• Inquiry comes amid federal probe of $12.8 trillion market
  • State agency has jurisdiction over nine of 22 primary dealers

A New York regulator has joined a federal probe of banks that serve as primary dealers in the $12.8 trillion U.S. Treasuries market in an effort to determine whether traders colluded.

New York’s Department of Financial Services sent letters last month to the banks it regulates that act as counterparties for the Federal Reserve Bank of New York, asking for information about how they operate in that market, according to a person briefed on the matter.

Of the 22 primary dealers, nine are regulated by DFS: Bank of Nova Scotia, BMO Capital Markets Corp., BNP Paribas Securities Corp., Barclays Capital Inc., Credit Suisse Securities LLC, Deutsche Bank Securities Inc., Goldman Sachs & Co., Mizuho Securities USA Inc., and SG Americas Securities LLC.

Representatives from Barclays, Credit Suisse, Deutsche Bank, Mizuho, BNP Paribas and SG Americas declined to comment. Representatives for the others didn’t immediately respond to requests for comment.

The letters are intended to gather information and don’t indicate that the New York regulator has any evidence of wrongdoing, said the person, who wasn’t authorized to speak publicly about the matter. The New York inquiry was first reported by the Financial Times.

The U.S. Department of Justice launched a probe of the Treasuries market earlier this year, following multi-bank settlements over allegations of manipulation of interest rates and foreign-exchange rates.

The Boston public employees’ retirement system sued the primary dealers in July. The lawsuit alleges that the banks colluded to manipulate the market, in part through "when-issued" securities, or contracts that investors and banks trade before the issuance of U.S. bonds, notes or bills.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE