CME CME Group Inc

European antitrust authorities have dropped a high-profile investigation into 13 of the world's largest investment banks over alleged collusion in the lucrative credit-derivatives market.

The European Commission, the bloc's top antitrust regulator, had charged the banks two years ago with colluding to prevent the multitrillion-dollar market for credit-default swaps from moving onto regulated exchanges and away from markets controlled by the banks.

But in a low-profile statement on Friday, the commission admitted that the "evidence was not sufficiently conclusive to confirm the commission's concerns with regards to the 13 investment banks."

It said the decision was "based on a thorough analysis of all information received from the parties in their replies and during the oral hearing of May 2014, as well as on documents obtained through additional fact finding."

The statement was buried at the bottom of a daily news email sent out by the EU's executive arm.

Credit-default swaps, the derivatives that act as insurance against a debt default by a company or a government, were blamed for accelerating the spread of the financial crisis after the collapse of Lehman Brothers Inc. in 2008. Before the financial crisis erupted, trading CDSs were a source of big profits for financial institutions.

European authorities argued that the banks, including Goldman Sachs Group Inc., J.P. Morgan Chase & Co., and Deutsche Bank AG, conspired to prevent trading from moving onto potentially less risky, more-transparent platforms, where their profits would be significantly lower.

The banks controlled the data that allowed the market to function and conducted trades "over the counter," in direct transactions among one another, in ways that bolstered profits and prevented other firms from entering the market, European Union authorities said.

The charges were sent out by the EU's former antitrust chief, Joaquí n Almunia, in July 2013. At the time, Mr. Almunia said exchange operators Deutsche Bö rse AG and the CME Group Inc. had attempted to open the market between 2006 and 2009, but were foiled by the banks' anticompetitive practices.

The banks charged were Merrill Lynch, now a unit of Bank of America Corp., Barclays PLC, J.P. Morgan Chase & Co. as well as the Bear Stearns operation it bought during the crisis, BNP Paribas SA, Citigroup Inc., Credit Suisse AG, Deutsche Bank, Goldman Sachs, HSBC Holdings PLC, Morgan Stanley, Royal Bank of Scotland Group PLC and UBS Group AG. The commission also sent charges to the International Swaps and Derivatives Association, an industry group controlled by the banks, and Markit, a data provider owned by the banks.

In its statement on Friday, the commission said it would continue to investigate ISDA and Markit. It will also "continue monitoring the practices of investment banks in financial markets, including in the credit default swaps sector."

Write to Tom Fairless at tom.fairless@wsj.com

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(END) Dow Jones Newswires

December 04, 2015 07:45 ET (12:45 GMT)

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