By Jonathan Stempel
NEW YORK (Reuters) - A U.S. judge on Friday said investors may pursue part of their nationwide antitrust lawsuit accusing 12 of the world's biggest banks of conspiring to rig the $275 trillion market for interest rate swaps.
U.S. District Judge Paul Engelmayer in Manhattan said 11 of the banks, including Bank of America Corp <BAC.N> and JPMorgan Chase & Co <JPM.N>, must defend against claims that from 2013 to 2016 they boycotted three upstart electronic platforms for swaps trading, hoping to destroy them.
Investors seeking damages in the proposed class action said banks did this to preserve their 70 percent market share, and boost profit by making trading more costly. Engelmayer dismissed all claims against the 12th bank, HSBC Holdings Plc <HSBA.L>.
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Interest rate swaps let parties exchange future interest payments, typically by exchanging a fixed rate for a floating rate, to manage risk or bet on whether rates will rise or fall.
Banks have faced many private lawsuits and regulatory probes into alleged rigging of derivatives, rates, securities and commodities.
In his 108-page decision, Engelmayer said the complaint by investors led by the Public School Teachers' Pension and Retirement Fund of Chicago and including the city of Baltimore was "rife with specifics" about alleged collusion in swaps.
He rejected defense arguments that the 2010 Dodd-Frank financial reforms precluded the claims, saying "it cannot credibly be claimed" that a boycott was "necessary or appropriate to achieve Dodd-Frank's purposes."
But the judge also dismissed claims of alleged collusion from 2008 to 2012 to block the creation of electronic platforms, including through investments by most of the banks in Tradeweb, allegedly to control that platform's direction.
The remaining bank defendants include Barclays Plc <BARC.L>, BNP Paribas SA <BNPP.PA>, Citigroup Inc <C.N>, Credit Suisse Group AG <CSGN.S>, Deutsche Bank AG <DBKGn.DE>, Goldman Sachs Group Inc <GS.N>, Morgan Stanley <MS.N>, Royal Bank of Scotland Group Plc <RBS.L> and UBS Group AG <UBSG.S>.
"It remains a very large case," Daniel Brockett, a lawyer for the investors, said in an interview. "The banks have gotten some temporary relief. We will study the opinion and review our options."
Bank of America, Barclays, Citigroup, Credit Suisse, Deutsche Bank, Goldman, HSBC and JPMorgan declined to comment. The other banks had no immediate comment.
Engelmayer also said Javelin Capital Markets LLC and TeraExchange LLC, which created two of the electronic platforms, can pursue some of their own claims against banks. A lawyer for both declined to comment.
The case is In re: Interest Rate Swaps Antitrust Litigation, U.S. District Court, Southern District of New York, No. 16-md-02704.
(Reporting by Jonathan Stempel in New York; Editing by Richard Chang)