The Hong Kong Monetary Authority said it has received information from overseas regulators about "possible misconduct" by UBS involving submissions for the city's interbank offered rate, known as Hibor, and other reference rates in Asia.
"The HKMA has commenced an investigation with a view to ascertaining any misconduct committed by the bank in relation to Hibor submissions," it said.
The HKMA added that it would assess whether the potential misconduct had any material impact on the Hibor rate, which is considered a key benchmark interest rate in the wider Asian economies.
It also said that it would work with overseas regulatory authorities to gather information and "consider further actions that need to be taken" pending the findings of the investigation.
"We continue to work closely with various regulatory authorities to resolve issues relating to the setting of certain global benchmark interest rates," a Hong Kong-based spokesman for UBS said jn an emailed statement to AFP.
"As we are currently in active discussions with these authorities, we cannot comment further."
UBS agreed on Wednesday to pay $1.5 billion in fines — the second-largest banking fine ever — to national regulators in three countries to settle accusations that it tried to manipulate interest rates.
The probes by Swiss, British and US regulators revealed evidence of massive misconduct in the setting of the London interbank offered rate (Libor), a global reference that affects products from student loans to mortgages.
UBS said that the settlement, equivalent to almost 1.2 billion euros, would likely push it into a net loss of between 2.0-2.5 billion francs ($2.2-$2.7 billion) in the fourth quarter.
Two former UBS traders were also charged with conspiracy by US authorities.
The deepening Libor scandal threatens over a dozen other banks, with British bank Barclays agreeing in June to pay £290 million ($471 million) to
British and US regulators to settle charges related to manipulation of rates.
Several other banks are reportedly in talks with regulators, including Royal Bank of Scotland and Deutsche Bank.
"It's time for them to clean up their act," analyst Francis Lun from Hong Kong financial services firm Lyncean Holdings told AFP on the latest investigation against UBS.
"Everyone now knows that all the major banks actually manipulated the interbank (Libor) rates," he added, saying that financial regulators are under increasing responsibility to scrutinize the banks.
The Libor rate is used as a benchmark for global financial contracts worth about $300 trillion, and revelations that it had been rigged have harmed the reputation of the City of London financial centre, although the misconduct is also alleged to have occurred elsewhere.
The UBS fine is the second highest to hit a bank, after HSBC paid $1.92 billion earlier this month to US authorities to settle allegations of money laundering.
UBS was the first bank to reveal problems in the rate-setting process of the Libor, which is compiled by selected banks that provide information on the rates they offer to other banks.
Regulators found UBS employees had manipulated the information to benefit the bank's trading position and influence the image of UBS's creditworthiness during the 2007-2008 financial crisis.