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In re Interest Rate SWAPS Antitrust Litigation

United States District Court, S.D. New York

July 28, 2017


          OPINION & ORDER

          PAUL A. ENGELMAYER, District Judge

         This multi-district litigation involves claims, brought primarily under the antitrust laws, of unlawful collusion by investment banks who were dealers in the market for interest rate swaps ("IRS" or "IRSs"). There are two groups of plaintiffs. The first consists of a putative class of investors who bought and sold IRSs between January 2008 and December 2016. They claim to have been subject to unfavorable pricing as a result of collusive actions among IRS dealers that impeded the development and later the survival of certain electronic exchange-based platforms for IRS trades. The second consists of a pair of companies, Javelin Capital Markets, LLC ("Javelin") and Tera Group, Inc. ("Tera") (together, "Javelin/Tera"). They claim that such dealers conspired to boycott and otherwise undermine the trading platforms that each developed and put in place by 2013 or 2014, which would have supplied investors with more competitive IRS prices. Plaintiffs sue 13 corporate entities and their affiliates: 11 investment banks that functioned as IRS dealers (the "Dealers" or "Dealer Defendants")[1]; one broker of IRS trades, ICAP Capital Markets, LLC (“ICAP”); and one provider of electronic trading services for IRSs, Tradeweb Markets LLC (“Tradeweb”).

         Pending are defendants' motions, under Federal Rule of Civil Procedure 12(b)(6), to dismiss plaintiffs' claims. For the reasons that follow, these motions are granted in part and denied in part.

         I. Factual Background

         The following facts are drawn from the Second Consolidated Amended Class Action Complaint (“SAC”), Dkt. 142 in No. 16-MD-2704, and Javelin/Tera's Second Consolidated Amended Complaint (“JTSAC”), Dkt. 145 in No. 16-MD-2704 (together, the “SACs”). In resolving the motions to dismiss, the Court assumes all well-pleaded facts to be true and draws all reasonable inferences in favor of the plaintiffs. See Koch v. Christie's Int'l PLC, 699 F.3d 141, 145 (2d Cir. 2012).[2]

         An important preface to the long factual allegations that follow is that the IRS market underwent major changes during the period (2007-2016) covered by the alleged conspiracy. The infrastructure necessary to support the electronic trading platforms which the investor plaintiffs claim were denied them as a result of defendants' collusion-platforms enabling anonymous “all-to-all” exchange trading of IRSs-evolved. There was also a major regulatory development: the Dodd-Frank statute, passed July 21, 2010 in response to the 2008 financial crisis. Dodd-Frank's mandates, as implemented by ensuing regulations, reshaped the IRS market. They facilitated the emergence, in 2013-2014, of electronic “all to all” platforms for anonymous IRS trading, like those of Javelin and Tera, accessible to investors.

         In considering plaintiffs' claims, it is, therefore, important to focus on the distinct goal, at each point, of the alleged conspiracy. Through 2012, plaintiffs allege concerted action among the Dealer Defendants and others to inhibit the emergence of electronic trading platforms accessible to investors that threatened to erode the Dealers' profit margins on IRS trades. From 2013 on, after such platforms emerged, plaintiffs allege a boycott aimed at destroying three such new platforms, including Javelin's and Tera's.

         A. Interest Rate Swaps

         An IRS is a financial derivative. It permits two parties to trade interest-rate-based cash flows on a specific amount of money over a fixed time period. Typically, one party to an IRS pays cash flows based on a fixed interest rate, while the counterparty pays cash flows based on a floating interest rate, keyed to a benchmark or reference point such as the London Interbank Offered Rate, or “LIBOR.” For example, a party might agree to pay a fixed interest rate on a $10 million notional amount for 10 years in exchange for the other party paying a floating rate (such as one tied to LIBOR) for that same 10-year period. The party paying a fixed rate is typically referred to as the “buyer, ” and the party making payments at the floating rate is known as the “seller.” The value of the contract to each side moves (in opposite directions) depending on changes in interest rates. SAC ¶¶ 1-2; JTSAC ¶ 2.

         IRSs are used by an array of investors to manage risk and protect themselves against fluctuating interest rates. For example, a municipality that issued a floating rate bond to pay for a clean-water project might later use an IRS to convert floating-rate payments on the bond into fixed payments, so as to hedge against interest-rate increases. Investors in interest-rate swaps include pension funds, asset managers, endowment funds, corporations, insurance companies, municipalities, and hedge funds. The IRS market has grown exponentially over the last three decades, with billions of dollars in notional quantity traded daily. In 2006, the outstanding notional quantity of IRSs was approximately $230 trillion. By 2014, it was approximately $381 trillion. SAC ¶¶ 3, 72; JTSAC ¶ 3.

         B. The Evolution of IRS Trading Practices and Platforms

         1. Early Years to 2013

         In the early years of IRS trading, IRS contracts were not standardized. They typically were negotiated and documented on a trade-by-trade basis, imposing high transaction costs. Over time, IRS trading became more standardized. In 1987, the International Swaps and Derivatives Association (“ISDA”) created the ISDA Master Agreement. It set out standardized terms to govern over-the-counter (“OTC”) derivatives transactions, and became widely used. By 2000, the material terms of most IRSs were standardized. These included the tenor (the maturity or term of the swap), the fixed rate, the reference index used to calculate floating payment, the payment frequency, and the timing of payments. This resulted in lower trading costs and higher trading volumes. SAC ¶¶ 70-71; JTSAC ¶¶ 67-68.

         As demand for IRSs spread, the investment banks who dealt in interest swaps positioned themselves as the exclusive market makers or liquidity providers in the IRS market. As market makers, these banks became the sellers of IRSs (the “sell side”), offering fixed and floating-rate cash flows to their customers (the “buy side”). In this role, these Dealer Defendants profited from the “spread” between the “bid” and the “ask” for IRSs. The “bid” and the “ask” were typically set as follows: Because the floating rate is usually keyed to LIBOR, the key variable that is negotiated when entering into an IRS is generally the fixed rate that will be paid. A buy-side customer that seeks to pay the floating rate and to receive the fixed rate will receive the “bid” price quoted by a dealer for the fixed rate; a buy-side customer that seeks to pay the fixed rate and to receive the floating rate will pay the “ask” or “offer” price quoted by a dealer for the fixed rate. For example, a dealer's “bid” to pay the customer a fixed rate on a five-year IRS might be 2.00% whereas its “ask” as to the fixed rate it would receive from the customer for the same IRS might be 2.05%. The wider the spread between the bid and ask prices quoted by the dealer, the more profit the dealer will make from its IRS line of business. SAC ¶¶ 73-75; JTSAC ¶¶ 70-73.

         Historically, dealers and their buy-side customers communicated almost exclusively over the counter (“OTC”), by telephone. This means of IRS trading was advantageous to dealers. In practice, it meant that customers received real-time pricing information from only the dealer, or at most from a small number of dealers, because contacting many dealers for price information was logistically unrealistic and costly. Dealers were also advantaged, because, to obtain a price quote, the customer was required to disclose to the dealer its identity and the direction and notional amount of the trade it sought to make. Dealers could use this “one-way flow of information” about upcoming trades to their trading advantage. Dealers also often required customers to execute trades “on the wire, ” meaning during the phone call, or else the price quote might lapse; or to disclose whether the customer was putting one dealer “in competition” with other dealers. These practices, too, tended to diminish price competition. SAC ¶¶ 76-78; JTSAC ¶¶ 74-76.

         Electronic trading in fixed income securities was introduced in the mid-1990s. It gained momentum in the IRS market in the early 2000s. Such trading had potential to make IRS trading more efficient, transparent and competitive. But, plaintiffs allege, electronic trading developed asymmetrically. With respect to trading between dealers, the dealers utilized electronic platforms operated by entities known as interdealer brokers (“IDBs”). These platforms allowed dealers to access better and transparent pricing for themselves, and speedier execution, while they responded to buy-side requests to trade. A dealer using an IDB submits its bid and ask prices to the IDB, which then publicizes the best quotes (known as the “inside market”) anonymously to all other dealers in the platform. A dealer can immediately enter into an IRS contract at a quoted price without negotiations, or it can ask the IDB to attempt to negotiate a better price. As to standardized IRS products that are actively traded, an IDBs uses electronic trading platforms akin to electronic “order books, ” which automatically match the best bids and offers. In return for facilitating dealer-to-dealer trades, an IDB earns a commission, known as a “brokerage fee, ” on each trade. But, plaintiffs allege, the IDBs allowed only dealer-to-dealer transactions. Plaintiffs allege, for example, that defendant ICAP, the leading IDB for IRSs, did not open its interdealer platform to buy-side customers. SAC ¶¶ 10-13, 84-86; JTSAC ¶¶ 81- 83.

