MAS announces proposals to regulate financial benchmarks

SINGAPORE — The Monetary Authority of Singapore (MAS) has announced new proposals to regulate financial benchmarks.

Under the proposals, released in a public consultation paper today (July 29), the manipulation of any financial benchmark in Singapore will be considered a criminal offence. In addition, administrators and those submitting systemically important benchmark rates will need to be licensed.

In recent years, there has been widespread investigation into rate-rigging scandals around the world, with traders accused of manipulating LIBOR and other key rates. Here in Singapore, the MAS censured 20 banks last year after it found that 133 traders from those firms had tried to manipulate the SIBOR, the swap-offered rates and foreign exchange spot benchmarks.

In the wake of those incidents, a public consultation was conducted last year. The central bank said the feedback garnered shows that there is support for its proposal to make benchmark manipulation a criminal offence, and to introduce civil sanctions under the Securities and Futures Act.

The MAS said this will apply to acts of manipulation occurring in Singapore, and in respect of financial benchmarks administered here. Criminal or civil liability will be attributed to the corporate entity where the misconduct is committed with the consent or connivance of the corporate entity. Where the misconduct is attributable to the negligence of the corporate entity, the corporate entity will only be subject to civil penalty action. If the corporate entity had gained a profit or avoided a loss as a result of the trader’s misconduct, it may also be liable to affected third parties.

The state of mind of an accused will be a key element in determining liability under the proposed offences. It is proposed that the mental element for the new offences will be similar to the existing provisions for false trading and market rigging. In addition, administrators and submitters of financial benchmarks designated by the MAS will be subject to regulation, including licensing requirements.

For now, the central bank intends to designate the SIBOR and Swap Offered Rates as key benchmarks. “The proposed regulatory framework will deter manipulation of financial benchmarks and enhance the integrity of benchmarks set in Singapore,” said the MAS. The consultation closes on Aug 29. CHANNEL NEWSASIA