It's been a long time since I was last in Singapore. It was a financial powerhouse then - it's a monster today. Hong Kong and Tokyo were the big financial hubs back then, but in my experience, the best traders were always in Singapore. Beyond talent, Singapore had another element that made it a success - money - lots of it. None of that has changed. Singapore was then, and still is, rightfully proud of its reputation as a financial seat of power.
My recollection of Singapore is that it was a very orderly place. The sidewalks were crowded, but the people walked in well-organized lines. (I'm used to the chaos you might get on NYC's streets.) There was no jaywalking in Singapore. To step off the curb was a big fine, and there were police making sure there were no offenders. The streets were immaculate. Littering was not allowed. There are no gum marks on the sidewalks either. Chewing gum has been banned for 20 years. And of course, there is that "canning' thing that Singapore is famous for.
I bring this us as a background to a Reuters story that has my interest. There is a rate fixing scandal in Singapore that has been simmering for a few months, it is now blowing up.
The problems in Singapore are similar to the LIBOR fixing catastrophe in London. A few local bankers were setting the fixing rates for the settlement of FX contracts. There were communication between the banks that set the rates. There is evidence of collusion - the objective of the collusion was to make money at someone else's expense.
The contracts involved were for the currencies of Malaysia, Indonesia, and Vietnam. Therefore, this is a much smaller issue than the problems with LIBOR. In this case, I'm not sure that "size" is the issue. Singapore is very keen to maintain its image of a fair/legitimate capital market. The FX rate fixing is about as far from being "fair" as it could get.
I think the Monetary Authorities in Singapore are going to come down hard on this. Who knows? We might yet get to seen the canning of some bankers, it's a sure bet that some are going to jail on this one.
There are 14 banks who are involved with the rate setting. The list of names includes all of the usual suspects (when thinking of rate fixing). Reuters asked all of the banks for comment, none of them would say a word. But someone is going to look silly on this. Reuters has this very damning quote:
"Traders were talking to traders, saying: 'I need you to help me today, I need to fix low'"
I'm thinking (and laughing) about this. There have been times in the past when Singapore has caned someone for breaking the rules. Often, this resulted in criticism of the City-State in the western media. On balance, the public perception outside of the country condemns Singapore for its brutal treatment of prisoners.
But if Singapore were to arrest a few of those rate fixing bankers; cane them and send them to jail, a billion folks in the west would be quietly applauding. Go figure....
This is the sign for no gum
But what does this one ban? No mangoes?