MAS looking into the way Sibor is set

The way the local interest rate benchmark is set is being assessed by the authorities in the light of the Libor scandal engulfing British bank Barclays. The MAS said yesterday that the move follows similar steps being undertaken by regulators around the world. Dr Aurobindo Ghosh, Programme Director at the Sim Kee Boon Institute for Financial Economics at SMU, said: “An average over more banks is less variable, or is more stable. “Having said that, it is easier to monitor fewer banks. So fewer banks might not necessarily make it easier to manipulate, particularly with the strong governance and monitoring in place.” Having 12 banks means the top and bottom three quotes are removed before the mean is calculated. Dr Ghosh said, “however, as there are now fewer than eight banks to coverage, ABS will provide at least two quotes from money brokers so Sibor is an average of at least eight quotes. This is according to ABS' past methodology.”