June 22 (Bloomberg) -- CME Group Inc., operator of the world’s biggest futures market, was sued by 24 Chicago Board of Trade brokers and traders over a shift in how the exchange determines final trade settlement prices.
The exchange in May announced it was changing its method for computing final price settlements in agricultural trading, abandoning a traditional open-outcry trading pit system for one using an algorithm that combines open-outcry and electronic trading information, according to a complaint filed today in an Illinois state court in Chicago.
“This will cause -- and as this complaint was filed, has already caused -- a rapid, dramatic decrease in trades being sent to the plaintiffs in the ‘pits,’” they said, causing the loss of jobs and violating their rights as board shareholders.
Also named as defendants in the complaint are CME Group Chairman Terrence Duffy and Chief Executive Officer Phupinder Gill.
The brokers and traders are seeking a court order barring the CME Group and the Board of Trade from making that change, scheduled to take effect June 25, as well as money damages. Their lawyers will go before a Cook County Circuit Court judge that day to ask for injunctive relief, attorney George Sang said.
Laurie Bischel, a spokeswoman for the Chicago-based CME Group, declined to comment on the allegations in the complaint.
The organization is making changes on June 25 to ensure the exchange is “consistent” with the federal Commodity Exchange Act and with Commodity Futures Trading Commission requirements, Bischel said today in a telephone interview.
“We believe that the new settlement methodology accurately captures contract value across both open outcry and electronic trading during the settlement period,” she said, adding it is “fully consistent” with CME Group’s functions as a designated contract market andderivatives clearing organization.
The case is McKerr v. The Board of Trade of the City of Chicago Inc., 12CH23185, Cook County, Illinois, Circuit Court, Chancery Division (Chicago).
--Editor: David Glovin, John Pickering