By Basil Katz
NEW YORK, Nov 8 (Reuters) - Exchange operator CME Group
asked a U.S. court on Thursday to prevent the chief U.S.
derivatives regulator from enforcing swap reporting rules passed
after the 2008 financial crisis.
Thursday's lawsuit, filed in federal court in Washington
D.C., is the third industry challenge to the Commodity Futures
Trading Commission (CFTC) in its history.
In the lawsuit, CME asks that a judge issue an injunction
to prevent the CFTC from enforcing the rules against the
exchange when they come into effect for it on Nov. 13.
By adopting the rules without "the benefit of an adequate
cost-benefit analysis," CME said in the lawsuit, "the CFTC acted
in a manner that was arbitrary and capricious and otherwise not
in accordance with law".
A CFTC spokesman declined to comment on the lawsuit.
CME, specifically, is challenging the requirement that
exchanges make available non public reports of cleared swap
transactions to new CFTC-registered entities called "swap data
repositories" (SDRs) which would in turn make the swap data
available to the CFTC.
"CME incurs substantial costs in terms of time, personnel,
technological infrastructure, and money to maintain these data
in the ordinary course of business," the lawsuit said.
The new rules would only "impose costly, cumbersome, and
duplicative requirements".
CME said in the lawsuit that it had applied to register as
an SDR, but that its request had not been granted.
The rules at issue are part of the Dodd-Frank Act, a
reaction to the 2008 financial crisis. The act was in part
designed to improve transparency in the $640 trillion
over-the-counter derivatives market.
The law requires standard swaps to be traded on regulated
platforms and routed through clearing houses, which stand in
between parties to guarantee trades.
The case is Chicago Mercantile Exchange Inc. v. U.S.
Commodity Futures Trading Commission, U.S District Court for the
District of Columbia, No. 12-cv-1820.
For CME Group : Mark Davis Young of Skadden, Arps, Slate,
Meagher & Flom
For the CFTC: Not immediately available.
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