©2022, TeraExchange, LLC. All rights reserved.

TeraExchange, LLC

Swap Execution Facility Rulebook

Version 1.21

BY BECOMING A PARTICIPANT, OR BY ACCESSING TERAEXCHANGE IN ANY 

WAY, AND WITHOUT ANY NEED FOR ANY FURTHER ACTION, UNDERTAKING 

OR AGREEMENT, A PERSON AGREES (I) TO BE BOUND BY AND COMPLY WITH 

TERA RULES AND OBLIGATIONS, AND INSTRUMENT SPECIFICATIONS, IN EACH

CASE TO THE EXTENT APPLICABLE TO IT, AND APPLICABLE LAW, (II) TO 

BECOME SUBJECT TO THE JURISDICTION OF TERAEXCHANGE WITH RESPECT 

TO ANY AND ALL MATTERS ARISING FROM, RELATED TO, OR IN CONNECTION 

WITH, THE STATUS, ACTIONS, OR OMISSIONS OF SUCH PERSON RELATED TO 

TERA RULES, AND (III) TO ASSIST TERAEXCHANGE IN COMPLYING WITH ITS 

LEGAL AND REGULATORY OBLIGATIONS, (IV) TO COOPERATE WITH 

TERAEXCHANGE AND THE CFTC IN ANY INQUIRY, INVESTIGATION, AUDIT, 

EXAMINATION OR PROCEEDING, AND (V) TO AUTHORIZE TERAEXCHANGE TO 

PROVIDE INFORMATION REGARDING IT TO THE CFTC OR ANY SELFREGULATORY ORGANIZATION.

February 2022
- 2 -

CHAPTER 1 DEFINITIONS AND RULES OF CONSTRUCTION ..................................6

Rule 101 Definitions...........................................................................................................6

Rule 102 Rules of Construction.........................................................................................13

CHAPTER 2 SEF GOVERNANCE .................................................................................14

Rule 201 Board.................................................................................................................14

Rule 202 Regulatory Oversight Committee .......................................................................14

Rule 203 Additional Committees and Panels.....................................................................15

Rule 204 Power of the Board to Review Decisions............................................................15

Rule 205 Eligibility of Directors .......................................................................................16

Rule 206 Officers..............................................................................................................18

Rule 207 Chief Compliance Officer ..................................................................................18

Rule 208 Conflicts of Interest............................................................................................19

Rule 209 Material Non-Public Information .......................................................................21

Rule 210 Emergency Rules...............................................................................................22

Rule 211 Maintenance of Books and Records ...................................................................23

Rule 212 Information-Sharing Agreements.......................................................................24

Rule 213 [Reserved]..........................................................................................................24

Rule 214 Prohibited Use of Data Collected for Regulatory Purposes.................................24

CHAPTER 3 PARTICIPANTS ........................................................................................25

Rule 301 Eligibility Criteria for Becoming a Participant....................................................25

Rule 302 Authorized Traders ............................................................................................26

Rule 303 Participant Application Process..........................................................................27

Rule 304 Limitations on Trading Privileges ......................................................................28

Rule 305 Assessments and Fees........................................................................................28

Rule 306 Authorized Representatives................................................................................28

Rule 307 Recording of Communications...........................................................................29

Rule 308 Notices to Participants........................................................................................29

Rule 309 Communications between Tera and Participants.................................................29

Rule 310 Application of Tera Rules and Jurisdiction.........................................................29

Rule 311 Compliance with the Commodity Exchange Act ................................................30

Rule 312 Description of Participants’ Status......................................................................31

Rule 313 Designated Categories of Participants ................................................................31

Rule 314 Termination of Participants................................................................................31

Rule 315 Withdrawal of Participants.................................................................................31

Rule 316 Access ...............................................................................................................32

CHAPTER 4 OBLIGATIONS OF PARTICIPANTS .......................................................32

Rule 401 Information to be Provided by Participants.........................................................32

Rule 402 Duties and Responsibilities of Participants.........................................................33

Rule 403 Representations and Required Disclosures to Tera .............................................34

Rule 404 Inspections by Tera ............................................................................................35
- 3 -

Rule 405 Pre-Execution Credit Checks..............................................................................36

Rule 406 Minimum Financial and Related Reporting Requirements..................................37

Rule 407 Confidentiality of Financial and Other Information ............................................37

Rule 408 Authority to Impose Restrictions........................................................................37

Rule 409 Participants or Executing Firms Accessing Tera on Behalf Others......................37

Rule 410 Verification of ECP Status.................................................................................38

Rule 411 Disclosure Requirements....................................................................................38

Rule 412 Position Liquidation Upon Default.....................................................................38

Rule 413 Responsibility for Mandatory Trading................................................................38

CHAPTER 5 TRADING PRACTICES AND BUSINESS CONDUCT ............................39

Rule 501 Scope .................................................................................................................39

Rule 502 Procedures .........................................................................................................39

Rule 503 Business Days and Trading Hours......................................................................40

Rule 504 Supervision ........................................................................................................40

Rule 505 Mishandling of Customer Orders .......................................................................40

Rule 506 Trading on the Order Book.................................................................................40

Rule 507 Price-Time Priority in Order Book .....................................................................40

Rule 508 Electronic and Voice-Assisted Order Entry ........................................................40

Rule 509 Position Accountability......................................................................................42

Rule 510 Order Types.......................................................................................................43

Rule 511 Bunched Orders and Orders Eligible for Post-Execution Allocation ...................43

Rule 512 Orders Entered Prior to SEF Opening.................................................................44

Rule 513 Identification of Authorized Traders...................................................................44

Rule 514 Block Trades......................................................................................................44

Rule 515 Risk Controls.....................................................................................................45

Rule 516 Use of Trading Privileges...................................................................................46

Rule 517 Priority of Customers’ Orders ............................................................................46

Rule 518 Adherence to Law..............................................................................................46

Rule 519 Rule Violations..................................................................................................47

