Telephone conversations between a top Westpac trader and his colleagues show he knew manipulating the bank bill swap rate was wrong, ASIC has told a Federal Court trial.
The regulator on Tuesday played an audio recording of Colin Roden, managing director of the bank's group treasury department, saying he would "f*** the rate" as it opened its case against Westpac.
The Australian Securities and Investments Commission has accused Westpac of misconduct and market manipulation between 2010 and 2012 in relation to the bank bill swap rate.
The BBSW, as it is known in financial markets, is a key benchmark used to price billions of dollars of loans, bills, bonds and derivatives.
The rate determines what banks charge to lend money to each other and is not directly linked to mortgage or other retail lending interest rates.
It's alleged Westpac traded in a manner intended to affect the price of bank bills on 16 occasions between April 2010 and June 2012.
Counsel for ASIC, Philip Crutchfield QC, said Westpac traders had the intention of moving the BBSW higher or lower because it had "so much riding on the rate set".
"Our case is what happened in this market is the project of the trading became to move the rate, rather than the rate falling out of the trading," Mr Crutchfield said.
"In effect it's the tail wagging the dog."
The barrister says Mr Roden's comment "I'm going to f*** the rate" was about trying to keep the BBSW rate down.
"In this context, it means 'manipulate'," Mr Crutchfield said.
"And Mr Roden used it quite a number of times."
ASIC has also tendered transcripts of Mr Roden telling another trader "I know it was completely wrong, but I thought f*** it, I might as well f*** it" on April 6, 2010.
"We have got so much money on it, we just had to trade it," Mr Roden says.
"It's such a big rate set," his London-based colleague, Sophie Johnston, replies.
Mr Crutchfield said the traders had tried to explain the conversations in a different light.
"Westpac's valiant attempt to reconstruct what happened on the day frankly defies congruity," he said.
The trial before Justice Jonathan Beach resumes on Wednesday.