         In contrast, plaintiffs allege, until 2013, the only IRS electronic trading platforms that developed that were open to buy-side customers typically used a “request-for-quotes” (“RFQ”) protocol. In it, a buy-side customer, via electronic messages, can request quotes from several dealers. Such a customer, however, was required to supply its identity at the time of the request. Plaintiffs allege that these platforms are inferior to the dealer-to-dealer trading platforms in several ways. Buy-side customers using these platforms are denied streaming prices (they instead receive limited quotes via RFQs); are required to disclose their identities (they cannot remain anonymous); cannot participate in live markets (they are limited to RFQ responses); and are limited in the number of dealers whom they can access. SAC ¶¶ 78-80; JTSAC ¶¶ 77-80.

         Plaintiffs allege that different infrastructures and processes also developed as between dealer-to-dealer and buy-side trading to handle the process of clearing IRS trades. For dealer-to-dealer trades, dealers used central clearinghouses. A clearinghouse is an entity designed to step into the middle of a bilateral trade to reduce counterparty risk. It becomes a counterparty to both sides. It turns the transaction into two separate trades: a sale from the seller to the clearinghouse, and a sale from the clearinghouse to the buyer. Central clearing is common to developed financial markets, including equity and commodities markets. It is essential to anonymous exchange trading, because it brings buyers and sellers to a centralized platform, creates an infrastructure and unified standards for the processing of trades, and eliminates the need for trade- and party-specific creditworthiness assessments. Because each party faced the same counterparty (the clearinghouse), central clearing eliminates the need for contracts between the parties to an IRS. In contrast, in a non-cleared IRS trade, the parties to the trade face each other directly; each party therefore bears the risk that its counterparty will default on its obligations. Plaintiffs allege that central clearing became feasible in the IRS market by the early 2000s. By about 2005, SwapClear, an entity controlled by the Dealers, cleared most interdealer trades. Despite its technological feasibility, however, plaintiffs allege that the central clearing model was not extended to buy-side trades, inhibiting the introduction of an all-to-all trading platform accessible to the buy-side. As addressed below, plaintiffs claim that the lack of central clearing for buy-side trades, before Dodd-Frank took effect, resulted from collusion among the Dealer Defendants. SAC ¶¶ 12, 90-98; JTSAC ¶¶ 87-96, 343. The Dealers counter that this reflected unwillingness by the buy-side to incur the start-up and ongoing costs associated with a central clearing mechanism, including the posting of substantial collateral to secure cleared trades.

         2. Dodd-Frank

         On July 21, 2010, Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act. Relevant here, Title VII of Dodd-Frank amended the Commodities Exchange Act (“CEA”) to “establish a comprehensive new regulatory framework for swaps, ”[3] and vested the Commodities Futures Trading Commission (“CFTC”) with exclusive jurisdiction to implement that framework. 7 U.S.C. §§ 2(a)(1)(A), 2(h). A goal of Dodd-Frank was to increase accountability and transparency in the financial system, including in the OTC swaps markets, which were viewed as less transparent than the exchange-traded futures and securities markets. SAC ¶ 22; JTSAC ¶¶ 97-98.

         The CFTC has issued sweeping regulations implementing Dodd-Frank. Three categories of these regulations are relevant here.

         Trading regulations: Dodd-Frank required that certain types of swaps be traded on “swap execution facilities, ” or “SEFs.” SAC ¶ 22, 202; JTSAC ¶¶ 97-101. A SEF is defined as “a trading system or platform in which multiple participants have the ability to execute or trade swaps by accepting bids or offers made by multiple participants in the facility or system.” 7 U.S.C. § 1a(50); 17 C.F.R. § 1.3(rrrr). Subject to certain exceptions, swaps must trade on SEFs if they are subject to the CFTC's mandatory clearing rules and have been “made available to trade, ” or “MAT, ” by a registered SEF with the consent of the CFTC. See 7 U.S.C. §§ 2(h)(8), 7b-3.[4]

         Under CFTC regulations issued in 2013, trading on a SEF may occur through either an order book or an RFQ system. See 17 C.F.R. § 37.9(a)(2).[5] In order-book trading, offers to buy and sell are entered into a matching system and matched either manually or automatically by algorithm. See generally 17 C.F.R. § 37.3(a). In RFQ trading, by contrast, a customer can send a price request to a number of counterparties in a particular swap tenor, the prices are relayed back to the customer, and the customer then has a time window in which to execute. Customers who engage in RFQ trading must send requests to trade to a minimum of three recipients. See 17 C.F.R. § 37.9(a)(3). The CFTC thus enabled, but did not require, that IRSs be traded via an anonymous, all-to-all trading platform.

         In February 2014, a CFTC mandate for certain assets “made available to trade” went into effect. See 7 U.S.C. § 2(h)(8); 17 C.F.R. § 37.10.

         Clearing regulations: Congress believed that the risk of defaults on non-cleared swaps “played an important role in freezing up credit markets” during the 2008 financial crisis. S. Rep. 111-176, at 30 (2010). Dodd-Frank therefore granted broad authority to the CFTC to mandate clearing of swaps. See 7 U.S.C. § 2(a)(1)(A).

         In 2012, the CFTC enacted a final rule for mandatory clearing of IRS trades, effective on a rolling basis beginning in March 2013. See 17 C.F.R. § 37.701; see also Clearing Requirement Determination Under Section 2(h) of the CEA, 77 Fed. Reg. 74, 284 (Dec. 13, 2012) (“Clearing Requirements Rule”).[6] In enacting this rule, the CFTC recognized that the vast majority of new IRS clearing volume would come from the buy-side. See, e.g., Clearing Requirements Rule, 77 Fed. Reg. 74, 284 at 74, 287. The CFTC delayed implementation of this mandate to 2013, in part due to multiple requests from buy-side entities for extra time to cope with the costs and burdens imposed by implementing mandatory clearing, which one commenter described as “overwhelming.” See Clearing Requirements Rule at 74, 320; Swap Transaction Compliance and Implementation Schedule, 77 Fed. Reg. 44, 441, 44, 456 (July 30, 2012).[7]

         Dodd-Frank used a futures commission merchant (“FCM”) model for clearing, in which an entity called an FCM serves as an intermediary between buy-side clients and the clearinghouse. Plaintiffs allege that the Dealer Defendants' ownership of almost all of the approximately 20 FCMs for IRS trading effectively made them, under the Dodd-Frank regime, “gatekeepers for IRS clearing.” SAC ¶¶ 22, 202; JTSAC ¶¶ 97-101 & n.14.

         Impartial access regulations: Dodd-Frank requires that SEFs provide all market participants with “impartial access” to their trading facilities, thereby making, for example, buy-side firms free to trade on “dealer-to-dealer” platforms. See 7 U.S.C. § 7b-3(f)(2)(B)(i). This requirement “prevent[s] a SEF's owners or operators from using “discriminatory access requirements as a competitive tool” against particular market participants. See SEF Rule, 78 Fed. Reg. 33, 476 at 33, 508.

         C. Overview of Plaintiffs' Theories of Collusion

         The following sections first recount plaintiffs' allegations as to the means used by the Dealer Defendants, before Dodd-Frank took effect, to discourage emergence of an anonymous all-to-all trading platform accessible to buy-side investors. Plaintiffs allege that the different trading platforms and related infrastructure such as clearing mechanisms that developed for inter-dealer versus buy-side IRS transactions result from a long-running conspiracy among the Dealer Defendants and others such as IDBs.

         The later sections set out plaintiffs' allegations as to how the conspiracy continued after Dodd-Frank took effect. Plaintiffs claim that, after several electronic platforms (including Tera's and Javelin's SEFs) emerged with potential to enable buy-side IRS transactions to occur on an anonymous all-to-all basis, the conspiracy pivoted to boycotting and destroying these platforms.

         D. The Dealers Prevent Tradeweb From Developing an All-to-All Platform

         In 1998, Tradeweb was founded as a private, dealer-backed firm that provided an online marketplace for fixed-income products, such as U.S. Treasuries. Tradeweb later developed a dealer-to-client RFQ platform for IRSs on which buy-side investors could (non-anonymously) request non-executable and non-binding quotes from dealers. It was thus an OTC platform that facilitated the dealers' roles as the sole IRS market makers. Because Tradeweb's platform relied on the dealers to make markets, its success depended on the dealers' use of the platform. In 2004, the dealers sold Tradeweb to Thomson Corporation. SAC ¶¶ 100-01; JTSAC ¶¶ 273-74.

