BRUSSELS, April 30 (UPI) -- The world's largest banks are under the scrutiny of European Union antitrust regulators looking into their roles in the derivatives market, an EU official says.
The European officials are investigating whether banks such as Barclays and Goldman Sachs have damaged other financial firms in the derivatives arena, The New York Times reported Friday.
"Lack of transparency in markets can lead to abusive behavior and facilitate violations of competition rules," European Union antitrust Commissioner Joaquin Almunia said in a statement. "I hope our investigation will contribute to a better functioning of financial markets and, therefore, to more sustainable recovery."
The Times said it had found earlier that major banks sought to control access to the $600 trillion derivatives market and the same time global regulators are trying to bring transparency and safety to the business.
The newspaper noted derivatives, which move risk from one party to another, contributed to the panic during the financial crisis because banks and regulators did not know all the parties involved in trillions of dollars of interweaving contracts.
The Times said the European investigators are focusing on a type of derivative called a credit default swap, which it described as essentially an insurance contract. They are common in stock investing and mortgage investing, when an investor wants to bet against a company's bond or a mortgage bond, the Times said.
