domestic change with its r and third that ninety nine point nine nine nine nine nine percent chance of the plaintiffs and the defendant having a trading relationship did not honor what happened there was defendants in their brief asserted that there was a difference and i cited a web page for the care x but in we didn't the district court should not have considered that exits outside the pleading bottom your argument rests on the following in order to determine whether liability attaches revocable we are not in illinois we also have to look at determine whether liability attaches in aurora illinois well your honor i mean what i'm trying to say is that under each path whether you're siemens roll plight or the carrick's rules apply equally to the same place places where the transact it's where the the the price is agreed upon and oftentimes are made under both sets of rules you arrive at aurora illinois that's what's why there is a night market that's why they didn't you know that it took place here so it doesn't matter whether you see a mega c m e is rules or the korean exchange was you and to get past motionlessness where all inferences are in our favor we only had two minutes whether the transactions are place so it's not on the record below but the facts are there the characters are all the same and that's the one we focus on the charge of this scare x product for the seamy he said yes transactions are binding when made and then we called the seamy globe access help desk and they said the exact same thing so three different sources all saying the same thing and it will be six motion that's more than plausible the fact that we we would be belt suspenders and a second set of suspenders your honors i assume that should be sufficient contract is this is not some you know small obscure market this is a major one a major derivatives exchange in the world the fact that it's under under economics definition plain language definitions it's an exchange so i and it's indisputably to mastic so we would assert that under both prongs or there are two exchanges involved here from your perspective yes the see me go back and the korean exchange and when it comes to settlement which is the only thing the two minutes for a bottle here from town please the court no again for the defendant i want to answer the questions about where your vocal liability attaches but before i do that i want to take one step back in what we're trying to answer in this case the guiding principle of the morrison decision is that regulation of transactions on foreign exchanges would be an impermissible extraterritorial application of united states law we think that that principle decides this case here we have foreign plaintiffs suing about foreign issued futures contracts that were traded on a foreign exchange what plaintiffs are trying to say is they want to allude morrison by saying that because the korean exchange uses the computers  orders that were submitted in korea on the korean exchange before those come back to korea not just for settlement for clearance which is important an important step of the contract for the korean exchange to step into the shoes of the parties and that is the binding commitment that comes out of any trade on an exchange i don't have any commitment to the person who takes the other side of a trade when we're trading on an exchange i don't even know new york stock exchange whatever exchange you say i'm trading with an exchange when liability attaches when the match is made and i do i disagree with that because what we have to ask is what is the contractual commitment that arises out of a trade on an exchange the contractual commitment that arises is a commitment to the exchange it is not a commitment to the counter party what they're trying to do is go under the hood of an exchange trade a foreign exchange rate at that would you explain to me what we meant by irrevocable in the absolute act of this sure irrevocable absolute activist is not a case about exchange trading or foreign exchange trading it's about purchases directly between parties of us penny stock there is not that we don't but we strongly disagree that the absolute activist irrevocably liability test was meant to apply in a way that would undermine the guiding principle of morrison which is if you're trading on a foreign exchange that's impermissible extraterritorial application of u s law for example there's nothing in absolute activist that says you should dissect the anatomy of a foreign exchange trade to try to find the spot during that trade when there is irrevocabl because i agree with that and i want to explain on both parts here i want to explain why there is no irrevocable liability but also why we don't think that the test should apply here we don't think it should apply what we think is it's basically if you're going to apply the test here it ought to be like this court's decision in city  pontiac in that case what you said was the court said twice look the supreme court emphasized that the exchange act was not meant to regulate transactions on a foreign exchange you said you said look the supreme court said there is no national public interest in regulating those trades on a foreign exchange and then what you said very specifically was that while in the context of securities that are not traded on a foreign exchange the place where the bio order is made is important that is not important it is insufficient quote in the context of transactions in foreign securities on a foreign exchange in my submission first is that you shouldn't take the absolute activist irrevocably liability test and apply it in a way that says let's dissect each step of a foreign exchange trade and figure out whether it applies now as to your question just well i don't i want to get back to it i want to make sure i'm answering it the reason is you have to ask you can't just say we need is there a binding commitment you asked when is thereby the binding commitment to buy or sell when i conducted an exchange trade for example let's take the parties here the defendant tower and the first name plaintiff choice if they happen to have been matched by the x and let's say that tower doesn't deliver the money mr choice cannot sue tower he has no binding commitment to mr troy if this is an exchange trade the binding commitment that happens is to the exchange that happens in korea the very rules that he that my colleague is saying that they are that they did the research and so every only of exchange trades absolutely and that you are saying that in every exchange based trade  shot at all i'm saying no i'm not i'm saying that the irrevocable liability happens in korea that is where under the korean exchanges rules if you look at that it's part three chapter four it's in it's in the appendix i believe it's  it's somewhere around eighty four thirty where that's the declaration that it's and it says that's where the exchange steps into the shoes of each party that's where you know vague in essence you asked the question isn't it rely on a preexisting obligation i'm not fighting the fundamental logic that the reason my client has an obligation to the exchange is because they will miss the new currency all settlement not until clear and it's clear as that's right settlement really is a different doesn't occur during the match that's that's correct that's what your position is that's where it happens and if this really with you about that and what do we do if if you disagree with us on that i still think for the reasons i've said the absolute activist test shouldn't the  x they are quoting rules of the chicago mercantile exchange that govern trades that happen on the chicago mercantile exchange you can look at the website where the rule book is found