DTCC rails at CFTC/CME swaps repository rule change
The U.S. Commodity Futures Trading Commission's ("CFTC") rules and interpretations of the Dodd Frank Act have made it clear for nearly a year that clearinghouses must provide open access and that data repositories cannot bundle other services as the CME Group Inc. ("CME") proposes.
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In fact, the CME is proposing that as a condition for using their clearing services, market participants must agree to report their trade data to the clearinghouse's own captive swap data repository (SDR). The industry has spent hundreds of millions of dollars to be fully prepared to meet reporting obligations that will become effective in one month. The Commission's action late yesterday was an unexplained and an abrupt reversal of course. This action is inconsistent with the Commission's previous actions, and will cause market participants to question the finality of any Commission rule or interpretation. This will ultimately disrupt the progress the industry and regulators have achieved so far to implement the financial reforms mandated by the Dodd-Frank Act. We are surprised and disappointed that the Commission would take such a step at this late date and ask that it reverse its decision and reinstate the FAQs which have provided the industry with appropriate decision-making capabilities in regards to their own swaps data.