Rule 520 Fraudulent Acts Prohibited.................................................................................47

Rule 521 Fictitious, Wash or Non-Competitive Transactions Prohibited............................47

Rule 522 Market Disruption Prohibited.............................................................................47

Rule 523 Disruptive Trading Practices Prohibited .............................................................48

Rule 524 Market Manipulation Prohibited.........................................................................48

Rule 525 Misstatements Prohibited ...................................................................................49

Rule 526 Acts Detrimental to Welfare of Tera Prohibited..................................................49

Rule 527 Misuse of Tera Prohibited ..................................................................................49

Rule 528 Withholding Orders Prohibited...........................................................................49

Rule 529 Pre-discussed or Cross Trades............................................................................49

Rule 530 Disclosing Orders Prohibited..............................................................................50

Rule 531 Arranged Transactions .......................................................................................50

Rule 532 Voice-Assisted and Electronic Request for Quote Trading .................................51

Rule 533 Disputes.............................................................................................................53

Rule 534 Trade Cancellation and Price Adjustment...........................................................53

Rule 535 Trade Review, Correction and Notification ........................................................53
- 4 -

Rule 536 Cleared Error Trade Correction..........................................................................55

Rule 537 Post Trade Anonymity .......................................................................................58

CHAPTER 6 CLEARING................................................................................................58

Rule 601 Mandatory Clearing ...........................................................................................58

Rule 602 Clearing Accounts..............................................................................................58

Rule 603 Clearing Firm Guarantee....................................................................................58

Rule 604 Clearing House Rules.........................................................................................59

Rule 605 Other Clearing Organizations.............................................................................59

Rule 606 Clearing Fees.....................................................................................................59

Rule 607 Clearing and Finality..........................................................................................60

Rule 608 Uncleared Transactions......................................................................................60

CHAPTER 7 RECORDKEEPING AND REPORTING ...................................................61

Rule 701 Records to be Maintained by Clearing Firms......................................................61

Rule 702 Customer Type Indicator (CTI) Codes ...............................................................62

Rule 703 Records of Trading Activity on Tera and Related Transactions ..........................62

Rule 704 Reporting to SDR...............................................................................................62

Rule 705 Enforceability ....................................................................................................66

CHAPTER 8 DISCIPLINARY RULES ...........................................................................67

Rule 801 General ..............................................................................................................67

Rule 802 Inquiries and Investigations................................................................................68

Rule 803 Reports of Investigations....................................................................................69

Rule 804 Opportunity to Respond to Investigatory Report.................................................70

Rule 805 Review of Investigative Reports.........................................................................70

Rule 806 Warning Letters .................................................................................................71

Rule 807 Notice of Charges ..............................................................................................71

Rule 808 Service of Notice of Charges..............................................................................72

Rule 809 Answer to Notice of Charges..............................................................................72

Rule 810 Admission or Failure to Deny Charges...............................................................73

Rule 811 Denial of Charges and Right to a Hearing ..........................................................73

Rule 812 Settlements ........................................................................................................74

Rule 813 Hearing Panel ....................................................................................................74

Rule 814 Convening Hearings of Disciplinary Proceedings...............................................75

Rule 815 Respondent Review of Evidence ........................................................................76

Rule 816 Conducting Hearings of Disciplinary Proceedings..............................................77

Rule 817 Decision of Hearing Panel..................................................................................78

Rule 818 Sanctions ...........................................................................................................79

Rule 819 Costs..................................................................................................................80

Rule 820 Right to Appeal..................................................................................................81

Rule 821 Summary Imposition of Fines ............................................................................83

Rule 822 Summary Suspensions and Other Summary Actions ..........................................84

Rule 823 Rights and Responsibilities after Suspension or Termination..............................84
- 5 -

Rule 824 Notice to the Respondent and the Public ............................................................85

CHAPTER 9 MISCELLANEOUS ...................................................................................85

Rule 901 Anti-Money Laundering and Anti-Terrorism......................................................85

Rule 902 Gifts and Gratuities............................................................................................86

Rule 903 Market Data .......................................................................................................86

Rule 904 Extension or Waiver of Tera Rules.....................................................................87

Rule 905 Governing Law, Jurisdiction and Dispute Resolution .........................................87

Rule 906 LIMITATION OF LIABILITY, NO WARRANTIES ........................................88

Rule 907 Effect of Amendment, Repeal, or New Rule.......................................................90

CHAPTER 10 INSTRUMENT SPECIFICATIONS...........................................................91

Rule 1001 Instruments Listed for Trading ...........................................................................91

Annex A Swap Transaction Reporting Party Requirements .......................................92

Annex B Product Terms and Conditions....................................................................94
©2022, TeraExchange, LLC. All rights reserved.

CHAPTER 1 DEFINITIONS AND RULES OF CONSTRUCTION

Rule 101 Definitions

When used in the Tera Rules the following terms shall have the respective meanings as follows:

“Account” means, with respect to each Participant, any account established and maintained 

on Tera by such Participant or by or on behalf of an Account Holder through which Participant 

will trade Instruments.

“Account Holder” means the beneficial owner of an Account who uses a Participant as agent 

to transact on Tera and shall include the meaning of ‘Customer’ as defined below and in CFTC 

Rule 1.3(k) as well as all other Persons who are counterparties to swaps executed on 

TeraExchange. For the avoidance of doubt, an Account Holder is not a Participant on Tera.

“Account Series Designation” means an identifier assigned by a Participant to a group of 

accounts, which facilitates their treatment as one account for purposes of a Bunched Order.

“Affected Person” means a SEF applicant whose participant application is declined or is 

conditioned or a Person whose status as a Participant is terminated as set forth in Rule 303(e).

“Affiliate” means, with respect to any Person, any Person who, directly or indirectly, Controls, 

is Controlled by, or is under common Control with, such other Person.

“Appeals Panel” means a panel appointed by the Chief Compliance Officer pursuant to Rule 

820.

