Europe Investigating Banks over Derivatives

An article in The New York Times reported that the European Commission announced two broad-sweeping investigations into some of the world’s largest banks over their roles in the derivatives market, where trillions of dollars of financial instruments are controlled by a small number of companies.

According to the article, the inquiry follows an examination of that market last year by The New York Times that highlighted efforts by banks like JPMorgan Chase, Deutsche Bank, Goldman Sachs and others to control access to the derivatives market, even as global regulators try to bring transparency and safety to a murky corner of the financial world.

The commission said in a statement last Friday morning that it was looking at nine banks that had been involved in setting up a new type of financial intermediary known as a clearing house. That clearing house was arranged with the Intercontinental Exchange, and it is supposed to help reduce risk in the derivatives market. The nine financial firms are Bank of America, Barclays Bank, Citigroup, Crédit Suisse, Deutsche Bank, Goldman Sachs, JPMorgan, Morgan Stanley and UBS.