A leading US trading software firm has filed a lawsuit against UK hedge-fund company Man Group in the row over claims that a patent awarded last year entitles it to a share of trading revenue on futures exchanges.
Chicago-based Trading Technologies (TT) was awarded two UK patents on its MD Trader product, which it claims is used for half of all global electronic futures trading.
The software allows traders to enter orders and compare prices across exchanges and TT claims this entitles it to a 2.5 cent per trade fee on the 'big four' futures exchanges — the Chicago Board of Trade, Chicago Mercantile Exchange, Eurex US and Euronext.liffe.
In an open letter to the futures industry, TT said: "Already, the savings that TT brings to the futures industry dwarf a 2.5 cent inclusion. In this ultra-competitive environment, the industry is enjoying the benefits of record volume and thriving more than ever."
In an attempt to force the exchanges' hands, TT has gone after individual trading firms and the latest suit has been filed against the Man Financial brokerage division of Man Group, following similar infringement cases against the electronic bond-trading arm of Cantor Fitzgerald and Refco. Other cases last year against two US trading firms were settled out of court.
A spokesman for Man Group said the company is confident it has not infringed any patents.
"Man Financial only received a copy of TT's complaint yesterday," he said. "Man Financial is confident that none of the software or trading systems we are providing to our clients — all of which is provided by third-party vendors — infringe any TT patents," he said."