Trade groups appeal U.S. decision on CFTC mutual funds rule

Thu Dec 27, 2012 2:06pm EST

(Reuters) - Two industry trade groups moved on Thursday to appeal a judge's decision earlier this month upholding a new regulation for the mutual funds industry, in a ruling that came as a rare win for the U.S. Commodity Futures Trading Commission.

The Investment Company Institute and the U.S. Chamber of Commerce said the rule duplicates existing rules enforced by securities regulators. They said the CFTC did not sufficiently consider the impact on markets when it wrote its new rule.

"Nothing in the district court's decision changes the fact that the CFTC did not adequately consider alternative approaches to its flawed and overly-broad approach," David Hirschmann, president of the chamber's Center for Capital Markets Competitiveness, said in a statement.

The mutual funds rule requires advisers to register with the CFTC if commodity trades, including futures, swaps and options, exceed certain thresholds. That would trigger record-keeping requirements, disclosure obligations and other responsibilities.

The groups said the rule is redundant because the Securities and Exchange Commission already oversees mutual funds. They filed a lawsuit challenging the rule in April. U.S. District Judge Beryl Howell, in her ruling on December 12, said the CFTC had done enough to weigh the costs and benefits of the new rule.

The CFTC declined to comment on the appeal of the decision, which gave the commission a boost in its struggle with industry pushback against many of its latest rules. The mutual funds rule stems from a request by the National Futures Association, a self-regulatory industry group.

Financial industry groups have succeeded in challenging some CFTC rules by charging that regulators did not adequately consider the impact of its rules on markets.

In September, a judge tossed out the CFTC's rule capping speculative positions in commodities. It was a big win for the derivatives industry.

Regulators are appealing the decision against the position limits rule, written to enforce the 2010 Dodd-Frank financial law aimed at preventing another financial crisis.

(Reporting By Emily Stephenson; Editing by David Gregorio)

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