Tuesday, April 05, 2016 6:18:24 AM
Westpac pulled into ASIC rate-rigging case
"ANZ Bank Suspends Staff Amid Rate-Fixing Investigation"
Apr 5 2016 at 5:55 PM Updated 48 mins ago
ASIC has interviewed about 20 Westpac staff as it investigates manipulation of
the bank bill swap rate. Louise Kennerley
by Patrick Durkin
Westpac Banking Corp generated millions in profits manipulating a key market interest rate over two years, according to legal proceedings filed by the corporate regulator.
The Australian Securities and Investments Commission launched legal proceedings against Westpac .. http://tinyurl.com/jaxmmvl .. in the Federal Court in Melbourne on Tuesday for unconscionable conduct and market manipulation for Westpac's part in setting the bank bill swap reference rate (BBSW) between April, 2010 and June, 2012.
Westpac managing director group treasury Colin Roden, known as one of the most influential traders in interest rate markets, is named in court documents talking to another trader in a telephone conversation in one of 16 alleged cases of manipulation.
"I knew it was completely wrong but f--- it I might as well, I thought f--- it. We've just got so much money on it, we just had to do it, right ...", court document allege Mr Roden said.
On the day in question, April 6, 2010, Westpac faced a "short" exposure to an interest rate setting of $14 billion which meant the bank would make money if the bank bill swap rate was set lower than expected. Mr Roden explains in the recorded conversation how the bank made a $12 million profit after he bought billions of dollars worth of one month bank bills, and three month bank bills which drove the rate setting down from 4.30 per cent to 4.23 per cent.
ANZ is already facing allegations it manipulated the rate of 44 separate occasions .. http://www.afr.com/business/banking-and-finance/financial-services/how-anz-were-alleged-to-manipulate-the-bbsw-20160304-gnaw26 .. over a similar period. This is a civil action that carries a fine of $1 million for each transgression, which suggests a possible total fine of more than $16 million for Westpac and $44 million for ANZ. ANZ offered as much as $50 million to settle the case but negotiations reached a stalemate after the bank refused to concede it manipulated the BBSW.
During the period Westpac is alleged to have manipulated the rate, the swap rate was set by a panel of 14 banks which submitted the rates at which they traded bank bills. Traders at banks are alleged to have realised that by virtue of their size, they could influence the supply and demand of bank bills during the five-minute trading window when the swap rate was set.
"ASIC alleges that on these days 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 alleges that Westpac was seeking to maximise its profit or minimise its loss to the detriment of those holding opposite positions to Westpac's," ASIC said in court documents.
Westpac to fight
Westpac said it will vigorously defend the court proceedings.
"ASIC has not suggested it has any concerns with Westpac's current practices. There are also no allegations of collusion with any other entity," the bank said in a statement.
ASIC is continuing to investigate the National Australia Bank and Commonwealth Bank of Australia but is yet to launch legal proceedings.
The BBSW is the key interest rate benchmark used in Australian financial markets, administered by the Australian Financial Markets Association (AFMA). Last month, the Council of Financial Regulators proposed tighter oversight .. http://www.afr.com/news/economy/council-of-financial-regulators-examines-bbsw-20160331-gnvdq0 .. and possible new criminal penalties following allegations of manipulation.
Following revelations of widespread manipulation of the LIBOR rate by banks in Europe and the United States it is estimated that banks in the northern hemisphere have paid around $US235 billion in fines since 2008.
In 2014, three foreign banks - UBS, BNP Paribas and Royal Bank of Scotland - admitted to submitting false bids to try to influence the BBSW rate. They all chose to enter enforceable undertakings and paid voluntary contributions totalling $3.6 million to fund financial literacy programs.
http://www.afr.com/business/banking-and-finance/westpac-pulled-into-asic-raterigging-case-20160405-gnz2l2
This vigilance, and push for for oversight, regulation, even tougher new criminal penalties for breaking ordinary
financial rules, is a real thorn in the butt, eh. Trump and his GOP comrades would never tolerate the interference!
