Interest Rate Benchmark Reform in Australia

Interest rate benchmarks are widely relied upon in global financial markets. They are referenced in contracts for derivatives, loans and securities. They are also used by market participants to value financial instruments, and by investment funds as benchmarks for assessing their performance. In response to the weaknesses identified in the setting of financial benchmarks such as the London Interbank Offered Rates (LIBOR), the global regulatory community has been involved in a program to strengthen financial benchmarks (for further information, refer to Financial Stability Board – Libor and Other Benchmarks). For the Australian dollar, the key interest rate benchmarks are the bank bill swap rates (BBSW) and the cash rate. Reforms have also been undertaken to enhance the robustness of these benchmarks.

Bank Bill Swap Rates (BBSW)

BBSW are credit-based interest rate benchmarks which measure the cost for highly rated banks in Australia to issue short-term bank paper for each monthly tenor between one month and six months. BBSW was administered by the Australian Financial Markets Association (AFMA) until this responsibility was transferred to the Australian Securities Exchange (ASX) in 2017. Australia has an active bank bill market, where the major banks issue bills as a regular source of funding, and a wide range of wholesale investors purchase bills as a liquid cash management product. The Australian financial regulators have been working closely with the ASX and market participants to ensure that BBSW remains robust. For further information about the reforms undertaken to strengthen BBSW, refer to ASX Benchmark Administration.

Cash Rate

The (near) risk-free benchmark rate (RFR) for the Australian dollar is the cash rate. It is administered by the Reserve Bank and calculated as the weighted average interest rate on unsecured overnight loans between banks. The cash rate is best known as the Reserve Bank Board's operational target for monetary policy. The cash rate is also known by the acronym AONIA (AUD Overnight Index Average) in financial markets. The RBA also publishes a cash rate total return index (TRI) since May 2016 as a complementary backward-looking benchmark, based on the cash rate. For further information about the cash rate, refer to Cash Rate Methodology.

Regulatory Framework for Financial Benchmarks

In April 2018, the Australian Government implemented a new regulatory framework for financial benchmarks. For further information on the financial benchmarks deemed significant by ASIC, refer to ASIC Financial Benchmarks.

Committees Working on Benchmark Reform

The Australian financial regulators have been working closely with industry working groups to ensure that key interest rate benchmarks for the Australian dollar remain robust. Key working groups involved in interest rate benchmark reform in Australia are:

  • ASX BBSW Advisory Committee – ASX, in consultation with the BBSW Advisory Committee, has primary oversight of the governance of the BBSW benchmark. The BBSW Advisory Committee has broad industry representation. For further information on the BBSW benchmark, refer to ASX Benchmark Administration.
  • Australian Financial Markets Association (AFMA) – AFMA's Market Governance Committee promotes industry dialogue and facilitates information sharing among market participants, including on benchmark reform issues, to assist efficiency and professionalism in the operation of the financial markets. AFMA also hosts the IBOR Transformation Australian Working Group, which is Australia's national working group for considering the strategic issues facing Australia in relation to IBOR transition and benchmark reform, and leading work on domestic responses to the change. For more information, refer to AFMA.
  • Australian Securitisation Forum (ASF) – the ASF has established a working group to consider the implications of benchmark reform for the Australian securitisation market. For more information, refer to ASF.

Robust Contractual Fallbacks

Fallbacks provide important insurance when using any benchmark. ISDA's 2020 IBOR Fallbacks Protocol and associated Supplement to the 2006 ISDA Definitions came into effect in early 2021, implementing robust fall-back provisions for derivative contracts referencing key interbank offered rates (IBORs), including LIBOR and BBSW. If a particular IBOR was to become unavailable, these fallback provisions provide for it to be replaced with the relevant risk-free rate plus a fixed spread. For more information, refer to ISDA. Australian regulators have strongly encouraged financial institutions and corporations that use derivatives contracts referencing LIBOR to review and, wherever practical, adhere to the ISDA protocol as a key element of the orderly transition away from LIBOR. In addition, in September 2021, the Reserve Bank published new repo eligibility criteria requiring robust fallback provisions for securities referencing BBSW. In order to be eligible as collateral in the Reserve Bank’s market operations, all floating rate notes (FRNs) and marketed asset-backed securities issued on or after 1 December 2022 that reference BBSW must include robust fallback provisions. For more information, refer to Media Release.


  • Christopher Kent (2021), ‘The End of Libor and the Australian Market’, Keynote Address to ISDA Benchmark Strategies Forum Asia Pacific, Online, 18 March.
  • Christopher Kent (2020), ‘Benchmark Reforms’, Remarks to the Australian Securitisation Forum Virtual Symposium, Sydney, 17 November.
  • Christopher Kent (2019), Panel participation at the Australian Securitisation Forum – Sydney, 19 November.
    Audio 13.33MB
  • Christopher Kent (2019), Panel participation at the International Swaps and Derivatives Association – Sydney, 23 October.
    Audio 8.05MB
  • Guy Debelle, Cathie Armour, Andrew Bailey and Christopher Giancarlo, (2019), Panel discussion – The End of Libor and the Impact on Australian Financial Markets – Sydney, 13 May.
    Audio 34.21MB
  • Guy Debelle (2019), ‘Progress on Benchmark Reform’, Keynote Address at ISDA 34th Annual General Meeting, Hong Kong, 11 April.
  • Christopher Kent (2019), ‘Bonds and Benchmarks’, Address to the KangaNews DCM Summit, 19 March.
  • Christopher Kent (2018), ‘Securitisation and the Housing Market’, Address to the Australian Securitisation Forum Conference, 26 November.
  • Guy Debelle (2018), ‘Interest Rate Benchmark Reform’, Keynote Address at ISDA (International Swaps and Derivatives Association) Forum (appearance via video link), Hong Kong, 15 May.
  • Guy Debelle (2017), ‘Interest Rate Benchmarks’, Speech at FINSIA Signature Event: The Regulators, Sydney, 8 September.
  • Guy Debelle (2016), ‘Interest Rate Benchmarks’, Speech at KangaNews Debt Capital Markets Summit 2016, 22 February.
  • Guy Debelle (2015), ‘Benchmarks’, Address to Bloomberg Summit, Sydney, 18 November.

Media Releases