(Updates with comment from traders' lawyer, no comment from
By Tom Polansek
CHICAGO, March 31 CME Group Inc can keep
in place rules that factor in electronic trades for settling
end-of-day grain futures prices, an Illinois judge ruled on
Monday following a legal challenge from veterans of the Chicago
Cook County Circuit Court Judge Jean Prendergast Rooney in
Chicago ruled that CME Group, which owns the Chicago Board of
Trade, had the authority to implement the settlement method in
June 2012 without taking a vote among certain stakeholders.
A spokeswoman for CME Group declined to comment.
A group of traders from the CBOT's 140-year-old agricultural
trading floor in June 2012 sued the exchange to overturn the
method, saying that it was putting them out of business. Prior
to the change, the CBOT had a century-old tradition of settling
futures prices for crops like corn and soybeans based on
transactions executed in open-outcry pits.
"As indicated in the ruling, there is no question that the
settlement change devastated our clients' business," said George
Sang, a lawyer for the traders. "We look forward to continuing
to make that case."
The lawsuit was seen as something of a last stand for
open-outcry traders, whose business has declined since the rise
of electronic trading. The floor traders traditionally did much
of their business at the close of trading and said CME Group's
new settlement procedures made the pits largely irrelevant.
The traders had argued in court that CME Group failed to
hold a required vote to approve the new settlement method among
certain holders of CBOT memberships. CME said it did not need to
take a vote, and the judge agreed.
"Based on all of the evidence, the plaintiffs have not
satisfied their burden to show, by a preponderance of the
evidence, a clear right to a member vote," Rooney wrote in her
Some traders believe CME wants to shut down the floor in
favor of electronic trading because the pits are expensive to
maintain. CME executives have said they are committed to keeping
the floor open.
The case is Anthony McKerr et al v. The Board of Trade of
the City of Chicago et al, Circuit Court of Cook County,
Illinois, No 12-CH-23185.
(Editing by Steve Orlofsky and Eric Walsh)