Media Releases
Published Date: 15 June 2013

MAS Proposes Regulatory Framework for Financial Benchmarks

Singapore, 14 June 2013… The Monetary Authority of Singapore (MAS) announced today a proposed regulatory framework for financial benchmarks1.  The new framework will enhance the integrity of the processes for setting these financial benchmarks.

2   MAS has also completed its year-long review of the processes relating to banks’ benchmark submissions. Based on its findings, MAS has taken a range of supervisory actions against banks for deficiencies in the governance, risk management, internal controls, and surveillance systems, relating to these processes. 

MAS’ Review and Supervisory Actions

3   MAS’ review covered the Singapore dollar interest rate benchmarks – the Singapore Interbank Offered Rates (SIBOR) and Swap Offered Rates (SOR) – and the Foreign Exchange spot benchmarks (FX Benchmarks) that are commonly used to settle Non-Deliverable Forward FX contracts, over the period from 2007 to 2011.


4   Twenty banks were found to have deficiencies in the governance, risk management, internal controls, and surveillance systems for their involvement in benchmark submissions. MAS has censured these banks and directed them to adopt measures to address their deficiencies. The banks are required to report their progress to MAS on a quarterly basis, and conduct independent reviews to ensure the robustness of their remedial measures.

5   The banks are required to set aside additional statutory reserves2 with MAS at zero interest for a period of one year. The duration for which the additional statutory reserves are to be placed with MAS may be varied depending on MAS’ assessment of the adequacy of the measures put in place by each bank to address the deficiencies and risks identified.

6   MAS’ supervisory actions against the banks are calibrated according to the severity of attempts by traders in these banks to inappropriately influence financial benchmarks.  This includes consideration of the number of traders within the bank who attempted to inappropriately influence benchmarks, whether traders from other banks were involved, and the number of times these attempts occurred. MAS has also considered supervisory actions taken by other regulators for deficiencies relating to the London Interbank Offered Rate benchmark submissions, and the size of the Singapore market relative to other markets. Details of the supervisory actions taken against the banks are listed in the Annex.


7   A total of 133 traders were found to have engaged in several attempts to inappropriately influence the benchmarks. While there is no conclusive finding  that SIBOR, SOR and FX Benchmarks were successfully manipulated, the traders’ conduct reflected a lack of professional ethics.  Although the number of traders involved represents a small proportion of the trading community in Singapore, MAS takes a serious view of the need to uphold high standards of integrity in the industry and expects banks to foster a culture of ethical conduct among all their employees.

8   The respective banks have taken disciplinary actions against the traders involved. About three-quarters of these  traders have resigned from or have been asked to leave their banks. The rest of the traders who remain employed by their banks have been, or will be, subject to disciplinary actions. These include reassignment to other jobs, demotions, and forfeiture of bonuses. The industry will put in place measures to facilitate reference checks, so that an institution would be made aware if a potential hire had been implicated in attempts to inappropriately influence benchmarks.

9   MAS has referred some cases to the Commercial Affairs Department and the Attorney-General’s Chambers. Based on the available information and evidence, no criminal offence under current Singapore law appears to have been committed.

Proposed Regulatory Framework for Financial Benchmarks

10   The proposed new regulatory framework for financial benchmarks3 has two key thrusts.

11   First, MAS will introduce specific criminal and civil sanctions under the Securities and Futures Act (SFA) for manipulation  of any financial benchmark.
This will cover all financial benchmarks including SIBOR, SOR, and FX Benchmarks.

12   Second, MAS intends to subject the setting of key financial benchmarks to regulatory oversight. MAS will have the powers under the SFA to designate key benchmarks based on considerations such as the systemic importance of a benchmark and an assessment of its susceptibility to manipulation. MAS proposes to designate as key benchmarks the SIBOR, SOR and FX Benchmarks currently administered by the Association of Banks in Singapore (ABS).

13   The administrator and submitters of key benchmarks will be required to be licensed by MAS, and will be subject to regulatory requirements.

14   Requirements for administrators of key benchmarks will include:

i. establishing effective arrangements for regular monitoring and surveillance of benchmark submissions;
ii. putting in place robust governance arrangements to identify and mitigate actual and potential conflicts of interest; and
iii. establishing a committee that will be responsible for overseeing the benchmark administration process and code of conduct for submitters.

15   Requirements for submitters of key benchmarks will include:

i. compliance with the code of conduct for submitters developed by the respective administrators; and
ii. appointment of an external auditor to conduct an annual independent review of the submitter’s benchmark submission activities and submission of this auditor’s report to MAS.

16   The industry will be announcing new measures to improve the financial benchmark setting process for existing benchmarks. MAS welcomes these measures.

17   Teo Swee Lian, Deputy Managing Director, MAS, said, "Ensuring the integrity of the processes for setting financial benchmarks is vital. MAS has taken firm supervisory actions against the banks, based on a careful assessment of their respective deficiencies. The proposed new regulatory framework will minimise the risk of attempts to inappropriately influence these benchmarks. The industry must also play its part in enhancing the robustness of the financial benchmarks, and in cultivating high standards of professional integrity and ethics."


1 A financial benchmark is any price, estimate, rate, index or value that is calculated using a formula and used as a reference to determine (i) the interest payable or other sums due on deposits or loans; (ii) the price, value or performance of any investment product; or (iii) the price, value or performance of any product offered by any entities regulated by MAS.

2 Statutory reserves, for this purpose, is the amount of liquid assets in Singapore Dollars to be held by the bank.

3 The proposals have taken into account discussions at the International Organisation of Securities Commissions (IOSCO) and related global regulatory developments.  IOSCO is the global standard setter for the securities industry. MAS is a member of the IOSCO Board.

4 For the purpose of this press release, references to manipulation include any act that is intended or likely to create a false or misleading appearance with respect to the price, value or level of a financial benchmark.