EC investigation of alleged collusion in the global market for trading credit default swaps

Brattle was retained by a global investment bank in connection with the European Commission (EC) investigation of alleged collusion and exclusionary conduct by 14 investment banks in the global market for trading credit default swaps (CDS). Our tasks involved analyzing the liquidity of CDS index trading during 2006-2009 to determine if the market was sufficiently liquid to move from over-the-counter to exchange based trading. We also evaluated the allegation that the investment banks excluded exchanges from setting up exchange trading of CDS products. To this end we assessed the exchanges’ preparedness to conduct CDS trading. This involved reviewing the evidence on financial and other derivatives launched by exchanges to determine the factors required to ensure a successful outcome of a financial futures product. We submitted economic and financial analyses and reports to the EC, and provided written and oral testimony to the EC at case hearings.