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 index swaps is often viewed as a measure of Australian bank funding pressures.Sean Keane, of Triple T Consulting, wrote in his bulletin for Credit Suisse yesterday that "as might be expected in a country with an active central bank… the overnight index swap product... has increasingly pushed out other instruments as the preferred hedging tool for managing bespoke interest rate risk."Overall, AFMA said interest rate product volumes increased 19 per cent over the financial year.Among highlights of the data were:-- The 64 per cent rise in overnight index swap volume and a 47 per cent rise in interest rate options volume.-- Turnover in Commonwealth government and state government bonds increased 19 per cent.-- Turnover in non-government bonds (including corporates and asset-backed securities) fell 35 per cent. AFMA said the value of this fall was around the same as the rise in government bonds, possibly reflecting portfolio risk re-balancing. -- Short-term money market securities' volumes were flat, while repurchase agreement volumes increased by two per cent.-- Credit derivatives' turnover increased 30 per cent on the back of solid growth in credit index trading (largely between banks). AFMA said this now represents 70 per cent of total credit trading volumes.  -- Interest rate swaps' volumes contracted by nine per cent, a trend AFMA attributes, in part, to the approaching mandatory clearing of many transactions on centralised platforms, as well as to increased capital requirements on trading book activities. -- Forward Rate Agreement volumes increased by nine per cent.