Swaps Reprieve, State Street Probe, Pfizer Sued: Compliance

European swap-trading platforms won a reprieve from Dodd-Frank Act rules in a deal that puts U.S. and European authorities on a path toward sharing oversight of most of the $693 trillion global market.

The U.S. Commodity Futures Trading Commission and European Union officials, in an agreement announced Feb. 12, granted the trading facilities relief until March 24 from U.S. registration. U.K. and European regulators also are implementing trading rules designed to meet U.S. standards that could then be relied on to substitute for Dodd-Frank oversight in the long-term, said Mark P. Wetjen, acting CFTC chairman.

The CFTC said in a summary of the deal that it would revoke the relief to trading platforms if they fail to meet U.S. conditions for competition and transparency.

Many interest-rate swaps will be required to trade on swap execution facilities, or Sefs, in the U.S. under CFTC rules starting Feb. 15. Platforms owned by Tradeweb Markets LLC, ICAP Plc (IAP), GFI Group Inc. (GFIG) and Bloomberg LP, parent of Bloomberg News, have temporarily registered with the CFTC. The Sefs facilitate transactions among banks and between banks and asset managers or other clients.

The international reach of CFTC rules has been among the most contentious issues between the Washington-based regulator and financial firms that operate around the world.

Wetjen said the primary platforms affected are in London.

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Compliance Action

State Street Overcharging Probed by U.K. Police, Irish Fund Says

London police are investigating client overcharging at State Street Corp. (STT)’s U.K. unit that led to a 22.9 million-pound fine ($38.1 million) from regulators, an Irish fund official told lawmakers in Dublin.

The U.K. Financial Conduct Authority fined State Street on Jan. 31 for charging clients “substantial” mark-ups without their consent. A State Street spokeswoman declined to comment, saying it was a matter for the City of London Police.


Pfizer Sued by Australia Regulator for Generic Lipitor Deals

Pfizer Inc. (PFE)’s Australian unit was sued by the nation’s competition regulator for misuse of market power relating to sales of its generic version of the Lipitor cholesterol drug.

The regulator said it filed the lawsuit yesterday in federal court in Sydney claiming Pfizer Australia Pty.’s deals with pharmacies in 2012 for the sale of atorvastatin breached competition rules because by giving unfair incentives to the pharmacies to sell the drug upon the expiration of the Lipitor patent.

Pfizer said in an e-mailed statement yesterday it believes the offers made to the pharmacies were competitive, and declined to comment further because the matter is before the court.

Volcker Rule Bankers’ Lawsuit Dropped as Regulations Revised

The American Bankers Association is dropping its lawsuit challenging a provision of the Volcker Rule that requires community banks to divest their holdings in some collateralized debt obligations.

The industry group, which previously said banks would suffer losses of $600 million because of the provision, is working with regulators which have already made changes to the rule that “allowed many banks to avoid taking hundreds of millions of dollars in unnecessary writedowns,” Frank Keating, the president of the association, said in a statement.

The group had objected to a portion of the rule that would force lenders to get rid of CDOs backed by trust-preferred securities.

The district court case is American Bankers Association v. Federal Deposit Insurance Corp., 13-cv-02050, U.S. District Court, District of Columbia (Washington). The appeals court case is American Bankers Association v. Federal Reserve System, 13-1310, U.S. Court of Appeals for the District of Columbia Circuit (Washington).

To contact the reporter on this story: Carla Main in New York at cmain2@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

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