GTS Securities, LLC v. CBOE Exchange, Inc., 1:25-cv-03361

GTS Securities, LLC (GTS), an SEC-registered broker-dealer, was a designated primary market maker (DPM) on Cboe Exchange, Inc. and Cboe EDGX Exchange, Inc. (collectively, "Cboe Exchanges").
Traditionally, Cboe Exchanges allowed DPM appointment transfers for consideration, enabling GTS to acquire its appointments and, based on exchanges' representations, later attempt to transfer them to third parties.
After being notified by Cboe that its quote performance fell below standards, GTS sought to transfer its DPM appointments to other firms for compensation, with both Cboe Exchanges’ knowledge and initial encouragement.
Despite apparent agreement and no objections from Cboe, Cboe ultimately reallocated DPM symbols to third parties not part of GTS’s transfer agreements, preventing GTS from collecting payment.
GTS sued in Illinois state court alleging fraud and violation of the Illinois Consumer Fraud Act; Cboe removed to federal court, arguing federal jurisdiction due to purported federal securities law issues.
GTS moved to remand the case to state court, contending that its claims do not arise under federal law.

Issue	Plaintiff's (GTS) Argument	Defendant's (Cboe) Argument	Held
Does the case arise under federal law (federal question jurisdiction)?	No, claims are based on misrepresentation, not on federal or SRO rule violations.	Yes, claims necessarily involve Cboe’s compliance with SEC-approved rules.	No federal question jurisdiction; claims are fact-bound and not necessarily federal in nature.
Is there complete preemption by the Exchange Act?	No, state law claims are not wholly displaced by federal law.	Yes, Exchange Act preempts related state law claims.	No complete preemption; Exchange Act does not fully displace state law claims in this context.
Does conflict preemption create federal jurisdiction?	Conflict preemption is a defense, not a basis for removal jurisdiction.	State law claims conflict with federal regulation and are thus preempted.	Conflict preemption does not allow removal; it is a defense for use in state court, not a removal basis.
Should GTS be awarded fees and costs under § 1447(c)?	Yes, removal was improper.	No, removal was reasonably based on legal arguments.	No fees or costs; Cboe had an objectively reasonable basis for removal despite the court’s disagreement.

Gunn v. Minton, 568 U.S. 251 (2013) (state law claims implicating embedded federal issues only create federal jurisdiction in a "special and small category" of cases)
Grable & Sons Metal Prods., Inc. v. Darue Eng’g & Mfg., 545 U.S. 308 (2005) (outlines the test for arising-under federal jurisdiction in state law claims involving federal issues)
Empire Healthchoice Assurance, Inc. v. McVeigh, 547 U.S. 677 (2006) (state law claims must actually and substantially implicate federal issues to justify federal jurisdiction)
Merrill Lynch, Pierce, Fenner & Smith v. Manning, 578 U.S. 374 (2016) (federal securities laws do not completely preempt state law claims)
Martin v. Franklin Cap. Corp., 546 U.S. 132 (2005) (fee awards under § 1447(c) require lack of objectively reasonable basis for removal)