Financial regulators in Singapore have found that 133 traders in 20 banks attempted to manipulate interest rates and foreign exchange benchmarks, with bailed-out Royal Bank of Scotland among those identified for the toughest punishment.
In a new development in the LIBOR-rigging scandal, which first erupted a year ago when Barclays was fined ￡290 million (US$455.4 million) for rigging the interest-rate benchmark, the Monetary Authority of Singapore (MAS) said the banks had taken action against the traders involved, who had left, been demoted or denied bonuses. Their attempts to manipulate interest rates would be mentioned in job references, the authority said.
The traders were not found to have successfully manipulated interest rate benchmarks known as SIBOR and SOR, or foreign exchange benchmarks, but were deemed to lack “professional ethics.”
“Although the number of traders involved represents a small proportion of the trading community in Singapore, MAS takes a serious view of the need to uphold high standards of integrity in the industry and expects banks to foster a culture of ethical conduct among all their employees,” the central bank said.
MAS forced banks to hold more capital on reserve in Singapore for a year, with Royal Bank of Scotland, Swiss bank UBS and Dutch bank ING required to hold more than the others — up to S$1.2 billion (US$958.7 million). RBS and UBS have already been fined by authorities in the UK and US a total of ￡390 million and ￡930 million respectively for LIBOR rigging.
All the banks were also censured for deficiencies in governance, risk management and surveillance systems, and required to appoint an external assessor to ensure they change their systems.
Some of the cases had been referred for criminal investigation by the Commercial Affairs Department and the attorney-general’s chambers, MAS said, but the information available did not appear to show criminality had taken place.
About 100 of the traders had either resigned or been asked to quit, while those who remained had been disciplined. Disciplinary measures included “reassignment to other jobs, demotions, and forfeiture of bonuses,” MAS said.
Bank of America, BNP Paribas and Overseas-Chinese Banking Corporation are each required to hold an extra S$800 million, while another group of banks, including Barclays and Standard Chartered, must retain up to an extra S$600 million. Germany’s Commerzbank was on the list, but not required to hold extra capital, while another group, including Citibank and JP Morgan, was required to hold up to S$300 million.
The action in Singapore comes in a week when the integrity of the benchmarks used in financial markets was again called into question when the city launched an investigation into potential manipulative traders in the currency markets.
The action by the Financial Conduct Authority, the new regulator for the city, became known after Bloomberg reported allegations that traders were putting in client orders ahead of a 60 second window when the benchmarks are set.
The FCA is continuing its investigation into LIBOR, with four other financial firms facing fines or other action while the parliamentary commission on banking standards, set up in the wake of the Barclays fine, is poised to publish its recommendations for reforming the city.