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.