Australia is scrapping the panel that sets interbank lending rates after the proposal of new international guidelines and an exodus of the banks that set the rate in the wake of the Libor rate-rigging scandal.
The Australian Financial Markets Association (AFMA), which administers Australia's bank bill swap (BBSW) reference rate, said it would bypass the panel and derive the rates directly from brokers and electronic markets.
"An advantage of this enhancement is that it will remove the need for a BBSW Panel, which will eliminate the associated compliance and ancillary costs which otherwise exist for panelist banks," the AFMA said in a statement issued late on Wednesday.
"This change is subject to technical requirements being satisfied, but it is hoped that this solution will be achievable within a period of months."
Banks around the world are reviewing their involvement in interest-rate setting panels after regulators dished out billions of dollars in fines to banks, including Barclays, UBS and Royal Bank of Scotland, for manipulating the London Interbank Offered Rate, known as Libor.
(Read More: Recent Libor Settlement Are Just Tip of the Iceberg)
Earlier this month, JP Morgan Chase confirmed it was pulling out of the BBSW, joining UBS, which left earlier this year.
The Swiss bank's move followed the publication of a U.S. Commodity Futures Trading Commission report into its manipulation of Libor and its Japanese yen equivalent.
Submissions to the BBSW process report the prevailing prices for a single type of clearly defined and homogeneously traded paper from four "prime banks" and observed by up to 14 panelists. The six middle submissions set the rate.