Klein & Co. Futures, Inc. v. Board of Trade of the City of New York Page 6

Klein & Co. Futures, Inc. v. Board of Trade of the City of New York general information

Media for Klein & Co. Futures, Inc. v. Board of Trade of the City of New York

Audio Transcription for Oral Argument - October 29, 2007 in Klein & Co. Futures, Inc. v. Board of Trade of the City of New York

Drew S. Days, III:

--Well, it's hard to know who walks on what floor.

I think what is clear about this industry is that it is the clearing FCM who is always at the center of this, the essential participant in this entire process.

The FCM's may not know who the customer is.

They certainly don't know who the customer is on the other side.

The clearinghouse doesn't know who the customer is, or the investor is.

So the investor actually plays a very small role other than putting up his or her money at the beginning of the process.

John G. Roberts, Jr.:

No.

I mean the... the market is about investors.

It's about buyers and sellers.

Now, you're... the clearinghouse and these FCM's may or may not be covered by the language of the statute, but it's an awful big stretch to say they are central to the market.

What's central to the market are the investors.

That's why they have these.

They wouldn't have this market for... for your clients, I mean for the clearinghouse or anything else.

The market is there for the buyers and the sellers.

That's the central transaction.

Drew S. Days, III:

We don't argue that investors are barred from bringing suits under 25(b)(1).

They would be persons who engaged in transactions on, or subject to, the rules of the contract market.

Ruth Bader Ginsburg:

Didn't Judge Friendly refer to the FCM as a central player or a principal in--

Drew S. Days, III:

Yes.

That... that's certainly been the case in Leist where Judge Friendly wrote the opinion.

And also--

Antonin Scalia:

What is the transaction... what is the single transaction that you think brings your client within this language?

Drew S. Days, III:

--Well, I mentioned--

Antonin Scalia:

What is the transaction, the guarantee?

Drew S. Days, III:

--The one... the contract market requires that the clearing FCM clear a contract with one hour... assume the contract.

So the assuming of the contract and the clearing required by the rules of the contract market is a violation of the CEA.

Antonin Scalia:

I'm not talking about what the rule is that was violated.

It says

"who engaged in any transaction on or subject to the rules of such contract market. "

What is, in brief, "the transaction" you're relying upon?