SIBOR, SIBOR, GO AWAY

Sibor, Sibor Go Away.
There is no one left to play.

Tongue in cheek  of course.

Just got to thinking what would happen if SIBOR was abolished as indeed some rumours have it that it would.

Well. Nothing.

SGD Sibor cannot go away but USD Sibor certainty can and probably will according to my sources.

USD Sibor does not belong to Singapore. It is just USD Libor fixed during Singapore hours and used as a convenient proxy inter timezones.

What is USD Sibor used for ?

* USD loans and floating rate notes priced in Asian hours, specifying the use of USD Sibor as benchmark.
* SOR fixings which are derived from USD/SGD fx fwd points and USD Sibor.

Doesn’t sound like a lot ? Yes. Probably right. It is just the paperwork that needs to be adjusted, and a lot of it.

What is lost is not so much the function of USD Sibor but the repercussions on other jurisdictions and products. Singapore’s does not fail to impress again with their exemplary disciplinary machinery. According to the Reuters report,

Exclusive: Bank probes find manipulation in Singapore’s offshore FX market – source

the market has lost half the NDF (Non Delieverable Forwards) traders due to these probes with probably more to come.

The report went on to allege that market turnover has fallen 50% since about half the traders have gone and that HKMA and the Australian Securities and Investments Commission are looking into the fixings of their respective markets. Volumes are going to fall and price discovery will be even more difficult leaving the market open to the big players with muscle and fire power. Then shall it become MONOPOLY instead of MANIPULATION ?

When will this end ? When the PBOC is faulted as the biggest currency manipulator of them all ? Or will be lie forgotten once all these “junior” traders are buried and Singapore becomes the first in the world to implement a new fixing mechanism ?

Sitting here and watching the fireworks while thinking about the can of worms.