The methodology for setting the Bank Bill Swap Rate was revised in September 2013, following the revelation of the Libor rigging scandal. This involved moving from a submissions based benchmark to a market data based benchmark.Now the Council of Financial Regulators is proposing further revision. On Friday, the Council released a consultation paper presenting options for the further evolution of the methodology for setting this financial benchmark of systemic importance.BBSW serves as a reference rate for pricing many debt securities and lending transactions. It is also used to determine payment obligations on a range of derivatives such as interest rate swaps, cross-currency swaps and forward rate agreements, and is influential in the pricing of bank bill futures.The Australian Financial Markets Association is responsible for the methodology used to calculate BBSW.BBSW is calculated using live and executable prices from trading venues for bank accepted bills and negotiable certificates of deposit. An automated process extracts these rates directly from observable prices, thereby removing the need for submissions, and was designed to ensure that BBSW remains underpinned by an actively traded market.AFMA calculates the BBSW rate as the midpoint of the nationally observed best bid and best offer for these securities. The problem is that there is low volume of observable transaction taking place at time of day when BBSW is set - this being 10 am.Several options are set out in the consultation paper, including continuing with the current NBBO calculation methodology and anchoring the methodology to a broader set of market transactions. This option would require direct negotiation of interest rates on BABs and NCDs with third parties rather than linking rates to BBSW, as is the current practice.Another option is amending the calculation methodology to be based on submissions of the aggregate cost of wholesale fund raising. This is similar to how Libor is set now.A third option is to amend the calculation methodology to be based on submissions of individual wholesale funding transactions. This is similar to how Euribor is set.AFMA subsequently released a statement saying it was working with the Council to ensure BBSW remained a robust and reliable benchmark. AFMA also noted that "a move to a submitter panel methodology, like LIBOR or Euribor, could require some form of regulatory compulsion, which is beyond AFMA's authority" as it is not a regulatory body.The consultation period will end on 3 December 2015.