[ by Melanie Gretchen ] The U.S. Court of Appeals for the District of Columbia Circuit dismissed a lawsuit filed in December by SIFMA and ISDA on behalf of the financial industry that challenged new CFTC rules aimed at cracking down on speculation in commodities markets.  The Court ruled that the case must first be heard by a lower court, as requested by the CFT.

"There is no express congressional authorization of direct appellate review applicable to the petition for review in this case."  Federal laws provided for appellate review for other agency action but not the challenged regulation. -- Three-judge panel written order, issued last week.

In October, the CFTC voted 3-2 to set "position limits" on the number of commodity futures and swaps contracts that a trader could hold.  Traders have criticized the vote as a politically motivated effort to cap prices that will make markets less liquid and more volatile. SIFMA and ISDA took the argument one step further.  They sued in order to block the new rules from becoming effective, arguing that the Commission exceeded its authority and that the regulations were not adequately justified. CFTC Position. The CFTC argued that the case should first be heard by the U.S. District Court for the District of Columbia.  Thereafter, any court decision can be challenged at the appeals court level - a lengthier process.  The CFTC declined to comment at this time. ISDA Response. ISDA spokesperson Steve Kennedy said, "Although the statute was unclear, we thought that might be the answer and were prepared for it, and for that reason we filed in both courts.  We now will move forward quickly in the district court." As noted by Mr. Kennedy, SIFMA and ISDA already have a challenge filed at the district court, which was put on hold pending a decision by the appeals court on whether it would hear the case. The case: International Swaps and Derivatives Association, Inc. and Securities Industry and Financial Markets Association, U.S. Court of Appeals, District of Columbia, no. 11-1469. [Reuters, 1/23/12]