ISDA Caught Up in EU Probe of Credit-Default Swap Data

The International Swaps & Derivatives Association, a financial industry derivatives group, is being probed as part of a European Union antitrust investigation into how data on credit derivatives is shared.

Regulators found “indications that ISDA may have been involved in a coordinated effort of investment banks to delay or prevent exchanges from entering the credit derivatives business,” the European Commission said in a statement today. The EU started a probe in April 2011 into whether 16 lenders, including Citigroup Inc. (C) and Deutsche Bank AG (DBK), colluded by giving pricing information to data provider Markit Group Ltd.

The EU’s probes add to separate antitrust investigations into whether banks colluded to manipulate benchmark lending rates, including the London interbank offered rate. The U.S. Justice Department is also probing the credit derivatives clearing, trading and information services industries.

“It can often be difficult to prove that collusion or market distorting activities have been taking place,” Richard Reid, an economist at the University of Dundee in Scotland, said in an e-mailed statement. “Sometimes investigations like these are used to push for changes in the way certain markets operate in order to make the process more accountable in the future.”


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