CFTC Approves CME Rule on Reporting of CME-Cleared Swaps to CME's Swap Data Repository (with Lofchie Comment)

The CFTC issued a public letter to the Chicago Mercantile Exchange ("CME") in which it confirmed that CME Rule 1001, which requires that creation and continuation data for swaps cleared by the CME, as clearing organization, shall be reported to the CME, as swap data repository.

In a related statement, the CFTC concluded that this CME Rule is not inconsistent with the CEA, specifically CEA Sections 2(a)(13)(G), 5band 21, or with the CFTC rules. The CFTC statement concludes that the Part 45 rules (Swap Data Recordkeeping and Reporting Requirements) do not preclude CME from reporting the resulting swap data to an affiliate and that Parts 45and 49(Swap Data Repositories) of the CFTC's rules specifically contemplated that DCOs may report swaps to an SDR of their choosing. It also held that the rule was not inconsistent with Core Principle N (antitrust principles).

Lofchie Comment: It will be interesting to see if litigation results from the CFTC's decision. See, e.g., footnote 30 of the CFTC's statement, linked below, as to DTCC's assertion that the CFTC was required, but had failed, to consider the costs and benefits of the CME's rule.

Click hereto view the letter containing the CFTC's approval of the CME's rule (links externally to CFTC website).See also: CFTC Statement of Law (explaining its legal reasoning) (links externally to CFTC website). Related News Stories: Commissioner Sommers' Speech and Commissioner O'Malia's Speech.See also: Battle over Swaps Trade Reporting (with Lofchie Comment) (January 18, 2013).