Investment behaviour of investors pdf

The European Commission has informed some of the world’s largest investment banks investment behaviour of investors pdf its preliminary conclusion that they infringed EU antitrust rules that prohibit anti-competitive agreements by colluding to prevent exchanges from entering the credit derivatives business between 2006 and 2009. The sending of a statement of objections does not prejudge the final outcome of the investigation. Commission Vice President in charge of competition policy Joaquín Almunia said: “It would be unacceptable if banks collectively blocked exchanges to protect their revenues from over-the-counter trading of credit derivatives.

Over-the-counter trading is not only more expensive for investors than exchange trading, it is also prone to systemic risks. Between 2006 and 2009, Deutsche Börse and the Chicago Mercantile Exchange tried to enter the credit derivatives business. The Commission takes the preliminary view that the banks acted collectively to shut out exchanges from the market because they feared that exchange trading would have reduced their revenues from acting as intermediaries in the OTC market. CDS are used by investors for hedging and investing. As a hedge a CDS provides protection against the credit risk arising from holding debt instruments. In OTC trading an investment bank typically acts as intermediary between supply and demand in the market for credit derivatives by promising to be a seller to every buyer and to be a buyer to every seller.

Exchange trading, on the contrary, matches supply and demand on an exchange’s trading platform. The Commission’s antitrust tools are complementary to these regulatory measures, which together seek to ensure safe, sound and efficient financial markets. A statement of objections is a formal step in Commission investigations into suspected violations of EU antitrust rules. Please forward this error screen to 64.

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