MEXICO CITY (Reuters) - Mexico’s central bank has not seen signs of widespread price manipulation in the bond market, which is being probed for alleged collusion by a Mexican regulator, Banco de Mexico Governor Agustin Carstens said on Thursday.
Mexico’s antitrust agency (Cofece) in April said it was investigating alleged price manipulation in the market for government bonds and media reports said the regulator was targeting global banks operating in Mexico.
When asked if such practices were widespread in Mexico, Carstens said “to a large extent that has been absent in our markets.”
He underscored however “if there have been some events in the past, those events have not interfered with the conduction of our policies.”
“Our own perception is that market behavior has been adequate and that the price formation mechanisms in our markets have behaved well,” he said, adding that he was not privy to the specific events that the antitrust regulator was probing.
In May, the central bank said it was preparing to implement a new code of conduct governing foreign exchange and bond trading during the second half of the year.
The codes are based on best practice forex rules published by the Bank for International Settlements’(BIS) Foreign Exchange Working Group in May.
The BIS code emerged out of market manipulation scandals where global banks were fined billions of dollars surrounding the fixing of the Libor rate and foreign exchange trading.
Carstens said the new rules would not prevent “rogue traders” and he stressed that the Cofece probe and the decision by the central bank to develop the codes of conduct were separate issues.
“One ... had to do with events that happened in a very particular time in the past, and what we are ... trying to build is to establish a much stronger foundation for the development of our markets in the future,” he said.
Reporting by Frank Jack Daniel and Anthony Esposito; Writing by Michael O'Boyle; Editing by Andrew Hay