CME Group faces criticism over Dodd-Frank lawsuit

CME sued the CFTC last week, seeking a permanent injunction against certain cleared swap reporting requirements

CME Group Inc., the world’s largest futures and derivatives market, has come under fire for its recent lawsuit against the U.S. Commodity Futures Trading Commission, which it filed in an effort to block the implementation of certain Dodd-Frank reporting requirements.

The impending rules would require registered derivatives clearing organizations to report nonpublic information about cleared swap transactions to swap data repositories established under the Dodd-Frank Wall Street Reform and Consumer Protection Act. In a lawsuit filed Thursday, CME requested a permanent injunction against these rules, arguing that they “would impose costly cumbersome and duplicative requirements” on clearinghouses.

In the wake of the 2008 financial crisis, federal regulators have proposed or implemented rules designed to boost transparency and increase oversight of financial markets. Many financial industry participants have pushed back against these regulations, but at least one of those participants is siding with the government in its fight with CME.

The Depository Trust & Clearing Corp. (DTCC), which has received CFTC approval to run swap data repositories, filed a motion Monday to act as a defendant on the side of the agency. In a letter sent to the CFTC, DTCC said that CME’s lawsuit “threatens to dismantle and disrupt the entire regulatory regime statutorily mandated by the Dodd-Frank Act in order to preserve CME’s exclusive access to data that it acquires through its role as a derivatives clearing organization.”

CME is trying to establish its own swap data repository, but has not yet received approval from the CFTC. In the interim, the federal rules would require it to report trades to rival repositories, such as those run by DTCC and IntercontinentalExchange Inc.

Read more at Futures Magazine.

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Contributing Author

Alanna Byrne

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