“Applicable Law” means, with respect to any Person, any statute, law, regulation, rule, or 

ordinance of any governmental or self-regulatory authority applicable to such Person, 

including the CEA and CFTC Regulations.

“Authorized Representative” means any Person who is authorized by a Participant to 

represent the Participant in SEF matters pursuant to Rule 306.

“Authorized Trader” means any natural person who is appointed, employed, or authorized 

by a Participant to place Orders on Tera and is assigned a valid Trader ID.

“Block Trade” means a publicly reportable swap transaction that:

(1) Involves a swap that is listed on TeraExchange;

(2) Is executed on a TeraExchange trading system or platform that is not an order book as 

defined by CFTC Regulation 37.3(a)(3), or occurs away from the TeraExchange 

trading system or platform and is executed pursuant to the Tera Rules and procedures;

(3) Has a notional or principal amount at or above the appropriate minimum block size 

applicable to such swap; and
- 7 -

(4) Is reported subject to the Tera Rules and procedures and Commission Rule 43, 

including the appropriate time delay requirements of Commission Rule 43.5 and Tera 

Rule 704.

“Board” means the Board of Directors of Tera constituted from time to time in accordance 

with the Operating Agreement.

“Bunched Orders” means a single Order placed pursuant to Rule 511.

“Business Day” means the twenty-four-hour day, on all days except Saturdays, Sundays, and 

legal holidays.

“By-Laws” means, with respect to any Person that is not an individual, the By-Laws or 

Operating Agreement of such Person, and, if no other Person is specified, the By-Laws or 

Operating Agreement of Tera.

“CEA” means the Commodity Exchange Act, as amended from time to time.

“CFTC” means the Commodity Futures Trading Commission or any successor regulatory 

body.

“CFTC Regulations” means the rules and regulations promulgated by the CFTC, as amended.

“Chief Compliance Officer” means the individual appointed by the Board as Tera’s chief 

compliance officer in accordance with the Operating Agreement, with the duties and 

responsibilities as may be prescribed by the Board from time to time as set forth in Rule 207.

“Clearable Instrument” means an Instrument that is subject to the mandatory clearing 

requirement of Section 2(h)(1)(A) of the CEA or any Instrument that is accepted by a 

Derivatives Clearing Organization for clearing and which Participants have elected to submit 

for clearing.

“Clearing Firm” means a member or participant of a Clearing House that is authorized by the 

Clearing House to clear trades in any or all Instruments for a Participant. For the avoidance of 

doubt, a Clearing Firm need not be a Participant on Tera.

“Clearing House” means a CFTC-registered Derivatives Clearing Organization or a 

derivatives clearing organization that the CFTC has determined is exempt from registration.

“Clearing House Rules” means the Certificate of Incorporation, the By-Laws and any rule, 

interpretation, stated policy, or Instrument Specification corresponding to any of the foregoing, 

in each case as adopted or amended from time to time by the Clearing House relating to any 

or all Instruments.

“Closing Period” means the period defined by Tera as such in a Notice to Participants.
- 8 -

“Compliance Department” means all SEF Officials, agents, and service providers of Tera 

that assist Tera with the implementation, surveillance and enforcement of the Tera Rules and 

other Obligations.

“Control” means the possession, direct or indirect, of the power to direct or cause the direction 

of the management and policies of a Person, whether through the ownership of securities, by 

Instrument, or otherwise. The terms “controlling” or “controlled” shall have meanings 

correlative to the foregoing.

“CTI Code” means a Customer Type Indicator Code as described in Rule 702.

“Customer”, as defined in CFTC Rule 1.3(k), means any Person who uses a futures 

commission merchant, introducing broker, commodity trading advisor, or commodity pool 

operator as an agent in connection with trading on TeraExchange.

“Derivatives Clearing Organization” or “DCO” has the meaning attributed to such term by 

Section la(15) of the CEA.

“Designated Contract Market” or “DCM” means a board of trade designated as a contract 

market by the CFTC which is in compliance with the rules of the Commission and the core 

principles specified in Section 5 of the CEA. 

“Director” means any member of the Board.

“Disciplinary Panel” means one or more Review Panels and one or more Hearing Panels 

collectively which are responsible for conducting hearings, rendering decisions and imposing 

sanctions with respect to disciplinary matters.

“ECP” means an eligible contract participant as defined in section 1a(18) of the CEA.

“Eligibility Criteria” means the criteria set forth in Rule 301(a).

“Emergency” has the meaning set forth in CTFC Regulation 40.1(h).

“Emergency Rules” has the meaning set forth in Rule 210(a).

“End of Trading” means such time as Tera may prescribe in a Notice to Participants or other 

Writing. The End of Trading is the time as of which such actions as are specified in the Tera 

Rules or the relevant Instrument Specifications as taking place at the end of a Business Day, 

will occur.

“Exchange User License Agreement” or “EULA” means the agreement executed by 

Participant and Tera that governs Participant’s access to and use of Tera.

“Executing Firm” means any entity that is a Participant trading on Tera for its own account 

or on behalf of an Account Holder or Customer. An Executing Firm shall include, but not be 

limited to Persons registered as an Introducing Broker by the CFTC. 
- 9 -

“Financial Entity” has the meaning set forth in CEA Section 2(h)(7)(C).

“Floor Broker” means a Participant of the type described in Rule 313.

“Floor Trader” means a Participant of the type described in Rule 313.

“Foreign Exchange Cash Settled Forward” or “FX CSF” means a contract in which two 

counterparties agree on a currency pair exchange rate for a given notional amount on a date in 

the future.

“Foreign Exchange Non-Deliverable Forward” or “FX NDF” means a FX CSF in which 

one of the currencies in the currency pair cannot legally be delivered.

“Futures Commission Merchant” or “FCM” has the meaning set forth in Section 1a(28) of 

the CEA.

“Governmental Agency” means any governmental entity, body or agency of any government 

(including the United States, or a foreign government).

“Hearing Panel” means a panel responsible for adjudicating disciplinary cases pursuant to a 

Notice of Charges authorized by a Review Panel.

