Court rules in favor of CBOE in suit over index options listings

CBOE wins index options suit against ISE

CHICAGO — An Illinois court on Thursday upheld the exclusive rights of the Chicago Board Options Exchange to trade certain index options.

Under the ruling, competitor International Securities Exchange will be prohibited from trading options on the Standard & Poor’s 500 and the Dow Jones Industrial Average.

Internatinal Securities Exchange said it will appeal the decision. The company had filed a legal complaint in U.S. District Court in New York on Nov. 2, 2006 to end CBOE’s exclusive rights over the options. ISE says a license isn’t needed to trade the options, because their values are in the public domain.

CBOE filed its countersuit Nov. 15, 2006 in Cook County, Ill., to prevent ISE from trading the options in question. Founded in 1973, the Chicago exchange operator is the largest platform for options trading in the United States. The company is a unit of CBOE Holdings Inc., which went public last month.

CBOE was joined in the lawsuit by The McGraw-Hill Companies Inc. and its Standard & Poor’s division and by Dow Jones & Company Inc., with which it has licensing agreements for the indexes in question.

The ruling by the Circuit Court of Cook County also forbids The Options Clearing Corporation from clearing trades of the options in question. Jim Binder, an OCC spokesman, said the company will abide with the ruling.

Options are financial instruments used by investors to offset the risks of other investments. The value of an option depends on an underlying asset, such as a stock.