'Night market' trading of Korean index futures falls under Morrison's shadow

By John M. Jascob, J.D., LL.M. Five Korean citizens who conducted overnight transactions in Korea Exchange (KRX) futures contracts plausibly alleged that a New York high-frequency trading firm and its founder injured them by engaging in spoofing in violation of the Commodity Exchange Act (CEA). Reversing the ruling below, a Second Circuit panel held that the complaint plausibly alleged that the trades were “domestic transactions” under the U.S. Supreme Court’s Morrison decision and Second Circuit precedent. Accordingly, application of the CEA to the defendants’ alleged conduct was not an impermissible extraterritorial application of the statute (Choi v. Tower Research Capital LLC, March 29, 2018, Walker, J.). Night market trading and spoofing. The plaintiffs purchased on the so-called “night market” commodity futures contracts based on the KOSPI 200, a Korean stock index. On the KRX night market, traders enter orders in Korea, when the KRX is…

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