UBS hit over interest rate rigging The Australian arm of UBS has been forced to review internal processes and will put $1 million towards financial literacy after some of its staff tried to manipulate a key local interest rate. The Australian Securities and Investments Commission on Monday said UBS had last year provided it with evidence that staff were trying to influence submissions to the bank bill swap rate, a key short term money market. The submissions were intended to benefit UBS" derivatives positions, though an independent expert has since found their market impact was "insignificant," ASIC said. After withdrawing from the group of banks that makes submissions used to set the bank bill swap rate in February this year, it has now committed to an enforceable undertaking with the regulator. It must ensure it does not compromise benchmarks in the future, and has also put $1 million towards funding financial literacy projects, ASIC said. Until September this year the bank bill swap rate was calculated through submissions from up to 14 local banks. However it is now calculated electronically, as regulators globally investigate the integrity of benchmark interest rates following revelations London's inter-bank offered rate (LIBOR) was rigged by bankers. Global investment banks are under severe scrutiny after traders were found to have distorted key market benchmarks such the Libor between 2005 and 2010. Libor is used to set an estimated $US500 trillion of bonds, home loans and other interest-rate products. UBS paid $US1.5 billion in fines to US, British and Swiss market regulators for its traders" role in rigging Libor. ASIC said its investigations into Australia's benchmark rate were continuing. In a separate move, NAB will also make a voluntary contribution of $2 million to fund independent financial literacy projects in Australia. The move came as ASIC also secured an enforceable undertaking from National Australia Bank over its role in the way it regulated information through the bank. The undertaking relates specifically to NAB's responsibility for ""potential market misconduct"" undertaken by a traders linked to a contractor. This trading led to a price spike across several ASX200 stocks - including banks - on October 18 last year. ASIC said its investigation of the contractor and its trading personnel continues. NAB has agreed to adopt specific monitoring and control systems for its direct market access trading. ASIC will supervise those systems for the next three years. NAB's review under the EU will address ASIC's concerns about the inadequacy of its systems and controls in relation to its use of direct market access. ""It is imperative that entities have adequate monitoring and control systems in place to ensure this type of activity does not occur,"" said ASIC Commissioner Cathie Armour.