Bank of America, Credit Suisse and Credit Agricole fined €28 million for role in bond trading cartel; Deutsche Boerse and Commerz Bank invest in 360x; New US credit benchmarks gain traction;
Bank of America, Credit Suisse and Credit Agricole fined €28 million for role in bond trading cartel
After an investigation by The European Commission, Bank of America, Credit Suisse and Credit Agricole were found guilty of manipulating bond trades and were fined 28 million Euros. The investigation started off through a whistleblowing activity that was raised by Deustche Bank.
The commission found out that the traders coordinated via Bloomberg chat groups for over five years. The commission stated “The behaviour of the investment banks restricted competition in a market in which investment and pension funds regularly buy and sell bonds on behalf of their investors and pensioners. The cartel harmed the financial markets and today’s decision sends a clear message that the Commission will not tolerate any type of collusive behaviour.”
In 2019, Barclays, RBS, Citi, JP Morgan and MUFG were fined by The European Commission for manipulating prices and trading activity across 11 currencies in the FX market. The total penalties summed up to over 1 billion euros.
Deutsche Boerse and Commerzbank invest in 360x
Duetsche Boerse and Commerzebank announced their new partnership with 360x to develop a new platform in trading digital assets. The new platform is expected to be a marketplace for tangible assets such as real-estate and arts as opposed to cryptocurrencies. Earlier this year, non-fungible tokens where a public proof of ownership is traded via distributed ledger came in to highlight. While it was regarded as a fad by some, other argued that the NFTs are a good way to enforce license. A distributed ledger based mechanism for trading real-estate for example could improve the transparency of the ownership as there can be only one wallet holder who has the ownership of a given token.
Deutsche Börse and Commerzbank have previously worked together on the distributed ledger space when they executed tokenized share trades over a distributed ledger in 2019.
New US credit benchmarks gain traction
With the FCA announcing phasing out of LIBOR by end of 2021, US credit benchmarks have gained new popularity. The Ameribor published by American Financial Exchange and the Bank Short Term Borrowing Yields index (BSBY) published by Bloomberg appear to be the choice for many substitute benchamarks across the US. Bank of America has stated that they have issued a 1 billion USD six-month floating rate note referencing the BSBY.
CME group however has stated that it will offer SOFR rates and curves based on the futures trading on SOFR contracts. SOFR futures trading volume at CME went up to 112,000 daily contracts in the first quarter. However the Eurodollar futures that refer the LIBOR rate still remains a favourite at an average of 2.7 billion daily contracts.
