISDAfix is an important benchmark in the U.S. financial system and a key interest rate for a broad range of interest rate derivatives and other financial instruments. It impacts everything from ordinary interest rate swaps (an exchange of a floating interest rate for a fixed one) and swaptions (options on interest rate swaps) to more esoteric financial instruments such as swapnote futures, cash-settled swap futures, and constant maturity swaps, among others. ISDAfix rates are also used to price commercial real estate mortgages and various types of structured notes and bonds.

ISDAfix was designed to represent current fixed rates for interest rate swaps of various terms.  Specifically, it is supposed to be an average mid-market swap rate for six major currencies at selected maturities. Throughout the period relevant to this case, ISDAfix for swap rates priced in U.S. dollars was set every day between 11:00 and 11:15 a.m. ET. For USD swap rates, ISDAfix was administered by ICAP and was based on the submissions of the Defendant Banks.


The partial settlement breaks down as follows:


Parties eligible for the settlement include all persons or entities who entered into, received or made payments on, terminated, transacted in, or held an ISDAfix Instrument between January 1, 2006 and January 31, 2014, excluding the defendants and affiliates. As a component of the various settlement agreements reached to date, the settling defendants have agreed to collaborate with Class Counsel and the Claims Administrator to assist in the compilation of relevant transaction data. As such, it is likely that there will be an opportunity to work with the Claims Administrator to determine, at least on a preliminary basis, your likely eligibility and projected losses.