UBS investigated for potential Hong Kong rates misconduct

UBS, which will pay $1.5bn to settle charges with US and UK regulators for manipulating Libor, is under scrutiny in Hong Kong for possible misconduct linked to the benchmark rate set in the city. The Hong Kong Monetary Authority has started an investigation to see if there was wrongdoing by the Swiss bank in its submission of data for setting the Hong Kong Interbank Offered Rate, according to a statement from the de-facto central bank yesterday. The HKMA is also reviewing whether the potential misconduct may have had a material impact on the rate. Overseas regulators alerted the HKMA about potential manipulation of the local interbank lending rates and other reference rates in the region, it said. The move signals that the world’s biggest banks, some of which have already been penalised in Japan, may now be probed in more Asian nations even as they seek to placate US and UK authorities. “The whole episode is a wake-up call to regulators globally that markets are moving faster than regulators,” Sandy Mehta, chief executive officer of Value Investment Principals Ltd in Hong Kong, said yesterday. “While we do not need more rules and regulations, large firms in particular need to tighten their internal controls.” For years, traders at Royal Bank of Scotland Group, Barclays, UBS, Deutsche Bank, Rabobank Groep and other firms worked with employees responsible for setting the London interbank offered rate to rig the price of money, according to documents obtained by Bloomberg and interviews with two dozen current and former traders, lawyers and regulators. Preliminary information provided by an overseas regulator indicates potential misconduct by staff rather than a problem with the bank’s systems, HKMA deputy chief executive Arthur Yuen said at a news conference in Hong Kong yesterday.