Alert December 10, 2013

CFTC Faces Court Challenge to Cross-Border Guidance

The Securities Industry and Financial Markets Association (“SIFMA”), International Swaps and Derivatives Association (“ISDA”), and Institute of International Bankers (“IIB”) filed a suit against the CFTC in the U.S. District Court for the District of Columbia, challenging the CFTC’s cross-border guidance (the “Guidance,” discussed in the July 23, 2013 Financial Services Alert) and certain related advisories.  The plaintiffs argue, among other things, that the Guidance is actually or should be a rule, and that the adoption of the Guidance unlawfully circumvented the requirements of the Administrative Procedure Act.  For example, the plaintiffs contend that the Guidance lacks the required cost/benefit analysis, fails to respond adequately to comments received on the proposed versions of the Guidance, and “radically changed” in certain respects from the proposed versions without giving the public the opportunity to comment on those changes.  The complaint also alleges that the adoption of the Guidance ignored the requirements of the Regulatory Flexibility Act, Paperwork Reduction Act, and Small Business Regulatory Enforcement Fairness Act.  In addition, the plaintiffs contend that the Guidance exceeds the scope of the CFTC’s authority under Section 2(i) of the Commodity Exchange Act.