The Commodity Futures Trading Commission charged Christophe Rivoire with manipulating the price of interest rate basis swaps to benefit his employer in connection with an interest rate swap with a bond issuer client of his firm. At the time, Mr. Rivoire was the head of Flow Rates at HSBC Global Banking and Markets. (Click here to access Mr. Rivoire’s LinkedIn entry.)
According to the CFTC, the alleged manipulative scheme occurred during June and July 2012 and was instituted in response to Mr. Rivoire’s knowledge of an impending US dollar-denominated bond issuance by the client that the client planned to hedge with an interest rate swap opposite HSBC. The CFTC said that Mr. Rivoire knew that the client intended to price its hedge basis prices posted by an unnamed inter-dealer broker firm. In response, the CFTC claimed that Mr. Rivoire engaged a trader he supervised to help him work with the inter-dealer broker to decrease the price of five-year basis swaps on the broker’s screens. This purportedly resulted in a less profitable transaction for the issuer and a transaction with more profit for HSBC.