Channel NewsAsia

Currency probe jitters in Asia

New York authorities have joined the ranks of global authorities probing currency manipulation by big banks. The scrutiny the foreign exchange industry has come under has sparked a shakeout that has not spared Asia.

SINGAPORE: New York authorities have joined the ranks of global authorities probing currency manipulation by big banks.

On Wednesday, Benjamin Lawsky, New York's financial services superintendent requested documents from more than a dozen institutions, as the state regulators look into the manipulation of the currency markets by large banks.

Since last November, lenders in Europe and the US have fired or suspended more than a dozen traders following investigations.

The scrutiny the foreign exchange (FX) industry has come under has sparked a shakeout that has not spared Asia.

It was business as usual on Singapore trading floors although the reverberations were being felt from suspensions at international counterparts such as HSBC, Royal Bank of Scotland, UBS, JPMorgan Chase and Standard Chartered.

The first of the investigations into potential manipulation of the currency markets began in April 2013.

Industry experts Channel NewsAsia spoke to said they have not seen massive firing or resignations by FX traders in Asia as a result of the global currency probe.

Gary Lai, managing director at Charterhouse Partnership, said: “I don't see many bankers in Asia losing their job over the currency probe investigations as what you see in Europe and the US. But I do hear of underlying concerns among traders about where this investigation is going to lead to. But for now, there is no massive exodus or firing of people due to these investigations."

Frederick Shen, head of global treasury business management at OCBC Bank, said: "The WM/Reuters probe is primarily focused on fixings at 4pm London time. It is unlikely that Singapore banks are very active at that hour. The major international banks would typically have passed their FX books to London and/or NY (New York) counterparts by then."

Mr Lai, however, cautions that these global probes could send more shockwaves into the region.

He elaborated: "I do see Asia being impacted by the investigations as part of a wider probe. Already we see Switzerland, London… and the EC (European Commission) having investigations, and now Hong kong is picking up on it.

“Singapore being the third largest FX centre in the world, it will definitely be involved in investigations. I do see a wave coming. It's very similar to the rates investigations just last year."

Indeed, as part of a global rate rigging probe, the Monetary Authority of Singapore disciplined 20 banks and revealed that 133 traders tried to manipulate interest rate and foreign exchange benchmarks in July 2013. 

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