ASIC has accepted an EU from both RBS plc and RBS NV in relation to potential misconduct involving the Australian Bank Bill Swap Rate (BBSW) – the primary interest rate benchmark used in Australia.
Following ASIC enquiries, RBS reported to ASIC that it had found evidence of conduct seeking to influence its BBSW submissions, based on how the submissions may benefit RBS's derivatives positions. RBS had withdrawn from the BBSW submissions panel on 30 April 2012.
RBS also reported to ASIC that it had found limited instances of communications discussing trading of Reference Bank Bills with reference to the setting of BBSW.
As a result of the information provided by RBS and ASIC’s enquiries, ASIC is concerned that RBS may not have complied with its obligations under the Corporations Act by reason of its conduct in relation to the BBSW rate set process.
The EU requires RBS to ensure its contribution to Australian interest rate benchmark settings is in accordance with its obligations under the United States Commodity Futures Trading Commission (CFTC) Orders.
RBS is also required to undertake certain remedial measures with respect to its trading in Reference Bank Bills. An Independent Compliance Expert will be required to review and report on RBS’s compliance with the EU in respect of these remedial measures. ASIC will make public the outcome of that review.
The EU follows similar undertakings by UBS AG and BNP Paribas with ASIC in relation to the BBSW submission process.
