Aussie regulator prepared for legal action against bank swap bill manipulators

The Australian regulator investigating manipulation of the country's intra-bank lending rates said it is prepared to take legal action should those found in breach contest the charges.

The Australian Securities and Investment Commission (ASIC) has been investigating the setting of the bank bill swap rate (BBSR) - the Australian equivalent of LIBOR - since mid-2012, which has led to the suspension of seven traders at Australia and New Zealand Banking Group (ANZ), among other penalties in banks operating in Australia.

BBSRs, or benchmarks, are integral to the functioning of stock markets, setting interest rates on hundreds of billions of dollars of wholesale and retail fixed-income securities.

ASIC commissioner Cathie Armour told an Australian Senate committee on Thursday the regulator's investigations into alleged BBSR manipulation are at an advanced stage, however "we haven't come to the conclusion on whether there is a need for us to take action to enforce the law."

In the same committee, ASIC chairman Greg Medcraft, who's previously complained about the lack of cooperation from Australia's banks in the investigation, said the regulator has 80 million Australian dollars (56.88 million U.S. dollars) for litigation and is prepared to use it.

"We can either have a contested outcome in the court or we can have an agreed outcome in the court," Medcraft said.

"We're happy to go to court and we have a war chest."

Fairfax Media on Monday reported the regulator was in preparations to launch legal action against ANZ and up to 10 individuals in the rate-rigging case over breaches to BBSR law occurring between 2007 and 2013.

It is not known if ASIC will file one action against ANZ and the 10 persons, or use the British model and launch separate actions against the bank and individuals. An announcement is expected within the next few weeks.

ANZ has said it is cooperating with ASIC's investigation. Endit