The term "rate fixing" refers to the practice of manipulating interest rates in financial markets. The spelling of this word begins with the consonant cluster /r/ followed by the vowel /eɪ/. The second word starts with the consonant /f/ followed by the vowel /ɪ/. The stress falls on the first syllable of each word, making /reɪt/ and /fɪksɪŋ/ the emphasized parts of the word. This term is commonly used in the finance industry and is often associated with illegal activities.
Rate fixing refers to the practice of establishing or manipulating the price or interest rates of a particular product, service, or financial instrument, typically through colluding or conspiring among market participants. It involves a deliberate effort to set rates at artificial levels, typically for personal gain or to influence market conditions in favor of a particular individual, company, or group.
Rate fixing can occur in various industries, such as banking, insurance, energy, telecommunications, or the stock market. By controlling rates, these individuals or organizations can distort market dynamics, influence the cost of borrowing, affect investment returns, or manipulate the price of goods and services. This unfair and often illegal activity can harm consumers, investors, and market competition.
Rate fixing can take different forms, including price cartels, where competitors agree to fix the prices of their products; interest rate collusion, where financial institutions manipulate benchmark rates such as LIBOR (London Interbank Offered Rate) or EURIBOR (Euro Interbank Offered Rate); or energy market manipulation, where energy providers conspire to influence electricity or gas prices. Such actions are typically investigated and prosecuted by regulatory authorities and may result in significant fines, legal consequences, and reputational damage for the individuals or organizations involved.
Efforts to prevent rate fixing include the establishment of regulatory bodies, industry standards, and oversight mechanisms to monitor and maintain fair and competitive markets. Additionally, strict enforcement of antitrust laws and penalties against rate-fixing activities aim to deter and curtail such practices.
The word "rate fixing" is a compound noun consisting of two distinct words, "rate" and "fixing". Here is the etymology of each word:
1. Rate:
The noun "rate" originated from Middle English "rate" and "raten", which derived from the Old French word "rate" meaning "estimated value, price, or tax". This Old French term ultimately traces back to the Medieval Latin word "rata", which meant "a fixed amount" or "proportion". The Latin word was derived from the Latin verb "reri", meaning "to think" or "to reckon".
2. Fixing:
The noun "fixing" originated from the verb "fix", which came from Middle English "fixen" and ultimately from Latin "fixare", meaning "to make firm" or "to fasten".