By Douwe Miedema
NEW YORK, Nov 12 (Reuters) - The Depository Trust and
Clearing Corp (DTCC), a U.S. clearing house, sought to intervene
Monday in a lawsuit by the CME Group that would allow the
exchange operator to avoid making changes to comply with new
CME, the biggest operator of U.S. futures exchanges, last
week filed a lawsuit against the Commodity Futures Trading
Commission to prevent the regulator from enforcing reporting
rules on trading in swaps that passed after the 2008 financial
CME is challenging the requirement that exchanges make
available non-public reports of cleared swap transactions to new
CFTC-registered entities called swap data repositories, or SDRs.
The CFTC has already granted a license for New York-based
DTCC to function as an SDR, which are meant to shed more light
on the opaque derivatives market that stood at the center of the
In a motion filed with the U.S. District Court in
Washington, D.C., DTCC said the CME lawsuit would harm the
clearing house if it were successful and that it was against
"If granted, the requested injunction will disrupt and
dismantle the regulatory regime favoring transparency in the
derivatives markets," said DTCC, which had earlier sent a letter
to the CTFC warning it was considering legal action.
CME, which operates the Chicago Mercantile Exchange, the
Chicago Board of Trade and the New York Mercantile Exchange,
said in a statement Monday that the swap rules would impose
"costly, cumbersome, and duplicative requirements" on trading
The CFTC could not immediately be reached for comment.
Swaps - a catch-all phrase for many kinds of often highly
complex and lightly regulated financial instruments - will need
to be traded on exchange-like platforms in what is expected to
lead to an overhaul of the lucrative business.
In large part they will also need to be cleared, and
transaction data will need to be centrally stored in the SDRs.
The CFTC has not yet responded to a request by the CME to
function as an SDR. CME does not trade swaps but like the DTCC
also offers clearing services.
As a result, CME will need to report transaction data to a
rival from the close of business on Tuesday unless it
successfully challenges the CFTC in court, or the
Washington-based regulator grants the futures exchange a further
The CME, which already collects a great amount of data by
virtue of being a swap clearinghouse, believes it can do the job
itself and that it would be costly to use a third party.
The case is one of a growing number of legal challenges
facing U.S. regulators, but differs in that there is no industry
consensus about the issue, as the CME is advancing a more narrow
The International Swaps and Derivatives Association lobby
group on Friday distanced itself from CME by warning against a
proliferation of data warehouses.
The CFTC suffered a setback in October, when it was forced
to delay a crucial set of rules aimed at making the derivatives
market more stable and less opaque.
And regulators from Europe and Asia criticized the watchdog
in a public hearing last week for its aggressive stance on how
its rules apply to international banks and traders.
The Securities and Exchange Commission has also seen several
of its rules challenged in the courts.
The CME 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.
(Additional reporting by Nate Raymond)
Follow us on Twitter @ReutersLegal | Like us on Facebook