Probe Into Mexico’s Bond-Market Collusion Expanding Isabella Cot, Eric Martin, Michelle Davis and Nacha Cattan - Bloomberg
go to original July 3, 2017

The securities regulator known as the CNBV has started its own investigation into whether banks, brokers and pension funds colluded to suppress prices for government securities, according to three people with knowledge of the matter. The development comes months after antitrust regulators began looking into the local market, and both bodies have requested records of electronic chats and other communications, one person said.

The parallel investigations raise the stakes for participants in Mexico’s bond market, where primary dealers bid on notes via auction. The CNBV’s probe means that more investigators are looking into wrongdoing, and those identified as perpetrators could face higher penalties.

Mari Nieves Lanzagorta, a spokeswoman for the CNBV, said that the agency will “make public the information that corresponds with this particular case in due time” and declined further comment. Cofece, as the competition agency is known, didn’t immediately return a request for comment.

Cofece began its investigation in October and made it public six months later in an attempt to attract informants. Bloomberg News reported in May that seven banks - the local units of Banco Santander SA, Banco Bilbao Vizcaya Argentaria SA, JPMorgan Chase & Co., HSBC Holdings Plc, Barclays Plc, Citigroup Inc. and Bank of America Corp were at the center of the probe. Some banks have already been contacted by Cofece about the case. None have been accused of wrongdoing.

... The competition agency has said that the damage to public finances from the alleged manipulation could be “serious.” By suppressing prices, buyers would be able to get higher yields on the bonds, making interest payments more expensive for the government.

The investigation follows long-running cases over interest-rate rigging in the U.K. and comes after U.S. prosecutors in January charged workers from some of the world’s biggest banks with conspiring to coordinate trading of dollars and euros to manipulate prices.

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