Singapore regulator said to plan bank rate-rigging reprimand

Singapore’s central bank plans to reprimand banks in the city-state as early as Friday following an 11-month review into how benchmark interest rates are set, five people with knowledge of the matter said.

The Singapore Foreign Exchange Market Committee, which includes the Monetary Authority of Singapore and banks, plans to separately announce changes to the rate-setting process on the same day, two of the people said today, asking not to be identified before the announcements are made.

The island nation’s review into possible manipulation of the Singapore interbank offered rate follows a global crackdown on rigging of benchmark borrowing costs by banks and brokers. Barclays Plc, UBS AG and Royal Bank of Scotland Group Plc were fined $2.5 billion to settle claims with U.S. and U.K financial regulators. A British markets supervisor is considering opening a probe into potential manipulation in currency markets, another person briefed on the matter said today.

Sibor, used to price debt ranging from commercial term- loans to home mortgages, is calculated on behalf of the Association of Banks in Singapore, based on submissions by banks including Standard Chartered Plc, DBS Group Holdings Ltd. and JPMorgan Chase & Co. Edinburgh-based RBS last year withdrew from the panel.

Lenny Feder, group head of financial markets at London- based Standard Chartered and chairman of the SFEMC, didn’t immediately return two calls to his mobile phone. Ong-Ang Ai Boon, director at the Association of Banks, didn’t respond to an e-mail seeking comment after business hours in Singapore.

Deposit Funds

The monetary authority isn’t planning to impose criminal sanctions on the banks or any employees, said two of the people. MAS will probably require some of the banks to set aside funds as a deposit with the central bank for a period of time and strengthen their internal controls, two people said.

Singapore expanded its review in September to include non- deliverable forwards, a derivative used by traders to speculate on the movement of currencies that are subject to domestic restrictions. UBS, based in Zurich, and RBS suspended at least three traders in Singapore as part of probes into the manipulation of those rates, two people with knowledge of the matter said in October.

Members of the currency traders’ committee met on Jan. 22 to examine a proposal to end Singapore’s U.S. dollar-linked Sibor, a person with knowledge of the matter said in February. The central bank will probably announce changes to the benchmark rates and the process for setting them by the end of June, the person said at the time.

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