Derivatives Are Focus of Antitrust Investigators

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The Justice Department is investigating the role of several major companies in the credit markets, in another indication that the government is intensifying its scrutiny of derivatives,

Markit Group Holdings, a data warehouse controlled by several big banks, said Tuesday that it had been notified by antitrust officials at the Justice Department of an inquiry into the “credit derivatives markets and related markets” and that it would “provide any information requested.”

The department is conducting a similar inquiry at several banks to determine if they had unfair access to pricing information, according to a person briefed on the situation.

The investigation is a sign of the increased attention the derivatives business is getting in Washington.

Derivatives are sophisticated and profitable instruments that were intended to limit risk but instead were at the center of the financial crisis last year. The derivatives market now represents transactions with a face value of $600 trillion.

They were blamed for the near collapse of the American International Group, the insurance company that was a crucial trading partner with Wall Street firms in one widely used form of derivatives.

http://www.nytimes.com/2009/07/15/business/15cds.html?th&emc=th