Goldman Sachs Group Inc. and JPMorgan Chase & Co. were among more than a dozen financial institutions accused by the European Union of colluding to curb competition in the credit derivatives industry.
According to Bloomberg, the EU sent a so-called statement of objections to 13 banks, data provider Markit Group Ltd. and the International Swaps & Derivatives Association over allegations they worked together “to prevent exchanges from entering the credit derivatives business between 2006 and 2009,” the European Commission said in an e-mailed statement.
“It would be unacceptable if banks collectively blocked exchanges to protect their revenues from over-the-counter trading of credit derivatives,” Joaquin Almunia, the Brussels-based commissioner in charge of competition, said in the statement.
“Over-the-counter trading is not only more expensive for investors than exchange trading, it is also prone to systemic risks.”
The European Commission in April 2011 opened a probe into whether banks colluded by giving market information to Markit, a data provider majority-owned by Wall Street’s largest banks.
In March, the EU extended its investigation to include ISDA, having found indications that it “may have been involved in a coordinated effort of investment banks to delay or prevent exchanges from entering the credit derivatives business.
Other banks in the probe include Citigroup Inc., Credit Suisse Group AG, Deutsche Bank AG, Morgan Stanley, Barclays Plc and UBS AG, the commission said.
Global regulators are seeking to toughen regulation of the credit-default swap market, saying the trades helped fuel the financial crisis.
The EU’s swaps probes add to separate investigations into whether banks colluded to manipulate the London interbank offered rate.
The US Justice Department is also probing the credit derivatives clearing, trading and information services industries.