“Independent Software Vendor” or “ISV” means a Person that makes available to 

Participants and Authorized Traders a system or platform offering smart order routing, 

aggregation services or other front-end applications but which does not provide the ability to 

effect transactions on such system or platform.

“Instrument” or “Tera Instrument” means any instrument that is a swap as defined in 

Section la(47) of the CEA, and any other financial contract or instrument, which is listed for 

trading on Tera or subject to the Tera Rules and not readily susceptible to manipulation in 

compliance with CFTC Regulation 37.300.

“Instrument Specification” means, with respect to any Instrument, the rules or other trading 

protocols containing specifications for such Instrument, as adopted, amended, supplemented 

or otherwise modified from time to time by Tera.

“Interest Rate Swap” means an Instrument in which two parties agree to exchange payments 

on a periodic basis based on interest rate calculations.

“Interested Person” has the meaning attributed to such term in Rule 208(a).

“Introducing Broker” means persons within the meaning set forth in Section 1a(31) of the 

CEA and within the definition of ‘foreign broker’ set forth in 17 C.F.R. 1.3(xx).

“ISDA” means the International Swaps Derivatives Association, Inc. 

“Legal Entity Identifier” has the meaning set forth in Part 45 of the CFTC Regulations.
- 10 -

“Limit Order” means an Order in which the Participant specifies a minimum sale price or 

maximum purchase price.

“Major Swap Participant” has the meaning set forth in Section la(33) of the CEA.

“Market Maker” means a Participant of the type described in Rule 313.

“Market Order” means an Order to buy or sell an Instrument at whatever price is obtainable 

at the time it is entered in Tera.

“Member”, as defined in CEA Section 1(a)(34), means any Person having trading privileges 

on TeraExchange.

“No-Bust Range” means the price of an Instrument that is in the range specified by Tera from 

time to time in a Notice to Participants, as described in Rule 515(c).

“Notice of Charges” means a notice sent by the Compliance Department pursuant to Rule 807

“Notice to Participants” means a communication sent by or on behalf of Tera to all 

Participants as described in Rule 308.

“Obligation” means each Tera Rule, order or procedure issued by Tera, including any Notice 

to Participants, and any other requirement implemented by Tera under the Tera Rules or 

pursuant to the EULA.

“Officer” has the meaning attributed to such term in Rule 206.

“Operating Agreement” means the Limited Liability Company Agreement of Tera.

“Order” means the entry of a proposed Trade into the Order Book, or a response to a Request 

for Quote.

“Order Book” means, in accordance with CFTC Regulation 37.3(a)(3), the trading system or 

platform operated by Tera in which all market participants have the ability to enter multiple 

bids and offers, observe or receive bids and offers entered by other market participants, and 

transact on such bids and offers.

“Participant” means any Person that has been granted access to TeraExchange and maintains 

Trading Privileges under its Rules and shall include the meaning of “Member” as defined 

above and under the CEA. A reference to Participant includes any Person who is either 

employed by or is an agent of such Participant (including but not limited to an Authorized 

Trader or Supervised Person) or any Person who accesses or utilizes TeraExchange pursuant 

to a Trader ID linked to a Participant. For the avoidance of doubt and subject to Applicable 

Law, a Participant may act on behalf of itself in its own Account or on behalf of an Account 

Holder or Customer pursuant to a written delegation of trading authority. An ISV cannot be a 

Participant.
- 11 -

“Participant Documentation” means such application forms and agreements including 

without limitation the EULA (together with any applicable schedules, exhibits or appendices 

thereto required by Tera) in form and substance acceptable to Tera, that are required to be 

executed and delivered to Tera before a Person may access Tera.

“Participant ID” means a unique identifier assigned to a Participant by Tera for access to 

Tera.

“Permitted Transaction” means any transaction involving an Instrument that is not a 

Required Transaction.

“Person” means any natural person, association, partnership, limited liability company, joint 

venture, trust, corporation or similar entity.

“President” means the President of TeraExchange, or one duly authorized to act with the 

authority of the President.

“Proprietary Account” has the meaning ascribed to it by CFTC Regulation 1.3(y).

“Proprietary Data” means, with respect to any Person, any information that separately 

discloses business transactions, market positions, or trade secrets of such Person.

“Public Director” means a Person that meets the qualifications described in Rule 205(h).

“Records” shall have the meaning set forth in Rule 701(a).

“Reference Price” means a floating price series (including derivatives contract prices and cash 

market prices or price indices) used by the parties to a swap or swaption to determine payments 

made, exchanged or accrued under the terms of a swap contract.

“Regulatory Oversight Committee” means the committee of the Board constituted in 

accordance with Rule 202.

“Reporting Counterparty” means the Participant that is designated as such pursuant to Rule 

704. The general hierarchy for determining the Reporting Counterparty is set forth as: 

• If one party is a Swap Dealer, the Swap Dealer is the Reporting Counterparty. 

• If both parties are a Swap Dealer, the selling Swap Dealer is the Reporting 

Counterparty. 

• If one party is a Major Swap Participant, the Major Swap Participant is the Reporting 

Counterparty. 

• If both parties are a Major Swap Participant, the selling Major Swap Participant is the 

Reporting Counterparty. 

• If neither party is a Swap Dealer or Major Swap Participant and only one party is a 

financial entity (as defined in CEA Section 2(h)(7)(C)), the financial entity is the 

Reporting Counterparty. 
- 12 -

• If neither party is a Swap Dealer, Major Swap Participant nor a financial entity and one 

party is a US Person, the US Person will be the Reporting Counterparty. 

• If neither party is a Swap Dealer, Major Swap Participant, a financial entity nor a US 

Person, the parties will agree which party will be the Reporting Counterparty.

“Request for Quote” or “RFQ” means an electronic or voice message disseminated on or by 

Tera for the purposes of soliciting bids or offers for a specific Swap pursuant to Rule 532.