         Plaintiffs allege that-with IRS trading volumes having grown and IRS products having evolved to the point where introduction of all-to-all electronic trading market was feasible-the Dealer Defendants perceived a threat to their position as the primary IRS market makers. In response, and aware that other financial instruments had migrated from OTC trading, Goldman Sachs' Principal Strategic Investments Group (“PSI”) devised a “dealer consortium” strategy to work with the other Dealers “to maintain control of the IRS market.” The PSI's principal goal was to control how markets would evolve so as to protect the “dealer community” from the threat to profitability presented by electronic exchanges and other forms of all-to-all trading that threatened to “disintermediate” the dealers. Specifically, the PSI recognized that, if the buy side of the IRS market shifted to all-to-all platforms, buy-side entities would be able to trade directly with one another. This, in turn, stood to diminish the profits earned by the Dealer Defendants from serving as intermediaries in the dealer-to-client market. Plaintiffs allege that similar “strategic investment” groups at other Dealers (including at Bank of America, Barclays, Citibank, Credit Suisse, Deutsche Bank, and J.P. Morgan) existed to control market structures and that dealers who lacked a distinct group, such as BNPP, “conduct[ed] similar strategic activities through their trading business.” Plaintiffs allege that, between 2008 and 2016, these groups “regularly met in private, ” communicated by phone and electronically, and “secretly collaborated, ” to protect their “privileged status as dealers in markets they have historically controlled.” SAC ¶¶ 102-09; JTSAC ¶¶ 275-82.

         This collaboration, plaintiffs allege, involved regaining control of Tradeweb “to prevent it from introducing all-to-all trading.” By late 2007, plaintiffs allege, Tradeweb was planning to introduce electronic all-to-all trading to the IRS market, for which there was great demand from the buy-side. Tradeweb had touted itself as a “real-time trading platform” and represented that it was “well positioned to capture new business as the market migrates to more efficient electronic trading platforms.” In response, members of three strategic investment groups-Goldman Sachs (Brad Levy), Deutsche Bank (Stephen Wolff), and Lehman Brothers (Dexter Senft)-“devised and implemented a scheme to eliminate the threat from Tradeweb.” SAC ¶¶ 111-12; JTSAC ¶¶ 283-84.

         Specifically, plaintiffs allege, Levy, Wolff and Senft recognized that Tradeweb's liquidity contracts with the Dealers-which Tradeweb needed to drive liquidity to its RFQ and eventually its all-to-all platform-were expiring. This gave the Dealers leverage over Thomson, which “realized the banks would take their liquidity and shop it around, which would threaten the value of TradeWeb.” To exploit this leverage, Levy, Wolff and Senft recruited other Dealers to join an initiative they named “Project Fusion.” It was designed to enable the Dealers to take control of Tradeweb's IRS business to eliminate Tradeweb as a threat, but without attracting scrutiny. SAC ¶¶ 113-14; JTSAC ¶¶ 285-86.

         Project Fusion, plaintiffs allege, entailed first taking over majority ownership of a company that would be the entity through which the Dealer Defendants controlled Tradeweb, while making it appear that they were taking only a “minority” stake as investors. To this end, on October 1 and 2, 2007, the Dealer Defendants and Tradeweb formed two Delaware LLCs. The first, “Tradeweb Markets LLC, ” would be “the public face of the deal and the one through which [d]efendants would take a minority stake in exchange for paying $180 million to Thomson[, ]” Tradeweb's then-parent. The second was “Tradeweb NewMarkets LLC”; the Dealer Defendants paid Thomson approximately $280 million for an “overwhelming majority stake (80%) in this entity, ” which would “house Tradeweb's IRS business.” Plaintiffs allege that the Dealers gave the two new entities similar names and used the generic name “Tradeweb” in their press releases, to conceal their control over the entity responsible for IRS trading. Plaintiffs allege these press releases also misleadingly claimed the Dealers were investing in Tradeweb's business to provide “a significant opportunity for institutional investors to benefit from the efficiencies of electronic trading, ” when in fact, their purpose was to keep Tradeweb from offering an all-to-all platform.[8] Plaintiffs allege that the Dealers agreed with each other (1) that Tradeweb would not move forward with an all-to-all trading platform or support other platforms that would move the market toward all-to-all trading; and (2) to provide liquidity to Tradeweb's platforms to the exclusion of competing platforms.” SAC ¶ 115-25; JTSAC ¶¶ 287-94.

         After obtaining these stakes, plaintiffs allege, the Dealer Defendants installed their senior personnel on the boards of Tradeweb Markets, LLC (16 of 26 seats) and Tradeweb NewMarkets, LLC (16 of 24 seats). These included named personnel from Goldman Sachs, Bank of America, Barclays, Citibank, Credit Suisse, Deutsche Bank, J.P. Morgan, Morgan Stanley, RBS and UBS. The CEO of both entities was a former chief operating officer for fixed income at Credit Suisse. SAC ¶¶ 126-37; JTSAC ¶¶ 295-06.

         Plaintiffs allege that the boards' members “include some of the primary architects of the conspiracy” and communicated in several ways. Members “met regularly under the cover of Tradeweb's boards and committees to plan how the Dealer Defendants could maintain control of the IRS market and make sure they were not ‘disintermediated' by buy-side friendly IRS trading platforms.” There were also often-weekly board conference calls, and an annual board meeting in Miami, Florida, which, plaintiffs claim, the Dealers used “to discuss and coordinate their strategy for controlling the IRS market.” The Dealers also allegedly controlled Tradeweb through governance committees that determined, inter alia, who can participate on Tradeweb's SEFs. Finally, the Dealers' personnel discussed “market structure issues” at dinners at the home of the head of interest rate swaps for Tradeweb's interdealer SEF and at New York City restaurants, attended by Dealer representatives. In these gatherings, plaintiffs allege, the Dealers “coordinate[d] their strategy and “discussed their plans for keeping the market bifurcated and preventing the natural progression to all-to-all trading.” SAC ¶¶ 138-41; JTSAC ¶¶ 307-10.

         In November 2010, Tradeweb NewMarkets LLC merged into Tradeweb Markets LLC, leaving the latter as the surviving company. The Dealers continued to hold a majority of seats on the surviving entity's board. SAC ¶ 142; JTSAC ¶ 311.

         Plaintiffs allege that, from Project Fusion forward, Tradeweb, while holding itself out as independent, acted for the benefit of the Dealers. Although Tradeweb's independent (i.e., non-bank) managers recognized that it would be in Tradeweb's interest to launch an all-to-all anonymous electronic trading platform, the Dealers pressured them to change course; these managers capitulated. Plaintiffs allege that the Dealers publicly touted Tradeweb as a platform that could provide “accurate pricing information” and “greater market transparency.” In fact, these claims were untrue as to the dealer-to-client OTC market structure, in that the “buy side can trade on Tradeweb only via its dealer-to-client RFQ platform and cannot engage in all-to-all trading.” The decision to forego all-to-all trading cost Tradeweb additional business and profits from the resulting fees. SAC ¶¶ 143-46; JTSAC ¶¶ 312-15.

         As of the date of the SACs, plaintiffs allege, Tradeweb, pursuant to its agreement with the Dealer Defendants, “continues to play an active role in maintaining a two-tiered market structure.” Post-Dodd-Frank, Tradeweb today operates two different SEFs: Dealerweb SEF, which plaintiffs claim is meant only for dealers and allows anonymous competitive trading; and Tradeweb SEF, which “is designed for non-dealer market participants and always discloses counterparty identities.” To deal on the former, Tradeweb charges $50, 000 per month and requires that an entity pay for a minimum of a full year (i.e., $600, 000). But it charges only $100 per month to trade on Tradeweb SEF. The reason for this cost differential, plaintiffs allege, is to “establish and entrench a bifurcated dealer-to-dealer and dealer-to-customer marketplace.” Plaintiffs also allege that while Tradeweb SEF claims to offer an “order book, ” it is effectively closed off to the buy side, because dealers do not trade on that platform, but instead trade with each other on Dealerweb or other IDBs and limit trades with end users to the dealer-to-client RFQ. The Tradeweb platform is thus “inactive and seen by the buy side as inaccessible.” SAC ¶¶ 147-49; JTSAC ¶¶ 316-19.

         E. The Dealers Use Trade Associations as Forums for Collusion

         Plaintiffs identify Tradeweb as the “principal forum though which the Dealer Defendants . . . colluded to coordinate their efforts to control the IRS market.” But, they allege, the Dealers also used two trade associations as means of collusion. SAC ¶ 151; JTSAC ¶ 320.

