Singapore Banks Tighten Electronic Communication Scrutiny

DBS Group Holdings Ltd., Southeast Asia’s largest lender, restricted access to chat rooms, while Singapore rivals United Overseas Bank Ltd. and Oversea-Chinese Banking Corp. increased scrutiny on electronic communications.

“In line with evolving industry practice, we have restricted access to chat rooms and enhanced our guidelines to further strengthen governance and controls,” DBS said yesterday in an e-mailed statement. UOB said it tightened guidelines and OCBC said it put monitoring protocols in place.

Goldman Sachs Group Inc., Royal Bank of Scotland Group Plc, UBS AG, JPMorgan Chase & Co. and Citigroup Inc. are among banks that have banned or curtailed employees’ participation in chat rooms involving other banks. That curbed the multidealer conversations used by traders to agree on transactions, share gossip and exchange tips on business flows.

Bloomberg News reported in June that dealers used chat rooms to pool information about their positions, executed their own trades before client orders and sought to manipulate benchmark rates by pushing through trades around the 60-second windows when they are set.

Investigators from Switzerland to Hong Kong are examining the markets. The Monetary Authority of Singapore, the central bank in Asia’s biggest foreign-exchange center, said in October that it has been in touch with foreign regulators over the issue of currency manipulation.

June Censure

Singapore’s monetary authority censured 20 banks including the three local lenders in June for trying to rig benchmark interest and currency rates. It ordered 19 of the companies to set aside as much as S$12 billion ($9.4 billion) at zero interest pending steps to improve internal controls.

OCBC, Southeast Asia’s second-largest bank, said in an e-mailed statement that all of its employees are guided by a code of conduct that aims to promote integrity and fair dealing.

“In relation to the use of instant messaging tools, our traders and dealers are also constantly made aware of what constitutes proper use of the services and the importance of protecting confidential proprietary information,” Frederick Shen, head of OCBC Bank’s global treasury business-management unit, said in the statement. “As an additional safeguard, we have put in place monitoring protocols where we selectively review communication conducted over these channels.”

Tightening Guidelines

In the June censure, OCBC was among banks asked by the monetary authority to set aside S$700 million to S$800 million, while DBS and UOB were asked to set aside S$400 million to S$600 million.

“As part of industry moves, we have tightened our guidelines on the use of electronic communication for our traders,’’ Tan Ping Ping, a UOB spokeswoman, said in an e-mailed statement. “We also monitor the various forms of communication made by our traders, including chat room conversations.”

Twenty banks and 133 traders tried to manipulate the Singapore interbank offered rate, swap offered rates and currency benchmarks in the city-state, the Monetary Authority of Singapore said at the time.

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