SINGAPORE — Twenty banks were found to have deficiencies in setting interest rate and foreign exchange benchmarks, and will be required to set aside cash reserves with the authority while they address the issues, said the Monetary Authority of Singapore (MAS) as it unveiled its year-long review on the financial benchmark setting processes yesterday.
The review also uncovered hundreds of attempts by 133 traders from these banks to manipulate the benchmarks, though no conclusive finding suggests that such manipulation has succeeded, MAS added.
The benchmarks targeted by the review are the Singapore Interbank Offered Rates (SIBOR), Swap Offered Rates and the Foreign Exchange spot benchmarks. SIBOR determines the interest rates for most bank loans.
The manipulation of similar benchmarks have led to crackdowns globally in recent years, and the MAS began its investigation July last year. Over 100 million documents have been reviewed to assess irregularities between 2007 and 2011.
The twenty banks with deficiencies will be required to set aside “additional statutory reserves” with the MAS for one year. The amount, based on the severity of deficiency, range from S$100 million to S$1.2 billion.
All three local banks have been targeted for these supervisory actions, which also include requirements to enforce further measures and supervision.
Meanwhile, three quarters of the involved traders have resigned or been fired, with the remaining set to be disciplined by the banks.
To enhance the regulatory framework for financial benchmarks, the MAS has proposed enforcing measures such as introducing criminal and civil sanctions for benchmark manipulation. Separately, the Association of Banks in Singapore will put in place extra measures to reduce the risk of SIBOR being manipulated.
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