         One was ISDA. From 2008 forward, the Dealers controlled ISDA's board, on which employees of 10 Dealer Defendants sat. Another was the Futures Industry Association (FIA), on whose board employees of 10 Defendant Dealers sat. Among the working groups created by these trade associations was one devoted to drafting the “Cleared Derivatives Execution Agreement (“CDEA”), ” a form contract intended to govern the relationship between clearing agents and their customers. After Javelin came to exist, its executives sought to attend a meeting of this working group out of concern that the CDEA was being drafted only for OTC transactions and did not anticipate IRS trades covered on a SEF; Javelin's CEO and general counsel were permitted to attend, but when the general counsel inquired about the CDEA, her question was not answered. The chair of the meeting, a Credit Suisse in-house counsel, later told Javelin that its personnel were unwelcome at future meetings. SAC ¶¶ 152-57; JTSAC ¶¶ 321-27.[9]

         F. The Dealers Prevent IDBs from Opening Platforms to the Buy Side

         The SACs allege that, in several contexts, the Dealer Defendants acted to prevent IDBs from opening all-to-all trading platforms to buy-side investors.

         1. Punishment of IDBs That Took Steps Towards All-to-All Platforms

         Plaintiffs allege that the Dealers threatened to punish any IDB that considered opening its platforms to the buy side. This included threatening to withdraw liquidity from such platforms, which the Dealers referred to as placing the IDB in the “penalty box” or “pulling the line” on the IDB. Twice, in 2009 and 2014, GFI group (“GFI”), which operates IDB platforms, attempted to introduce anonymous trading protocols on its platform; each time, the Dealers threatened to pull their business from GFI, which reversed course. In the 2014 episode, GFI received heated phone calls from Credit Suisse and J.P. Morgan, and reverted to using a name-disclosed protocol. The Dealers also threatened buy-side investors with the “penalty box” for attempting to trade on an all-to-all platform. Such threats were effective, plaintiffs claim, because they deprived the investor of access to primary market makers and thus from trading IRSs; the Dealers sometimes also threatened investors with “withdrawal of key banking services.” As a result of these tactics, plaintiffs allege, IDBs did not open their platforms to the buy side. SAC ¶¶ 159-65; JTSAC ¶¶ 328-34.

         2. The Dealers' “Détente” With ICAP

         In 2009, plaintiffs allege, defendant ICAP agreed with the Dealer Defendants to prevent the buy side from accessing its platform, as part of an agreed “détente.” ICAP had contemplated giving such access to the buy side in retaliation for Tradeweb and the Dealers having launched a trading platform for mortgage bonds called “Dealerweb, ” which cut into ICAP's mortgage-bond platform's business. In retaliation, ICAP threatened to launch an all-to-all trading platform open to the buy side. This threat, plaintiffs claim, was credible because ICAP was developing an electronic-trading platform for Europe called iSwap, which ICAP could have launched in the United States as an all-to-all anonymous IRS trading platform, and/or because ICAP could have allowed buy-side investors to use its existing IDB platform. In response, representatives of ICAP and the Dealer Defendants spoke in 2009 and reached a détente. The Dealers agreed not to further expand Dealerweb into the IDB space; in exchange, ICAP agreed not to establish an all-to-all anonymous trading platform. SAC ¶¶ 166-69; JTSAC ¶¶ 335-37.

         Plaintiffs allege that ICAP and the Dealers have abided by that agreement, despite iSwap's success and the potential to ICAP of expanding iSwap to the United States. They allege that when ICAP did expand that platform to the United States in 2013, it took steps that effectively limited participation to the Dealers, while publicly claiming otherwise. The Dealers, in turn, abiding by the détente, have kept Dealerweb from expanding into IRS or any other market in a meaningful way. SAC ¶¶ 166-73; JTSAC ¶¶ 335-42.

         G. The Dealers' Attempts to Block Buy-Side Clearing

         Plaintiffs allege that the Dealer Defendants identified the central clearing of OTC products as a first step towards electronic trading. They cite a 2010 report from J.P. Morgan describing clearing as a “main concern for the Investment Banking industry” because it could lead to “exchange/SEF trading for OTC products.” As a result, plaintiffs allege, the Dealers long sought to control the clearing infrastructure for the financial markets they dominate, to position themselves to “head off threats to their dominance.” In the context of the IRS markets, the Dealers allegedly took control of the IRS clearing infrastructure, and their representatives allegedly met to discuss “how to prevent or delay buy-side access to IRS clearing.” These discussions occurred on Tradeweb and through an entity called OTCDerivNet.” SAC ¶¶ 174- 75; JTSAC ¶¶ 343-44.

         Plaintiffs allege that the Dealers took several steps to block such clearing.

         First, the Dealers agreed, through their strategic investment groups, to take control of an IRS clearinghouse, “SwapClear, ” formed in 1999 by LCH.Clearnet, an entity that builds clearinghouses for financial instruments. To do so, eight Dealers, in October 2000, formed OTCDerivNet; four others joined in 2001 and two others in 2009. They held out OTCDeriv.Net as for all IRS participants, including the buy side. In fact, plaintiffs allege, OTCDerivNet was formed as a vehicle to secure control of SwapClear. After creating the new entity, the Dealers announced that it would “partner” with LCH.Clearnet to develop a secure, efficient and cost-effective trade environment” for the OTC derivative industry. In fact, the Dealers, through OTCDerivNet, provided 100% of the funding of SwapClear, in return for a share of profits and governance control. Using that control, the Dealers imposed restrictions that effectively limited clearing membership only to Dealers. These included that any new member must put up $5 billion in capital towards the clearinghouse, a sum so large only investment banks could afford it. The Dealers also required unanimous approval of existing members before a new member could join. SAC ¶¶ 176-80; JTSAC ¶¶ 345-49.

         Second, plaintiffs allege, the Dealers, through their board domination of OTCDerivNet, acted to block other buy-side clearing ventures. In the mid-2000s, the Chicago Mercantile Exchange (“CME”), a sophisticated entity with a long history of developing clearing solutions for financial markets, was focused on doing so for swaps markets, including IRSs and CDSs. It announced plans to introduce a cleared IRS product called “CME Cleared Swaps, ” which promised to offer clearing of OTC swaps executed on or submitted through its trading platform Swapstream or through its OTC platform. Given CME's track record and technical and commercial ability, the Dealers viewed this as a “serious threat.” In response, plaintiffs allege, the Dealers boycotted Swapstream. “Meeting through OTCDerivNet, the Dealer Defendants agreed to clear only interdealer IRS trades and only on SwapClear (the entity they controlled).” Because the Dealers are a party to nearly every IRS trade, plaintiffs allege, their collective refusal to clear IRS trades through Swapstream meaning that effectively no trades were cleared through the platform, “starving CME of clearing volumes and revenues.” As a result, “CME's clearing solution for IRS[s] swiftly failed.” SAC ¶¶ 181-88; JTSAC ¶¶ 350-56.

         Third, after the passage of Dodd-Frank, regulators put pressure on the Dealers to expand clearing in derivatives markets and to open up clearing to the buy side. In response, plaintiffs allege, the Dealers made superficial changes at SwapClear that purported to expand buy-side access, while adopting new rules that prevented meaningful buy-side participation. For example, they added a rule that needlessly required clearing members to contribute large amounts of capital to the clearinghouse's default (or “guaranty”) fund. Only large investment banks like the Dealers could meet this requirement. SAC ¶¶ 189-90; JTSAC ¶¶ 357-58.

         Fourth, as noted, Dodd-Frank mandated that certain IRSs move to SEFs and be centrally cleared. Dodd-Frank's FCM model of clearing made the FCM divisions owned by the Dealer Defendants-most FCMs-the “gatekeepers” for IRS clearing. Plaintiffs allege that the Dealers exploited this by causing their FCMs to refuse to clear buy-side trades on IRS trading platforms that use all-to-all protocols. Plaintiffs allege that FCMs should be agnostic as to which trading platforms their customers use; any trade it clears adds to its revenue. But, plaintiffs allege, the Dealers caused their FCMs to withhold clearing services from any buy-side entity seeking to trade on SEFs that operated all-to-all anonymous trading platforms, including Tera, Javelin, and TrueEx. This practice was aimed at preventing IRS trades from proceeding on these platforms. Separately, plaintiffs allege, FCMs refused to carry out pre-trade checks for any prospective trade on an anonymous all-to-all SEF. This restricted order flow of buy-side customers onto all-to-all platforms. Plaintiffs allege that the Dealers coordinated these activities through their clearing operations, which communicate regularly and meet “under the cover of FIA board meetings.” SAC ¶¶ 191-201; JTSAC ¶ 100.

