CBOE Wins Options Index Licensing Litigation

by Glen Shapiro, LawAndTax-News.com, New York

22 July 2010

A US court has ruled in favour of the Chicago Board Options Exchange regarding the right to list index options on certain US exchanges.

The ruling by the the Circuit Court of Cook County, Illinois, prohibits the International Securities Exchange (ISE) from listing or offering a market for trading in options on either the S&P 500 Index (SPX) or the Dow Jones Industrial AverageSM (DJX), for which the CBOE holds an exclusive license. In addition, the ruling forbids the Options Clearing Corporation (OCC), which clears trading for all US options exchanges, from clearing SPX and DJX options unless they are traded pursuant to CBOE's exclusive license.

On November 15, 2006, the CBOE filed a lawsuit in Cook County against the ISE and the OCC to prevent the former from listing or offering a market for trading in SPX or DJX options and to prevent unauthorized clearing of such trades. The CBOE was joined in the lawsuit by The McGraw-Hill Companies, Inc. and its Standard & Poor's Division and Dow Jones & Company, Inc. (now CME Group Index Services, LLC).

"We are obviously gratified that the Court has ruled in CBOE's favor," said CBOE Chairman and CEO William J. Brodsky.

"No third party should be able to interfere with contractual licensing agreements. Nor should any exchange have a free ride on the enormous investment CBOE made in creating options on these indexes and in developing and marketing them for over two decades," Brodsky added.

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