JPMorgan, Morgan Stanley pay most in $1.9 bln swaps price-fixing settlement

By Nate Raymond

Oct 16 (Reuters) - JPMorgan Chase & Co, Morgan Stanley and Barclays Plc will pay over half of a more than $1.86 billion settlement resolving investor claims they conspired to fix prices and limit competition in the market for credit default swaps, according to a court filing.

Details of the settlement's breakdown with those and nine other banks were disclosed in papers filed late on Friday, in federal court in Manhattan, a month after the proposed deal was first announced.

JPMorgan will pay $595 million, while Morgan Stanley and Barclays will pay $230 million and $178 million, respectively, according to the filings.

The defendants in the case include Bank of America Corp , BNP Paribas SA, Citigroup Inc, Credit 0Suisse Group AG, Deutsche Bank AG, Goldman Sachs Group Inc, HSBC Holdings Plc, Morgan Stanley, Royal Bank of Scotland Group Plc and UBS AG.

Goldman Sachs, Bank of America and Credit Suisse are set to pay about $164 million, $90 million and $159 million, while Deutsche, Citi and BNP Paribas will pay $120 million, $60 million and $89 million.

British banks HSBC and Royal Bank of Scotland will pay $25 million and $33 million.

The International Swaps and Derivatives Association (ISDA) will pay $750,000, while Markit Ltd, which provides credit derivative pricing services, will pay $45 million.

Credit default swaps are contracts that let investors buy protection to hedge against the risk that corporate or sovereign debt issuers will not meet their payment obligations.

The market peaked at $58 trillion in 2007, according to the Bank for International Settlements, but shrank to $16 trillion seven years later as investors better understood its risks.

American International Group Inc's CDS exposure was a major factor behind the 2008 federal bailout of that insurer.

In the lawsuit, investors claimed the defendants' activity caused them to pay unfair prices on CDS trades from late 2008 through the end of 2013, even though improved liquidity should have driven costs down.

They also said the banks tried in late 2008 to thwart the launch of a credit derivatives exchange being developed by CME Group Inc by agreeing not to use new CDS platforms and pushing ISDA and Markit not to provide licenses to the exchange.

U.S. and European regulators have also examined potential anti-competitive practices in the CDS market.

The investors include the Los Angeles County Employees Retirement Association and Salix Capital US Inc.

The case is In re: Credit Default Swaps Antitrust Litigation, U.S. District Court, Southern District of New York, No. 13-md-02476.

(Reporting by Nate Raymond in New York; Editing by Michael Perry)