         H. The Dealers Attempt to Block SEFs Offering All-to-All Trading

         Plaintiffs allege that, after Dodd-Frank's implementing regulations took effect, the Dealer Defendants conspired to boycott and destroy the SEFs that emerged and that promised to offer all-to-all anonymous trading of IRSs. As developed below, plaintiffs allege that three companies-TeraExchange, Javelin, and TrueEx-each spent millions of dollars developing such platforms. But, plaintiffs allege, the Dealers conspired to boycott these platforms, and to cause their affiliated clearing entities to refuse to clear trades on them. Plaintiffs allege that the Dealers coordinated their “joint opposition” to these SEFs through their “strategic investment groups, ” through “secret discussions, ” and through a forum supplied by an IDB called “Tradition, ” which, between 2013 and 2015, hosted monthly meetings in New York City with the collective heads of the Dealers' trading desks to discuss issues relating to SEFs. Plaintiffs further allege that, when a SEF solicited participation by the Dealers, the Dealers coordinated their response; for example, a Goldman Sachs employee in its E-Commerce division would call his counterparts to discuss whether to use the platform. As a result, “Goldman Sachs and the other Dealer Defendants did not make individual decisions about which SEFs to support. They made those decisions in collaboration with each other.” SAC ¶¶ 202-06; JTSAC ¶¶ 124-42.

         The effect of the “roadblocks” implemented by the Dealers, plaintiffs allege, was that, whereas it had been forecast that 40-50 firms could end up competing for swaps execution business, the three SEFs that invested heavily in doing so were “largely crushed by the Dealer Defendants' cartel.” Each had developed the necessary technology, secured the required regulatory approvals, and garnered sufficient support to introduce anonymous all-to-all trading platforms to the buy side. But, plaintiffs allege, the Dealers' tactics-including refusing to trade on these new platforms, refusing to let their affiliates clear buy-side trades executed on the new platforms, and threatening to retaliate against anyone who traded on the platforms-“effectively shut down Tera Exchange and Javelin.” The Dealers allegedly used similar strategies to limit dealer-to-client trading on TrueEx's platform to by RFQ protocols. As a result, plaintiffs claim, a dichotomous IRS trading market persisted, in which the buy side “continues to be shut out of all-to-all electronic trading” but the Dealers are not. SAC ¶¶ 207-09; JTSAC ¶¶ 138, 141-42.

         1. The Boycott of TeraExchange

         Tera was formed in 2010. It raised $7 million in capital. It developed all-to-all electronic trading platforms for asset classes including IRSs-platforms which it claimed promised greater price transparency and competition and to offer firm quotes to the buy-side. Tera developed the technology necessary for such a platform, including swap data repositories, connectivity with the various clearinghouses and credit hubs, and a system to ease the calculation and posting of collateral. Tera offered “full market depth” and “real time pricing.” JTSAC ¶¶ 115-16.

         Tera, with such features, began offering access to its electronic platform in 2011, while it waited for the CFTC to formalize SEF registration rules. Tera was described at the time as poised to take business from “the big banks that have dominated swaps trading.” While it welcomed the Dealers to participate on its platform, plaintiffs allege, Tera did not depend on them. Instead, it focused on recruiting large proprietary trading firms that were eager to trade IRSs, 15 of which the SAC names. These firms, plaintiffs allege, “were ready, willing, and able to provide the liquidity to the Tera platform that would allow the platform to thrive, ” were eager to trade IRSs, and “were willing to quote immediately executable bid/ask spreads” that were tighter than those offered by traditional dealers. Plaintiffs allege that, had these proprietary trading firms participated in Tera's platform, then Dealers would effectively have been obliged to use the platform as well. That is because Dealers' clients often demand that Dealers supply them “best execution, ” meaning securing the best price available in executing a trade when acting as the customer's agent. Had the best price been available on Tera, plaintiffs allege, Dealers would have been required “by regulation or contract” to obtain it, leading to execution of trades on that platform. SAC ¶¶ 210-17; JTSAC ¶¶ 119-20.

         In preparation for its launch, plaintiffs allege, Tera made its platform compliant with regulatory rules. On September 19, 2013, the CFTC granted Tera temporary SEF certification. And numerous market participants, 12 of which plaintiffs name, committed to provide liquidity to the platform. By the end of 2013, Tera was valued at more than $50 million. SAC ¶¶ 217-19; JTSAC ¶¶ 122-23.

         Plaintiffs allege that the Dealers “conducted secret meetings, including under the cover of Tradeweb, to discuss how to neutralize this threat, ” which the Dealers termed a “Trojan Horse.” One tactic was to attempt to jointly invest in Tera, “with the real goal of taking it over and shutting it down.” Several Dealers reached out to Tera to arrange meetings; at these, in early 2013, Tera expected to discuss trading but were instead “met by strategic investment personnel offering to take a stake in TeraExchange's company.” One meeting was with two Goldman Sachs officials; similar tactics were used by strategic investment groups at Barclays, Bank of America, Credit Suisse, Citi, Deutsche Bank and Morgan Stanley. Tera declined the Dealers' “investment” offers; no Dealers signed up for Tera's platform or ever agreed to provide liquidity, “pursuant to their agreement to starve TeraExchange of liquidity.” SAC ¶¶ 220-24; JTSAC ¶¶ 186-88.

         Plaintiffs allege that the Dealers used other “aggressive tactics” to thwart Tera. One was refusing to clear, on their FCMs, trades of any of their buy-side clients occurring on Tera; Tera received reports from those who had signed up for it that these FCMs were refusing to clear. To obscure this refusal, at times, these FCMs would quote “extremely high clearing fees” for trades executed on Tera, while quoting far lower fees for clearing trades on platforms they did not view as threats. For example, Bank of America's FCM quoted Knight Capital Group “exorbitant clearing fees” to Tera, while charging Knight no clearing fees for trades executed “on dealer-friendly platforms such as Tradeweb and Bloomberg.” When Tera tried to convince FCMs to change course and clear trades, one official, at Bank of America, replied: “My bosses are never going to let me” clear trades for TeraExchange. SAC ¶¶ 225-28; see also Id. ¶¶ 229-31 (citing “runaround” explanations for non-participation given to Tera by Barclays, Morgan Stanley, Credit Suisse, HSBC, and ANZ Bank); JTSAC ¶¶ 189-210 (alleging refusals to clear by FCMs of numerous dealers).

         The Dealers' “collective refusal” to clear trades on Tera's platform “was a major blow” and caused early supporters to withdraw. Plaintiffs also allege that several buy-side entities indicated to Tera that they “were facing reprisals” from dealers for meeting with Tera. On Friday, June 13, 2014, two large trading platforms successfully conducted the first trade on Tera's order book, a single trade for a notional amount of $10 million. The trade was to be cleared through BNPP's clearing affiliate, but BNPP's trading desk “immediately contacted the parties to the trade and threatened them with a loss of access to clearing and other banking services, including execution services in other asset classes and access to general market research, if they continued to trade on TeraExchange.” The next business day, Monday, June 16, 2014, BNPP, Citibank, J.P. Morgan, and UBS, “each separately contacted TeraExchange demanding to ‘audit' TeraExchange's rulebook and stating that they would not help clear any further trades until the audit was complete.” There was, in fact, no valid basis for such an audit, as Tera had already been certified by the CFTC; the Dealers' “real goal was to prevent the buy side from trading on TeraExchange.” At around the same time, Bank of America's FCM “threatened buy-side clients with inflated clearing fees and liquidity boycotts if they made markets or traded on Tera's all-to-all trading platform. As a result, no such trades took place. SAC ¶¶ 232-36; JTSAC ¶¶ 206-10.

         Plaintiffs allege that the Dealers shut down a different means by which Tera attempted to build its platform. Because Dodd-Frank requires certain IRS trades involving U.S. entities- whether trading domestically or internationally-to be executed through a SEF, Tera recognized that European IDBs serving U.S. banks had to become a SEF or execute their trades through a SEF. Tera reached out to European IDBs, which lacked proprietary SEFs, to offer them its services; it initially received favorable responses. The Dealers, however, “shut down” this effort. “In strikingly parallel fashion, in early- to mid-2014, the Dealer Defendants informed these IDBs they would not accept any trades reported or executed on TeraExchange.” Citibank and BNPP in particular each told an IDB that they would not accept trades reported or executed on Tera, and the CEO of a second-tier IDB told Tera that the major swap dealers would not allow him to sign up with TeraExchange. SAC ¶¶ 237-42; JTSAC ¶¶ 211-16.

         In the end, plaintiffs allege, these efforts succeeded. “[T]o date, no IDB has been able to process a trade through TeraExchange's order book, and some have since gone out of business.” TeraExchange, in turn, shifted its focus to other lines of business, and “effectively left the IRS market.” SAC ¶¶ 243-44; JTSAC ¶¶ 217-18.

