05 October 2012 6:32am

Banks and other intermediaries are tending to the management of their short-term interest rate risks more energetically, if the annual compendium of data on market activity from the Australian Financial Markets Association is any guide.

AFMA said that turnover in overnight index swaps increased two-thirds to A$8.7 trillion in 2011/12. This is more than four times the turnover in this interest rate risk-management product than four years earlier, and is one indicator of the altered practice of bank treasuries.

The spread between the bank bill swap reference rate and overnight...