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Bank Investigators Find Manipulation In Singapore’s Foreign Exchange Market

Manipulation In Singapore's Foreign Exchange MarketSINGAPORE: According to a source who claims to have knowledge of the queries, internal probes by banks in Singapore found proof that traders conspired to manipulate band rates in the offshore foreign exchange market.

This latest discovery broadens a worldwide lending rate aspersion into new exchange markets, as a consequence of  the Libor situation puts banks in Singapore under added surveillance and stimulates both institutions and  regulators  to rethink how certain currency and  key interest rates are decided.

The inquiries discovered evidence exhibiting that traders from numerous banks had communication with each other via electronic messages regarding what rates they planned to submit to the local banking association’s fixings for non-deliverable foreign exchange forwards (NDFs), with the goal of benefiting their trading records.

The bank source, who requested that his identity remain unknown because of the confidential nature of he analysis said, “Traders were talking to traders, saying: ‘I need you to help me today, I need to fix low.'”

NDFs are products that allow investors, and businesses speculate or hedge on developing market currencies  when foreign exchange controls make it hard for foreigners to engage with the spot market directly.

The contracts are paid out in dollars; therefore, there isn’t any exchange of the underlying currency; however, they have the potential to affect exchange rates.

The Monetary Authority of Singapore directed banks that assist in setting up NDF rates, and local interbank lending rates to analyze the fixing process in 2012, while British and American regulators focused on manipulation taking place in the London interbank  offered rate (Libor), a barometer utilized to establish interest rates for close to $600 trillion worth of securities.

 

 

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Posted by on Feb 4 2013. Filed under Finance. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry

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