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, GFI Group Inc. 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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State Street Overcharging Probed by U.K. Police, Irish Fund Says
London police are investigating client overcharging at State Street Corp.’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.’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 they gave 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).
Comings and Goings/Agency Management
Sweetheart Deal Lets SEC Employees Get Valentine’s Day Flowers
There may still be time to send Valentine’s flowers to your favorite officials at the U.S. Securities and Exchange Commission.
SEC workers were notified earlier this week that the agency was prohibited by law from using government resources for personal reasons -- and that included accepting and delivering flowers to employees’ offices. The ban didn’t sit well with SEC union chief Greg Gilman who told his troops in an e-mail that he had demanded the SEC provide “the legal basis for the assertion.” Before the dustup could devolve into a legal battle, Gilman offered up his own bouquet to management, proposing that union volunteers sit at tables in office lobbies to accept flower deliveries.
SEC management backtracked on Feb. 12, offering a “clarification” that deliveries could be received and employees would be called down to pick up their flowers.
Gilman, an enforcement lawyer in the SEC’s Boston office, didn’t return a call seeking comment.
The resolution could presage a thaw in what have often been tense relations between the SEC’s management and its union. Gilman has been critical of a decision last year by Chairman Mary Jo White to give added retirement and vacation benefits only to managers.