SYDNEY, Oct 26 (Reuters) - Australian regulators are set to overhaul the way that benchmark interbank interest rates are set, in response to worries about the impact of global banking reforms and a growing perception of regulatory risk.
The Council of Financial Regulators (CFR) is seeking views on a new methodology for calculating the bank bill swap rate (BBSW) benchmark, it said on its website.
Revisions could include a complete change in how BBSW is calculated or small tweaks such as requiring banks to directly negotiate interest rates on certificates of deposits with third parties.
The proposed changes could expand the scope of eligible transactions, widen the panel of submitting banks as well as the timing of transactions, according to a CFR consultation paper.
The CFR is seeking formal submissions and comments in response to its consultation paper by December 3.
Global regulators have been reforming rate-setting practices after Barclays Plc BARC.L , UBS AG UBSG.VX , RBS RBS.L and others were fined billions of dollars for rigging the London Interbank Offered Rate, known as Libor.
Australia, in 2013, scrapped its BBSW rate-setting mechanism after an exodus of banks from the panel, the first major market to dismantle the tarnished structure.
It replaced the panel of 14 banks with an automated rate mechanism that examines live and executable prices from trading venues for bank accepted bills (BABs) and negotiable certificates of deposit (NCDs).
Last year, Australia and New Zealand Banking Group ANZ.AX suspended seven staff involved in a regulatory investigation into BBSW rate fixing.