CME CEO Terry Duffy on suing CFTC: I'm always up for a good battle, 'I won't shy away from this'

CME Group Chairman Terry Duffy announces a lawsuit against the CFTC, arguing that newly approved perpetual futures contracts are legally swaps under the Dodd-Frank Act, not futures. He claims the CFTC circumvented Dodd-Frank requirements, including 5-day margin and swap dealer registration. Duffy states the lawsuit is not personal but about clarifying the rules of the road, and that his retirement transition to Lynn Fitzpatrick was planned eight months ago, unrelated to the controversy.

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CME CEO Terry Duffy on suing CFTC: I'm always up for a good battle, 'I won't shy away from this'

Futures; Perpetual futures

Asks Terry Duffy what he wants to accomplish with the lawsuit.

Melissa
Terry Duffy

Under Dodd-Frank, when two parties exchange payments, that is a swap. The CFTC's approved perpetual futures are actually swaps, not futures, and thus require 5-day margin and swap dealer registration. The CFTC circumvented Dodd-Frank.

Case law cited by CFTC was pre-Dodd-Frank and irrelevant.
If the lawsuit succeeds, prediction markets would not be able to offer these products unless they become swap dealers themselves.

Melissa
Terry Duffy

Correct, they would have to list them as swaps. He still believes the CFTC violated the Commodity Exchange Act, but his suit is based on Dodd-Frank.

He has been working on this plan with his board for eight months, not a reaction to recent events. Lynn Fitzpatrick's succession was planned long ago.
Asks Duffy to address rumors that the CFTC's perpetual futures approval scared him into retiring, and to explain the genesis of his retirement plan.

Guy
Terry Duffy

He almost backed out of the announcement due to those rumors, but he is not backing away. The retirement transition was planned eight months ago, not a reaction. The lawsuit will be filed tomorrow.

He is not trying to pick a fight, just stating the law. The rules of the road are unclear and there is misrepresentation of facts.
Asks if Duffy thinks the CFTC is misrepresenting facts.

Melissa
Terry Duffy

Yes, the CFTC chairman said they created a rule around 24/7 trading, which they did not. He also misrepresented case law, ignoring Dodd-Frank.

There are a handful of things the chairman said that are just not true.

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