According to CFTC’s filling, Goldman made transactions of dozens of “same-day” equity index swaps with US-based clients in 2015 and 2016. The “same-day” equity index swap involves striking the equity leg on the day that the other key terms of the swap are agreed upon, instead of the following day, which is the usual practice. Goldman, however, did not disclose the PTMMMs of these swaps, but instead disclosed a PTMMM to another swap, thereby concealing the true value of the swap.
The regulator said:
The order found that Goldman solicited or consented to engage in same-day Swaps only when it was financially profitable to Goldman and not for clients. The same-day swaps appeared to be more financially advantageous to clients because of the way Goldman communicated with them.
The CFTC found that at certain times, the company communicated a PTMMM for the “T+1” swap and then bid over it for the “same-day” swap, leaving the client with the impression that the same-day swap was a better deal than the T+1 swap when it was not.
The regulator found that Goldman had an additional benefit that allowed it to…