The Australian Securities and Investment Commission (ASIC) has initiated action against Westpac Banking Corporation (Westpac) over its alleged manipulated of the Bank Bill Swap Rate (BBSW).
ASIC said it had initiated action in the Federal Court in Melbourne, alleging the bank had acted unconscionably and manipulated the market to set BBSW from 6 April 2010 to 6 June 2012, on 16 occasions.
The BBSW is the primary interest rate benchmark used in Australian financial markets. It's administered by the Australian Financial Markets Association (AFMA). The AFMA changed the way the BBSW is calculated on 27 September 2013, and the allegations relate to Westpac's conduct before that date.
ASIC alleges, Westpac was trading to maximise its profit or minimise losses, by having a large number of products priced or valued off the BBSW, and then trading in the bank bill market with the intent of moving the BBSW higher or lower.
Through the court, ASIC is filing to not only penalise Westpac, but is ordering the company to implement a compliance program.
But, it's not the first time ASIC has taken legal action against a big four bank for market manipulation in setting the BBSW.
In March 2016, ASIC also filed a civil penalty against the Australian and New Zealand Banking Group Limited (ANZ) for its involved in setting the BBSW from March 2010 to May 2012.