A dozen major banks agreed Friday to pay $1.9 billion to settle allegations of price-fixing in the market for credit default swaps, a derivative that acts as insurance against bond defaults.

JPMorgan Chase, BNP Paribas of France and Barclays of Britain were among the banks striking the deal to settle investor allegations in US District Court in Manhattan, a lawyer for the plaintiffs told AFP.

"All defendants in the case agreed, including twelve of the world's largest banks," Dan Brockett, the lawyer, said in an email.

A group of investors led by the pension fund of a unit of the Sheet Metal Workers union filed the class-action lawsuit in 2013. They accused the defendants of rigging the CDS market and making them pay unfairly higher prices for the instruments.

CDS are a murky corner of the financial sector that is under scrutiny by authorities in several countries. The swaps were used widely as speculative tools during and after the 2008 financial crisis.

The other banks in the settlement are four US banks, Bank of America, Citigroup, Goldman Sachs and Morgan Stanley; and five foreign banks: Credit Suisse, Deutsche Bank, HSBC, Royal Bank of Scotland, and UBS.

Among other defendants was Markit Group, a British firm that provides financial information services, including on the CDS market.

Brockett said the $1.866 billion settlement agreement was expected to be finalized in seven to 10 days.

The US Department of Justice and the European Commission, the European Union's executive arm, have ongoing investigations of these same banks, Markit, and the International Swaps and Derivatives Association.

About two million CDS are in circulation worldwide, representing $11 trillion.