NEW YORK MF Global has sued 12 large banks, accusing them of restricting competition in the $25 trillion credit default swap market, the latest in a string of lawsuits alleging that banks impeded new entrants by blocking exchange trading of the contracts.
The case, filed on Monday in the U.S. District Court in the Northern District of Illinois, follows similar suits filed by an Ohio-based pension fund, the Sheet Metal Workers Local 33 Cleveland District Pension Plan, and by a group of Danish pension funds in the same court.
An additional plaintiff, the Value Recovery Fund, has filed a similar lawsuit in the Southern District of New York.
The companies allege that dealers used their ownership and controls over clearing, data and other entities crucial to the market to block an independent clearinghouse from offering exchange trading, to deny market participants real-time price information and to stop new participants from entering the market.
As a result of the bank actions, the companies allege that they paid artificially high trading costs to buy and sell the credit default swaps, contracts that are used to protect against losses if a borrower defaults or to speculate on a company or country's credit quality.
Markit, the main CDS price provider and owner of the benchmark CDS indexes, and trade group the International Swaps and Derivatives Association (ISDA), which owns documentation and other licenses, are also named in the suit.
The 12 banks named in the complaint are Bank of America Corp (BAC.N), Barclays (BARC.L), BNP Paribas (BNPP.PA), Citigroup Inc (C.N), Credit Suisse CSGN.VX, Deutsche Bank (DBKGn.DE), Goldman Sachs Group Inc (GS.N), HSBC (HSBA.L), JPMorgan Chase & Co (JPM.N), Morgan Stanley (MS.N), The Royal Bank of Scotland (RBS.L) and UBS UBSN.VX.
Markit, ISDA and all banks named in the suit either declined comment or did not immediately respond for comment.
(Reporting by Karen Brettell; Editing by Ken Wills)