and if to really prove this point go find the website that they that the blockquote in paragraph twenty one comes from it's not even to the chicago mercantile exchange it's to the chicago board of trade and entity that not even they allege has any relevance in this case that's because each exchange that uses x has its own set of rules about what that means with you want to know what it means to be young globe x in the context of the korean exchange look in the appendix at eighty four thirty those are the korean exchange rules that have a specific section on the use of c m e globe x and one more point i just want to make sure i make this because it's not really clear in our brief there's another reason why the absolute activist test should not apply in this case which is a commodities exchange case morrison was a statutory interpretation case about section ten b of the exchange act the two prongs the second prong of morrison which is purchase or security i'm sorry purchase or sale of a security in the united states was based on the of the language of ten b ten b says that it prohibits manipulation in connection with the purchase or sale of a security on a national register to exchange national securities exchange or any other security so register that's what the second prong is applying to there is no application in this case the provision in this case is that manipulation is prohibited in connection with any contract for future delivery on or subject to the rules of any registered entity there is no second phrase that says or any other futures contract and absolute activists was interpretating the specific statutory language purchase contract about when a contract is know what i'm saying is that each exchange has rules about how trades are conducted and so if i if i submit a limit order which is how futures contracts are done to say i will purchase one hundred of these contracts at two dollars i'm not talking to anyone specifically normal contract law that's over the counter trading when i would specifically engage in a trade with a specific party and i would say i see your offer and i accept it that's not how trading on an exchange works i put in my limit order if the exchange identify somebody who will take the other side of that position not because they know of my order strange matches the exchange matches them and then steps into their shoes the reason exchanges exist one important reason is you don't want counterparty risk i don't want to know i don't want to have to do the research on mr choice doesn't want to have to do the research on tower tower as i want to have to do the research on mr choice to find out whether he's a good credit risk i'm entering into a contract with an exchange so i'm not saying that it displaces contract rules what i'm saying is you have to find out what is the contract that comes out of all of this and the contract that comes out of an exchange trade is a contract with the exchange that happens in korea isn't that it that's exactly the law is there not some liability to the exchange there is and that happens in korea that the exchange does not step into shoes obviously the exchange doesn't step into the shoes of the parties through the rules of the c m e it's the korean exchange and that happens in korea look at page eight one o one this is a document a website page that they cited at footnote ten of their brief it explains all of this very clearly how it works and it says that order routing the very first part of the trade so the offer and acceptance judgeable or happens in korea it has to go through korea it has to go through a k or x member firm so if you're going to assume the fiction that people who don't know about one another are nevertheless offering and accepting that offer and then acceptance is made in korea it then in the night trades that's where it has to happen that's what this document explains in the ny trades then they come over to see a me that's just a computer that matches it for the exchange to figure out which ones match all these offers and acceptances are happening over there if we're going to use contract lingo and then it's match there then it comes back w so all trades executed on the c m a global x again this is page a one o one will be transferred to k r x for position management and credit controls and also be consolidated with the trades of the regular session on the following trade date for clearing and settlement and clearing is where this is where the binding commitment with the exchange comes into place it's the clearance that in the rules that we have cited there at eighty four thirty six to eighty four eighty two that is chapter four of part three of the korean exchanges rules that are on clearing and settlement of a trade and that's when the exchange steps in or a member of no tower has to trade direct through i'm sorry did you say c m e i don't know that's not a legend i actually don't know they're not a member of the korean exchange is what i meant to answer they have to trade through a korean exchange member firm i think it's i want to be clear i don't think you notice judge lawyer there is no allegation in this complain that the c m a rules apply to trading on the korean exchange and that is what judge wood said she said you haven't allege that there is nothing here to give any meaning that says these rules apply so there's nothing and i think basic logic shows it too if you go when you look a group website they all apply to the individual exchanges the rule that they cite is a secada board of trade rules not even a chicago mercantile exchange rule and the orders that they are the rules that they quote in their brief all talk are all rules that talk about how when an order is submitted on the c m e what asked to happen and the korean exchange rules and the document that they cite which is a one zero one of the appendix very clearly explained that when our ex trading happens on the c m e orders do not go to the c m e as a one on one the document they cite explains customers direct connection to see amigo is not available direct market access is not allowed for any care x product under the korean regulations it has to go through the hub in seoul your time is long expired i apologize if if there are no further questions  or whatever they want to call it the scene where the trades to place is it binding at matching and they said yes i don't know what more we need to do in a told me six motion that's should be more than sufficient if it's binding that's where the contract is for get settled in on the d t c that doesn't mean it didn't happen in korea just as as here that settlement is relevant if there's talk about dissect a transaction only one point is transaction accounts understand a contract law it's where the deal is made this is an electronic footnote twenty four that you cannot determine that a transactions domestic under morrison if it settles the d t c in other words abstract of us is identifying a single point which terms of the transaction is made what you say in petra boss is that point is not test we need to test a bright line rule we are to the right side of that bright line moreover i think more broadly argument that the two protest in morrison doesn't strictly apply because the regime here is different from tenby five and the ten b five dealt with a situation where you would use either be on our exchange or would not be our exchange and here we've got a trader on an exchange and therefore that second prong doesn't  apply well your honor first of all this court has held that morrison does apply to see a claim second in morrison itself it was a transaction a foreign exchange that was analyzed to specifically the australian exchange so they did a two part test there they said you know it