ICAP Wins Dismissal of US Antitrust Suit Over Interest Rate Swaps

A New York federal judge on Monday dismissed ICAP Capital Markets, which was rebranded last year to NEX Group, from a class action litigation alleging that the broker dealer and some US banks conspired to prevent the trading of interest rate 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 on electronic exchanges.

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NEX Group welcomed the decision by the US Southern District of New York, saying that the plaintiffs did not provide evidence to support their claims which were, according to the company, “variously conclusory, insufficient to state a plausible claim, and inadequate to support an inference of participation in any wrongdoing.”

The case is related to a pension fund’s antitrust lawsuit alleging that ICAP, Tradeweb and several banks blocked market participants from trading the instruments on exchanges to preserve their profits. As a result of this collusion, the suit alleges, two platforms and a dozen megabanks, including Goldman Sachs and Bank of America, were able to limit competition from non-banks in the lucrative $320 trillion market for interest rate swaps.

The suit alleged that since at least 2007 the banks “have jointly threatened, boycotted, coerced, and otherwise eliminated any entity or practice that had the potential to bring 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 trading to buyside investors. Defendants did this for one simple reason: to preserve an extraordinary profit center.”

In 2015, 12 of Wall Street’s biggest banks and two trading platforms settled similar allegations for another type of derivative known as credit default swaps by agreeing to pay nearly $2 billion.