CME Group Inc., operator of the world’s largest futures market, must defend a lawsuit brought by Chicago Board of Trade brokers and traders challenging a change in how final-trade settlement prices are determined.
Cook County Circuit Judge Lee Preston in Chicago today denied in part a defense request that he throw out the lawsuit filed against CME in June. The suit seeks to prevent a shift from computing agricultural trade prices solely by open outcry from the trading pits to a system relying on an algorithmic blend of open outcry and electronic-trade information.
Announced in May, the change went into effect on June 25, before the more than 20 suing traders and brokers, who claim their membership rights were violated, could obtain a court order to block it.
Preston today said the plaintiffs could proceed on their claims for injunctive relief and for breach of contract against CME and the Board of Trade.
“It’s our position that CME did an end run around their own certificate of incorporation to implement this rule,” George Sang, the lawyer for the floor traders and brokers, said in a telephone interview.
The change in price settlement methodology “had the effect of destroying their businesses and livelihoods,” Sang said.
While Preston dismissed the breach of contract claim against CME Group Chairman Terrence Duffy and Chief Executive Officer Phupinder Gill, he said the plaintiffs could pursue breach of fiduciary duty claims against them. The judge rejected a breach of fiduciary duty claim asserted against the company.
Laurie Bischel, a spokeswoman for Chicago-based CME Group, said the company doesn’t comment on pending litigation.
While his clients still seek a court order blocking the new measure, Sang said no hearing date has been set. The parties are due in court on Dec. 4 for a hearing on the next steps in the case.
The case is McKerr v. The Board of Trade of the City of Chicago, 12CH23185, Cook County, Illinois, Circuit Court, Chancery Division (Chicago).