William Mitting looks at the legal dispute between NYSE Liffe and TOM over index licensing and argues that any court decision could have far reaching implications.
When the Chicago Mercantile Exchange launched its first
equity index futures contract (and the world’s
second, by a matter of weeks) on the Standard &
Poor’s 500 index back in April 1982, S&P was
not going to charge the exchange for the licence.
Indeed, the CME’s then chairman Leo Melamed had
to persuade S&P to let the CME pay for it. In doing so, he
created one of the most lucrative and contentious issues that
has existed in the futures market ever since.
There is nothing new about exchanges suing other exchanges
for breach of licence. In the US, the CBOE’s
longstanding battle with the International Securities Exchange
over the rights to offer options on the S&P 500 continues
to rage (although recent rulings have been overwhelmingly in
Yesterday, news broke that NYSE Liffe had become the latest
exchange seeking to protect the IP on an index licence with a
legal challenge to Dutch rival The Order Machine (TOM). At the
centre of the challenge is the TOM MTF Option, which was
launched in January.
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