Singapore Banks Tighten Electronic Communication Scrutiny

DBS Group Holdings Ltd. (DBS), Southeast
Asia’s largest lender, restricted access to chat rooms, while

Singapore rivals United Overseas Bank Ltd. (UOB) and Oversea-Chinese

Banking Corp. increased scrutiny on electronic communications.

“In line with evolving industry practice, we have

restricted access to chat rooms and enhanced our guidelines to

further strengthen governance and controls,” DBS said yesterday

in an e-mailed statement. UOB said it tightened guidelines and

OCBC said it put monitoring protocols in place.

Goldman Sachs Group Inc., Royal Bank of Scotland Group Plc,

UBS AG, JPMorgan Chase Co. and Citigroup Inc. are among banks

that have banned or curtailed employees’ participation in chat

rooms involving other banks. That curbed the multidealer

conversations used by traders to agree on transactions, share

gossip and exchange tips on business flows.

Bloomberg News reported in June that dealers used chat

rooms to pool information about their positions, executed their

own trades before client orders and sought to manipulate

benchmark rates by pushing through trades around the 60-second

windows when they are set.

Investigators from Switzerland to Hong Kong are examining

the markets. The Monetary Authority of Singapore, the central

bank in Asia’s biggest foreign-exchange center, said in October

that it has been in touch with foreign regulators over the issue

of currency manipulation.

June Censure

Singapore’s monetary authority censured 20 banks including

the three local lenders in June for trying to rig benchmark

interest and currency rates. It ordered 19 of the companies to

set aside as much as S$12 billion ($9.4 billion) at zero

interest pending steps to improve internal controls.

OCBC (OCBC), Southeast Asia’s second-largest bank, said in an e-mailed statement that all of its employees are guided by a code

of conduct that aims to promote integrity and fair dealing.

“In relation to the use of instant messaging tools, our

traders and dealers are also constantly made aware of what

constitutes proper use of the services and the importance of

protecting confidential proprietary information,” Frederick Shen, head of OCBC Bank’s global treasury business-management

unit, said in the statement. “As an additional safeguard, we

have put in place monitoring protocols where we selectively

review communication conducted over these channels.”

Tightening Guidelines

In the June censure, OCBC was among banks asked by the

monetary authority to set aside S$700 million to S$800 million,

while DBS and UOB were asked to set aside S$400 million to S$600

million.

“As part of industry moves, we have tightened our

guidelines on the use of electronic communication for our

traders,’’ Tan Ping Ping, a UOB spokeswoman, said in an e-mailed

statement. “We also monitor the various forms of communication

made by our traders, including chat room conversations.”

Twenty banks and 133 traders tried to manipulate the
Singapore interbank offered rate, swap offered rates and

currency benchmarks in the city-state, the Monetary Authority of

Singapore said at the time.

To contact the reporter on this story:

Sanat Vallikappen in Singapore at

vallikappen@bloomberg.net

To contact the editor responsible for this story:

Chitra Somayaji at

csomayaji@bloomberg.net

Singapore Banks Tighten Electronic Communication Scrutiny