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Australian regulator ramps up investigation over rate fixing
June 12, 2014 / 4:45 AM / in 3 years

Australian regulator ramps up investigation over rate fixing

SYDNEY/SINGAPORE, June 12 (Reuters) - Australian regulators are ramping up their investigation into the country’s banks over fixing of the benchmark inter-bank interest rates and currencies, two sources with direct knowledge of the matter told Reuters.

The investigation is part of a series of reviews that Australian Securities and Investment Commission (ASIC) has undertaken to uncover any misconduct in rates setting by banks.

Earlier this year, it censured French lender BNP Paribas after revealing its traders tried to influence the setting of the inter-bank interest rates.

Global regulators have been reforming rate-setting practices after Barclays Plc, UBS AG, Royal Bank of Scotland Group Plc and others were hit with fines totalling billions of dollars for rigging the London Interbank Offered Rate, known as Libor.

Libor and other similar inter-bank rates are used to price home loans, credit cards and other financial products worth trillions of dollars.

Last year, Australia scrapped its Bank Bill Swap Reference Rate (BBSW) mechanism after an exodus of banks from the panel that set the rate, the first major market to dismantle the tarnished structure.

In its latest round of investigations, ASIC has broadened its inquiry seeking six to seven years of data from banks and asking for more detailed information, the sources said.

The sources, senior executives at Australian banks, did not want to be identified as the investigation was not public.

“There is request for specific information by dates, time frame and people. There is a mountain of information to share,” said one of the sources.

The investigation is an added cost burden on banks already feeling the pressure from a tighter capital regime being instigated under Basel III global banking regulations, the source said.

ASIC said it was undertaking inquiries of BBSW panel members but declined to provide any details.

“Since mid-2012, ASIC has been undertaking inquiries of BBSW panel bank members in relation to the integrity of their past involvement in the BBSW submission process,” it said in an emailed statement to Reuters.

“ASIC’s inquiries in relation to the BBSW rate set are ongoing and we do not propose to provide a running commentary.” (Additional reporting by Sonali Paul in Melbourne; Editing by Kim Coghill)

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