Watchdogs mull rate rigging offences
The Australian April 1, 2016 12:00am
Andrew White
Australia’s financial regulators want to make manipulation of ¬financial benchmarks a new -offence in a belated legislative response to widespread local and international rigging of key ¬financial measures by banks.
The Council of Financial Regulators is also seeking the power to make benchmarks such as the widely used bank bill swap rate a regulated activity and to compel market players to submit binding submissions to the setting of those benchmarks in a bid to boost confidence in those benchmarks.
In a discussion paper released last night, the CFR, which includes the Reserve Bank, Australian Prudential Regulation Authority and Australian Securities & Investments Commission, said there was a clear need for reform to ensure confidence in Australia’s financial markets.
It was seeking the extra powers amid concerns about the reliability and robustness of the benchmarks, which are used to price a wide range of loans, deposits and financial contracts. The proposals follow a global crackdown by regulators in the US and Britain that have yielded ¬billions of dollars in fines and regulatory settlements against banks for manipulation of global benchmarks such as the London Interbank offered rate. ASIC last month launched legal action against ANZ for 44 alleged instances of manipulating the BBSW, the key Australian rate benchmark, between 2008 and 20112.
ASIC and the Australian Competition & Consumer Commission are also investigating other banks.
The crackdown follows industry-backed efforts to change the way the BBSW is calculated. But the RBA has expressed concerns that the benchmark is not an accurate reflection of interest rates because the crackdown on manipulation has made banks reluctant to submit prices that could be used to set the benchmark. The CFR said in a discussion paper last night poor conduct in relation to benchmarks can mean a benchmark did not accurately reflect the underlying interest it measures.