The Zacks Analyst Blog Highlights: Bank of America, JPMorgan Chase, Goldman Sachs Group, CME Group and IntercontinentalExchange

 The Zacks Analyst Blog Highlights: Bank of America, JPMorgan Chase, Goldman
             Sachs Group, CME Group and IntercontinentalExchange

PR Newswire

CHICAGO, July 3, 2013

CHICAGO, July 3, 2013 /PRNewswire/ announces the list of stocks
featured in the Analyst Blog. Every day the Zacks Equity Research analysts
discuss the latest news and events impacting stocks and the financial markets.
Stocks recently featured in the blog include Bank of America Corporation
(NYSE:BAC-Free Report), JPMorgan Chase & Co. (NYSE:JPM-Free Report), Goldman
Sachs Group, Inc. (NYSE:GS-Free Report), CME Group Inc.
(Nasdaq:CME-FreeReport) and IntercontinentalExchange, Inc. (NYSE:ICE-Free


Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of
the Day pick for free.

Here are highlights from Tuesday's Analyst Blog:

EU Slaps CDS Collusion Charge on Banks

Investment banks' hold over the derivatives market has come under regulatory
scrutiny as European Commission – the European Union's (EU) anti-trust body –
accused 13 large global banks of colluding against stock exchanges. The EU
charged the banks for preventing the exchanges from entering the lucrative
derivatives market during 2006–2009.

Some of the banks indicted by the EU include – Bank of America Corporation
(NYSE:BAC-Free Report) and JPMorgan Chase & Co. (NYSE:JPM-Free Report) along
with the Bear Stearns Co. business that it purchased, BNP Paribas SA and The
Goldman Sachs Group, Inc. (NYSE:GS-Free Report). Concurrently, International
Swaps and Derivatives Association (ISDA) and Markit – a financial data
provider – was also charged by the EU.

After conducting preliminary investigation, the EU concluded that banks, aided
by ISDA and Markit, prevented Deutsche Boerse Group and CME Group Inc.'s
(Nasdaq:CME-Free Report) Chicago Mercantile Exchange from entering the credit
default swaps (CDS) business during 2006–2009. Nevertheless,
IntercontinentalExchange, Inc. (NYSE:ICE-Free Report) has started offering
credit futures on its exchange from this year.

CDS permits an investor to place a bet on whether a company or country will
default on its bonds within a fixed time period. CDS were initially traded
over-the-counter (OTC). Gradually, given the regulatory efforts to improve
transparency, CDS have been shifting to exchanges.

The EU alleged that the banks were against the CDS move from OTC to the
exchanges, as their bottom lines would have suffered, since exchange-traded
CDS are less expensive. Hence, the banks instructed ISDA and Markit to refuse
the stock exchanges licenses to use their data for creating exchange traded
CDS. They were only given licenses to using data for OTC products.

Further, OTC trading of CDS lacked transparency and regulatory oversight,
thereby weakening the financial markets. This was all the more exposed when
Lehman Brothers Inc. collapsed in 2008. Since then, efforts from regulators
across the globe continue in an attempt make derivatives trading more

The banks charged by the EU for their alleged involvement in such contentious
practices are expected to be severely penalized. Moreover, the U.S. anti-trust
authorities have started their own investigation with respect to similar

For banks, these charges and investigations pose huge risks. These are likely
to increase legal expenses and tarnish the company's reputation to some extent
as well.

However, for financial markets as a whole, these initiatives will help in
countering economic crisis in the future. Notably, this could ultimately
result in less involvement of taxpayers' money in the bailout of troubled
financial institutions.

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of
the Day pick for free.

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