UBS AG's interest-rate-rigging settlement this week is shining a spotlight on the arcane world of London's interdealer brokers, who appear to have played a key role coordinating banks' efforts to manipulate the London interbank offered rate (Libor), the Wall Street Journal reported today. These firms wear multiple hats. They act as middlemen between banks that are looking for trading partners. They are informal information clearinghouses for banks looking to gauge market appetite for various assets. And, it turns out, they can serve as conduits for allegedly illegal activity. U.S., British and Swiss authorities on Wednesday detailed an elaborate scheme in which UBS traders enlisted multiple brokerage firms to help orchestrate a multibank rate-rigging network. In exchange, the brokers received hundreds of thousands of pounds worth of compensation, authorities say. As part of its $1.5 billion settlement, UBS acknowledged wrongdoing.
