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This is a rather arcane matter in financial market-speak. It has recently come up almost daily in news reports because of the scandal involving Barclay's Bank attempt to manipulate the interbank lending rate it reported that it could count on (the figure that goes into the setting of the London Interbank Offered Rate or LIBOR).
Normally, to "fix" a price is an illegal (anti-competitive) action - it means to collude with other competitors to set the price of a product, thereby keeping prices artificially high (by preventing the law of supply and demand from operating freely).
However, in the case of the LIBOR rates, what the participant banks do, if I understand correctly, is properly called "fixing" the rate for that day, and indeed the banks' reported rates are referred to as "the fixings".
I suppose the reason for this usage is that the LIBOR is by definition not determined on the free market, but set by the traders of a number of big banks, using some complex formula.
My question is: is there not a potential confusion, then, between "fixing" as an illegal anti-market action, and "fixing" which for certain rates is a legitimate and normal action?
Compare this article in the EU Observer on this topic: "Today, new revelations and scandals (e.g., Barclays' fixing of LIBOR, HSBC's money laundering) have again raised the issue of regulation and public ownership." with this reported email sent by a Barclay trader: "We have about 80 billion fixing for the desk and each 0.1 lower in the fix is a huge help for us."
Am I correct in assuming that in the latter example, the word "fixing" is just the normal operation that goes into constructing the LIBOR rate (i.e., a group of major financial institutions report their rates, and the LIBOR is calculated (more or less) as a mean of those figures)? Hence "tampering with" that fixing is what constitutes the infraction for which Barclays was given a soaring fine recently.
Price fixing as a noun phrase does, in common conversation, tend to refer to a conspiratorial act. But the verb form, at least for now, is context sensitive.
In these contexts the verb to fix has to do with the inhibition of movement. This can be used of physical objects, or of ephemera, such as ideas, dates, or prices. While there is some limited possibility for confusion between situations in which to fix refers to setting prices illegally and setting prices legally, the context usually makes it quite clear.
It is no different from making the statement: "John parked his car in the blue zone." This statement could be used by an officer defending the parking ticket, or by a defense lawyer, explaining why the ticket was unjust. You need to understand what the blue zone represents, or who is making the statement to be clear on the statement's reference to the legality or illegality of the action.
Parking is not intrinsically illegal. Neither is it intrinsically illegal to fix a price.
It seems inevitable from the way those 'fixing' emails have been paraded all week long as evidence of malfeasance, that the word itself should share in that aura, and the strength of that nefarious sense it always has should jump higher by one whole notch.
Except in this one case, that simple inference of the meaning of a word from its context is unjust, because as sandorm notes above, the emailers, conspiratorial they were, apparently meant by the word its technical sense as a jargon of high finance, or the brazenness and stupidity otherwise would be too hard to believe.
But all that is *not* to say that a context might do a poor job of informing the words in it, rather that it can do its job through an ironic and emotional logic that is no less valid or deserving of deference for being technically unjust or outright wrongheaded.
Remember that an older meaning of "fix" means to fasten in place, to "affix". When two companies are convicted of "fixing" the price, that's an illegal act like "fixing" a fight or a horse race. What sandorm says about the LIBOR sounds to me like a company fixing their price at $3.50/unit. I guess what I'm saying in finance, "fix" is not the same as "fix at"; in my head the LIBOR is fixed for the day at a certain rate, whether or not the rate is actually mentioned.
By the way, I've added "LIBOR rate" to a list I keep, joining "VIN number", "PIN number" and "automated ATM machine".
Martha Barnette
Grant Barrett
Grant Barrett
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