Regulator alleges fixing of BBSW rate Westpac denies allegations...

• Regulator alleges fixing of BBSW rate
• Westpac denies allegations
• Westpac is second Australian bank to be targeted

(Adds details on alleged offences, rejection of wrongdoing and comments from Westpac)

Australia's securities regulator said on Tuesday it has started legal action against Westpac Banking Corp (WBC) for allegedly fixing the bank bill swap reference rate (BBSW), an allegation the bank said it rejects.

The Australian Securities and Investments Commission (ASIC)alleges that Westpac traded in a manner intended to create an artificial price for the BBSW on 16 occasions from April 6, 2010 through June 6, 2012.

The regulator said it intends to press for financial penalties if Westpac is found guilty.

"ASIC alleges that on these days Westpac had a large number of products which were priced or valued off BBSW and that it traded in the bank bill market with the intention of moving the BBSW higher or lower," ASIC said in a statement.

"ASIC alleges that Westpac was seeking to maximise its profit or minimise its loss to the detriment of those holding opposite positions to Westpac's."

The BBSW is the primary interest rate benchmark used in Australian financial markets to price home loans, credit cards and other financial products worth trillions of dollars.

Westpac said in a statement that it intends to "vigorously" defend itself from the allegations.

"We reject the allegations made by ASIC and do not believe Westpac, or any employee, has acted unlawfully in relation to the instances detailed by ASIC," said Westpac Chief Financial Officer Peter King in a statement filed at the Australian Securities Exchange.

Westpac is the second Australian bank targeted by ASIC over alleged rate-fixing.

ASIC last month began legal action against Australia and New Zealand Banking Group Ltd (ANZ) (ANZ) for "unconscionable conduct and market manipulation" over allegedly fixing the BBSW.

ANZ rejects the allegation. Australia changed the method by which it calculated the BBSW in 2013 after an exodus of banks from the panel that set the rate, becoming the first major market to dismantle such mechanisms.