Board of Trade of the City of Chicago v. CFTC

In January 1998, the Cantor Financial Futures Exchange (Cantor) applied to the Commodity Futures Trading Commission (CFTC) (defendant) for designation as a contract market for trading certain United States Treasury futures contracts. The CFTC approved the application on September 4, 1998. Subsequently, the Board of Trade of the City of Chicago, the Kansas City Board of Trade, and the Minneapolis Grain Exchange (collectively, the exchanges) (plaintiffs) brought suit against the CFTC to challenge its approval of Cantor’s application. The exchanges argued that (1) the CFTC failed to make the necessary finding that approval of Cantor’s application would not be contrary to the public interest, (2) the CFTC held Cantor to a lower regulatory standard, (3) the CFTC failed to address public comments before approving the application, and (4) the CFTC failed to provide notice or an opportunity to comment on the application. Specifically, the exchanges also argued that (1) Cantor’s practice of exclusive time trading was inconsistent with the competitive-trading standard required under CFTC regulations, (2) the previous disciplinary offenses of Cantor’s subsidiary should have precluded Cantor’s approval, and (3) Cantor would fragment the market for treasury futures. The CFTC moved to dismiss the action on the basis that approval of applications was not subject to judicial review. The CFTC also moved for summary judgment on the merits of the exchanges’ claims.