“Required Swap Creation Data” means all primary economic terms data for a swap in the 

swap asset class in question, and all confirmation data for the swap, as defined in CFTC 

Regulation 45 and detailed Appendix 1 to Part 45.

“Required Transaction” means any transaction involving an Instrument that is subject to the 

trade execution requirement of Section 2(h)(8) of the CEA.

“Review Panel” means a panel responsible for determining whether a reasonable basis exists 

for finding a violation of Tera Rules, and for authorizing the issuance of notices of chargers 

against persons alleged to have committed violations if the Review Panel believes that the 

matter should be adjudicated.

“Rules” means, with respect to any Person, the rules of such Person and the interpretations, 

resolutions, orders, directives and procedures of the Person thereunder as in effect from time 

to time, and if no other Person is specified, means the Rules of Tera and the interpretations, 

resolutions, orders and directives and procedures of Tera thereunder as in effect from time to 

time.

“SDR” means a Swap Data Repository, as defined in Section 1 a(48) of the CEA.

“SEC” means the U.S. Securities and Exchange Commission.

“Self-Regulatory Organization” shall, unless otherwise provided, have the meaning 

attributed to such term in CFTC Regulation 1.33(ee) and, in addition, shall include a 

Derivatives Clearing Organization, and a registered futures association. Tera is a selfregulatory organization.

“SEF” means a Swap Execution Facility as defined in Section 1a(50) of the CEA.

“SEF Action” and “SEF Actions” have the meanings attributed to such terms in Rule 208(a).

“SEF Activity” means business for which a Participant is subject to the Tera Rules, which is 

purportedly conducted subject to the Tera Rules, or which should have been conducted subject 

to the Tera Rules.

“SEF Official” means any Director or Officer of, or individual employed directly by, Tera, a

regulatory services provider or any individual rendering similar services to Tera under an 

administrative or similar agreement.

“SEF Proceeding” has the meaning attributed to such term in Rule 208(a).
- 13 -

“Supervised Persons” means any directors, officers, employees or agents (including any 

Authorized Traders) of any Participant.

“Swap Dealer” has the meaning set form in Section 1a(49) of the CEA.

“TeraExchange” or “Tera” means TeraExchange, LLC, a Delaware limited liability 

company.

“Trade” or “Transaction” means the execution of any Order made on Tera or subject to Tera 

Rules.

“Trader ID” means a unique identifier issued to each Authorized Trader which enables Tera 

to identify the individual entering Orders into the Order Book.

“Trading Hours” means, for any Business Day, the hours during which Orders may be placed 

on TeraExchange, as shall be published by Tera in a Notice to Participants from time to time.

“Trading Privileges” means the rights granted to a Participant to transmit Orders and/or 

otherwise effect Transactions whether directly or indirectly, including through an ISV, on or 

pursuant to the Rules of Tera, either on its own behalf or as an Executing Firm on behalf of an 

Account Holder or Customer.

“Tera System” means the electronic trading facility and related operations platform, including 

but not limited to, voice assistance, for the trading of Tera Instruments.

“Unique Product Identifier” means the unique product identifier and product classification 

system determined by the CFTC under CFTC Regulation 45.7 for identifying each swap 

subject to CFTC jurisdiction in all recordkeeping and swap data reporting. 

“Unique Swap Identifier” shall have the meaning ascribed to it by CFTC Regulation 45.5, or 

any successor regulation thereto.

“Written” or “Writing” means any mode of representing or reproducing words or data in a 

visible form, including via electronic transmissions.

Rule 102 Rules of Construction

The following rules of construction shall apply to the Tera Rules:

(a) The headings in the Tera Rules are for convenience only and do not affect the 

construction of the Tera Rules;

(b) All references to time in the Tera Rules are to Wall Township, New Jersey, except 

where expressly provided otherwise;

(c) In the Tera Rules, words denoting a singular number include the plural number 

where the context permits and vice versa;
- 14 -

(d) Where the context permits or requires, any pronoun shall include the corresponding 

masculine, feminine and neuter forms; and

(e) References in the Tera Rules to statutory provisions include those provisions as 

amended, and any rules or regulations promulgated thereunder.

CHAPTER 2 SEF GOVERNANCE

Rule 201 Board

(a) The Board shall manage the business and affairs of Tera in accordance with the 

Operating Agreement. The Board has the power and authority to call for review, 

and to affirm, modify, suspend or overrule, any and all decisions and actions of 

standing committees or special committees of the Board or any panel of the 

Officers.

(b) The Board may act only by the decision of an absolute majority in number of the 

members of the Board, either by vote at a meeting or by written consent without a 

meeting.

(c) Each Director shall be appointed in accordance with the Operating Agreement and 

the procedures included therein and shall serve until his or her successor is duly 

appointed, or until his or her earlier resignation or removal, with or without cause.

(d) The members of the Board shall be of sufficiently good repute and, where 

applicable, have sufficient expertise in financial services.

(e) At all times, at least 25% of Directors, and no fewer than two, shall be Public 

Directors meeting the criteria of Rule 205(h) below.

(f) Within thirty days following the election of Directors to the Board Tera shall file 

with the CFTC a current list of its governing Board members, the membership 

interests they represent, and a description of how their qualifications meet the 

requirements of regulation 1.64(b), including the fair representation of the diversity 

of membership interests at TeraExchange.

Rule 202 Regulatory Oversight Committee

(a) The Regulatory Oversight Committee of the Board shall consist of two Public 

Directors appointed by the Board. Each member of the Regulatory Oversight 

Committee shall serve until the due appointment of his or her successor, or until his 

or her earlier resignation or removal, with or without cause, as a member of the 

Regulatory Oversight Committee or as a Director. A member of the Regulatory 

Oversight Committee may serve for multiple terms. The Regulatory Oversight 

Committee shall report to the Board

(b) The Regulatory Oversight Committee shall oversee Tera’s regulatory program on 

behalf of the Board. It shall make such recommendations to the Board as will, in its 
- 15 -

judgment, best promote the interests of Tera. The Regulatory Oversight Committee 

shall also have such other powers and perform such other duties as set forth in the 

Tera Rules, the Operating Agreement and as the Board may delegate to it from time 

to time.

