JPMorgan’s advantage over its Wall Street peers is fading in the eyes of credit- derivatives traders as fines and regulator probes hobble profits while firms from Citigroup Inc. to Morgan Stanley rebound.

Credit-default swaps traders are demanding 16 basis points less to protect against losses on JPMorgan bonds than the average cost to insure debt of the bank’s five-biggest U.S. rivals, according to prices compiled by Bloomberg. The gap, a measure of the bank’s credit strength relative to its competitors, has narrowed from an average 80 basis points since 2008 and 152 in April 2012, the month before JPMorgan disclosed a trading loss that reached $6.2 billion.

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