Libor arrests signal switch to individuals The arrests on Tuesday of a former UBS trader and two employees of RP Martin, an interdealer broker, signal a change of pace in the sprawling investigation into rate-fixing on Libor and other interbank lending benchmarks. As well as the first public action by the Serious Fraud Office since it stepped into the case in July, the arrests also signal that authorities are looking beyond the global banks toward individuals. People familiar with the probe identified the three arrested UK citizens as former UBS trader Tom Hayes and RP Martin brokers Jim Gilmour and Terry Farr. They have not been charged with wrongdoing and by Wednesday morning had been bailed pending further investigation. Lawyers for the three men could not immediately be reached for comment. Mr Hayes started his career aged 22 as a trainee for Royal Bank of Scotland and worked as a derivative trader on the macro desk of UBS from late summer 2006 until September 2009. His last job in banking was as a Tokyo-based trader at Citigroup, where he took leave two years ago - less than 10 months after he started at the US bank. One person familiar with his time at Citi said he was not given his trading book before April 2010 and left by the summer of that year. The father of a one-year-old son, he recently completed an MBA course at Hult International Business School in London, where he graduated this summer and was known by classmates to be one of the brightest students. One classmate said the 33-year-old finished his course as the second best student. This classmate described him as an "incredibly smart geek." He was not exactly very social. It was the big talk at the course when he cracked his first joke ... but he was never flashy, arrogant or pompous. He was very nice, soft-spoken and calm. He did an MBA because his life has changed. He has married a few years ago, built a house and he became a father. The classmate said Mr Hayes had been very interested in joining the technology scene. Shortly before finishing his MBA this year, he invested in a London-based web and mobile software start-up. Mr Farr and Mr Gilmour are brokers at RP Martin, a privately owned interdealer broker. They worked with traders who wanted to place bets on Libor, but they have both been on leave for much of the year. Mr Farr is a longtime Essex resident - his public Facebook page shows he attended secondary school in the area. He also sells plants at the Southend Farmers" Market, and has passion for motorcycles, according to his Facebook page. Barclays is the only institution to have been fined for its part in the rate-fixing scandal, although UBS and Citi were disciplined by Japanese authorities in December 2011. UBS and RBS are in advanced settlement negotiations with the US and UK authorities. The SFO's involvement in the "college of Libor" - the moniker used by the global authorities for their unprecedented level of co-operation - was prompted by a political firestorm ignited by Barclays" £290m settlement in late June. Libor underpins the terms of $350tn of contracts worldwide, including mortgages, derivatives, credit cards and corporate loans. The subsequent call from politicians from all parties that any bankers found to have manipulated Libor should face jail - and the admission by the FSA that it did not have the necessary criminal powers to make that happen - prompted David Green, the new director of the SFO, to rethink his predecessor's decision not to investigate Libor manipulation. Mr Green managed to secure at least £3.5m in ringfenced SFO funding for his Libor investigation. However, this money has come with a price: the SFO director feels under pressure to get results, people familiar with the probe have told the Financial Times. The SFO said last month that "significant developments" were to be expected, and Mr Green told the Independent in an interview published in October that he wanted to make a decision on whether to charge any individuals by January. Typically there is a time lag that can stretch into years rather than months between arrest and any decision on charges in complex economic crime cases. US authorities are also said to be looking at whether to charge individuals in connection with their investigation of Libor rate-fixing. The three people arrested by the SFO Tuesday are all UK nationals living in the UK. The arrest of two inter-dealer brokers who worked at RP Martin shines spotlight onto one of the main conduits for information between large banks and broker-dealers, write Philip Stafford, Caroline Binham and Brooke Masters. An inter-dealer broker such as RP Martin acts as a middleman for banks around the world that trade large and frequently illiquid assets, such as over-the-counter derivatives, commodities or blocks of shares. The broker will talk to a range of bank traders, both by phone and electronically, every day and their profit is the commission for negotiating deals to move securities between sellers and buyers. Authorities have been examining whether the links between inter-dealer brokers and panel banks could be exploited to influence rate-setting, but up to Tuesday, most of the official interest stemmed from competition authorities rather than financial regulators or criminal prosecutors. The Canadian bureau of competition has alleged in court documents that a bank, which came forward to cooperate with inquiries - which is UBS, according to several people familiar with the investigation - worked with both banks and brokers. "The cooperating party has provided the bureau with information that during the material times, the participant banks, at times facilitated by the cash brokers, entered into agreements to submit artificially high or artificially low Libor submissions in order to impact the yen Libor interest rates," the bureau wrote in court papers seeking information from five banks including Citigroup, and two brokers including RP Martin. This was done for the purpose of adjusting the prices of financial instruments that use yen Libor rates as a basis. Unlike the panel banks that have been under investigation, inter-dealer brokers do not participate in the daily rate-setting process of Libor, although they trade some Libor-related instruments. "If they're arresting brokers, it means they believe they [may be] conduits for the information," said one London-based defence lawyer who advises a broker who was not arrested on Tuesday. Up until now a lot of the comment we have had is around bank-to-bank collusion. London-based RP Martin is one of the world's oldest money brokers, although regarded as one of the market's smaller operators, in comparison with ICAP, Tullet Prebon and BGC Partners. Since a management buyout backed by private equity group Gresham in 2005, it has expanded rapidly through acquisitions. The company has traditionally been strongest in the cash money markets, trading over-the-counter derivatives such as forward rate agreements. RP Martin declined to comment on the arrests but said the company itself is not under investigation.