Hong Kong is looking to change the way it sets benchmark lending rates, following a review sparked by the Libor scandal that rocked the financial industry earlier this year.

The Hong Kong Association of Banks (HKAB) said on Monday that it is considering a series of reforms to the Hong Kong Interbank Offered Rate (Hibor), including bringing in a formal code of conduct and reducing the number of rates it publishes.

Faith in the way benchmarks like Hibor are determined plummeted after Barclays was fined 290 million pounds ($464 million) by UK and U.S. regulators in June for rigging Libor. Other banks are still under investigation for possible manipulation.

The rates are meant to be a measure of banks' wholesale funding costs, however the Libor probe revealed some bank traders tried to manipulate them so they could profit from bets on interest rate derivatives.

The HKAB said a review carried out by the city's Treasury Markets Association found the current Hibor fixing mechanism meant it was less likely to be manipulated than Libor, although there were areas that could be improved.

"The Hibor fixing mechanism remains sound," said Henry Cheng of the Treasury Markets Association who carried out the review. "The key point of these proposals are to make sure the mechanism can be sustained."

The UK's Financial Services Authority announced reforms to the Libor system in September that included cutting the number of rates calculated from 150 to just 20 and tighter auditing of banks that contribute the data.

The HKAB is the first banking association in Asia to publish similar reforms.

Currently, Hibor rates are set across 15 different maturities, ranging from overnight to 12 months. The HKAB is looking to cut the number of maturities to seven, focusing on those that are most commonly used as reference rates.

It will also look at formalizing a code of conduct for the 20 banks that provide the rates Hibor is calculated from.

Hibor is used to price a range of financial products in Hong Kong like credit card rates and mortgages.

A similar review of benchmark rates is also underway in Singapore, where the central bank has ordered lenders to review the way rates are set for interbank lending and non-deliverable foreign exchange contracts.

The HKAB is now going to consult with the industry on these recommendations and will provide a report to the Hong Kong Monetary Authority by the end of the year.

(Reporting by Grace Li; Writing by Rachel Armstrong; Editing by Kim Coghill)