Australia is to become the first major global economy to scrap its benchmark interbank borrowing rate. The Australian Financial Markets Association (AFMA) has today (27 March) unveiled sweeping changes to the way in which the Bank Bill Swap Reference Rate is set.

AFMA is implementing a system to collect BBSW(Bill Swap Reference Rate) related trade data from active traders in the market for Prime Bank paper and trading venues. The associated transactions database will:

• enable AFMA to monitor the market more effectively on a daily basis and assist committees in the management of market issues, like liquidity;
• enable AFMA to publish information on aggregate trading levels and volume weighted prices in the market on a delayed basis, in a form that is consistent with maintaining liquidity and with prudential interests; and
• provide the regulators with access to a convenient data base, which could be especially useful to ASIC for the purpose of its market regulation.

Implementation of this project is well advanced. (No date has been given for completion at this time.)

The BBSW panel will comprise 10 banks from the end of March, following advice AFMA has received from HSBC Bank Australia Ltd and Citibank NA of their intention to withdraw from the panel from that time.

Rick Moscati, treasurer at the Australia & New Zealand Banking Group, told Bloomberg his organisation "broadly supports" this "positive step".