In the latest challenge to a rule-making by the Commodity Futures Trading Commission, the Chicago Mercantile Exchange has filed suit against the regulator and its approach to the implementation of the Dodd-Frank Act.
The CME alleges that the CFTC aggressively interpreted a statute requiring clearinghouses to report swap data to a swap data repository because the CFTC can already access the data by approaching CME. The firm also alleges that the regulator failed to conduct an adequate cost-benefit analysis on the mandate and that the regulator has adopted the rules with no regard to the Administrative Procedure Act, PointofLaw.com reports.
The CME maintains that an additional reporting requirement is neither required nor bolstered by a cost-benefit analysis.
The firm applied in June to become a swap data repository, which would essentially allow it to cut out any middlemen. The CFTC is conditioning the CME’s registration with compliance on a rule present in a CFTC guidance document that may conflict with the regulator’s own rule, according to PointofLaw.com.
The suit is one of several filed against the CFTC as it continues to implement Dodd-Frank. The CFTC’s position limits rule was struck down in September by a U.S. federal judge who sent the rule back to the commission for further consideration, signaling a major victory for traders just two weeks before parts of the rule were set to take effect.