FCA publishes Decision Notice for former UBS LIBOR trader

The Financial Conduct Authority (FCA) has today published a Decision Notice in respect of Mr Arif Hussein, formerly a derivatives trader at UBS in London. This sets out the FCA’s finding that Mr Hussein is not a fit and proper person and its decision to prohibit him from any role in regulated financial services.

Mr Hussein disputes the FCA’s decision and has referred the matter to the Upper Tribunal at which the FCA and Mr Hussein will be able to present their cases. Accordingly, this decision notice has no effect pending the determination by the Tribunal. In relation to the FCA’s decision to prohibit Mr Hussein from any regulated role, the Tribunal will determine whether to dismiss the reference or remit it to the FCA with a direction to reconsider and reach a decision in accordance with the findings of the Tribunal. The Tribunal’s decision will be made public on its website.

Mr Hussein was Head of UBS’s GBP Rates Desk where he traded interest rate derivative products referenced to benchmarks including GBP LIBOR. The FCA has found that Mr Hussein understood that it would be improper for UBS’s Trader-Submitters to make LIBOR submissions with the aim of benefitting UBS’s trading positions. However, between 28 January and 19 March 2009 Mr Hussein engaged in 21 communications in which he informed UBS’s GBP Trader-Submitters of his preferences (or, occasionally, his lack of a preference) for GBP LIBOR rates. Mr Hussein’s preferences were based upon his trading positions. During this period such communications were routine and they ended only when Mr Hussein resigned from UBS. Mr Hussein closed his mind to the risk that UBS’s GBP Trader-Submitters would use his preferences to influence the GBP LIBOR submissions they made on behalf of UBS, with the aim of benefitting his trading positions. In so doing, the FCA found that he acted recklessly and so lacks integrity.

Notes to editors

  1. The decision notice for Mr Arif Hussein.
  2. LIBOR is a benchmark reference rate fundamental to the operation of both UK and international financial markets including markets in interest rate derivatives contracts. Its integrity is of fundamental importance to both UK and international financial markets. LIBOR is published daily in a number of currencies and maturities and during the Relevant Period was set according to a definition published by the BBA.  It was based on interbank borrowing in the London market and Panel Banks made daily submissions to the BBA to enable LIBOR to be calculated.
  3. On 19 December 2012 the FSA published a Final Notice against UBS and imposed on UBS a financial penalty of £160 million. The Final Notice stated that UBS had committed serious misconduct in respect of its LIBOR and EURIBOR submissions process, including by not observing proper standards of market conduct in its submissions, and failing to take reasonable care to organise its affairs responsibly and effectively, with adequate risk management systems in relation to the process.
  4. The UBS Final Notice describes in detail UBS’s failings. Amongst other things it states that over a period of six years, UBS routinely sought to manipulate LIBOR in order to improve the profitability of Trading Positions.
  5. On the 1 April 2013 the Financial Conduct Authority (FCA) became responsible for the conduct supervision of all regulated financial firms and the prudential supervision of those not supervised by the Prudential Regulation Authority (PRA).
  6. The FCA has an overarching strategic objective of ensuring the relevant markets function well. To support this it has three operational objectives: to secure an appropriate degree of protection for consumers; to protect and enhance the integrity of the UK financial system; and to promote effective competition in the interests of consumers.
  7. Find out more information about the FCA.