Westpac was in breach of its obligations under its financial services licence at times in 2010 and also held to have engaged in unconscionable conduct in the bank bill market, the Federal Court of Australia ruled yesterday.

The bank has evaded any adverse findings regarding ASIC's allegations of market manipulation or market rigging, and also deflected allegations of misleading or deceptive conduct.

In a colossal, 650 page ruling yesterday, Justice Jonathan Beach rejected the majority of claims made by the Australian Securities and Investments Commission against Westpac.

The bank faces penalties guessed to come in somewhere around the A$5 million mark for its misconduct, an amount that is around half the level of the penalties paid by ANZ and NAB on corresponding allegations raised by ASIC that each bank settled out of court.

The bank is likely to forgo an appeal.

While dismissive of the bulk of ASIC's case, Justice Beach nevertheless portrayed the conduct of Westpac's treasury in embarrassing terms.

"Westpac had obligations to support the Bank Bill Market as a Prime Bank, BBSW panellist and member of relevant AFMA committees. Its conduct on the four occasions [in 2010] ran counter to those obligations," Beach wrote.

Breaches by Westpac of its responsibilities under its financial service licence are a recurring theme of the judgment.

"I consider that Westpac contravened s 912A(1)(f) of the Corporations Act by not ensuring that all employees of Group Treasury and Financial Markets on either side of the information barrier were adequately trained to ensure that there was no osmosis of relevant information across the barrier," Beach said.

"In my view Westpac failed to take reasonable steps to ensure that its representatives did not engage in trading in Prime Bank Bills in the Bank Bill Market with the sole or dominant purpose of manipulating the BBSW.

"Further, Westpac failed to ensure that its traders were adequately trained not to engage in trading with such a sole or dominant purpose. This should have been reinforced and stipulated to them orally and in writing."

Beach concluded there was a "special disadvantage" to some of the bank's counterparties, and that this "was sufficiently evident to Westpac to render its conduct unconscionable.

"Westpac expected those counterparties to understand the BBSW to be a key financial market reference or benchmark rate. It therefore must have expected those counterparties to assume that the BBSW was determined by and to reflect genuine market forces of supply and demand."

In fact, Beach said, Westpac "was aware that the practice and the susceptibility of the BBSW to manipulation through such a practice was not common knowledge."

Beach shared ASIC's view of some moral matters.

"I agree with ASIC that having regard to the nature of the BBSW as a market reference rate and the affected counterparties' understanding of the BBSW as the 'bargain' ... was one founded on the BBSW being free from manipulation by Westpac.

"The substance of the contractual benefit bargained for was the calculation of payment obligations under the various BBSW Referenced Products by reference to a rate free of such manipulation."