WASHINGTON Feb 7 The financial industry
asked a federal court late on Tuesday to temporarily block
regulations approved by the U.S. futures regulator aimed at
preventing excessive speculation in commodity markets such as
oil and gold.
The Securities Industry and Financial Markets Association
(SIFMA) and the International Swaps and Derivatives Association
(ISDA) told the court if the U.S. Commodity Futures Trading
Commission's rules go into effect they would irreparably harm
their members and the public.
In a 50-page filing with the U.S. District Court for the
District of Columbia, the groups said unless the court granted a
preliminary injunction to delay the rules until the case is
decided, the industry would shoulder additional costs that could
never be recovered.
In addition, they argued market participants would be forced
to forgo trading strategies and their ability to hedge against
risks would be damaged.
"A stay will, however, avoid imposing costs that the agency
concedes will occur and that a majority of the (CFTC)
commissioners determined would harm consumers and the markets as
a whole," the groups told the court.
SIFMA and ISDA members "will experience added costs and
irreparable harm each day this rule remains in effect, and there
will be no identifiable harm from a stay", they said.
The CFTC narrowly approved the position limit plan in
October by a 3-2 vote, but there was significant internal
dissent within the agency on whether the rule was needed.
Most on Wall Street have decried the notion of capping the
number of futures and swaps contracts that any single trader
could hold. They view the proposal, first made following the
commodity spike in 2008, as a misguided political attempt to
stem soaring prices.
SIFMA and ISDA sued in December to block the rules, arguing
the CFTC exceeded its authority and that they were not
adequately justified. Traders also have cried foul, saying the
rules were a politically motivated effort to cap prices that
will make markets less liquid and more volatile.
The futures regulator was given the authority to impose
position limits under the Dodd-Frank financial regulatory
overhaul legislation passed in 2010.