Yesterday afternoon Bloomberg filed a lawsuit in the U.S. District Court for the District of Columbia to prevent the U.S. Commodity Futures Trading Commission (CFTC) from implementing flawed regulation relating to the clearing of swaps that will put our financial markets in jeopardy.
The regulation, which will go into effect June 10, 2013, requires far more upfront costs – five times the margin requirements – to trade a cleared financial swap than an identical cleared financial swap future. This will push investors of all types toward swap futures which have less regulatory requirements, less transparency, but pose much higher investor risk.
We did not come to the decision lightly. Bloomberg has worked along with market participants and our buy and sell-side clients since October 2012 to alert the CFTC to the consequences of their ruling. As well, the CFTC has failed to respond to our formal request – made by legal counsel Eugene Scalia – to change and stay the implementation of this rule, leaving us with no other option.
We are confident in the merits of our case, remain committed to Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and will continue to strongly advocate in favor of transparency and stability in the global financial markets.
Statements from our outside attorneys Eugene Scalia and Mario Cuomo can be found here.
To read Dan Doctoroff’s piece on the CFTC lawsuit please click here.