* HKMA finds no collusion between banks
* UBS says has active appropriate measures
By Michelle Chen and Denny Thomas
HONG KONG, March 14 (Reuters) - Hong Kong's de facto centralbank has rapped UBS AG for its role in the city'sbenchmark lending rate fixing case and warned that it wouldconsider additional supervisory actions in light of the Swissbank's compliance failures.
Marking the end of a 15-month investigation, the Hong KongMonetary Authority (HKMA) said Friday it has found no evidenceof collusion between banks to rig benchmark lending rates aftergoing through messages and emails between 2005 and 2012.
But HKMA said it has uncovered material weakness in the wayUBS submitted estimated Hong Kong Interbank Offered Rates to thecity's banking association.
"The HKMA found about 100 communication records during2006-2009, in the form of internal chat messages, whichcontained change requests by several UBS traders to the UBSHibor submitter with a view to rigging the Hibor fixing," HKMAsaid in a statement.
The traders involved no longer work at the firm, a HongKong-based spokesman for UBS told Reuters, declining to say ifthey had quit on their own accord or had been asked to leave.
While HKMA estimates the UBS change requests had negligibleimpact on the actual outcome of the Hibor fixing, it said theSwiss bank's failure to report its staff's misconduct to theregulator was unacceptable.
UBS has been at the centre of global investigations intorate rigging. It was fined $1.5 billion in December 2012 byBritish and U.S. regulators for Libor manipulation, and in June2013, was one given one of the stiffest punishments in Singaporefor attempted manipulation of currency and lending rates in thecity-state.
Evidence that UBS may have been involved in attempted raterigging in Hong Kong materialised in December 2012, when U.S.financial regulators said their investigation into Libormanipulation by UBS had found evidence of possible misconduct bythe bank in relation to Hibor.
"We have not been part of the Hibor fixing panel since 2010and have taken appropriate steps to incorporate the HKMA'ssuggested improvements into our operations," UBS said in astatement.
The HKMA investigation was extended to include HSBC and a number of other banks in June 2013.
HKMA said in October that it was speaking to foreignregulators about possible manipulation of fixings in the spotforeign exchange market.
In June 2013, Singapore's central bank reprimanded 20 banksafter it found 133 traders had been involved in attempts tomanipulate benchmark lending and currency rates in thecity-state.
HSBC Holdings (HSBA)
