Australia's corporate regulator has started legal action against ANZ Banking Group for alleged involvement in interest rate rigging among Australia's big four banks.

The Australian Securities and Investment Commission (Asic) today said it had commenced proceedings in the federal court in Melbourne against ANZ for "unconscionable conduct and market manipulation" in relation to the setting of the bank bill swap reference rate between March 2010 and May 2012.

The BBSW is the primary interest rate benchmark used in Australian financial markets, and is administered by the Australian Financial Markets Association.

On September 27, 2013, the AFMA changed the method by which the BBSW is calculated. The alleged conduct preceded that change.


ANZ has rejected the allegations and says it will "vigorously" defend legal action.

"We believe the Commission's statement of claim is based on a misunderstanding of how bank bill issuance and interest rate risk management operates and the limited case law which applies to this area," ANZ chief risk officer Nigel Williams said in a statement.

"Our practices in the BBSW market were consistent with Australian market practices in wholesale financial markets and we reject ASIC's characterisation of the transactions in question."

ANZ is the first of Australia's major banks to face action.

UBS, BNP Paribas and Royal Bank of Scotland have already acknowledged what ASIC called evidence of conduct seeking to influence the BBSW.

The trio of international banks also donated a total $2.6m to independent financial literacy projects after agreeing to enforceable undertakings in relation to potential misconduct.

"We have cooperated fully with ASIC's investigation over many months, at a cost of many millions of dollars," Williams said.

"It is now for the courts to provide clarity on trading practices."