BCS Barclays PLC

By Katy Burne 

The Commodity Futures Trading Commission ordered Royal Bank of Scotland Group PLC to pay $85 million to settle charges that it attempted to rig a key pricing gauge for derivatives in the years surrounding the financial crisis.

The civil penalty announced Friday marks the latest enforcement action over banks' attempted manipulation of global financial benchmarks, and the fourth by the CFTC for a benchmark used to settle contracts tied to billions of dollars of interest-rate trades.

In the order, the CFTC charged RBS with trying to rig the rate, called ISDAFIX, over a five-year period from Jan. 2007 to March 2012. The CFTC previously has charged Goldman Sachs Group Inc. $120 million, Citigroup $250 million and Barclays PLC $115 million over attempts to rig ISDAFIX.

Ross McEwan, chief executive of RBS since 2013, said in a statement: "This is an example of past misconduct that has no place at RBS and we strongly condemn these actions."

ISDAFIX is widely used in areas such as setting payouts on pension funds and valuing complex financial contracts between banks and institutional investors. Its name comes from the global trade group, the International Swaps and Derivatives Association, which in 2014 changed the way the benchmark is calculated after it attracted scrutiny from regulators.

The CFTC said RBS traders located in Stamford, Conn., acted through an unidentified derivatives broker, whose job it was to poll market participants daily at 11 a.m. ET for the repricing of the benchmark. It said the bank's aim was to benefit its own trading positions whose values were set off the rate.

In emails and audio recordings collected by the CFTC, the agency found one email from an RBS trader, labeled Swaps Trader 1, who joked that charges relating to hedge fund Amaranth's trades in the energy market were charges for rigging ISDAFIX.

"An RBS swap trader converted a news story about the lawsuit into a prescient 'joke' where RBS took the place of Amaranth as the manipulator sued by the government," the CFTC said in the order.

Mr. McEwan said in his statement that such findings "make for uncomfortable reading and we have already taken significant steps to make sure this kind of behavior cannot happen again."

Under the order, RBS agreed to implement new controls to ensure the integrity of its participation in setting interest-rate benchmarks. The new moves include measures to detect and deter trading, potentially intended to manipulate swap rates.

"People around the world rely on benchmark rates such as ISDAFIX," said Aitan Goelman, director of the CFTC's enforcement division in a statement. He said the CFTC actions "make clear that the Commission takes very seriously its role in ensuring the integrity of any and all benchmarks used in our markets."

Write to Katy Burne at katy.burne@wsj.com

(END) Dow Jones Newswires

February 03, 2017 12:01 ET (17:01 GMT)

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