US Justice Dept. confirms credit derivatives probe

July 16, 2009

   WASHINGTON, July 15 (Reuters) – The U.S. Justice Department confirmed on Wednesday that its Antitrust Division is investigating possible anti-competitive practices involving credit derivatives.
   “The Antitrust Division is investigating the possibility of anti-competitive practices in the credit derivatives clearing, trading and information services industries,” spokeswoman Laura Sweeney said in a statement.
   She declined further comment.
   Her statement came the day after Markit Ltd, a dealer-owned provider of prices in the credit default swap market, said the department was investigating the $26.5 trillion market.
   “Markit has been informed of an investigation by the Department of Justice into the credit derivatives and related markets,” the company said in a statement on Tuesday, but it did not specify the targets of the probe.
   The Justice Department’s Antitrust Division sent civil investigative demands this month to some large dealers in the CDS market, seeking detailed information about their CDS exposures and their relationship to Markit, according to people familiar with the letters.
   The Justice Department is thought to be looking into whether dealers that have an equity stake in Markit have any unfair advantage over other market participants relating to CDS price information, analysts said.
   The Obama administration’s Antitrust Division, under the leadership of Assistant Attorney General Christine Varney, has taken a more aggressive approach in enforcing the antitrust laws than the Bush administration.
 (Reporting by James Vicini; editing by Bernard Orr and Andre Grenon) ((jim.vicini@thomsonreuters.com +1-202-898-8397; Reuters Messaging: jim.vicini.reuters.com@reuters.net)) Keywords: FINANCIAL CDS/JUSTICE 
  
Wednesday, 15 July 2009 23:37:11RTRS [nN15367395] {C}ENDS

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[...] or abused a dominant market position. The U.S. Justice Department in 2009 launched a more tepid inquiry into “anti-competitive practices” in the trading, clearing and pricing of CDS in the United [...]