Dan Gledhill: Memories of the time that Libor ruled my life

 

Share
Related Topics

Reading the explosive emails which implicate Barclays traders in the crime of fixing Libor rates brought back memories of the days when this five-letter acronym meant financial life or death to me.

In the late 1990s, I worked for an American investment bank in London, effectively taking bets on whether I thought interest rates (in my case, US and Canadian interest rates) would go up or down. I would gamble that, for example, the three-month Canadian base rate would be above 5 per cent on a given date in the future. When the date arrived, the value of my bet (how much money it had made or lost) was determined by the Libor fix on that day.

So 11am, when the Libor rates are revealed every day, was a nervous time. I would sit glued to my screens as, one by one, the banks which between them calculated the fix came up with their numbers. Even then the process stank. The rates would bear little relationship to what was going on in the real market. One could only assume that they were skewed to suit the trading positions of these banks. If you weren't one of the institutions setting the rate, you were going to be disappointed.

The damage to my position would – on the very worst days – amount to hundreds of thousands of pounds (of my employer's money, that is). Larger-scale traders could lose (or make, if they worked for the right bank) millions on the stroke of 11. Which may explain why dealing rooms in my day tended to have adjourned for lunch by half-past.

Now, clearly, as a former City trader who saw the light, I'm not looking for sympathy. The real victims of this crime are not market professionals but the variable-rate mortgage borrowers and others who have now joined the ever-growing list of innocents who have been conned by the banks. What's interesting, though, is the fact that all of us in the dealing room where I worked knew this went on, but simply accepted it. Perhaps we just set the morality bar pretty low. But when this practice is exposed to the public gaze, it betrays a world where cheating was – and probably still is – institutionalised.

Dan Gledhill is deputy editor of 'The Independent' and a former trader with Bank of America

React Now

  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
iJobs Job Widget
iJobs General

Recruitment Genius: Junior Web Designer - Client Liaison

£6 per hour: Recruitment Genius: This is an exciting opportunity to join a gro...

Recruitment Genius: Service Delivery Manager

Negotiable: Recruitment Genius: A Service Delivery Manager is required to join...

Recruitment Genius: Massage Therapist / Sports Therapist

£12000 - £24000 per annum: Recruitment Genius: A opportunity has arisen for a ...

Ashdown Group: Practice Accountant - Bournemouth - £38,000

£32000 - £38000 per annum: Ashdown Group: A successful accountancy practice in...

Day In a Page

Read Next
 

Etch, a Sketch

Jane Merrick
 

Something wrong with the Conservative Party’s game plan

John Rentoul
Election 2015: How many of the Government's coalition agreement promises have been kept?

Promises, promises

But how many coalition agreement pledges have been kept?
The Gaza fisherman who built his own reef - and was shot dead there by an Israeli gunboat

The death of a Gaza fisherman

He built his own reef, and was fatally shot there by an Israeli gunboat
Saudi Arabia's airstrikes in Yemen are fuelling the Gulf's fire

Saudi airstrikes are fuelling the Gulf's fire

Arab intervention in Yemen risks entrenching Sunni-Shia divide and handing a victory to Isis, says Patrick Cockburn
Zayn Malik's departure from One Direction shows the perils of fame in the age of social media

The only direction Zayn could go

We wince at the anguish of One Direction's fans, but Malik's departure shows the perils of fame in the age of social media
Young Magician of the Year 2015: Meet the schoolgirl from Newcastle who has her heart set on being the competition's first female winner

Spells like teen spirit

A 16-year-old from Newcastle has set her heart on being the first female to win Young Magician of the Year. Jonathan Owen meets her
Jonathan Anderson: If fashion is a cycle, this young man knows just how to ride it

If fashion is a cycle, this young man knows just how to ride it

British designer Jonathan Anderson is putting his stamp on venerable house Loewe
Number plates scheme could provide a licence to offend in the land of the free

Licence to offend in the land of the free

Cash-strapped states have hit on a way of making money out of drivers that may be in collision with the First Amendment, says Rupert Cornwell
From farm to fork: Meet the Cornish fishermen, vegetable-growers and butchers causing a stir in London's top restaurants

From farm to fork in Cornwall

One man is bringing together Cornwall's most accomplished growers, fishermen and butchers with London's best chefs to put the finest, freshest produce on the plates of some of the country’s best restaurants
Robert Parker interview: The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes

Robert Parker interview

The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes
Don't believe the stereotype - or should you?

Don't believe the stereotype - or should you?

We exaggerate regional traits and turn them into jokes - and those on the receiving end are in on it too, says DJ Taylor
How to make your own Easter egg: Willie Harcourt-Cooze shares his chocolate recipes

How to make your own Easter egg

Willie Harcourt-Cooze talks about his love affair with 'cacao' - and creates an Easter egg especially for The Independent on Sunday
Bill Granger recipes: Our chef declares barbecue season open with his twist on a tradtional Easter Sunday lamb lunch

Bill Granger's twist on Easter Sunday lunch

Next weekend, our chef plans to return to his Aussie roots by firing up the barbecue
Joe Marler: 'It's the way I think the game should be played'

Joe Marler: 'It's the way I think the game should be played'

The England prop relives the highs and lows of last Saturday's remarkable afternoon of Six Nations rugby
Cricket World Cup 2015: Has the success of the tournament spelt the end for Test matches?

Cricket World Cup 2015

Has the success of the tournament spelt the end for Test matches?
The Last Word: Justin Gatlin knows the price of everything, the value of nothing

Michael Calvin's Last Word

Justin Gatlin knows the price of everything, the value of nothing