UPDATE 1-Singapore reprimands 20 banks after benchmark rate review
* MAS found 133 traders acted inappropriately
* UBS, ING, RBS must set aside most in reserves
* Banks to start basing benchmarks on traded prices
SINGAPORE, June 14 (Reuters) - Singapore's central bank has censured 20 banks on Friday after it found traders in the city state tried to manipulate benchmark borrowing and currency rates, and has ordered them to set aside additional reserves for a year.
The Monetary Authority of Singapore (MAS) said that it had found 133 traders had tried to inappropriately influence the rates.
Some of their cases have now been referred to the city-state's white collar crime unit and the Attorney General's Chambers, though MAS said no offence under Singapore law appeared to have been committed.
The city-state's banking and market associations also unveiled a series of reforms of how banks will set the benchmarks, including plans to start basing several of them on actual trades rather than estimates submitted by banks.
The announcements come as financial market reference rates are under intense scrutiny worldwide following the discovery that some of them had been rigged, most notably the Libor -- London Interbank Offered Rate -- benchmark for interest rates.
While strong rebukes from MAS against big banks are relatively rare, Singapore's moves are not on the same level as the action taken by U.S. and British counterparts, which have imposed hundreds of millions of dollars in fines on lenders.
"It seems like they want to maintain their reputation as a fair place to do business, establish markets for offshore trading in instruments, without looking like they are becoming a haven for activity which would be deemed less than fair in other jurisdictions," said Aninda Mitra, a Singapore-based economist at Capital Economics.
All of the 19 banks on the Singapore's setting panels for interbank lending and currency rates were censured, along with Australia's Macquarie Bank.
UBS, Royal Bank of Scotland and ING have been ordered to set aside the most in additional reserves, with each having to post between an extra S$1 billion ($799.52 million) and S$1.2 billion with the central bank.
The money will be returned if the banks take the required remedial action.
UBS and ING could not immediately be reached for comment. RBS said it had co-operated fully with MAS's review and would comply with any required remedial measures.
Other banks censured included BNP Paribas, Bank of America, Oversea-Chinese Banking Corporation, Barclays Bank PLC, Credit Suisse, DBS , Deutsche Bank and Standard Chartered .
MAS said the level of reserves banks must set aside were calibrated according to the severity of attempts by traders at those banks to inappropriately influence benchmarks.
The MAS also announced plans to implement a new framework for regulating financial benchmarks, which included bringing in criminal and civil sanctions for rate manipulation.
It is nearly a year since the regulator first ordered banks in the city-state to conduct a review into the way they set benchmark borrowing rates. That review was extended in September last year to foreign exchange benchmark rates used to price currency derivatives, particularly non-deliverable forwards.
Reuters reported in January how the banks' investigations had found evidence that traders were manipulating rates in the offshore foreign exchange market.
Singapore's two main lending benchmarks, the Singapore Interbank Offered Rate (Sibor) and the Swap Offer Rate (SOR) are used to price mortgages and other types of loans in the city-state.
The Singapore Foreign Exchange Market Committee and the Association of Banks in Singapore announced that the U.S-dollar linked version of Sibor would be scrapped, with banks relying on U.S.-dollar Libor instead.
It also announced that, while Singapore dollar Sibor will continue to be based on banks' estimates of borrowing costs, other benchmark rates, including the SOR, the Indonesian rupiah and the Thai Baht would now be based on traded prices.
That marks a departure from the previous system where banks made submissions every morning on their estimate of market rates. It also puts Singapore ahead of the United States and Europe, where regulators are proposing that benchmarks should be based on actual transactions but have not yet bought in systems to do that.
Benchmark rates for the Malaysian ringgit, Vietnamense dong, and swap offer rates for the Indonesian rupiah and Thai baht will be scrapped.
Thomson Reuters, the parent company of Reuters News, calculates and distributes the benchmark rates for the Association of Banks in Singapore.
MAS said that of the 133 traders found to have acted inappropriately, three quarters have either been fired or resigned. The remainder will be subject to disciplinary action, including forfeiting their bonuses.
Three former traders from UBS are currently suing the bank for wrongful dismissal having been fired from the Swiss bank for allegedly being involved in the scandal.