NEW YORK (Reuters) - A small trading exchange on Thursday filed an antitrust lawsuit accusing Bank of America Corp , Citigroup Inc, JPMorgan Chase & Co and nine other banks of conspiring to shut it out of the $9.9 trillion credit default swap market.
Tera Group Inc accused the banks of coordinating a boycott of its seven-year-old TeraExchange platform by refusing both to send it any CDS transactions, and to clear and settle any CDS trades that customers wanted to handle there.
It also said the banks used their 95 percent market share to require that trading follow a protocol known as “request for quote,” which Tera described as opaque and inefficient.
Tera said this enabled banks to boost profit by keeping traders in the dark about prices, defeating a goal of the 2010 Dodd-Frank financial reforms, while instilling a “great fear of retaliation” against traders who defected to rival platforms.
“Faced with Dealer Defendants’ unyielding boycott, TeraExchange has been shut out of the CDS market,” Tera said in its complaint filed in Manhattan federal court.
Bank of America, Citigroup and JPMorgan, which the complaint said control 40 percent of the CDS market, declined to comment.
Lawyers for Tera did not immediately respond to requests for comment. Tera Group is based in Summit, New Jersey, while TeraExchange is based in New York.
The other defendants are Barclays Plc, BNP Paribas SA, Credit Suisse Group AG, Deutsche Bank AG , Goldman Sachs Group Inc, HSBC Holdings Plc , Morgan Stanley, Royal Bank of Scotland Group Plc and UBS Group AG.
Tera is seeking unspecified damages, which would be tripled if a violation of the Sherman Antitrust Act were found.
It sued the same 12 banks in April 2016 for allegedly conspiring to block customers from trading interest rate swaps on its platform.
That lawsuit was later combined with three similar lawsuits, and that litigation remains pending, court records show.
Thursday’s case is Tera Group Inc et al v. Citigroup Inc et al, U.S. District Court, Southern District of New York, No. 17-04302. The interest rate swap case is In re: Interest Rate Swaps Antitrust Litigation in the same court, No. 16-md-02704.