"ESMA, together with the national regulators, has been looking into the recent market movements, including in the CDS market," a spokesperson for the EU securities watchdog said.

The move comes after European Central Bank supervisor Andrea Enria said on Tuesday that volatility in Deutsche Bank shares was concerning as it showed investors were on edge and could be spooked by moves in the small market for CDS, a form of insurance for bondholders.

Enria also said that a selloff in the illiquid CDS market could have broader ramifications for the much larger share market and called for CDS to be centrally cleared.

Regulators are singling out a trade in Deutsche Bank CDS that they suspect fueled a global selloff on Friday, Bloomberg News reported on Thursday.

(Reporting by Akanksha Khushi in Bengaluru and Huw Jones; editing by Jason Neely)