Our SGD/MYR rates are manipulated, according to Malaysia sources.
M'sia tightens rules on fixing of ringgit rate
Move marks shift away from process that was subject to bid at manipulation
PUBLISHED MARCH 01, 2013
[KUALA LUMPUR] Malaysia's central bank moved yesterday to tighten rules on the fixing of onshore reference rates for the ringgit currency and "enhance the quality and integrity" of the process.
The central bank said from March 1, the calculation to fix the ringgit rate against the US dollar will have to be based on quotes with a bid and ask spread of not more than 10 pips or percentage in point.
A pip is the smallest price change that a given exchange rate can make.
"The revised methodology for the fixing will ensure that the rates used in the fixing calculation are tradable rates and the derived fixing rate appropriately reflects the market rates," the central bank said in a statement.
"This is a collaborative effort between Bank Negara Malaysia and Financial Markets Association Malaysia which aims at enhancing the quality and integrity of the USD/MYR fixing process."
Bank Negara's new rules are part of a wider move in the region to overhaul the process of setting key currency rates after evidence emerged of traders from banks in Singapore colluding to manipulate the market.
The move by Malaysia comes after its central bank held talks with other South-east Asian regulators this month to discuss ways to overhaul the reference rates for offshore non-deliverable currency forwards (NDFs), which are said to undermine foreign exchange controls.
This marks a shift away from a set of rates now overseen by a local banking association in Singapore that was found to have been subject to attempts at manipulation.
The set includes spot currency and interest rates for the ringgit, Singapore dollar, Thai baht and Indonesian rupiah.
The plans are unlikely to have impact on currency market flows, traders said.
Malaysia's central bank has already directed banks in January to use the domestic reference rate tied produced by the country's foreign exchange association for ringgit foreign exchange contracts.
The ringgit was the second most traded currency in South-east Asia after the Singapore dollar in 2010 although it accounted for just 0.3 per cent of total global foreign exchange market turnover daily, according to the Bank for International Settlements (BIS). - Reuters
http://www.businesstimes.com.sg/premium/malaysia/msia-tightens-rules-fixing-ringgit-rate-20130301