         2. The Boycott of Javelin

         Javelin was formed in 2009. It developed two all-to-all IRS trading platforms-an anonymous RFQ platform and an anonymous order book, both offering firm pricing for swaps as opposed to indicative quotes. In 2011, it began soliciting support for its platforms by giving demonstrations to buy-side entities and five Dealer Defendants (BNPP, Deutsche Bank, Goldman Sachs, J.P. Morgan, and RBS). It offered these Dealers the opportunity to receive a portion of Javelin's brokerage fees if they traded on the platform. Javelin's platform, which had a “state of the art user interface, ” successfully tested both as to execution and clearing of trades. It contained options to allow market participants to trade electronically either through that interface or through an industry-standard third-party gateway. The development of Javelin's SEF and technology platform called upon “enormous industry knowledge and technological skill, ” as well as substantial investments in, among other things, office rental, data center fees, and licenses for software and financial vendor platforms. By 2011, Javelin's order book was ready for testing and had successful test trials; by 2013, Javelin had created its own live credit-check system, which enabled Javelin to confirm that the customer had sufficient credit with their FCM to execute and clear a trade. On September 19, 2013, the CFTC granted Javelin temporary registration as a SEF, and Javelin's platforms were operational. On October 1, 2013, Javelin successfully executed and cleared its first trade as a SEF; by late 2013, Javelin had signed up seven second-tier dealers to trade on the platform. SAC ¶¶ 245-48; JTSAC ¶¶ 104-12.

         Most Dealers, however, refused to provide liquidity to Javelin. This, plaintiffs claim, reflected an agreement “with each other only to support platforms they could control.” Plaintiffs allege that the Dealers recognized that if Javelin successfully launched an anonymous all-to-all platform, this “would imperil their privileged status as market makers in a bifurcated market, as well as the supracompetitive bid/ask spreads they extracted from the buy side.” SAC ¶¶ 247-48; JTSAC ¶ 148.

         Between 2013 and 2015, Javelin met with senior employees at each Dealer, seeking their support. Of the Dealers, only RBS, for a short period, agreed to trade or provide liquidity to Javelin. Some Dealers refused to use the platform; others “provided an endless stream of pretextual excuses, ” such as the need for legal reviews of Javelin's rulebook, for refusing to do so; one stated that it needed to see Javelin's internal documentation but never did so. Some refused to test the platform's operability; others “flatly refused to engage.” Plaintiffs claim that J.P. Morgan initially proclaimed interest in trading on Javelin, but this “was merely a ruse to collect information on its trading platforms, ” in that J.P. Morgan “burden[ed] [Javelin personnel] with numerous pretextual requests for information.” SAC ¶¶ 249-50; JTSAC ¶¶ 143-45, 149, 151-61.

         In September 2013, Javelin conducted a series of mock trading sessions to showcase its all-to-all platforms to dealers and buy side entities. In advance of these sessions, Javelin asked the Dealers to conduct pre-trade credit checks for their buy-side customers to participate in these sessions. The Dealers' FCMs, including J.P. Morgan's, “largely refused” to do so, “effectively preventing the buy side from using Javelin's platform. Morgan Stanley similarly refused to act when Javelin, claiming to speak for a number of Morgan Stanley's FCM clients, asked it to connect to the platform so enable those clients to trade. Eventually, a Morgan Stanley official agreed to a demonstration of the platform's functionality, but delayed attending; even though the demonstration was successful, Morgan Stanley refused to clear trades executed on the platform. SAC ¶¶ 251-54; JTSAC ¶¶ 146, 154.

         Deutsche Bank allegedly gave Javelin “a similar runaround.” For months, it claimed that its legal department needed to approve Javelin's rulebook. This delay prevented seven buy-side entities that cleared trades through Deutsche Bank from trading on Javelin, as they had wished. Deutsche Bank also refused to test Javelin's connection to it, claiming a lack of capacity, even though, plaintiffs claim, testing the connection would have been simple. Plaintiffs allege that there were conversations over a period of 15 months that reveal an evolving series of excuses by Deutsche Bank for not doing such testing, for not completing a “legal review, ” and ultimately, for not approving trades on Javelin. SAC ¶¶ 255-61; JTSAC ¶¶ 152, 162-69. Other Dealers, including Morgan Stanley and Barclays gave similar, allegedly pretextual, excuses for not allowing their FCMs to clear trades executed through Javelin. JTSAC ¶¶ 170-72.

         Goldman Sachs also allegedly refused to allow its FCM to clear such trades. Although its officials did not state that Goldman Sachs would not support Javelin, its officers “demonstrated hostility” to Javelin at a September 24, 2013 meeting, and asked for the names of buy-side entities that had signed up to use the platform.” The next week, Javelin employees confronted a Goldman Sachs official, Tony Smith, a vice president of network engineering, about its refusal to clear trades executed on Javelin. “Smith responded that under no circumstances would Goldman Sachs deal with Javelin” and that “if Goldman Sachs was somehow forced to clear trades executed on Javelin, it would simply set the credit limits for all of its customers who attempted to trade on Javelin at ‘zero, ' thereby preventing the clearing of any trades executed on its platforms.” Thus: “Goldman Sachs' FCM was willing to forego clearing revenues and damage customer relationships in order to shut Javelin out of the market. SAC ¶¶ 262-63; JTSAC ¶¶ 154, 170.

         Some Dealers “actively pressured their customers not to trade on Javelin.” In August 2013, Senft, by then of Morgan Stanley, asked Javelin for a list of the buy-side customers who had expressed interest in Javelin; after Javelin gave this information, Senft distributed this list to other Dealers. One such customer, NISA Investment Advisors LLC (“NISA”) had been eager to trade on Javelin. But when Goldman learned this from Senft, a Goldman official notified NISA that “if NISA traded on Javelin, Goldman Sachs would withdraw all clearing services for the buy-side entity in any trading venue.” NISA later backed out of using Javelin's platforms; a NISA official later told Javelin that Goldman Sachs had forced him to stop trading on the platform. Another buy-side entity, the Citadel Fixed Income Master Fund, started using the platform in early 2014 but “suddenly stopped” such trading after its chief operating officer “received calls from the Dealer Defendants telling him not to use Javelin's platforms.” SAC ¶¶ 264-66; JTSAC ¶¶ 173-74.

         Despite these obstacles, plaintiffs allege, Javelin got some trading volume from its participants, having signed up, by late 2014, approximately 80 entities (19 named in the SAC) to trade on its all-to-all platform. But, because the Dealers refused to allow Javelin-based trades to clear through their FCMs and because of “the threats . . . described above, ” many potential customers of Javelin were unable to clear trades executed there, and, ultimately, “few were able to make any trades.” One buy-side entity, Mitsubishi, told Javelin that it had ceased attempting to trade on Javelin because it had “received ‘too much static' from J.P. Morgan, [its] FCM, for doing so.” In October 2014, “buy-side interest in Javelin and other all-to-all trading platforms collapses as buy-side investors grew concerned the Dealer Defendants would retaliate against them for trading on the platform.” Also in October 2014, a Deutsche Bank executive met with and told a Javelin official that “if he continued to push for Javelin's success, he would ‘never work' on Wall Street again.” SAC ¶¶ 267-70; JTSAC ¶¶ 173-78.

         In sum, plaintiffs allege, the Dealers had “clearly coordinated their joint opposition to Javelin; and proffered, in conversations with Javelin employees between August 2014 and April 2015, “nearly identical excuses for their refusal to deal, pointing to a supposed lack of buy-side participation on Javelin as the reason for their actions.” But these excuses, plaintiffs claim, were pretextual, because these Dealers “had gone to great lengths to ensure that buy-side firms did not trade on Javelin.” SAC ¶¶ 271-72.

         As for RBS, plaintiffs allege that it initially provided liquidity on Javelin, although not “in a meaningful way, ” and the prices that RBS streamed were “at unfavorable bid/ask spreads that resulted in no trades with buy-side customers.” Meanwhile, RBS demanded significant control in the operation and strategy of Javelin's platform. After Javelin, on October 18, 2013, filed an application with the CFTC that stood to allow a wide range of cleared IRSs to be executed on SEF's, plaintiffs allege, a senior IRS trader at RBS complained to Javelin's CEO, James Cawley, and RBS soon withdrew all its liquidity on the platform. In the ensuing days, a half-dozen RBS officials pressured Cawley to retract that submission. On October 30, 2013, Javelin filed a revised submission, narrowing the range of IRS instruments it covered. Even so, RBS and other Dealers continued to pressure it to reduce the scope of its application. Only after Javelin narrowed its submission did RBS resume providing Javelin with liquidity. Plaintiffs further allege that RBS's head IRS trader told Javelin not to discuss that RBS was a market maker on its platform, and that RBS gradually began widening the bid/ask spread it would stream to Javelin and otherwise distancing itself from Javelin. On April 26, 2015, RBS withdrew as a participant on Javelin's platform. SAC ¶¶ 273-78; JTSAC ¶¶ 158-61.