(c) Without limiting the generality of the foregoing, the Regulatory Oversight 

Committee shall have authority to:

Monitor the compliance program of Tera for sufficiency and effectiveness;

Oversee all facets of the compliance program, including trade practice and 

market surveillance, audits, examinations conducted by third parties, and other 

regulatory responsibilities with respect to Participants, (including ensuring 

compliance with any financial integrity, financial reporting, sales practice, 

recordkeeping and other requirements);

Review the size and allocation of the regulatory budget and resources and the 

number, hiring and termination, and compensation of compliance personnel;

Recommend changes that would ensure fair, vigorous, and effective 

compliance; and

Review compliance proposals and advise the Board as to whether and how such 

changes may impact compliance.

(d) The Regulatory Oversight Committee shall oversee the regulatory program of Tera 

on behalf of the Board. The Board shall delegate sufficient authority, dedicate 

sufficient resources, and allow sufficient time for the Regulatory Oversight 

Committee to fulfill its mandate.

Rule 203 Additional Committees and Panels

(a) The Board may create such additional standing committees of the Board as it may 

from time to time deem necessary or advisable.

(b) In addition to the standing committees, the Board may from time to time constitute 

and appoint, by rule or resolution, special committees of the Board and designate 

their composition, responsibilities and powers.

(c) Tera may create additional committees of Tera, or panels, for such purposes as may 

from time to time be necessary or advisable. Members of each such committee may 

be members of the Board, Supervised Persons of Participants or such other 

individuals as may be qualified to serve on such committee.

Rule 204 Power of the Board to Review Decisions
- 16 -

The Board has the power and authority to call for review, and to affirm, modify, suspend 

or overrule, any and all decisions and actions of standing committees or special committees 

of the Board.

Rule 205 Eligibility of Directors

(a) A Director must meet the qualifications set forth from time to time in the Operating 

Agreement.

(b) An individual may not serve as a Director or serve on any oversight, disciplinary 

or arbitration committee established by the Board or a Disciplinary Panel or an 

Appeals Panel if the individual:

Within the prior three (3) years has been found, by a final decision in any action 

or proceeding brought in a court of competent jurisdiction, the CFTC or any 

Self-Regulatory Organization, to have committed a disciplinary offense;

Within the prior three (3) years has entered into a settlement agreement in which 

any of the findings or, in the absence of such findings, any of the acts charged, 

included a disciplinary offense;

Has been suspended or expelled from membership in a Self-Regulatory 

Organization, is serving any sentence or probation, or owes any portion of a 

fine or penalty related to either:

(1) A finding of a disciplinary offense by a final decision in any action or 

proceeding brought in a court of competent jurisdiction, the CFTC, or any 

Self-Regulatory Organization; or

(2) A settlement agreement in which any of the findings or, in the absence of 

such findings, any of the acts charged included a disciplinary offense.

Is currently subject to an agreement with the CFTC or Self-Regulatory 

Organization not to apply for registration with the CFTC or for membership in 

the Self-Regulatory Organization;

Is currently, or within the past three (3) years has been, subject to a revocation 

or suspension of registration by the CFTC;

Has been convicted of a felony listed in Section 8a(2)(D)(ii) through (iv) of the 

CEA; or

Is currently subject to a denial, suspension or disqualification from serving on 

a disciplinary committee, arbitration panel or governing board of any SelfRegulatory Organization.

(c) Any Director, member of a committee established by the Board or any member of 

a Disciplinary Panel, Appeals Panel, any individual nominated to serve in any such 
- 17 -

role, or any individual authorized by the Regulatory Oversight Committee to take 

summary action shall immediately notify the President if such individual meets one 

or more of the criteria in Rule 205(b).

(d) Tera will submit to the CFTC a schedule listing all those rule violations which 

constituted disciplinary offenses by persons serving on any disciplinary 

committees, arbitration panels, oversight panels or governing boards and to the 

extent necessary to reflect revisions will submit an amended schedule within thirty 

days of the end of each calendar year. Tera will maintain and keep current the 

schedule of rule violations and will maintain a publicly posting of the schedule on 

the TeraExchange web site in a fashion designed to provide notice to members and 

otherwise ensure its availability to the general public.

(e) Tera will, within thirty days of finding by final decision that a person has committed 

a disciplinary offense which subjects such person to disciplinary action and renders 

such person ineligible to serve on any disciplinary committees, arbitration panels, 

oversight panels or governing boards, provide written notice to such person, and 

concurrently to the CFTC Division of Market Oversight. Such notice will state the 

length of ineligibility and include all information required to comply with the form, 

content and delivery of notice requirements of Regulation 9.11.

(f) Tera will submit to the CFTC within thirty days of the end of each calendar year a 

certified list of any persons who have been removed from any disciplinary 

committees, arbitration panels, oversight panels or governing board pursuant to this 

Rule and the requirements of Regulation 1.63 during the prior year.

(g) For purposes of this Rule, the terms “disciplinary offense,” “final decision,” and 

“settlement agreement” have the meanings set forth in CFTC Regulation 1.63(a).

(h) To qualify as a Public Director, a Director must be found, by the Board on the 

record, to have no material relationship with Tera or any of its Affiliates. A 

“material relationship” is one that reasonably could affect the independent 

judgment or decision making of such individual as a Public Director. In addition, 

an individual shall not be considered a “Public Director” if any of the following 

circumstances exists:

Such Director is an officer or an employee of Tera, or an officer or an employee 

of an Affiliate of Tera;

Such Director is a Participant, or a director, an officer or an employee of a 

Participant; or

Such Director, or an entity with which the Director is a partner, an officer, or a 

director, receives more than $100,000 in combined annual payments for legal, 

accounting, or consulting services from Tera or any Affiliate of Tera. 

