In a report addressing potential financial benchmark rigging in Australia, ASIC provided what is called an “overview of the importance of financial benchmarks and the need for financial benchmarks to be robust and reliable” as well as some as the investigations ASIC is undertaking.
Benchmark interest rates are set by groups of banks, both domestic and foreign, through various mechanisms. These rates are then used as the starting point for pricing many financial instruments in the stock and bond markets and are often determinants of commercial lending rates and mortgage rates.
As the benchmarks are part of so many transactions, any manipulation of them has far-reaching effects throughout the Australian economy and financial markets. ASIC said several banks had given enforceable undertakings with regards to BBSW submissions after it was found some banks had engaged in practices which may have benefited “house” trading and derivatives positions.