         In October 2014, plaintiffs allege, buy-side interest in trading on Javelin “collapsed” when buy-side customers learned that all-to-all trades on Javelin were not assured anonymous. News of this spread via a Dealer-friendly IDB. JTSAC ¶ 179.

         As a result of the Dealers' actions, plaintiffs allege, Javelin today “effectively has no revenues and facilitates no IRS trading. “Despite years of development and millions of dollars in investment capital, Javelin has executed less than 180 trades since its launch.” SAC ¶ 278; JTSAC ¶¶ 177-78, 182-84.

         3. The Boycott of TrueEx

         TrueEx was founded by Sunil Hirani, who had previously started a successful electronic trading platform for CDSs for an IDB called Creditex. In 2013, TrueEx sought to bring to market a SEF offering two IRS trading platforms: an anonymous all-to-all order book and a non-anonymous dealer-to-client RFQ platform. Approved by the CFTC, the TrueEx swaps exchange had features that caused it to be touted as having potential to increase competition and reduce prices in derivatives markets. Hirani stated publicly that TrueEx had signed up 62 buy-side participants. SAC ¶¶ 279-81; JTSAC ¶¶ 219-22.

         Plaintiffs allege that the Dealer Defendants boycotted TrueEx, by refusing to trade IRSs with buy-side investors on the TrueEx order book. They allege generally that, were a buy-side investor to execute a trade on TrueEx's order book, it would have to clear the trade through one of the Dealers' FCMs, which would alert the Dealers to this, causing them to retaliate. They further allege that the Dealers refused to use the TrueEx platform for dealer-to-dealer trading, a refusal which “makes no sense, except as part of [d]efendants' conspiracy, ” because TrueEx offered better financial terms than other platforms in which the Dealers traded, such as Tradeweb. The Dealers did provide “some limited liquidity to TrueEx's non-anonymous dealer-to-client RFQ platform, ” but ensured that this platform did not “reach critical trading mass” by refusing to trade “plain vanilla swaps”-those that trade in the highest volumes around the world-with the buy side on TrueEx. Instead, they limited such trading to “bespoke, one-off swaps, which trade in significantly smaller volumes.” There is no legitimate explanation for this behavior, plaintiffs claim, given that TrueEx provides “better technology with lower fees.” Plaintiffs claim that the Dealers' conduct successfully neutralized TrueEx “from bringing an all-to-all platform to market and becoming a competitive threat.” SAC ¶¶ 282-87; JTSAC ¶¶ 223- 25.

         I. The Dealers' Insistence on “Name Give-Up”

         Plaintiffs allege that-both before and after Tera and Javelin's platforms emerged-the Dealer Defendants insisted on maintaining a historical practice they called “name give-up, ” in which the names of each party to an IRS are identified to the other. The compulsory disclosure of swap counterparties, plaintiffs claim, serves as a policing mechanism, allowing the Dealers to retaliate against entities that attempt to trade on all-to-all platforms. In fact, buy-side investors prefer not to disclose their trading strategies and needs. Although “name give-up” served a purpose in an earlier era, as identification of the counterparty enabled assessment of its creditworthiness, now that IRS trades are centrally cleared, there is no need for the counterparty's name to be disclosed. SAC ¶¶ 292-95 (quoting commentators as to lack of justification today for “name give-up”); JTSAC ¶¶ 234-41 (same).

         Plaintiffs allege that the Dealers enforce “name give-up” by various means. Dealer officials-including at Goldman (Levy), Deutsche Bank (Wolf) and Barclays and Morgan Stanley (Senft)-conditioned giving liquidity to a platform on its using “name give-up.” Other Dealers joined this practice. Dealers also boycotted platforms, including Tera's and Javelin's, that did not require “name give-up.” Third, the Dealers' IDBs, at their insistence, use a service called MarkitWire, a trade processing service, to deliver trades to clearinghouses for execution. MarkitWire is operated by MarkitSERV, controlled by former Dealer officials. Before a trade clears, MarkitWire discloses counterparties' names to each other and gives each an opportunity to terminate the transaction. Due to “collective pressure” from the Dealers, numerous SEFs- including the largest IDB SEFs, seven of which plaintiffs name-maintain “name give-up, ” “thereby effectively preventing buy-side customers from trading on them.” The Dealers have also pulled, and threatened to pull, liquidity from platforms that allow anonymous trading other than among Dealers; one interdealer SEF received heated phone calls from executives at Credit Suisse and J.P. Morgan over the prospect of introducing trade anonymity. Dealers have also threatened buy-side customers with the “penalty box” if they attempt to trade on an all-to-all trading platform, whether operated by an IDB or an independent SEF like Tera or Javelin. Plaintiffs cite data indicating that platforms that do not use “name give-up” see virtually no IRS activity. SAC ¶¶ 296-311; JTSAC ¶¶ 242-56.

         J. Impact of the Boycott

         Plaintiffs claim that the boycott of Tera, Javelin, and TrueEx communicated that any platform giving the buy-side access to anonymous all-to-all IRS trading would be “collectively punished and strangled until it failed.” This “enforce[d] market discipline” and deterred others from opening such platforms. Similarly, plaintiffs allege, the Dealers deterred customers from using such platforms, by withholding clearing services from those who trade on them. SAC ¶¶ 288-91; JTSAC ¶¶ 226-33.

         Plaintiffs claim that the boycott has resulted in the Dealers' controlling 70% or more of the IRS market and preventing structural changes in that market. As a result, investors pay more money for IRSs, to which no other financial instrument is fully comparable. Plaintiffs allege that a comparison of data with fixed income and equities products sold on exchanges reveals the price benefits of such transparent all-to-all trading. SAC ¶¶ 312-47; JTSAC ¶¶ 267-72.

         II. Procedural History

         The initial complaint in this action was filed on November 25, 2015. Dkt. 1 in No. 15 Civ. 9139. On June 2, 2016, the United States Judicial Panel on Multidistrict Litigation (“JPML”) transferred all related cases to this Court for coordinated or consolidated pretrial proceedings with the actions pending in this District. Dkt. 1.[10] The cases encompassed by the JPML's order include cases brought on behalf of a putative class of IRS investors, and the separate case brought by Javelin and Tera. On July 26, 2017, the Court held an initial conference, and stayed formal discovery. Dkt. 10 (Order No. 3). On August 3, 2016, the Court appointed Quinn Emanuel Urquhart & Sullivan, LLP, and Cohen Milstein Sellers & Toll, PLLC, as interim co-lead counsel for the putative class. Dkt. 12 (Order No. 4). On September 9, 2016, class plaintiffs, Dkt. 13, and the Javelin/Tera plaintiffs, Dkt. 14, each filed an Amended Complaint. On November 4, 2016, defendants filed motions to dismiss. Dkts. 15-20; Dkts. 123-25, 127-29, 131-34 in No. 16-MD-2704. On December 9, 2016, class plaintiffs, Dkt. 23 (“SAC”), and the Javelin/Tera plaintiffs, Dkt. 145 in No. 16-MD-2704 (“JTSAC”), filed Second Amended Complaints. On January 20, 2017, defendants moved to dismiss, through separate motions filed by the Dealer Defendants, Dkts. 24-26, ICAP, Dkts. 28-30, HSBC, Dkt. 40 & Dkt. 163 in No. 16-MD-0274, and Tradeweb, Dkts. 169-71 in No. 16-MD-2704. On February 17, 2017, the class, Dkt. 32, and Javelin/Tera, plaintiffs, Dkt. 33, filed opposition briefs. On March 24, 2017, defendants filed reply briefs. Dkts. 36-40, & Dkts. 206-08, 210, 212 in No. 16-MD-2704. On May 23, 2017, the Court heard argument on the motions. See Transcript, Dkt. 233 in No. 16-MD-2704 (“Tr.”).

         III. The Motions to Dismiss: Overview and Standards

         The Dealer Defendants move to dismiss plaintiffs' Sherman Act § 1 claims on five grounds: that (1) the SACs do not state a plausible claim of an antitrust conspiracy; (2) the class plaintiffs lack antitrust standing; (3) the Commodities Exchange Act (CEA) and Dodd-Frank impliedly preclude plaintiffs' post-Dodd-Frank claims; (4) the SAC's pre-2012 claims are time-barred; and (5) the SAC's pre-2013 claims do not allege an injury-in-fact. Five individual defendants-three Dealer Defendants (BNPP, HSBC, and UBS), and the two non-Dealer Defendants (Tradeweb and ICAP)-move to dismiss for failure to state a § 1 claim for reasons particular to them.[11] Defendants also move to dismiss plaintiffs' state-law claims.

