They faced a potential conflict of interest when they participated in the market underpinning the benchmark and the derivatives market that references it. They stated that they were uncertain about how regulators expected them to manage these conflicts. 2. Managers of investment funds were reluctant to trade at outright yields.
They preferred to transact at the yet-to-be-determined BBSW since this minimised tracking error against their performance benchmarks. To address these challenges, two key steps are being taken to support BBSW. First, the BBSW methodology is being strengthened to enable the benchmark to be calculated directly from the wider set of market transactions that occur each day.