trueEX LLC v. MarkitSERV Ltd.

The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) requires that certain interest-rate swaps trade only on platforms known as swap-execution facilities (SEFs), regulated by the Commodity Futures Trading Commission (CFTC). Three major SEFs served the interest-rate-swap industry, trueEX (plaintiff), TradeWeb, and Bloomberg. Under Dodd-Frank, all interest swaps traded on any SEF must be cleared through a clearinghouse so as to effectively guarantee the performance of the parties. SEFs must also provide certain swap-related information to central recordkeeping organizations known as swap-data repositories (SDRs), which are intended to promote transparency in the market. Each trade therefore goes through what is known as trade processing, a process by which trade-related information is disseminated among the parties, the clearinghouse, and the SDR. The vast majority of trade processing in the interest-rate swap market was handled by an electronic trade-confirmation network called MarkitSERV (defendant). MarkitSERV also was the sole trade processor for dealer-to-dealer swap transactions, direct trades not traded on SEFs, and uncleared swaps, which together made up 92 percent of the interest-rate-swaps market. As to trades between dealers and buy-side customers, a minority of transactions were executed on SEFs operated by trueEX, Bloomberg, and TradeWeb. Even as to these transactions, though, most market participants used MarkitSERV’s trade-processing technology. Specifically, if trades were processed through the SEFs, MarkitSERV provided a service known as drop-copy workflow, which allowed the SEF to use MarkitSERV’s network to distribute trade information to the counterparties. trueEX was among those SEFs that used MarkitSERV’s drop-copy workflow to process trades for its clients. trueEX did not allow its clients to make a choice of trade processor; rather, trueEX clients were forced to use trueEX as the trade processor. Eventually, trueEX sought to establish a new trade-processing service, truePTS, to make it unnecessary for trueEX to use MarkitSERV. When MarkitSERV learned of trueEX’s intention to develop the truePTS service, MarkitSERV became concerned that it would lose market share. Accordingly, MarkitSERV notified trueEX that it intended to terminate its services to trueEX. Because truePTS was still in the development phase, terminating the relationship would have made it impossible for trueEX to process trades. trueEX and truePTS (plaintiffs) filed actions against MarkitSERV under the Sherman Antitrust Act, and trueEX alone filed an additional action against MarkitSERV for promissory estoppel. trueEX and truePTS also moved for a preliminary injunction to enjoin MarkitSERV from terminating its services pending the lawsuit. The federal district court granted the preliminary injunction, reasoning that it was necessary to preserve the status quo.