SIFMA, ISDA Say Position Limit Rule Could Cause Irreparable Damage
February 8, 2012
Two financial industry trade organizations filed a lawsuit in federal court late Tuesday to temporarily block a Commodity Futures Trading Commissions (CFTC) rule aimed at preventing excessive speculation in commodities trading.
In a 50-page filing with the U.S. District Court for the District of Columbia, the Securities Industry and Financial Markets Association (SIFMA) and the International Swaps and Derivatives Association (ISDA) claimed that the pending Position Limit Rules could irreparably harm their members and the public.
The ISDA and SIFMA filed a similar lawsuit against the CFTC on December 2 in the same U.S, District Court. It also filed the suit in the US. Court of Appeals for DC, a higher court.
In their filings they argued that the CFTC adopted the rule without making findings as to the necessity and appropriateness of the position limits, as required by statute.
At the time of the December 2 filing, the Associations were not sure whether the U.S. District Court or the higher U.S. Court of Appeals would have jurisdiction over the suit. “In the interim the Court of Appeals informed us we should start in the lower court,” says Ira Hammerman, chief legal officer for SIFMA.
Hammerman says the overriding purpose of the suit is to stay the CFTC’s implementation of the Rule until the underlying legal issues can be resolved. “If the position limit ruling went into effect, our members would have to foot the bill for significant costs including technology changes,” Hammerman says.
And if CFTC was subsequently proven to have been legally wrong in implementing the ruling, SIFMA and ISDA member companies wouldn’t get their money back. “That’s what we call irreparable damages,” Hammerman says.
CFTC said it had no comment because the matter is in litigation.
