ICE Trust pulls credit default swap application

CHARLOTTE, North Carolina (Reuters) - Intercontinentalexchange Inc said on Thursday it withdrew an application to register its credit default swaps trading as a derivatives clearinghouse with the Commodity Futures Trading Commission while the agency's rules are in flux.

ICE pulled the application for its ICE Trust subsidiary, filed on November 12, because of "the significant changes proposed to the commission regulations," a company spokesman said.

The CFTC is in the process of revamping the regulatory rules and oversight of the $600 trillion derivatives market, spurred by passage of the wide-ranging financial law, the Dodd-Frank Act, this summer.

ICE Trust would eventually be labeled as a derivatives clearinghouse under provisions of Dodd-Frank, but the company had sought to voluntarily enter the process earlier, according to its November application.

ICE shares were down 0.5 percent, or 63 cents, at $119.82 on the New York Stock Exchange.

CFTC SEEKS TO BREAK UP 'CLUBS'

The withdrawal comes a week after the CFTC proposed a rule that addresses part of the law requiring clearinghouses to have strong risk management standards and provide "fair and open access" to potential members.

Gary Gensler, chairman of the agency, has in the past complained that swaps clearinghouses acted like "exclusive clubs" and have unnecessarily kept out smaller players.

A spokesman for the CFTC declined comment on ICE's application.

The CFTC had received comments criticizing ICE's application because it required clearing members to have at least $1 billion in capital. (For the text ICE's application, click on r.reuters.com/san53r)

Michael Greenberger, a law professor at the University of Maryland and a former CFTC official, urged the agency to reject ICE's application because of its high barrier to membership.

"ICE Trust has been referred to as a 'Derivatives Dealers' Club' because it is dominated by swap dealers, such as Goldman Sachs, Citigroup Inc, JPMorgan, Credit Suisse Group AG, Bank of America Corp, and other large dealers," Greenberger wrote.

The Wholesale Markets Brokers' Association said it was "alarmed" that ICE Trust would be able to "arbitrarily" deny access and discriminate against new swap execution facilities under its application.

The group includes BGC Partners, GFI Group Inc, ICAP PLC, Tradition (North America) Inc and Tullett Prebon.

(Additional reporting by Roberta Rampton in Washington; Editing by Matthew Lewis and Steve Orlofsky)