CFTC Wins Dismissal of 3 of 5 Counts in DTCC Swaps Suit

The U.S. Commodity Futures Trading Commission won the dismissal of three of the five counts in a lawsuit by the Depository Trust & Clearing Corp. over data reporting requirements.

The ruling today by a federal judge in Washington allows DTCC to pursue the two remaining counts, including one the commission didn’t challenge.

The DTCC alleged that CME Group Inc.’s regulatory approval to have information about swaps routed to its own database is anticompetitive and lessens transparency. The DTCC accused the CFTC of unfairly favoring Chicago-based CME, owner of the world’s largest futures exchange, in violation of the Dodd-Frank Act.

U.S. District Judge Amy Berman Jackson said the CFTC didn’t take final action on two of three issues raised by DTCC, so there’s no legal basis to challenge them.

DTCC “failed to allege any final agency action that would be reviewable,” Jackson said in the ruling.

DTCC’s data repository is at a competitive disadvantage because it’s the only one not affiliated with a derivatives clearing organization, according to its complaint.

The CFTC didn’t seek dismissal of an allegation that it abused its authority in approving a rule that allowed CME to require that data from swaps it cleared be reported to its own data repository.

Donna Faulk-White, a CFTC spokeswoman, declined to comment on Jackson’s ruling.

Dodd-Frank Principles

“We are pleased that the judge has given the green light to the core of our case,” Larry Thompson, DTCC general counsel and chairman, said in an e-mailed statement. “DTCC is proceeding with the challenge to the approval of CME Rule 1001 and we look forward to the judge’s consideration of the merits of our case. We continue to believe that CME Rule 1001 is anticompetitive and undermines the core pro-competitive principles of the Dodd-Frank Act.”

The case is Depository Trust & Clearing Corp. v. U.S. Commodity Futures Trading Commission, 13-cv-624, U.S. District Court, District of Columbia (Washington).

Before it's here, it's on the Bloomberg Terminal.