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Business Comment

A regulator too far? Icap chooses to stand and fight EU over Libor


Outlook Regulatory agencies: are you running short of funds? Why not skewer the banks and brokers involved in the Libor scandal? It's not as if it will take an awful lot of work. Just use what has already been completed by the authorities in Britain and the United States as a template. Then release the hounds!

Sure, the finance houses may snarl and bitch a bit. But who cares? The public hates them. With, it should be said, considerable justification.

So if you're involved in the European Union, what better way to curry a bit of favour with the Eurosceptic hordes at your gates than by hitting their favourite target that isn't you?

At least, that's one way of reading Europe's move into a territory previously dominated by financial watchdogs from member states.

Yesterday the broker Icap was added to a growing list of those in the crosshairs of its competition watchdogs for alleged involvement in a rate-fixing cartel.

There are two distinct groups among those involved in this case. Those who have chosen to "assume the position" include Royal Bank of Scotland, Deutsche Bank, Société Générale, Citibank, the broker RP Martin and JP Morgan, which has accepted a fine for one market but is fighting charges related to another. (Barclays and UBS, of course, escaped penalties by playing the role of whistleblowers.) Some of this group have been fined by national regulators. Others are surely on the hit list.

But then there are those that have chosen to fight. In addition to JP Morgan they include HSBC and Crédit Agricole. And now Icap, run by the former Tory party treasurer Michael Spencer.

Icap is the first of those that have chosen to square off against Europe to have already accepted a penalty from national financial watchdogs, although that was small beer compared with what the banks have paid and, interestingly, the US side of the case didn't involve the Department of Justice.

As a smaller player in the scandal its decision to opt for a public scrap in Europe rather than quietly paying up is intriguing. We may now get to enjoy the spectacle of some of the City's dirty laundry being aired at a public hearing.

And perhaps Europe's dirty laundry too. It is, after all, something of a Johnny-come-lately to this affair and has relied upon competition law as its line of attack, rather than obvious breaches of regulatory rules. A very creative interpretation of that law, is what Icap and its peers may argue.