Brussels, 29/04/2011 (Agence Europe) - On Friday 29 April 2011, the European Commission decided on its own accord to open two investigations into the credit default swap (CDS) market.
The first will examine whether 16 investment banks negotiating contracts (JP Morgan, Bank of America Merrill Lynch, Barclays, BNP Paribas, Citigroup, Commerzbank, Crédit Suisse First Boston, Deutsche Bank, Goldman Sachs, HSBC, Morgan Stanley, Royal Bank of Scotland, UBS, Wells Fargo Bank/Wachovia, Crédit Agricole and Société Générale) and UK company Markit, the biggest supplier of financial information on the CDS market, agreed to give Markit exclusive or special access to key information like pricing and journals about CDS deals. This would amount to the collective abuse of a dominant position by preventing Markit's competitors from gaining access to key information. The investigation will also see whether the licensing and distribution deals signed by Markit contain abusive clauses liable to penalise the competition on the market for information about CDS.
The second investigation will examine the clearing of CDS and a raft of deals by nine of the above-mentioned banks (Bank of America, Barclays Bank, Citigroup, Crédit Suisse Group, Deutsche Bank, Goldman Sachs, JP Morgan, Morgan Stanley and UBS) with the ICE Clear Europe clearing house when it bought up The Clearing Corporation. The deals contain measures like preferential pricing and profit-sharing that could encourage banks to use ICE as their clearing house rather than another company. The Commission will also investigate whether ICE has granted preferential treatment in its committees to the nine banks to the detriment of other institutions negotiating CDS. (F.G./transl.fl)