Singapore, Asia’s biggest foreign-exchange center, is in discussions with regulators around the
world investigating the potential rigging of the $5.3 trillion-a-day currency market.
The Monetary Authority of Singapore “has been in touch
with foreign regulators on the issue of alleged manipulation in
the WM/Reuters foreign-exchange benchmark rates,” the central
bank said in an e-mailed statement today in response to queries.
“We stand ready to assist in their investigations.”
The comments mark the first public acknowledgment by a
regulator that probes into currency markets are centered on
WM/Reuters rates. The benchmarks, published hourly by State
Street Corp. (STT) and Thomson Reuters Corp., determine how much firms
pay for foreign exchange and are used to value pension funds and
calculate indexes. Even small distortions in the rates will
impact the value of trillions of dollars of investments.
Authorities from Bern to London to Washington this month
announced they are investigating allegations that dealers worked
together to rig the largely unregulated foreign-exchange market.
Banks and regulators began scouring millions of e-mails and
phone records after Bloomberg News reported in June traders may
have pooled information about their positions through instant
messages and used client orders to move WM/Reuters rates.
Biggest Center
Singapore overtook Japan as Asia’s biggest foreign-exchange
center after the average daily volume surged 44 percent to $383
billion as of April from the same month in 2010, the city’s
central bank said in September, citing a survey by the Bank for
International Settlements.
A spokeswoman at the Competition Commission of Singapore,
had said it’s the antitrust regulator’s policy not to comment on
whether it’s investigating any case.
The Monetary Authority of Singapore in June censured 20
banks for trying to rig interest rates and currency benchmarks,
ordering them to set aside as much as S$12 billion ($9.7
billion) and to boost internal controls. Singapore is also
making rigging financial benchmarks a criminal offense.
The central bank guides the local Singapore dollar against
a basket of currencies within an undisclosed band and adjusts
the pace of appreciation or depreciation.
Pricing Data
The WM/Reuters rates data are collected and distributed by
World Markets Co., a unit of Boston-based State Street Corp.,
and Thomson Reuters Corp. (TRI) Bloomberg LP, the parent company of
Bloomberg News, competes with New York-based Thomson Reuters in
providing news and information, as well as currency-trading
systems and pricing data. Bloomberg LP also distributes the
WM/Reuters rates on Bloomberg terminals.
“WM supports efforts by the industry to determine and
address any alleged disruptive behavior by market participants
and we welcome further discussions on these issues and what
preventative measures can be adopted,” State Street said in an
e-mailed statement.
Thomson Reuters said in an e-mailed statement it would
“lend its expertise to support any authorities’ investigation
into alleged disruptive behaviour on benchmarks.”
The WM/Reuters rates are published hourly for 160
currencies and half-hourly for the 21 most-traded. They are
calculated by taking a median of all trades in a minute-long
period starting 30 seconds before the beginning of each half-hour. Rates for less-widely traded currencies are based on
quotes during a two-minute window.
Track Stocks
The benchmarks are used by fund managers to compute the
day-to-day value of their holdings and by index providers such
as FTSE Group and MSCI Inc. that track stocks and bonds in
multiple countries. While the rates aren’t followed by most
investors, where they are set can affect the value of what
Morningstar Inc. (MORN) estimates is $3.6 trillion in funds that track
global indexes.
Regulators in the U.K. are scrutinizing an instant-message
group involving senior traders at banks including Barclays Plc (BARC),
Citigroup Inc. (C) and Royal Bank of Scotland Group Plc (RBS) for evidence
of manipulation, Bloomberg News reported Oct. 18. Over a period
of at least three years, the dealers exchanged messages through
Bloomberg terminals outlining details of their positions and
client orders, and made trades before key benchmarks were set,
said two people with knowledge of the probe, who asked not to be
identified because the inquiries are continuing.
Bloomberg News reported in June that traders at some banks
said they shared information about their positions through
instant messages, executed their own trades before client orders
and sought to manipulate the benchmark 4 p.m. WM/Reuters rates,
known as the London Close.
To contact the reporter on this story:
Andrea Tan in Singapore at
atan17@bloomberg.net
Liam Vaughan in London at
lvaughan6@bloomberg.net;
To contact the editor responsible for this story:
Douglas Wong at
dwong19@bloomberg.net
Singapore in Talks With Regulators on Currency Rigging
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