Bloomberg sues CFTC over swaps margin rule

Bloomberg sues CFTC over swaps margin rule

Bloomberg has filed a lawsuit against a US derivatives regulator over new margin rules that differentiate between swaps and futures.

Bloomberg is one of several outfits planning to take advantage of new Dodd-Frank regulations designed to bring OTC trading into the light by registering as a Swap Execution Facility (Sef).

The Commodity Futures Trading Commission (CFTC) has imposed minimum margin collateral rules that require buyers and sellers of swaps to set aside enough money to cover five days of losses.

In a suit filed in the US federal court for the District of Columbia, Bloomberg argues that it is wrong to have this five day margin when for futures contracts the figure is just one to two days.

The data giant contends that the difference gives exchanges the edge over Sefs, arguing in its complaint that the CFTC is adopting "requirements that pose a comparable threat to swap transparency" by giving "determinative weight to how products are labeled".

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