ASIC, RBA Endorse New ASX BBSW Trade Reporting Guidelines
- The BBSW methodology will now be utilizing a larger sample size of market transactions.
Australia’s bank bill swap rate (BBSW), a key determinant and benchmark for the Australian dollar (AUD), has seen a major change in its methodology. The BBSW’s procedure is being amended to reflect a wider set of market transactions. The move is endorsed by both the Australian Securities and Investments Commission (ASIC ASIC The Australian Securities and Investments Commission (ASIC) is the prime regulator in Australia for corporate, markets, financial services, and consumer credit. It is empowered under the financial service laws to facilitate, regulate, and enforce Australian financial laws. The Australian Commission was set up and is administered under the Australian Securities and Investment Commission Act of 2001. ASIC was initially the Australian Securities Commission based on the 1989 ASC Act. Initially, the The Australian Securities and Investments Commission (ASIC) is the prime regulator in Australia for corporate, markets, financial services, and consumer credit. It is empowered under the financial service laws to facilitate, regulate, and enforce Australian financial laws. The Australian Commission was set up and is administered under the Australian Securities and Investment Commission Act of 2001. ASIC was initially the Australian Securities Commission based on the 1989 ASC Act. Initially, the Read this Term) and the Reserve Bank of Australia (RBA).
The BBSW is widely referenced in financial contracts, though it has been historically plagued with low trading volumes during the rate set window, given the time of day that the BBSW was measured.
In light of this trend, the BBSW methodology is being shored up to broaden the sample size of market transactions. The move follows on the heels of a successful consultation by ASX, which acts as the administrator of the BBSW. The Exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term had been consulting market participants on the new framework, garnering strong support from both ASIC and the RBA.
ASIC Commissioner Cathie Armour commented: “We believe the ASX BBSW Guidelines will support the market’s trust in the robustness and reliability of BBSW, as the market makes the transition to the new BBSW methodology based on trading in the rate set window. Importantly, the ASX BBSW Guidelines recognise that trades in bank bills should not be done for a purpose of seeking to influence the level at which BBSW is set or maintained.”
ASIC Commissioner Cathie Armour
The newly retooled ASX BBSW Guidelines justify an important element of the new BBSW methodology. Bolstered by an industry-wide consultation, the new guidelines provide a better synopsis on the trading of bank bills during the rate set window.
Additionally, the ASX BBSW Guidelines set out how these trades should be reported to the ASX to support the timely calculation and publication of BBSW. It is largely expected that banks that issue bank bills will be falling in line with the new guidelines, a move championed by both ASIC and the RBA.
Intuitively, both groups believe the rate set window should be the most liquid part of the day in the bank bills market. This should garner improved results for all types of market participants, many of whom are now more likely to reap the best outcomes for their institutions and their respective clients by trading during this period.
“The Government recently introduced legislation to implement financial benchmark regulatory reform and ASIC has consulted on proposed financial benchmark rules. We have worked with the ASX and are confident that the ASX BBSW Guidelines will meet the requirements under Australia’s proposed regime, including the proposed ASIC rules,” explained Ms. Armour.
Australia’s bank bill swap rate (BBSW), a key determinant and benchmark for the Australian dollar (AUD), has seen a major change in its methodology. The BBSW’s procedure is being amended to reflect a wider set of market transactions. The move is endorsed by both the Australian Securities and Investments Commission (ASIC ASIC The Australian Securities and Investments Commission (ASIC) is the prime regulator in Australia for corporate, markets, financial services, and consumer credit. It is empowered under the financial service laws to facilitate, regulate, and enforce Australian financial laws. The Australian Commission was set up and is administered under the Australian Securities and Investment Commission Act of 2001. ASIC was initially the Australian Securities Commission based on the 1989 ASC Act. Initially, the The Australian Securities and Investments Commission (ASIC) is the prime regulator in Australia for corporate, markets, financial services, and consumer credit. It is empowered under the financial service laws to facilitate, regulate, and enforce Australian financial laws. The Australian Commission was set up and is administered under the Australian Securities and Investment Commission Act of 2001. ASIC was initially the Australian Securities Commission based on the 1989 ASC Act. Initially, the Read this Term) and the Reserve Bank of Australia (RBA).
The BBSW is widely referenced in financial contracts, though it has been historically plagued with low trading volumes during the rate set window, given the time of day that the BBSW was measured.
In light of this trend, the BBSW methodology is being shored up to broaden the sample size of market transactions. The move follows on the heels of a successful consultation by ASX, which acts as the administrator of the BBSW. The Exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term had been consulting market participants on the new framework, garnering strong support from both ASIC and the RBA.
ASIC Commissioner Cathie Armour commented: “We believe the ASX BBSW Guidelines will support the market’s trust in the robustness and reliability of BBSW, as the market makes the transition to the new BBSW methodology based on trading in the rate set window. Importantly, the ASX BBSW Guidelines recognise that trades in bank bills should not be done for a purpose of seeking to influence the level at which BBSW is set or maintained.”
ASIC Commissioner Cathie Armour
The newly retooled ASX BBSW Guidelines justify an important element of the new BBSW methodology. Bolstered by an industry-wide consultation, the new guidelines provide a better synopsis on the trading of bank bills during the rate set window.
Additionally, the ASX BBSW Guidelines set out how these trades should be reported to the ASX to support the timely calculation and publication of BBSW. It is largely expected that banks that issue bank bills will be falling in line with the new guidelines, a move championed by both ASIC and the RBA.
Intuitively, both groups believe the rate set window should be the most liquid part of the day in the bank bills market. This should garner improved results for all types of market participants, many of whom are now more likely to reap the best outcomes for their institutions and their respective clients by trading during this period.
“The Government recently introduced legislation to implement financial benchmark regulatory reform and ASIC has consulted on proposed financial benchmark rules. We have worked with the ASX and are confident that the ASX BBSW Guidelines will meet the requirements under Australia’s proposed regime, including the proposed ASIC rules,” explained Ms. Armour.