It seems like only yesterday and the large banks were paying fines for rigging the price of money (Libor), the foreign exchange rate or the price of commodities like electricity.  Today, we move on to yet another opaque market rigged by the bankers for their personal benefit.  This market is the $500 trillion interest rate swap market.

We know at least one bank, Barclays, was active in rigging this market.  As reported by the Financial Times, the regulators have already found the smoking gun email from a Barclays trader

sometimes Isdafix is manipulated.

Apparently the bank agreed it was rigging this market as the bank paid a $115 million fine for rigging the Isdafix.

What is the Isdafix?

It is a benchmark price for interest rate swaps built by asking several banks for their estimate of the price they would be willing to buy or sell a specific $50 million swap for.  What makes this benchmark easy to manipulate is it is based on estimates rather than actual trades.

Of course, since it is based on estimates bankers can manipulate, the Isdafix would not qualify for a label from the Transparency Label Initiative.  Rather, the Isdafix would be noted as opaque/rigged.