DTCC and the DTCC Data Repository (U.S.) LLC (DDR) have filed a lawsuit challenging three interrelated actions by U.S. Commodity Futures Trading Commission (CFTC) and asking a federal court to vacate the Commission’s approval of Chicago Mercantile Exchange, Inc. (CME) Rule 1001 and Intercontinental Exchange Inc. (ICE) Rule 211. The CME and ICE Rules are anticompetitive and undermine the core pro-competitive principles of the Dodd-Frank Act, the suit says. By approving these Rules, CFTC changed its original adherence to the pro-competitive principles of Dodd-Frank and instead sanctioned anticompetitive behavior that allowed these clearing houses to require reporting of cleared swap data to their captive swap data repository (SDR).
“Under the threat of a CME lawsuit last fall, the CFTC ignored the Administrative Procedure Act (APA) and the Commodity Exchange Act (CEA) and took action that paved the way for approval of these Rules,” said Larry Thompson, DTCC Managing Director and General Counsel, “The Commission failed to properly consider the anticompetitive effects of Rules 1001 and 211, and did not comply with the legally required administrative or cost-benefit analysis procedures. “These Rules jeopardize the underlying principles of Dodd-Frank, are inconsistent with the Commission’s own regulations, and compromise the ability of regulators and market participants to understand, assess and manage systemic risk. DTCC and DDR are market utilities and user-owned cooperatives and have now, after exhausting all regulatory channels, been forced to litigate to protect market participant choice, competition, and transparency and accountability in the global markets,” Thompson said.