Singapore in Talks With Regulators on Currency RiggingAndrea Tan, Sanat Vallikappen and Liam Vaughan
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. 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.
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.
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. 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.
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. 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, Citigroup Inc. and Royal Bank of Scotland Group Plc 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.