This educational guide is based on the linked primary sources. It is not a Court publication, is not affiliated with the Court, and is not legal advice.
In brief
Overview
Petitioner argues that a clearing futures commodity merchant (FCM) has standing to sue contract markets and clearing organizations under Section 25(b)(1) of the Commodity Exchange Act for bad‑faith failure to enforce required rules.
According to United States (Amicus Curiae), according to United States (Amicus Curiae), the United States, as amicus curiae, suggests that the word “transaction” in Section 25(b)(1) should be read as limited to the purchase and sale of futures and options contracts.
According to Respondents (Mr. Stewart), according to Respondents (Mr. Stewart), respondent contends that the clearing FCM assumes direct contractual liability to the clearinghouse.
According to Petitioner (Mr. Pincus), according to Petitioner (Mr. Pincus), petitioner further argues that “on or subject to” language in the statute refers to trades, and that Congress’s technical substitution of registered entities does not change that meaning.
Petitioner warns that the lack of clarity about the statute creates two categories of harm, including uncertainty about how far back liability may extend.
According to Mr. Days, speaking for the petitioner, the clearing FCM is financially liable throughout the transaction process and that Congress intended the statute to protect the public and preserve market credibility.
- [1] 98a8bfdbc7f446e1be61-r1-c0e044580014a111.pdf, p. 3
- [2] 98a8bfdbc7f446e1be61-r1-c0e044580014a111.pdf, p. 7
- [3] 98a8bfdbc7f446e1be61-r1-c0e044580014a111.pdf, p. 20
- [4] 98a8bfdbc7f446e1be61-r1-c0e044580014a111.pdf, p. 27
- [5] 98a8bfdbc7f446e1be61-r1-c0e044580014a111.pdf, p. 45
- [6] 98a8bfdbc7f446e1be61-r1-c0e044580014a111.pdf, p. 49
- [7] 98a8bfdbc7f446e1be61-r1-c0e044580014a111.pdf, p. 58
Background and question before the Court
Petitioner seeks to establish standing for an FCM to sue for bad‑faith enforcement failures, while Respondent argues that liability rests directly with the clearinghouse.
Justices raised questions about the potential for multiple liability if the FCM’s right to sue is recognized, and about the absence of a clear statutory definition of “transaction.”
What each side argues
Petitioner Position
According to Petitioner, petitioner asserts that an FCM has standing to sue under Section 25(b)(1) for bad‑faith failures to enforce required rules.
According to Petitioner (Mr. Pincus), according to Petitioner (Mr. Pincus), petitioner argues that “on or subject to” language in the statute refers to trades, and that Congress’s substitution of registered entities does not alter that meaning.
Mr. Days (for petitioner) contends that the clearing FCM is financially liable throughout the transaction process and that Congress intended the statute to protect the public and preserve market credibility.
Respondent Position
According to Respondents (Mr. Stewart), according to Respondents (Mr. Stewart), respondent argues that the clearing FCM assumes direct contractual liability to the clearinghouse.
What happened at oral argument
Justice Ginsburg asked whether allowing the FCM to sue could create multiple liability.
According to Justice Alito, justice Alito noted the absence of any clear definition of “transaction” in the statute.
Justice Scalia asked why the phrase “or subject to the rules” does not add anything to the petitioner’s argument.
What the Court decided
Why it matters
Terms to know
No glossary terms are available for this guide.
Primary sources
Read the source materials on the official site or open the immutable repository copy used for this guide.
- 98a8bfdbc7f446e1be61-r1-c0e044580014a111.pdforal argument transcript
Guide generated September 22, 2026. Automated validation accepted this version.