U.S. Futures Exchange, L.L.C. v. Board of Trade of the City of Chicago, No. 18-3558 (7th Cir. 2020)Annotate this Case
USFE planned to offer an electronic-based futures trading platform that posed a competitive threat to exchanges using the more traditional floor-trading model, like CBOT. USFE targeted February 1, 2004, as its launch date to establish itself before several futures and options contracts expired, so that traders could transfer their business to USFE. In July 2003, USFE sought approval as a designated contract market by the Commodity Futures Trading Commission. The Commission solicited public comment. CBOT, another futures exchange (CME), and others raised objections. CBOT and CME successfully requested a postponement.
USFE approached BOTCC to negotiate an agreement for clearing services that would have provided USFE with access to startup liquidity in the form of open interest created by market participants and held at BOTCC. CBOT also used BOTCC and proposed Rule 701.01. The Commission approved the rule, which compelled the transfer of CBOT’s open interest from BOTCC to its new, exclusive clearing partner. By draining its open contracts from BOTCC, CBOT deprived USFE of access to significant liquidity. The Commission approved USFE on February 4, 2004. USFE launched on February 8. The undertaking flopped. USFE sued under the Sherman Antitrust Act.
The Seventh Circuit affirmed summary judgment for the defendants. The Noerr-Pennington doctrine shields the defendants’ petitioning from antitrust scrutiny and neither exception (fraud or sham lawsuit) applies. The Commission’s explicit approval of Rule 701.01 impliedly repeals the antitrust laws, immunizing defendants against USFE’s open interest claims.