Interest rates traders at Westpac had regard "for Westpac's emphasis on funding and liquidity", counsel for the bank told the Federal Court yesterday as it opened its defence against ASIC's allegations of unconscionable conduct in the bank bill swap market several years ago.Matthew Darke, for the bank, told the court that "there were legitimate commercial reasons for Westpac's trading on each of the days in question," days on which ASIC contends there was bank misconduct.The bank had supplied "12 million communications" to ASIC, Darke said, going on to scorn ASIC's use of this trove in its own opening of the case on Tuesday."The case that ASIC seeks to make is based around a relatively small number of Westpac communications … they are, it seems, the best that ASIC can do," Darke scoffed.ASIC, on Tuesday, played 23 audio recordings, many featuring Colin Roden, the executive director and later managing director of portfolio management within group treasury at the bank. A senior associate, Sophie Johnson, is the main supporting act on the tapes and transcripts relied on by ASIC, many of the exchanges expressed crudely and in jargon.The credibility of Roden and Johnson looks set to be backstopped during the trial with the evidence of Curt Zuber, Westpac's group treasurer since 2004. Zuber was himself once in Roden's shoes, serving as manager of the bank's short-term interest rate risk desk before moving up to his present post.Darke foreshadowed evidence centred on the methods of the group treasury function of Westpac and its board's demands for diligence around funding, liquidity and interest rate risk management.Westpac's counsel led Justice Jonathan Beach through a history of bank funding markets, starting with the early days of the GFC, three years before the contentious 26 months of bank conduct under scrutiny in this hearing.Westpac, Darke explained, "was in competition with other banks in that respect to demonstrate its strength and security. From around 2007 there was a strong focus within Westpac on growing its holdings of liquid assets. That was due to a number of factors."First, from around 2007 there was the global financial crisis during which funding markets globally became very constrained. Then on 1 December 2008 Westpac acquired St George, which was another bank also heavily dependent on raising wholesale funding in domestic and offshore markets. And from 2009 one had the continuing effects of the GFC which were compounded by European sovereign debt crisis."In response to those events, Darke said, "between 2009 and 2012 Westpac increased its holding of liquid assets from around A$20 billion to around A$110 billion, an almost sixfold increase, and that included increasing Westpac's holdings of prime bank bills."He said that "during the relevant period, Westpac's holding of prime bank bills each month averaged between $6 billion and $10 billion. That increase in liquid asset holdings was implemented in part to ensure that prudential requirements were met."Darke outlined that the evidence of Curt Zuber, the bank's treasurer, "will be that during the period, he told members of group treasury on