DOJ’s antitrust investigation of credit derivatives could have wide ranging effects

A few weeks ago we posted the news that the DOJ had launched an antitrust investigation into how dealers provide credit derivatives prices (see our previous post by clicking here).

Two recent articles in the Financial Times indicates it opens a tussle between regulators and Wall Street.   As one article states “in a week when Goldman Sachs and JPMorgan released turbo-charged trading results for the second quarter (which amply illustrate how the decline of some rival dealers has reinforced their dominance), the DoJ’s move suggests that the future for such institutions may not be so rosy”.

The other states “in recent months the DoJ has had reason to look at the credit derivatives world because of a flurry of corporate activity. Most notably, efforts are under way to create clearing platforms and Markit is creating a joint venture. As the DoJ peers into this once-geeky world, it is not surprising if it thinks some of those practices look a touch odd – at least given the mood of the times”.

Both articles offer insight to the credit derivatives market and we thought it would be of interest to Posse List members who have asked for such background articles.   You can access the articles by clicking here and here.