Wall Street groups contest CFTC cross-border guidelines

Wed Dec 4, 2013 6:03pm EST
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By Emily Stephenson and Sarah N. Lynch

WASHINGTON (Reuters) - Three Wall Street trade groups sued the U.S. Commodity Futures Trading Commission on Wednesday in hopes of beating back tough overseas trading guidelines they fear could hurt markets and cut profits.

The groups accused the CFTC in their lawsuit of avoiding a rigorous rulemaking process, tacking changes on to the guidelines without seeking public input, and failing to study economic impacts of the regulation and its costs to industry.

They also said the lawsuit aims to stop the CFTC from what they described as an "unceasing effort" to seize authority over the global swaps market by publishing hasty, unpredictable advisory documents instead of issuing formal rules.

"This action, which has been taken so far outside the bounds of normal regulatory course ... needs to be addressed through the court system," Judd Gregg, chief executive of the Securities Industry and Financial Markets Association (SIFMA), told Reuters.

SIFMA, the International Swaps and Derivatives Association (ISDA) and the Institute of International Bankers (IIB) filed the suit in U.S. District Court for the District of Columbia.

A spokesman for the CFTC did not have an immediate comment.

The CFTC, the nation's top swaps regulator, was required by the 2010 Dodd-Frank law to write dozens of rules bringing the $630 trillion market under federal oversight for the first time. Regulators were also instructed to determine how their rules should apply to U.S. companies with operations overseas.

The issue sparked a trans-Atlantic conflict with banks and European regulators who did not want companies to have to comply with both U.S. and foreign rules.   Continued...

Gary Gensler, chairman of the Commodity Futures Trading Commission (CFTC), listens during an interview with Reuters in London October 2, 2012. REUTERS/Simon Newman