The Anatomy of Three Scandals: Conspiracies, Beauty Contests, and Sabotage in OTC Markets

Until the Great Recession, largely unregulated over-the-counter (OTC) markets had received little attention from compliance officers, regulators, and lawmakers. Perhaps more important than lack of regulatory framework as such, were widely perceived to be sufficiently large, liquid, efficient competitive withstand manipulative collusive attempts by traders banks. However, status quo was radically altered in 2012, when it revealed that major international banks systematically manipulated world’s most used interest rate benchmark. The “LIBOR scandal” quickly followed a “Forex discovery grave misconduct range other OTC benchmarks markets. At time writing, government bonds traded on electronic trading platforms are under particular scrutiny. This paper draws concepts conspiracies, beauty contests, sabotage reflect why took so long for scandals discovered.