Bloomberg LP Sues U.S. CFTC Over Swap Collateral Rules

Bloomberg LP sued the top U.S. derivatives regulator over rules setting higher collateral standards for swaps than comparable futures, arguing the requirements are arbitrary.

The Commodity Futures Trading Commission, which by law is required to evaluate the costs and benefits of proposed regulations “offered only a fleeting, bare-bones discussion of economic effects that contained no financial or quantitative estimates,” Bloomberg LP, the parent company of Bloomberg News, said in a complaint filed yesterday in federal court in Washington.

The commission adopted “requirements that pose a comparable threat to swap transparency” by giving “determinative weight to how products are labeled,” according to the complaint.

The current regulation harms plans by Bloomberg and others to operate swap-execution facilities, according to a news release and letter to the CFTC dated March 11 from the company’s outside counsel, Eugene Scalia, a partner at Gibson Dunn & Crutcher LLP.

The regulation “will drive liquidity away from standardized swaps to ‘swap futures’ that lack the post-trade transparency and regulatory requirements” that Congress determined “would best further the public interest,” Bloomberg said.

Steven Adamske, a spokesman for the CFTC, declined to comment on the lawsuit.

The case is Bloomberg LP v. Commodity Futures Trading Commission, 13-cv-00523, U.S. District Court, District of Columbia (Washington).

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