Last week, the Australian Financial Markets Association (AFMA) announced that it will transfer administration of the BBSW benchmark rate to ASX. It is the intention of both parties that ASX will administer BBSW from 1 January 2017.
ASX was selected following a highly competitive process, which began in July 2016 with a public invitation for interested parties to register their interest as a potential alternate benchmark administrator for BBSW.
Ernst & Young provided financial advisory services to AFMA for the externalisation process, while Mills Oakley acted as AFMA’s legal adviser.
“AFMA is delighted to have found in the ASX an organisation with strong credentials to take responsibility as administrator for BBSW,” said AFMA’s CEO, David Lynch. “ASX has the appropriate attributes as a benchmark administrator and it has a strong and unique capability to continue the work underway to transition the BBSW methodology to a VWAP process.”
For further details on the methodology transition process, please refer to AFMA Market Notice 2016_5. AFMA will support the future evolution of BBSW by working with ASX, market participants and the Council of Financial Regulators to promote the market infrastructure and practices required to support widespread trading at outright prices in the underlying market. AFMA will also operate as the calculation agent for ASX until the systems required to support the new methodology go live in 2017.
Today’s announcement will allow AFMA to focus on its core activities in policy advocacy, market development and industry education and ensure that it supports its members and Australia’s financial markets in an optimal way. In May 2016, AFMA had announced its intention to step away from the function of being a benchmark administrator for this purpose – see AFMA Market Notice 2016_3.
