On Sept. 16, a federal judge granted a motion to dismiss, in part, a lawsuit filed against the Commodity Futures Commission to overturn its guidance related to the application of Title VII in the Dodd-Frank Act to cross-border transactions. In addition, the court partially granted summary judgment for both the plaintiffs and the defendant, remanding some of the challenged rules back to the agency for further review.
U.S. District Judge Paul Friedman dismissed the part of the case challenging the cross-border guidance but ordered the CFTC to assess the costs and benefits of its extraterritorial application of a range of rules, including reporting and record-keeping rules, swap dealer registration requirements, the swap dealer definition and swap execution facility regulations. The judge explained that the CFTC's error was one of form and not substance, and it would need only to provide a reasoned explanation of why its consideration of the costs and benefits does not justify a change in the cross-border requirements. Further, the court granted summary judgment to the CFTC, affirming the challenged rules relating to large trader reporting, straight-through processing and clearing determinations.
The lawsuit was filed in December by the Securities Industry and Financial Markets Association, the International Swaps and Derivatives Association and the Institute of International Bankers. The organizations argued, among other things, that the CFTC did not follow required procedures when drafting rules when it issued its cross-border guidance.
For further information, please contact Jackie Mesa: jmesa@fia.org.
