BNP Traders Sought to Rig Australian Rates, Body Says
BNP Paribas SA (BNP) traders tried to influence the French bank’s submissions on Australia’s bank-bill swap rate, the local equivalent of the London interbank offered rate, the securities regulator said.
Singapore-based traders contacted colleagues on BNP Paribas’ treasury desk in Sydney between 2007 and 2010 expressing preferences on the direction and level of rate submissions, according to a document published today by the Australian Securities and Investments Commission. An independent expert found that the communications had an “insignificant” market impact, ASIC said.
Banks are under investigation across the globe on suspicion of manipulating benchmark rates including Libor. A 14-member panel for setting BBSW, the primary interest rate used in Australia’s financial markets, was disbanded in September. UBS AG (UBSN), JPMorgan Chase & Co., HSBC Holdings Plc (HSBA) and Citigroup Inc. were among members submitting prices.
Inquiries in relation to the BBSW submission process are ongoing, the Sydney-based regulator said.
BNP Paribas acknowledged ASIC’s concern that the bank may not have complied with legal obligations, without admitting wrongdoing, and agreed to make a voluntary contribution of A$1 million ($880,000) toward financial literacy projects, according to the ASIC document.
The bank conducted an investigation last year and reported its findings to ASIC, Julia Boyce, a spokeswoman for Paris-based BNP said by telephone today. “We took steps to sanction the staff involved, including the dismissal of a small number of staff members,” she said.
She declined to specify how many staff were dismissed or identify the individuals.
At least A$350 billion of Australian syndicated loans and floating-rate bonds are priced off BBSW, according to data compiled by Bloomberg last year. Trading of swaps, forward rate agreements and options tied to BBSW was worth more than A$8.7 trillion in the 2009 financial year, a letter from the Australian Financial Markets Association to global banking regulators in 2010 said.
Australia’s BBSW “substantially differs” from Libor in that lenders were required to make submissions based on the average mid-rate observed on bank bills, while Libor is subjective and not tied to observable transactions, ASIC said today.
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