Compensation for services as a director of Tera or as a director of an Affiliate 

of Tera does not count toward the $100,000 payment limit, nor does deferred 
- 18 -

compensation for services rendered prior to becoming a Director of Tera, so 

long as such compensation is in no way contingent, conditioned or revocable.

(i) Any of the relationships set forth in sub-paragraphs (e)(i) through (iii) of this Rule 

apply to the “immediate family” of such Director, i.e., spouse, parents, children and 

siblings.

(j) A Public Director may also serve as a director of an Affiliate of Tera if he or she 

otherwise meets the requirements in paragraphs (e) and (f) of this Rule.

Rule 206 Officers

The Board shall appoint a President, a Chief Compliance Officer, one or more vice 

presidents, a secretary, a treasurer, and such other officers of Tera (all of the foregoing, 

collectively, the “Officers”) as it may deem necessary or appropriate from time to time, in 

accordance with the Operating Agreement. The Officers shall have such powers and duties 

in the management of Tera as the Board may prescribe from time to time in accordance 

with the Operating Agreement. Each Director and Officer is entitled to indemnification 

pursuant to the Operating Agreement with respect to matters relating to Tera.

Rule 207 Chief Compliance Officer

(a) The Chief Compliance Officer shall report to the Board of Tera. A vote of the 

majority of the Board is required to approve the compensation of the Chief 

Compliance Officer, as well as to remove the Chief Compliance Officer. Tera shall 

notify the CFTC of the appointment or removal of the Chief Compliance Officer 

within two Business Days of such event.

(b) The individual designated to serve as Chief Compliance Officer shall have the 

background and skills appropriate for fulfilling the responsibilities of the position. 

No individual disqualified from registration pursuant to Sections 8a(2) or 8a(3) of 

the CEA may serve as a Chief Compliance Officer.

(c) The Board shall meet with the Chief Compliance Officer at least annually. The 

Chief Compliance Officer shall also meet with the Regulatory Oversight 

Committee at least quarterly. Each such meeting may occur in person or by 

telephone conference. The Chief Compliance Officer shall provide any information 

regarding the regulatory program of Tera that is requested by the Board or the 

Regulatory Oversight Committee.

(d) The position of Chief Compliance Officer shall carry with it the authority and 

resources to develop and enforce policies and procedures necessary to fulfill the 

duties set forth for Chief Compliance Officers in CFTC Regulations. The Chief 

Compliance Officer shall have supervisory authority over all staff acting at the 

direction of the Chief Compliance Officer.

(e) The Chief Compliance Officer’s duties shall include, but are not limited to, the 

following:
- 19 -

Overseeing and reviewing the compliance of Tera with Section 5h of the CEA 

and any related CFTC regulations;

In consultation with the Board or the President of Tera, resolving any conflicts 

of interest that may arise, including:

(1) Conflicts between business considerations and compliance requirements;

(2) Conflicts between business considerations and the requirement that Tera 

provide fair, open, and impartial access as set forth in CFTC Regulation 

37.202; and

(3) Conflicts between Tera’s management and members of the Board;

Establishing and administering written policies and procedures reasonably 

designed to prevent violations of the CEA and any rules adopted by the CFTC;

Taking reasonable steps to ensure compliance with the CEA and rules of the 

CFTC;

Establishing procedures for the remediation of noncompliance issues identified 

by the Chief Compliance Officer through a compliance office review, lookback, internal or external audit finding, self-reported error, or validated 

complaint;

Establishing and following appropriate procedures for the handling, 

management response, remediation, retesting, and closing of noncompliance 

issues;

Establishing and administering a compliance manual designed to promote 

compliance with the applicable laws, rules, and regulations and administering 

a written code of ethics designed to prevent ethical violations and to promote 

honesty and ethical conduct;

Supervising the SEF’s self-regulatory program with respect to trade practice 

surveillance; market surveillance; real-time market monitoring; compliance 

with audit trail requirements; enforcement and disciplinary and appeals 

proceedings; audits; examinations conducted by third parties; and other 

regulatory responsibilities with respect to Participants, (including ensuring 

compliance with, if applicable, financial integrity, financial reporting, sales 

practice, recordkeeping, and other requirements); and

Preparing and filing the annual compliance report of Tera.

Rule 208 Conflicts of Interest

(a) A Director, Officer, panel member or other Person authorized to exercise Tera’s 

authority concerning any inquiry, investigation or any disciplinary or appeals
- 20 -

proceeding, summary suspension, or other summary actions (any such action, a 

“SEF Action” and, collectively, “SEF Actions”), or Emergency actions taken 

pursuant to Rule 210 (each such SEF Action or Emergency Action, a “SEF 

Proceeding”) who knowingly has a “material conflict of interest” between his or 

her position as a Director, Officer, panel member or exercise of authority 

concerning any SEF Proceeding and his or her personal interests (each, an 

“Interested Person”) may not participate in any deliberations or vote of the Board,

Committee, or panel or exercise any authority in any SEF Proceeding involving his 

or her personal interest, except as described in Rule 208(d).

(b) For purposes of Rule 208(a), a “material conflict of interest” includes a Director’s, 

Officer’s, or other Person’s:

Being named as a respondent or potential respondent in a SEF Proceeding;

Being an employer, employee, fellow employee or an Affiliate of a respondent 

or potential respondent in a SEF Proceeding;

Having any significant, ongoing business relationship with a respondent or 

potential respondent in a SEF Proceeding;

Having a family relationship with a respondent or potential respondent in a SEF 

Proceeding (including the individual’s spouse, co-habitator, former spouse, 

parent, step-parent, child, step-child, sibling, step-brother, step-sister, 

grandparent, grandchild, uncle, aunt, nephew, niece, father-in-law, mother-inlaw, son-in-law, daughter-in-law, brother-in-law or sister-in-law); and/or

Having a direct and substantial financial interest in the result of the 

deliberations or vote based upon either SEF or non-SEF positions. A direct and 

substantial financial interest includes positions held in Instruments in the 

accounts of, controlled by, or affiliated with the Interested Person or any other 

types of direct and substantial financial positions of the Interested Person that 

are reasonably expected to be affected by the deliberations or vote.

