ASIC is now chasing Westpac for 'market manipulation' of benchmark interest rates

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Australia’s financial regulator, the Australian Securities and Investments Commission (ASIC), has taken Westpac to court for alleged “unconscionable conduct and market manipulation” of Australia’s benchmark bank bill swap reference rate (BBSW).

In filings to the Federal Court in Melbourne, ASIC alleges “Westpac traded in a manner intended to create an artificial price for bank bills on 16 occasions during the period of 6 April 2010 and 6 June 2012”.

Like the ANZ before it ASIC says Westpac “had a large number of products which were priced or valued off BBSW and that it traded in the bank bill market with the intention of moving the BBSW higher or lower”.

ASIC said it is seeking pecuniary penalties and an order requiring Westpac to implement a compliance program.

In a statement to the ASX Westpac said it will “vigorously defend court proceedings by ASIC”.

Westpac chief financial officer Peter King said the bank rejects the ASIC allegations.

“The operation of the interbank short-term money market, as well as bank balance sheet management, is highly complex and activity occurs for a range of valid reasons,” he said.

“We disagree with ASIC’s interpretation of the communication between employees referred to in the court documents and their assessment of trading activity given the complexity of strategies involved.”

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