         To survive a motion to dismiss under Rule 12(b)(6), a complaint must plead “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). A claim only has “facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). A complaint is properly dismissed where, as a matter of law, “the allegations in a complaint, however true, could not raise a claim of entitlement to relief.” Twombly, 550 U.S. at 558. For the purpose of resolving the motion to dismiss, the Court must assume all well-pled facts to be true, drawing all reasonable inferences in favor of the plaintiff. Koch, 699 F.3d at 145. However, that tenet “is inapplicable to legal conclusions.” Iqbal, 556 U.S. at 678. A pleading that offers only “labels and conclusions” or “a formulaic recitation of the elements of a cause of action will not do.” Twombly, 550 U.S. at 555.

         There is no heightened pleading standard in antitrust cases. Concord Assocs., L.P. v. Entm't Props. Tr., 817 F.3d 46, 52 (2d Cir. 2016). Rather, at the pleading stage, plaintiffs need only “raise a reasonable expectation that discovery will reveal evidence of illegality.” Mayor and City Council of Baltimore v. Citigroup, Inc., 709 F.3d 129, 135 (2d Cir. 2013) (“Citigroup”).

         IV. Plaintiffs' Sherman Act § 1 Claim

         A. Applicable Legal Principles

         The Sherman Act bans “[e]very contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States[.]” 15 U.S.C. § 1. “The crucial question in a Section 1 case is therefore whether the challenged conduct ‘stems from independent decision or from an agreement, tacit or express.'” Starr v. Sony BMG Music Ent'm't, 592 F.3d 314, 321 (2d Cir. 2010) (quoting Theatre Enters., Inc. v. Paramount Film Distrib. Corp., 346 U.S. 537, 540 (1954) (alterations omitted)).

         To plausibly allege a Sherman Act § 1 conspiracy, a complaint must allege “enough factual matter (taken as true) to suggest that an [illegal] agreement was made, ” that is, “enough fact to raise a reasonable expectation that discovery will reveal evidence of illegal agreement.” Twombly, 550 U.S. at 556. “The ultimate existence of an ‘agreement' under antitrust law . . . is a legal conclusion, not a factual allegation.” Citigroup, 709 F.3d at 135-36 (citing Starr, 592 F.3d at 319 n.2 (“The allegation that defendants agreed to [a] price floor is obviously conclusory, and is not accepted as true.”)).

         As the Second Circuit has recognized, there are two ways, at the pleading stage, for a plaintiff “to allege enough facts to support the inference that a conspiracy actually existed” so as to overcome a motion to dismiss. Citigroup, 709 F.3d at 136.

         First, a plaintiff may allege “direct evidence that the defendants entered into an agreement in violation of the antitrust laws.” Id. (citing In re Ins. Brokerage Antitrust Litig., 618 F.3d 300, 323-24 (3d Cir. 2010)); see also Burtch v. Milberg Factors, Inc., 662 F.3d 212, 225 (3d Cir. 2011) (direct evidence is “evidence that is explicit and requires no inferences to establish the proposition or conclusion being asserted”). “Such evidence would consist, for example, of a recorded phone call in which two competitors agreed to fix prices at a certain level.” Citigroup, 709 F.3d at 136.

         Direct evidence, however, is not required. And concrete “smoking gun” evidence of an illegal conspiracy between sophisticated actors “can be hard to come by, especially at the pleading stage.” Citigroup, 709 F.3d at 136; see also United States v. Snow, 462 F.3d 55, 68 (2d Cir. 2006) (“[C]onspiracy by its very nature is a secretive operation, and it is a rare case where all aspects of a conspiracy can be laid bare in court . . . with precision.”).

         As a result, as an alternative to direct evidence, to prove a conspiracy a plaintiff may rely on indirect or circumstantial evidence, that is, “inferences that may fairly be drawn from the behavior of the alleged conspirators.” Anderson News, LLC v. American Media, Inc., 680 F.3d 162, 183 (2d Cir. 2012) (quoting Michelman v. Clark-Schwebel Fiber Glass Corp., 534 F.2d 1036, 1043 (2d Cir. 1976)); see also In re Elec. Books Antitrust Litig., 859 F.Supp.2d 671, 681 (S.D.N.Y. 2012) (“eBooks”) (same).

         A horizontal agreement among competitors, the sort of pact alleged here, is commonly based on claims of parallel conduct by the alleged co-conspirators. However, as the Supreme Court held in Twombly, “alleging parallel conduct alone is insufficient, even at the pleading stage, ” to survive a motion to dismiss. Citigroup, 709 F.3d at 136. Rather, to plausibly allege a § 1 violation, the parallel conduct must be “placed in a context that raises a suggestion of a preceding agreement, not merely parallel conduct that could just as well be independent action.” Twombly, 550 U.S. at 557.

         Twombly illustrates these principles. After deregulation, regional telephone companies had, in parallel, elected not to enter incumbent carriers' local telephone and high-speed internet markets. From this, the complaint inferred an agreement among these carriers to allocate markets. Upholding dismissal, the Supreme Court held that the competitors' parallel conduct, as alleged, did not “render a § 1 conspiracy plausible.” 550 U.S. at 556. Although such conduct was consistent with the existence of an agreement, it was also “just as much in line with a wide swath of rational and competitive business strategy unilaterally prompted by common perceptions of the market.” Id. at 554. Parallel conduct by competitors that would not state a § 1 claim, the Court observed, can be the result of “coincidence, independent responses to common stimuli, or mere interdependence unaided by an advance understanding between the parties.” Id. at 556 n.4 (quotation omitted). And there were sound reasons for each carrier independently to have refrained from entering an incumbent's market. Id. at 564-69. The Court cautioned: “Even ‘conscious parallelism, ' a common reaction of ‘firms in a concentrated market that recognize their shared economic interests and their interdependence with respect to price and output decisions, ' is ‘not in itself unlawful.'” Id. at 553-54 (quoting Brooke Grp. Ltd. v. Brown & Williamson Tobacco Corp., 509 U.S. 209, 227 (1993)) (alterations omitted).

         Following Twombly, for a complaint to state a § 1 claim based on parallel conduct by competitors, it must plead facts sufficient to indicate that this conduct “flowed from a preceding agreement rather than from [defendants'] own business priorities.” Citigroup, 709 F.3d at 137- 38; see also Twombly, 550 U.S. at 557 (“A statement of parallel conduct, even conduct consciously undertaken, needs some setting suggesting the agreement necessary to make out a § 1 claim[, some] further circumstance pointing to the meeting of the minds[.]”). An inference of conspiracy will not arise when the conspirators' parallel conduct “made perfect business sense, ” Citigroup, 709 F.3d at 138, “there are obvious alternative explanations for the facts alleged, ” In re Ins. Brokerage Antitrust Litig., 618 F.3d at 322-23 (quotation and alterations omitted), or the alleged facts “suggest competition at least as plausibly as [they] suggest anticompetitive conspiracy, ” In re Elevator Antitrust Litig., 502 F.3d 47, 51 (2d Cir. 2007). However, the requirement of “‘plausible grounds to infer an agreement does not impose a probability requirement at the pleading stage; it simply calls for enough fact to raise a reasonable expectation that discovery will reveal evidence of illegal agreement, '” Anderson News, 680 F.3d at 184 (quoting Twombly, 550 U.S. at 556) (emphasis added by Anderson News), and “there may . . . be . . . more than one plausible interpretation of a defendant's words, gestures or conduct.” Id. at 189-90.

         Post-Twombly courts have analyzed § 1 claims based on parallel conduct by horizontal competitors by inquiring whether “plus factors” and/or other circumstantial evidence are present that, along with the parallel conduct, make it plausible to infer an agreement among competitors. See, e.g., Citigroup, 709 F.3d at 137; Gelboim v. Bank of America, Corp., 823 F.3d 759, 781 (2d Cir. 2016). These factors describe “circumstances under which . . . the inference of rational independent choice [is] less attractive than that of concerted action.” In re Ins. Brokerage Antitrust Litig., 618 F.3d at 323 (citation omitted)). The Second Circuit has identified three “plus factors” as ones that may support a plausible inference of conspiracy: “(1) ‘a common motive to conspire'; (2) ‘evidence that shows that the parallel acts were against the apparent individual economic self-interest of the alleged conspirators'; and (3) ‘evidence of a high level of interfirm communications.'” Gelboim, 823 F.3d at 781 (quoting Citigroup, 709 F.3d at 136). The Third Circuit has also identified as relevant circumstantial evidence facts “implying a traditional conspiracy, ” meaning “non-economic evidence ‘that there was an actual, manifest agreement not to compete, ' which may include ‘proof that the defendants got together and exchanged assurances of common action or otherwise adopted a common plan even though no meetings, conversations, or exchanged documents are shown.'” In re Ins. Brokerage Antitrust Litig., 618 F.3d at 322 (citations omitted).

         B. ...

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