EU Drops Probe Into Banks on Derivatives
December 04 2015 - 8:00AM
Dow Jones News
European antitrust authorities have dropped a high-profile
investigation into 13 of the world's largest investment banks over
alleged collusion in the lucrative credit-derivatives market.
The European Commission, the bloc's top antitrust regulator, had
charged the banks two years ago with colluding to prevent the
multitrillion-dollar market for credit-default swaps from moving
onto regulated exchanges and away from markets controlled by the
banks.
But in a low-profile statement on Friday, the commission
admitted that the "evidence was not sufficiently conclusive to
confirm the commission's concerns with regards to the 13 investment
banks."
It said the decision was "based on a thorough analysis of all
information received from the parties in their replies and during
the oral hearing of May 2014, as well as on documents obtained
through additional fact finding."
The statement was buried at the bottom of a daily news email
sent out by the EU's executive arm.
Credit-default swaps, the derivatives that act as insurance
against a debt default by a company or a government, were blamed
for accelerating the spread of the financial crisis after the
collapse of Lehman Brothers Inc. in 2008. Before the financial
crisis erupted, trading CDSs were a source of big profits for
financial institutions.
European authorities argued that the banks, including Goldman
Sachs Group Inc., J.P. Morgan Chase & Co., and Deutsche Bank
AG, conspired to prevent trading from moving onto potentially less
risky, more-transparent platforms, where their profits would be
significantly lower.
The banks controlled the data that allowed the market to
function and conducted trades "over the counter," in direct
transactions among one another, in ways that bolstered profits and
prevented other firms from entering the market, European Union
authorities said.
The charges were sent out by the EU's former antitrust chief,
Joaquí n Almunia, in July 2013. At the time, Mr. Almunia said
exchange operators Deutsche Bö rse AG and the CME Group Inc. had
attempted to open the market between 2006 and 2009, but were foiled
by the banks' anticompetitive practices.
The banks charged were Merrill Lynch, now a unit of Bank of
America Corp., Barclays PLC, J.P. Morgan Chase & Co. as well as
the Bear Stearns operation it bought during the crisis, BNP Paribas
SA, Citigroup Inc., Credit Suisse AG, Deutsche Bank, Goldman Sachs,
HSBC Holdings PLC, Morgan Stanley, Royal Bank of Scotland Group PLC
and UBS Group AG. The commission also sent charges to the
International Swaps and Derivatives Association, an industry group
controlled by the banks, and Markit, a data provider owned by the
banks.
In its statement on Friday, the commission said it would
continue to investigate ISDA and Markit. It will also "continue
monitoring the practices of investment banks in financial markets,
including in the credit default swaps sector."
Write to Tom Fairless at tom.fairless@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
December 04, 2015 07:45 ET (12:45 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
Royal Bank of Scotland (NYSE:RBS)
Historical Stock Chart
From Aug 2024 to Sep 2024
Royal Bank of Scotland (NYSE:RBS)
Historical Stock Chart
From Sep 2023 to Sep 2024