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Independent traders staged a walkout Friday of CME Group Inc. (CME) options on Eurodollar futures, protesting a large, privately negotiated trade a day earlier that they claimed was unfair.

The action by the floor traders, who are also known as locals, threatened to deplete volumes in one of CME's most-actively traded interest rate products, although there were signs the protest might be calming down as the morning went on.

The protest followed a massive block options trade performed in Eurodollar futures Thursday. Block trades are privately negotiated transactions performed off the trading floor, but cleared by the exchange, and reported minutes later on the CME website.

The locals were upset because they weren't able to participate in the trade, brokers said.

Market makers in trading pits like that devoted to Eurodollar futures contracts are critical intermediaries that enable banks and hedge funds to smoothly transact business in the derivatives, which provide protection against shifting interest rates. Such traders stand ready to buy and sell contracts, ensuring there is a party to take the other side of customers' trades at any given time.

Floor traders remain a particularly important component of the Eurodollar options market, where open outcry trading at CME's Chicago trading floor has been estimated to account for about 90% of business in the contracts.

One floor broker said roughly 95% of the Eurodollar options locals joined in the walkout Friday, and that the event had significantly reduced trading volume. A few dozen traders were standing outside the contract's trading pit in protest around 8:45 a.m. Central Time, though the crowd had thinned by an hour later.

CME spokesman Michael Shore said in a prepared statement that "a number of market makers continue to make markets in Eurodollar options." He called the block trade that sparked the protest "legitimate."

Independent traders were said to be meeting with CME representatives to discuss the situation.

David Stein, an independent trader who was standing outside the pit Friday and who helped organize the protest, said allowing privately negotiated block trades was "anti-competitive" and "un-American."

Block trades happen often. Stein said the trade in question was done by phone. When that happens, he said, information about the trade isn't immediately displayed on the exchange wall's screen, and before it appears the people involved in the trade can keep making other trades to profit, knowing the information could affect prices.

Stein said the protesters want the CME to ask that a party in a block trade first make the information public by doing an "all-or-none" offer in the trading pit. This would allow customers to get a better price on what they're buying in the block trade, and would also prevent what could be seen as insider trading, he said. The protesters also want the exchange to suspend block trading until a new rule is put in place.

The CME's Shore said the trade was legitimate and managed by long-standing rules at the exchanges.

"It was a legitimate, well-managed trade, which was executed within one tick and in one trade," Shore said.

The options trade in question involved tens of thousands of puts on June 2014 Eurodollar futures, with about half set to expire Friday and the others in June of this year. The transactions project short-term rates to rise, which is contrary to current market sentiment.

-By Howard Packowitz and Owen Fletcher, Dow Jones Newswires; (312) 750-4132; howard.packowitz@dowjones.com and 312-750-4120; owen.fletcher@dowjones.com

--Jacob Bunge and Stephen Bernard contributed to this article.

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