EU Regulators Exonerate Banks for Derivatives Manipulation Charges

13 banks have had accusations dropped against them from EU regulators due to lack of evidence, though Markit and ISDA's

A panel of leading EU antitrust regulators has collectively rescinded charges against thirteen banks for blocking exchanges from derivatives markets, according to a recent Reuters report.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 & 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 (CME) from entering the credit-derivatives business from 2006 to 2009.

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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.

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