In extending its two-year-long probe into CDS trading, the Commission says it found "preliminary indications that Isda may have been involved in a coordinated effort of investment banks to delay or prevent exchanges from entering the credit derivatives business. Such behaviour, if established, would stifle competition in the internal market in breach of EU antitrust rules."

The initial investigation centres on 16 banks that act as dealers in the CDS market and their practice of giving most of their pricing, indices and other essential daily data only to UK vendor Markit. The Commission is concerned that the practice may have been used as a means to foreclose the development of competing CDS trading platforms "through collusion or an abuse of a possible collective dominance".

The Commission is also looking into clauses in Markit's licence and distribution agreements which it alleges could "impede the development" of competition for CDS information provision.

In June last year, Isda called in Markit to help it develop a system enabling counterparties to amend their over-the-counter derivatives documentation for Dodd-Frank compliance.

The EU investigation follows a similar probe by the US Justice Deparment which was launched in 2009.

Markit has denied the allegations.

The Commission says it has informed Isda - a global trade association comprising over 800 member institutions - and the national competition authorities that it has extended proceedings in this case.

Isda says that it is co-operating fully with the invesitgation and that it is "confident that it has acted properly at all times and has not infringed EU competition rules".