Thirteen of the biggest investment banks in the world were accused by the EU of colluding to curb competition in the $10tn credit derivatives industry.
The EU sent a complaint, or statement of objections, to 13 banks, data provider Markit Group Ltd and the International Swaps & Derivatives Association (ISDA) over claims they sought “to prevent exchanges from entering the credit derivatives business between 2006 and 2009”, said the European Commission.
The probe is one of several by the commission into the financial industry, including if banks colluded to manipulate UK and European benchmark rates.
EU anti-trust chief Joaquin Almunia said he is seeking to settle the probes into Libor and Euribor with some of the banks in the credit default swaps case by the year end.
The EU, in Apr 2011, opened a probe into whether banks colluded by giving market information to Markit, a company majority-owned by Wall St’s largest banks. Earlier this year, the EU extended its investigation to include ISDA, having found signs it “may have been involved in a co-ordinated effort of investment banks to delay or prevent exchanges” from entering the credit swaps business.
The banks in the credit default swaps probe include Goldman Sachs, & Barclays, Bank of America and Royal Bank of Scotland.
“I’m sure banks are desperate to keep these products from going on exchange and keep as much of the pie to themselves as they can,” said Robert Kendrick, a credit analyst at Legal & General in London. “As an investor in banks, I’d be surprised if it makes a huge difference,” he said..”
ISDA is co-operating with the EU and “is confident that it has acted properly at all times,” it said in a statement.