A Chicago Board of Trade lawsuit against the Chicago Board Options Exchange over trading rights was dismissed by a Cook County Circuit Court judge in Chicago. Judge Thomas Durkin said the SEC, not the circuit court, should decide whether CBOT members can keep their trading rights at the CBOE once the CBOT becomes a for-profit corporation.
The CBOE has asked the SEC for rule changes that would allow it to revoke CBOT member trading rights in certain cases. Roughly half the CBOTs 1,400 members trade on the options exchange, and CBOE officials worry that number could grow once the Board of Trade demutualizes, thereby flooding an already competitive options market and diluting the value of CBOE memberships.
The CBOT argued those rule changes would violate the Securities Exchange Act, the CBOEs own constitution and a 1992 agreement between the CBOT and the CBOE, which spun off from the CBOT in 1973. The CBOT originally filed a lawsuit in June; it was dismissed by another judge. The CBOT has 28 days to file an amended complaint or appeal Mr. Durkins ruling to the Illinois Appellate Court.