Three Wall Street lobbying groups filed suit on Wednesday against the CFTC over the regulator’s Dodd-Frank-mandated cross-border rules published in July.
The Securities Industry and Financial Markets Association, International Swap and Derivatives Association and Institute of International Bankers challenged the rule, saying it “unlawfully circumvented” the Administrative Procedure Act and Commodity Exchange Act by characterizing regulations as guidance.
SIFMA, ISDA and IIB allege that the CFTC failed to adhere to legal requirements in developing the cross-border rule, which the groups also allege violates existing agreements between lawmakers and works against the G20 mission.
The groups also said in the filing that the CFTC failed to conduct a required cost-benefit analysis, engaged in a flawed rulemaking process and imposed a number of rules that “are contrary to the spirit and letter of international cooperation” and could have negative financial impacts.
“SIFMA and our members support responsible regulatory reform that will bring transparency and accountability to the derivatives markets,” former Senator and SIFMA CEO Judd Gregg said. “We are committed to constructive engagement with regulators following fair and open procedures. It is vital that the costs and benefits of any new rules are properly analyzed to ensure they won’t disrupt the markets. The CFTC’s arbitrary and unilateral approach to cross-border regulation is backdoor rulemaking which has led to widespread market confusion and is creating significant impediments to the orderly functioning of financial markets worldwide.”