Banker Rate Rigging Is Worse Than Expected Around The Globe

It's becoming clear that manipulation is not just a Libor problem.

Regulators in Hong Kong and Singapore say bankers have been manipulating the local benchmark rates there.

The Hong Kong Monetary Authority is looking into just how far possible manipulations of its Hong Kong Interbank Offered Rate stretches. The regulator told Bloomberg it started its probe in December with UBS but has since expanded its investigation into a number of other banks.

Last week Singapore's central bank censured a record 20 banks after finding that more than 100 traders there tried to rig key borrowing and currency rates. It did not fine the banks (which include UBS, RBS,  BNP Paribas , Bank of America , Oversea-Chinese Banking Corporation, Barclays , Credit Suisse, DBS, Deutsche Bank, Standard Chartered and ING) but asked them to reserve roughly $9.6 billion.

It was also announced today that a former derivatives trader, who was previously employed by UBS and Citigroup, was charged as part of the U.K.’s investigation into Libor manipulation. Tom Hayes was charged with eight counts of conspiracy to defraud.

Major rate rigging revelations came to the forefront last year when UK bank Barclays paid a then record  $450 million for its role in the massive Libor scandal. The news hit the bank hard and resulted in the resignation of its CEO Bob Diamond. In December, UBS became the second bank to settle Libor manipulation charges agreeing to pay $1.5 billion to US, UK and Swiss authorities. In February, Royal Bank of Scotland agreed to pay $615 million to settle U.S. and U.K. rate-rigging charges.

The Libor investigation is still ongoing with much uncertainty surrounding both the remaining banks involved as well as the future of the way the rate is set. A top UK regulator last year proposed a plan that would strip the British Banking Authority, the trade organization that was in charge of Libor from the start, of its role in helping set the rate.

With Singapore and Hong Kong facing similar problems it seems clear an overhaul in the way these keys rates are set needs to happen.

“So far, more than 20 banks and 130 individuals in more than five countries have been fined or identified as active participants in this egregious global conspiracy to manipulate markets and rip off customers around the world," said Dennis Kelleher, President and CEO of Better Markets, Inc., a nonprofit organization that promotes the public interest in the financial markets.

He adds, "The only way to end the rampant crime spree at the global mega banks is to prosecute all those involved in or aware of the outrageous and brazen illegal conduct. More traders, supervisors and executives must feel the sting of handcuffs being clamped around their wrists. More must see the inside of jail cells. More must hear the voice of justice announcing their prison sentences."