The Depository Trust & Clearing Corporation's (DTCC) subsidiary, DTCC Data Repository (U.S) LLC (DDR), today announced it has filed a motion for leave to intervene in the case brought by the Chicago Mercantile Exchange Inc. (CME) against the Commodity Futures Trading Commission (CFTC).
The documents were filed on Nov. 12, 2012, in the U.S. District Court in Washington, D.C.
The motion is a formal request to the court asking that DDR, a U.S.-registered swap data repository, be allowed to participate on the side of the CFTC in defense of the CFTC's swap data reporting rules. The CME filed a lawsuit on Nov. 8 seeking judicial review of and a permanent injunction against complying with various rules designed to implement the Dodd-Frank Act's swap data reporting regulatory regime. CME officially objected to DDR's request to enter the lawsuit as an intervener. DDR seeks to intervene on the side of the CFTC, named as a Defendant in the suit.
"We support the CFTC against the CME's challenge, and will work to defend the regulatory reporting regime that has been in place for over ten months," said Larry Thompson, General Counsel, DTCC. "The best way to ensure transparency in the marketplace is to have all trades, cleared and uncleared, reported to a swap data repository (SDR) and to ensure these SDRs provide open access to all market participants. Counterparties need to make the decision regarding which SDR they report to, and registered entities offering SDR services cannot bundle those services together with non-SDR services."
The timing of the CME's lawsuit suggests that the exchange is motivated not by concerns with the costs of reporting data on cleared swaps to SDRs, but rather in response to swap counterparties choosing to report to SDRs other than CME's captive SDR. In response to CME's suit, DTCC submitted a letter on Nov. 11 to the CFTC, highlighting significant concerns with the potential negative consequences of a judicial challenge or Commission action to remove the necessity for a legal dispute.
The documents filed last night also include a memorandum in support of the motion to intervene, outlining why DDR should be admitted to the case as a party. In addition, a proposed Answer to the Complaint filed by CME is included and responds to contentions made by CME in its complaint.