Industry regulator launches probe into Canadian lending rate setting

OTTAWA – Canada’s financial industry regulator says it is reviewing whether a rate rigging scandal that has rocked global banks could happen in Canada.

The Investment Industry Regulatory Organization of Canada says it is not aware of problems, but is launching a review of Canadian practices in light of the interest-rate fixing scandal engulfing European and American banks.

IIROC says it is reviewing what is known as CDOR, the Canadian dealer offered rate, set daily through a survey of rates provided by nine market makers, including Canada’s big banks.

The review is not related to a Competition Bureau investigation into whether Canadian affiliates of six international banks played a role in the fixing scandal with Libor.

Libor is short for the London interbank overnight rate that provides a benchmark for trillions of dollars in contracts around the world.

The scandal was sparked when venerable British bank Barclays admitted that it had submitted false information, resulting in a fine of $US$453 million and the resignation of its chief executive.