UBS, JPMorgan exit Aussie swap rate panel

SYDNEY: UBS AG and JPMorgan Chase & Co are withdrawing from a panel that sets Australia's benchmark swap rate and Citigroup Inc is reducing its role in Malaysia amid increased scrutiny following the global rate-rigging scandal.

UBS stopped contributions for the bank bill swap rate on February 4 and JPMorgan will pull out by the end of this month, said David Lynch, Sydney-based executive director at the Australian Financial Markets Association (AFMA), yesterday.

Citigroup ended submissions for Malaysian ringgit interest-rate swaps and the ringgit spot reference rate against the dollar last week, said sources.

The withdrawals underscore the risk that some rates will become less efficient at determining borrowing costs with fewer global banks participating.

"If you have a smaller number of players, you'll end up in the same spot where you'll have the risk of inefficient rates over the risk of manipulation," said Sandy Mehta, chief executive officer of Value Investment Principals Ltd in Hong Kong.

Citigroup, however, continues to contribute to the Kuala Lumpur Interbank Offered Rate, according to data compiled by Bloomberg.

The ringgit swap and exchange rates are used by traders for hedging against interest-rate and currency moves and speculating on their direction. Bloomberg