UBS traders tried to rig Hibor, HKMA probe finds

PUBLISHED : Friday, 14 March, 2014, 6:56pm
UPDATED : Saturday, 15 March, 2014, 5:00am

Six traders at Swiss lender UBS attempted to manipulate Hong Kong interbank offered rates following the rigging of similar London interbank rates, the Hong Kong Monetary Authority found after an investigation lasting more than a year.

After looking at millions of communication records from nine banks involved in Hibor fixing, the authority found that UBS traders had tried to rig the bank's submission for the fixing by sending "change requests" through about 100 internal chat messages from 2006 to 2009.

Regulators around the world have been clamping down on the rate-setting process after global banks were found to have rigged the Libor.

The fines for rigging interest-rate benchmarks reached US$6 billion globally by the end of last year. Meanwhile, watchdogs in the United States and Europe are probing the possible manipulation of currency markets.

"Once we found the change requests, we regarded that as misconduct," HKMA deputy chief executive Arthur Yuen Kwok-hang said yesterday. "The bank, when it discovered these change requests, did not report the cases to us … we equally found that unacceptable."

The six traders had left the bank, Yuen said, adding that the authority estimated the impact on the actual outcome of the Hibor fixing was insignificant. UBS ceased to be a Hibor reference bank in October 2010.

The HKMA ordered the bank to implement a remedial plan for the control and governance weaknesses it had identified within six months and take appropriate disciplinary actions against related staff.

A UBS spokeswoman said: "We have not been part of the Hibor-fixing panel since 2010 and have taken appropriate steps to incorporate the HKMA's suggested improvements into our operations."

The HKMA said its probe found no evidence of collusion among the banks under investigation to rig the fixing.

The eight other banks were Hongkong and Shanghai Banking Corporation, Bank of Tokyo-Mitsubishi UFJ, Citibank, Credit Agricole CIB, Deutsche Bank, JP Morgan Chase, Royal Bank of Scotland and Societe Generale.

The regulator said it had ordered another bank last month to conduct an external review of its communication records. It did not identify the lender.

The authority started its investigation in December 2012 after receiving information from overseas regulators about alleged misconduct by UBS.

The Treasury Markets Association, led by HKMA deputy chief executive Peter Pang, took over the supervision of the fixing system from the Hong Kong Association of Banks in February last year.