Corporate watchdog ASIC has commended civil penalty proceedings against NAB
for its role in manipulating interest rates.
The legal proceedings against the major bank commenced in the Federal Court in Melbourne this week, with NAB
to defend against charges of unconscionable conduct and market manipulation in relation to its involvement in setting the bank bill swap reference rate (BBSW) in the period 8 June 2010 to 24 December 2012.
The BBSW is the primary interest rate benchmark used in Australian financial markets, administered by the Australian Financial Markets Association (AFM
A). It is alleged that NAB
traded in a manner that was unconscionable and intended to create an artificial price for bank bills on 50 occasions during the period of 8 June 2010 and 24 December 2012.
On 27 September 2013, AFM
A changed the method by which the BBSW is calculated.
ASIC alleges that NAB
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 also alleges that NAB
was seeking to maximise its profit or minimise its loss to the detriment of those holding opposite positions to NAB
The watchdog has sought from the court pecuniary penalties against NAB
and an order requiring NAB
to implement a compliance program.