"ANZ Bank Suspends Staff Amid Rate-Fixing Investigation"
Apr 5 2016 at 5:55 PM Updated 48 mins ago
ASIC has interviewed about 20 Westpac staff as it investigates manipulation of
the bank bill swap rate. Louise Kennerley
by Patrick Durkin
Westpac Banking Corp generated millions in profits manipulating a key market interest rate over two years, according to legal proceedings filed by the corporate regulator.
The Australian Securities and Investments Commission launched legal proceedings against Westpac .. http://tinyurl.com/jaxmmvl .. in the Federal Court in Melbourne on Tuesday for unconscionable conduct and market manipulation for Westpac's part in setting the bank bill swap reference rate (BBSW) between April, 2010 and June, 2012.
Westpac managing director group treasury Colin Roden, known as one of the most influential traders in interest rate markets, is named in court documents talking to another trader in a telephone conversation in one of 16 alleged cases of manipulation.
"I knew it was completely wrong but f--- it I might as well, I thought f--- it. We've just got so much money on it, we just had to do it, right ...", court document allege Mr Roden said.
On the day in question, April 6, 2010, Westpac faced a "short" exposure to an interest rate setting of $14 billion which meant the bank would make money if the bank bill swap rate was set lower than expected. Mr Roden explains in the recorded conversation how the bank made a $12 million profit after he bought billions of dollars worth of one month bank bills, and three month bank bills which drove the rate setting down from 4.30 per cent to 4.23 per cent.
ANZ is already facing allegations it manipulated the rate of 44 separate occasions .. http://www.afr.com/business/banking-and-finance/financial-services/how-anz-were-alleged-to-manipulate-the-bbsw-20160304-gnaw26 .. over a similar period. This is a civil action that carries a fine of $1 million for each transgression, which suggests a possible total fine of more than $16 million for Westpac and $44 million for ANZ. ANZ offered as much as $50 million to settle the case but negotiations reached a stalemate after the bank refused to concede it manipulated the BBSW.
During the period Westpac is alleged to have manipulated the rate, the swap rate was set by a panel of 14 banks which submitted the rates at which they traded bank bills. Traders at banks are alleged to have realised that by virtue of their size, they could influence the supply and demand of bank bills during the five-minute trading window when the swap rate was set.
"ASIC alleges that on these days 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 alleges that Westpac was seeking to maximise its profit or minimise its loss to the detriment of those holding opposite positions to Westpac's," ASIC said in court documents.
Westpac to fight
Westpac said it will vigorously defend the court proceedings.
"ASIC has not suggested it has any concerns with Westpac's current practices. There are also no allegations of collusion with any other entity," the bank said in a statement.
ASIC is continuing to investigate the National Australia Bank and Commonwealth Bank of Australia but is yet to launch legal proceedings.
The BBSW is the key interest rate benchmark used in Australian financial markets, administered by the Australian Financial Markets Association (AFMA). Last month, the Council of Financial Regulators proposed tighter oversight .. http://www.afr.com/news/economy/council-of-financial-regulators-examines-bbsw-20160331-gnvdq0 .. and possible new criminal penalties following allegations of manipulation.
Following revelations of widespread manipulation of the LIBOR rate by banks in Europe and the United States it is estimated that banks in the northern hemisphere have paid around $US235 billion in fines since 2008.
In 2014, three foreign banks - UBS, BNP Paribas and Royal Bank of Scotland - admitted to submitting false bids to try to influence the BBSW rate. They all chose to enter enforceable undertakings and paid voluntary contributions totalling $3.6 million to fund financial literacy programs.
http://www.afr.com/business/banking-and-finance/westpac-pulled-into-asic-raterigging-case-20160405-gnz2l2
This vigilance, and push for for oversight, regulation, even tougher new criminal penalties for breaking ordinary
financial rules, is a real thorn in the butt, eh. Trump and his GOP comrades would never tolerate the interference!
It was Plato who said, “He, O men, is the wisest, who like Socrates, knows that his wisdom is in truth worth nothing”
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