EU Regulators Exonerate Banks for Derivatives Manipulation Charges

A panel of leading EU antitrust regulators has collectively rescinded charges against thirteen banks for blocking exchanges from derivatives markets, according to a recent Reuters report. However, the investigation is still ongoing against data provider, Markit Group Ltd and the International Swaps Swaps Swaps can be defined as a derivate contact composed of two parties that exchange to cash flow between two separate financial instruments.They are generally divided into two categories. This includes contingent claims (options) and forward claims, where forward contracts, swaps, and exchange-traded funds (ETFs) are exchanged. Commodity price, equity price, interest rate, and foreign exchange rate are common variables used as one of the cash flows in swaps upon initiation. Different Types of Swaps Swaps can be defined as a derivate contact composed of two parties that exchange to cash flow between two separate financial instruments.They are generally divided into two categories. This includes contingent claims (options) and forward claims, where forward contracts, swaps, and exchange-traded funds (ETFs) are exchanged. Commodity price, equity price, interest rate, and foreign exchange rate are common variables used as one of the cash flows in swaps upon initiation. Different Types of Swaps Read this Term & Derivatives Association (ISDA).

The original investigation stemmed from a series of accusations in 2013 against a total of thirteen banks, Markit, and ISDA, which allegedly had worked together to prevent Deutsche Boerse AG and the Chicago Mercantile Exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term (CME) from entering the credit-derivatives business from 2006 to 2009.

The thirteen banks whose charges were dropped today included Bank of America Merrill Lynch (BAML), Barclays, Bear Stearns, BNP Paribas, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC, JPMorgan, Morgan Stanley, Royal Bank of Scotland (RBS), and UBS.

While the European Commission found that the Citigroup and Deutsche Bank’s efforts to stymie exchanges from derivatives markets were baseless given the lack of evidence, both Markit and ISDA have reiterated their innocence and lack of wrongdoing in the matter.

The decision is important for the banking institutions, many of which have already been on the hook for a millions of dollars in fines for illicit behavior, scandals, etc. following charges of FX manipulation and other charges. Time will tell whether both Markit and ISDA had a hand in the erecting barriers to the derivatives market. Until then, the thirteen aforementioned banks, many of which have already begun to scale back operations in cost cutting measures, can breathe a sigh of relief.