The Bank Bill Swap Rate (BBSW), or Bank Bill Swap Reference Rate, is a short-term interest rate used as a benchmark for the pricing of Australian dollar derivatives and securities—most notably, floating rate bonds. The BBSW is determined by the market and published each day by the Reserve Bank of Australia. It is calculated as the weighted average yield on unsecured overnight repo transactions in the interbank market.The BBSW has become an important reference rate not only in Australia but also globally, given its role in setting rates for products linked to it such as AUD swaps, caps and floors. In recent years there has been increased scrutiny of how this benchmark is set, with allegations that some banks have been manipulating it to their advantage. This issue was highlighted in July 2014 when four global banks were fined a total of $2 billion by US and UK regulators for attempted manipulation of various currencies including the AUD/USD exchange rate.
