International Banks Monopoly – Interest Rate Swap Fixing in US$320 Trillion Market And Anti Trust Class Action Lawsuit

January 31, 2016

By Padmini Arhant

Wall Street control over finance is no surprise.  However, the major players in banking sector deriving billions of dollars in interest rate swaps dealings worth US$320 trillion exemplify monopoly.

The bankers barring non-banks participation from trading common derivatives like interest rate swaps on electronic exchanges similar to stocks subvert market economy.

Capitalism morphed into monopolistic system threatens the foundation of free enterprise preventing vibrant competition and fair pricing eventually affecting public investors in the market.

Such activities are not without repercussions and as expected the class action law suit filed in U.S. District Court in Manhattan, New York in November 2015 against Goldman Sachs, Bank of America Merrill Lynch, JP Morgan Chase, Citigroup, Credit Suisse, Barclays, BNP Paribas, UBS, Deutsche Bank and the Royal Bank of Scotland is the tip of the iceberg.

The lawsuit filed by The Public School Teachers’ Pension and Retirement Fund of Chicago against the banks and trading platforms ICAP and Tradeweb sheds light on bankers’ network in collusion with swap key cogs rheostats behind securing complete management and monetary rewards in swap market.

The bankers’ safety net for profiteering on interest rate and credit default swaps reaping phenomenal returns while prohibiting investor friendly swap exchanges development from CME Group, TrueEX, Javelin Capital Markets and TeraExchange confirms antitrust violations necessitating actions for transparency and accessibility to protected derivative infrastructure.

Adopting unethical and unlawful means not excluding aggressive tactics to restrict exchange trading, the bankers solidarity in thwarting swap deals availability to general investors endanger market economy viability.

The banks listed in the antitrust lawsuit maintaining equity ownership in trading companies like Tradeweb maneuver rules in their favor for exclusive rights in derivative products.

With the main objective to inhibit growth in profit sharing derivatives domain, the banks and relevant firms complicity follow precedence despite the practice resulting in US$1.87 billion settlement last September in antitrust breach and egregious decisions for vested interests.

In politics and economy, the operatives at the helm projected as promoters of democracy and capitalism respectively proved to be otherwise in reality.

The functions demonstrate credibility or the lack thereof and determines sustainability.

Finance and banking industry representing the axis of economy require scrutiny and accountability eliminating seclusion in profitable zone not to mention carte blanche authority amongst leading international banks claiming privileged status evade compliance of rules that are applicable to the rest.

Removal of abusive standards set up to benefit large financial institutions and trading counterparts is paramount to avert ripple effects on the economy.

Peace to all!

Thank you.

Padmini Arhant