The Second Court of Appeals granted the International Securities Exchange a win June 16 with a ruling that allows the exchange to trade options on two ETFs.
The ISE had been fighting to trade options on SPDRs and DIAMONDS without any form of license from those funds’ creators.
Standard & Poor’s, a division of McGraw-Hill Cos. Inc. and SPDR creator, and Dow Jones & Co. Inc., DIAMOND creator, both sued the ISE, alleging that the ISE’s unlicensed trading of the funds infringed upon their intellectual property rights.
The basis of the court’s decision focused on the differentiation between the ETF itself and what the court determined to be a “new product” – the ETF’s options.
The court said that because the new product is simply a means for trading financial instruments that the plaintiffs had already licensed for sale to the public, it doesn’t require any additional licensing.