ETFs Affected By Index Licensing Lawsuit?

There may be wider implications on the horizon for the exchange traded fund (ETF) businesses. Chicago Board Options Exchange has joined with Standard & Poor’s and the Dow Jones & Co to file a lawsuit against International Securities Exchange Holdings Inc. (ISE). The attempt is to block ISE from listing and trading options linked to the S&P and Dow Jones indexes. 

The legal action was taken because ISE threatened to list, trade and profit from financial products-specifically index options-based directly on the S&P 500, reports John Spence of Marketwatch. The CBOE said it’s trying to stop the S&P and Dow Jones options because it has an exclusive licensing agreement with the index managers. This case could cause a large change in the index licensing business, which suffered a setback last year due to ISE.