The European Securities and Markets Authority said it is scrutinizing the market for credit default swaps after recent trading activity amplified turmoil for banking stocks.
“ESMA, together with the national regulators, has been looking into the recent market movements, including in the CDS market,” a spokesman said in response to questions from Bloomberg.
Bloomberg reported earlier this week that regulators are singling out a trade on Deutsche Bank AG’s CDS that they suspect fueled a global selloff on Friday. The contracts can be illiquid, so a single bet can trigger big moves.
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