About Us  |   Contact Us  |   Register  | Login  |   

Follow HedgeWorld on Twitter HedgeWorld on LinkedIn






HEDGEWORLD NEWS
Search the News
Advanced News Search
HedgeWorld News by Region
United States / Americas
Europe
Asia / Australia
International
HedgeWorld News Sections
Managed Futures & Derivatives
Daily News
Regulatory/Legal
Strategies/Analysis
Technology
Opinion
People
Indexes
Other News Features
Most Popular
LexisNexis Headlines
Reuters Headlines
The HedgeWorld Blog
Alternative Advantage Daily Newsletter
RSS Service
Sign Up For Email News Alerts
Reprints



UPDATE 1-DTCC sues U.S. regulator CFTC in swaps data spat
05/02/2013 Email this story  |  Printable Version

By Douwe Miedema

WASHINGTON, May 2 (Reuters) - Depository Trust & Clearing Corp (DTCC) sued the top U.S. derivatives regulator over the way it has allowed two DTCC rivals to gather potentially lucrative swap trading data.

The Commodity Futures Trading Commission has given two futures exchange - CME Group Inc and IntercontinentalExchange - the nod to send client data to their own proprietary data warehouses.

DTCC - a financial services group controlled by investment banks that deals in post trade transactions - operates its own data warehouse and says the CFTC decision is anti-competitive. DTCC wants clients to have the choice where their data go.

"The commission failed to properly consider the anticompetitive effects of (the rules), and did not comply with the legally required administrative or cost-benefit analysis procedures," DTCC said in a statement.

Underlying the spat is a fight between Wall Street and Chicago's powerful commodity traders over who will dominate the swaps data business. Traditionally, a swap is the exchange of one security for another.

The CFTC is under siege from a rising number of lawsuits as it rushes through a flurry of new regulations mandated by the 2010 Dodd-Frank overhaul of Wall Street.

Last month, data vendor Bloomberg LP filed a lawsuit against the agency to fight a new rule that would make the trading of swaps more expensive.

The CFTC, led by former Goldman Sachs banker Gary Gensler, is writing rules for the $650 trillion swaps market, which critics say contributed to the 2007-09 credit meltdown by hiding huge risks from regulators.

Under the new rules, swaps will need to be traded through clearing houses, which stand between buyers and sellers to absorb risk and make trading safer.

Positions also will need to be reported by these clearing houses to so-called Swap Data Repositories (SDR), to give regulators more insight into the market. DTCC, ICE and CME each operate an SDR.

But while the CME and ICE operate their own clearing services, DTCC has to rely instead on LCH.Clearnet, which is being bought by the London Stock Exchange, to receive sufficient data in its SDR.

DTCC dominates the interest rate swaps segment because of its close ties to investment banks, while ICE is by far the biggest clearer of credit-default swaps.

The CME has no such dominant position but hopes to build up substantial market share in new areas.


Email This Story to a Friend   |   Display Printable Version of This Story

Story Copyright © 1999-2014 Reuters HedgeWorld All rights reserved.

HedgeWorld News is sponsored by:






Lipper    Privacy   User Policy  Legal Disclosure Copyright/DMCA  Site Map    FAQ    Glossary  Thomson Reuters for Hedge Funds
All rights reserved. Users may download and print extracts of content from this website for their own personal and non-commercial use only. Republication or redistribution of HedgeWorld content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters. HedgeWorld is a registered trademark of Thomson Reuters.