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Bank Bill Benchmark Rate guidance and overview published by FMA

Page last updated: 11 Oct 2017

Media release
MR No. 2017 – 44
11 October 2017

The Financial Markets Authority (FMA) published today guidance on conduct and expected controls in relation to trading that sets the Bank Bill Benchmark Rate (BKBM) and closing rates. Alongside this, the FMA is also publishing an overview of BKBM and benchmarks, their purpose and how they are regulated.

One of the FMA’s strategic priorities is capital market growth and integrity. The FMA wants to establish expectations in the wholesale markets that support public and business confidence in their integrity.

Garth Stanish, FMA's Director of Capital Markets said, “By clarifying our expectations of conduct and controls, we’re aiming to reduce regulatory uncertainty and encourage participation in these benchmarks. Some banks have stopped participating in recent years and with that comes an increased risk that benchmarks won’t be robust.”

The guidance sets out what the FMA is looking for when assessing trading conduct, its expectations and further sources of guidance.

It also makes clear that should the FMA see evidence of trading that has been undertaken for the purpose of moving the BKBM or another rate, the FMA will take appropriate and proportionate action.

There has been significant publicity around misconduct relating to various global benchmarks such as LIBOR and EURIBOR in recent years. In 2014, the FMA analysed a sample of trading and other data relating to BKBM between 2013 and 2014.

The FMA has conducted further targeted enquiries into specific conduct since then, but has found no evidence of systemic trading in bank bills that was not for legitimate purposes. However, the FMA will continue to engage with banks and overseas regulators on this topic.


Edwin Mitson
Ph: 021 702 036