By Aruna Viswanatha
WASHINGTON, March 10 Parts of a lawsuit filed by
the Depository Trust & Clearing Corp against the top U.S.
derivatives regulator in a fight over swaps data will be allowed
to proceed, a U.S. federal judge ruled.
The DTCC sued the Commodity Futures Trading Commission over
the way it allowed DTCC rivals CME Group Inc and
IntercontinentalExchange to gather potentially lucrative
swap trading data.
U.S. District Judge Amy Jackson dismissed three claims in
the DTCC lawsuit and said the court could not review them
because the allegations did not deal with any final action by
the CFTC, according to an order on Monday.
Underlying the dispute is a struggle between Wall Street,
represented by the DTCC, and Chicago's powerful commodity
trading companies over who will control swaps data.
The 2010 Dodd-Frank Wall Street reform law called for the
creation of swap data warehouses tasked with storing all
transactional trade data for over-the-counter derivatives to
help regulators police the market for potential abuses.
The DTCC filed its lawsuit last May after the CFTC gave the
two futures exchanges the OK to send client data to their own
proprietary data warehouses.
A swap is a financial instrument that derives its value from
something else, such as an interest rate, and is typically used
to hedge against potential future risks.
DTCC, a financial services group controlled by investment
banks that deals in post-trade transactions, operates its own
rival data warehouse and said the CFTC's decision is
anticompetitive. DTCC wants clients to have the choice where
their data go.
One of the DTCC claims Jackson dismissed dealt with some
revisions the CFTC made in answers to frequently asked questions
that it had posted on its website to help guide the industry.
The other two claims targeted a rule by ICE that went into
effect automatically through "self-certification," a process
that fast-tracks rule approvals if the CFTC opts not to act on
Jackson said only "final agency actions" are reviewable by
the court under the Administrative Procedure Act, a law that
governs how federal agencies draft rules.
Under that reasoning, she did allow DTCC's claims against a
similar CME rule to move forward because the CFTC had approved
that rule through a formal rulemaking process.
"We are pleased that the judge has given the green light to
the core of our case," DTCC general counsel Larry Thompson said
in a statement. "We continue to believe that CME Rule 1001 is
anticompetitive and undermines the core pro-competitive
principles of the Dodd-Frank Act."
A CFTC spokesman had no immediate comment.