Kiwi's Libor rigging trial begins

Darrell Read pleaded not guilty to two charges of conspiracy to defraud. Photo / AP

A New Zealand resident known as "Big Nose" was one of six brokers that helped convicted trader Tom Hayes manipulate bank rates by acting as middlemen between him and other traders, a London court has heard.

The six are former brokers of ICAP, RP Martin and Tullett Prebon and their trial began in the Southwark Crown Court in London overnight.

The group - Wellington resident Darrell Read, Colin Goodman, Danny Wilkinson, Terry Farr, James Gilmour and Noel Cryan - are defending charges of conspiracy to defraud.

They are accused of helping Hayes, a former Tokyo-based UBS and Citigroup trader, profit from his yen derivatives trades.

"They were rewarded in various ways to corrupt a process that should not have been corrupted," said prosecutor Mukul Chawla, according to the Financial Times.

The FT reported the jury was told that Hayes was found guilty of conspiracy to defraud and was the "central figure" who sought to manipulate the brokers. Hayes was convicted in August and sentenced to 14 years jail. He is appealing both his conviction and sentence.

The case is the second trial after a probe into the rigging of Libor - the London Inter Bank Offered Rate.

Libor is set every morning and is a key part of the relationship between borrowers and lenders around the world.

Read, known as "Big Nose", was a broker on the euro yen cash desk, first in London and later New Zealand, the FT reported.

Although Read moved to New Zealand in 2007, he continued working for ICAP - which in 2013 was fined US$87 million by regulators on both sides of the Atlantic for its role in the Libor scandal, which has seen numerous financial institutions penalised.

Goodman, known as "Lord Libor" for his daily emails, or run-throughs, that predicted where the rate would be set, would be told by Read of Hayes's trading positions and where he wanted the rate set, the FT reported.

The trial is expected to take up to 14 weeks.

The Libor Rates Rigging Case:

• Libor - or London interbank offered rate - is woven into the fabric of the world's capital markets.

• The rate sets the price for banks, international financiers or anyone wanting to raise funds through the interest rate markets.

• From major international deals through to home mortgages, Libor is key to the relationship between borrowers and lenders globally.

• Financial instruments worth hundreds of trillions of dollars are tied to Libor.
• A British banking trade group sets the Libor every morning after international banks submit estimates of borrowing costs.

• Libor became engulfed in scandal after the global financial crisis and allegations emerged that banks had rigged these rates.

• A string of financial institutions have paid billions in settlements.