CBOE Wins Illinois Court Ruling Barring ISE Max SPY Index

CBOE Holdings Inc. won an Illinois judge’s decision preventing International Securities Exchange LLC from offering new options trading based on the McGraw-Hill Cos. S&P 500 Index.

Judge Franklin U. Valderrama in Chicago today ruled that the ISE proposal violated a 2010 court order barring ISE from providing an exchange market for options based on McGraw-Hill’s Standard & Poor’s Financial Services LLC-licensed product.

CBOE and McGraw-Hill asked the court in March to enforce the two-year-old injunction. ISE countered that its planned Max SPY Index options product isn’t the same as the one that was previously blocked.

“The court finds that ISE’s interpretation of the July 2010 order is too narrow. The clear import of the July 2010 order was to cover any options that are based on the S&P 500,” Valderrama wrote in his nine-page decision. “The court finds that the Max SPY Options would be based on the S&P 500.”

ISE, based in New York, said in March announcement about the Max SPY Index that it’s a “new proprietary index” representing 10 times the value of the published share price for the SPDR S&P 500 ETF Trust -- a portfolio representing all 500 stocks in the S&P 500 Index -- which trades under the ticker symbol SPY.

Appellate Court

McGraw-Hill and CBOE responded by asking the court to enforce their rights under an earlier ruling by Judge William Maki. That decision was later affirmed by an Illinois appellate court.

Molly McGregor, a spokeswoman for ISE, declined to comment on Valderrama’s decision.

“This decision short-circuits ISE’s ongoing attempts to gain access to CBOE’s exclusive products by misappropriating McGraw-Hill’s intellectual property,” CBOE Holdings Chairman and CEO William J. Brodsky said in a press statement.

The case is Chicago Board Options Exchange Inc. v. International Securities Exchange LLC, 06CH24798, Cook County, Illinois, Circuit Court, Chancery Division (Chicago).

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