Major Banks Still on Hook in Interest-Rate Swap Case

MANHATTAN (CN) — A federal judge in New York advanced part of a consolidated lawsuit accusing 12 major banks — including Bank of America, Deutsche Bank and Goldman Sachs — of colluding to rig a $275 trillion market on interest-rate swaps.

An increasingly common and complex form of financial derivatives, interest-rate swaps allow two parties to trade interest-rate-based cash flows on a specific amount of money over a fixed time period.

U.S. District Judge Paul Engelmayer noted in his Friday ruling that this market has ballooned over the past three decades, estimating that its notional quantity grew from roughly $230 trillion in 2006 to $381 trillion by 2014.

Read on.

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