(Recasts, adds details in paragraphs 3-5)
Feb 1 (Reuters) - Australia's corporate regulator on Thursday rolled out supervisory directions for market intermediaries on pre-hedging practices, just a day after a court found Westpac (WBC) , the country's third-largest bank, guilty of unethical practices.
Westpac was slammed with a maximum penalty of A$1.8 million ($1.18 million) after a court found the bank allegedly engaged in pre-hedging while carrying out a A$12 billion interest rate swap transaction in 2016, the largest of its kind in the country.
Pre-hedging involves trading to hedge any anticipated risk ahead of a potential transaction.
The Australian Securities and Investments Commission (ASIC) raised competition concerns over differences in how market participants approach pre-hedging, and sent out a letter highlighting ways in which different chief executive officers can improve transparency.
"If pre-hedging is not carried out in an appropriate manner it can be unfair, unconscionable and result in poor client outcome. This may adversely impact investor confidence and undermine market integrity," ASIC said in a statement.
($1 = 1.5214 Australian dollars)
News: WBC UPDATE 1-Australia sets guidance for market intermediaries on pre-hedging practices
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