The announcement by the European Commission to probe the operation of top banks has taken the financial market off-guard. As per reports, the European Union’s antitrust regulator is all set to nail down the spurious nexus between top banks and a London-based organization that is the leading provider information on the market for credit default swaps, Markit.

Moreover, the investigation mainly involve deals pertaining to credit default swaps (CDS), which are essentially an insurance contract and are considered as a parameter of the credit worthiness of companies and governments.

Apparently, the Justice Department has been closely monitoring the activities in the derivative market in order to verify “the possibility of anticompetitive practices in the credit derivatives clearing, trading and information services industries”. As per reports, banks can be suitably penalized if they found guilty by the European Commission.

Meanwhile, the European Commission is in touch with the Department of Justice and the Federal Trade Commission about its ongoing investigation into the top banks, which includes JPMorgan, Bank of America, Barclays, BNP Paribas, Citigroup, Commerzbank, Crédit Suisse, Deutsche Bank, Goldman Sachs, HSBC, Morgan Stanley, Royal Bank of Scotland, UBS, Wells Fargo, Crédit Agricole and Société Générale.