Bank of Thailand says looking into how benchmark rate is set
BANGKOK/SINGAPORE Sept 27
BANGKOK/SINGAPORE Sept 27 (Reuters) - Bank of Thailand governor Prasarn Trairatvorakul said on Friday he had asked officials to look at how the Bangkok Interbank Offered Rate (Bibor), the main interbank lending rate, is set.
"I've asked them to do that, it's an internal matter," he told Reuters in response to a question on whether a scandal over the manipulation of the London Interbank Offered Rate (Libor), a global benchmark rate, had prompted a review.
Simon Clarke, a Hong Kong-based partner at Allen and Overy law firm who specialises in financial services, said the BoT had asked banks to review their Bibor submissions in recent weeks.
Prasarn didn't say what had prompted the BoT review. There is no suggestion of any irregularities in the Bibor market and the review could be purely precautionary.
Seventeen banks contribute to the Bibor rate, including Thailand's main banks and international lenders.
The rate is set by taking contributions from each lender about the rate at which banks are borrowing funds from other banks in Bangkok's interbank rate market. The two highest and two lowest contributions are eliminated from the calculation.
Regulators around the world have been looking into how benchmark rates are set after bank traders and brokers were found to have manipulated Libor. The rates are used to price trillions of dollars worth of financial products, ranging from personal loans to complex derivatives.
On Wednesday U.S. and British authorities fined ICAP , the world's biggest interdealer broker, $87 million and filed criminal charges against three former employees in the Libor scandal.
In June, the Monetary Authority of Singapore (MAS) reprimanded 20 banks and ordered them to set aside billions of dollars in additional reserves after finding that traders in the city state had tried to manipulate local benchmark lending and foreign exchange rates.
Allen and Overy's Clarke said that at a global level the investigations are far from over.
"It is enormous in scope and continues to be going," he said during the Thomson Reuters Pan-Asian Regulatory Summit on Thursday in Singapore. (Reporting by Kitiphong Thaichareon and Rachel Armstrong; additional reporting by Orathai Sriring; Editing by John Mair)
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