(c) Before considering any SEF Proceeding, an Interested Person must disclose in 

writing to the Board the material facts concerning his or her relationship or interest 

in the matter.

(d) Any Interested Person who would be required otherwise to abstain from 

deliberations and voting pursuant to Rule 208(a) as a result of having a direct and 

substantial financial interest in the result of the deliberations and vote may 

participate in deliberations, prior to a vote on the matter, if:

The material facts about the Interested Person’s financial interest in the matter 

are disclosed or known to the Board;

The Board determines that the participation by the Interested Person would be 

consistent with the public interest; and
- 21 -

A majority of the Directors (excluding any Interested Persons) vote to allow the 

Interested Person to participate in deliberations on the matter.

(e) If a determination is made pursuant to Rule 208(d) that an Interested Person may 

participate in deliberations prior to a vote, then the minutes of the meeting of the 

Board or committee thereof will reflect the determination and the reasons for the 

determination.

(f) If a determination is made pursuant to Rule 208(a) that all Directors are Interested 

Persons with respect to a matter subject to a vote by the Board, the President will 

appoint a panel of individuals who are not Interested Persons with respect to such 

matter, which will have the same authority and powers over such matter that the 

Board would have if the Directors were not Interested Persons with respect to such 

matter.

(g) No Director, Officer or member of any committee or panel established by the Board 

shall use or disclose for any purpose other than the performance of his or her official 

duties and responsibilities as a Director, Officer or committee or panel member any 

material, non-public information obtained as a result of the individual’s duties and 

responsibilities as a Director, Officer or committee or panel member. No Director, 

Officer or committee or panel member shall, directly or indirectly, disclose or use 

at any time, either during his or her association with Tera or thereafter, any 

confidential information of which the Board member or committee or panel 

member becomes aware. Each Director, Officer or committee or panel member in 

possession of confidential information shall take all appropriate steps to safeguard 

the information and to protect it against disclosure, misuse, espionage, loss and 

theft.

(h) Notwithstanding Rule 208(g), a Director, Officer or committee or panel member 

may disclose confidential information if required by law or a court order to be 

revealed to the United States Department of Justice or the CFTC.

(i) For the purposes of Rule 208(g), the terms “material information” and “nonpublic 

information” shall each have the meaning set forth in CFTC Regulation 1.59(a).

Rule 209 Material Non-Public Information

(a) No member of the Board or of any Board committee, no member of any other 

committee of the Company, no officer of Tera, no employee of Tera and no 

consultant to Tera shall:

Trade for such person’s own account, or for or on behalf of any other account, 

on the basis of any material, non-public information obtained through the 

performance of such person’s official duties;

Use or disclose, for any purpose other than the performance of such person’s 

official duties, any material, non-public information obtained by such person as 

a result of such person’s official duties, provided, however, that this Section 
- 22 -

shall not prohibit disclosures made by such person in the course of his or her 

official duties or disclosures made to the CFTC, any self-regulatory 

organization, a court of competent jurisdiction or any agency or department of 

the federal or state government; or

Trade, directly or indirectly, in any Instrument traded on Tera; in any related 

commodity interest; or in any commodity interest traded on any DCM or SEF 

or cleared by any Clearing House if such person has access to material nonpublic information concerning such Instrument or commodity interest.

Rule 210 Emergency Rules

(a) During an Emergency, the Board may implement temporary emergency procedures 

and rules (“Emergency Rules”), subject to the applicable provisions of the CEA 

and CFTC Regulations. Emergency Rules may require or authorize Tera, the Board, 

any committee of the Board, the President, or any other Officer to take any actions 

necessary or appropriate to respond to the Emergency, including, but not limited 

to, the following actions:

Imposing or modifying position limits;

Imposing or modifying price limits;

Imposing or modifying intraday market restrictions;

Ordering the liquidation or transfer of open positions in any contract;

Ordering the fixing of a settlement price;

Extending or shortening the expiration date or the trading hours;

Suspending or curtailing trading in any contract;

Transferring Participant contracts;

Altering any contract’s settlement terms or conditions; or

Providing for the carrying out of such actions through its agreements with its 

third-party provider of clearing or regulatory services.

(b) Before any Emergency Rule may be adopted and enforced, a required vote of the 

Board must approve the implementation of such Emergency Rule at a duly 

convened meeting. Directors may attend such a meeting by teleconference. If the 

President determines that Emergency Rules must be implemented with respect to 

an Emergency before a meeting of the Board can reasonably be convened, then the 

President shall have the authority, without Board action, to implement any 

Emergency Rules with respect to such Emergency that he or she deems necessary 

or appropriate to respond to such Emergency. In such circumstances, the President 
- 23 -

must convene a meeting of the Board as soon as practicable thereafter. 

Notwithstanding that the Board does not ratify or approve extending or making 

permanent any Emergency Rules implemented by the President pending convening 

of the Board meeting, all actions previously taken in accordance with such 

Emergency Rules shall remain binding and valid.

(c) Whenever Tera, the Board, any committee of the Board, or the President takes 

actions necessary or appropriate to respond to an Emergency (including, without 

limitation, the actions set forth in paragraph (a) above), a duly authorized 

representative of Tera will, as soon as practicable, ensure that an announcement is 

posted in a Notice to Participants. When the Board, any committee of the Board or 

the President determines that the Emergency is no longer in effect, permitting Tera 

to resume normal functioning, any such actions responding to an Emergency will 

be terminated.

(d) Tera will use reasonable efforts to notify the CFTC prior to implementing, 

modifying or terminating an Emergency Rule. If such prior notification is not 

possible or practicable, Tera will notify the CFTC as soon as possible or reasonably 

practicable, but in all circumstances within twenty-four (24) hours of the 

implementation, modification or termination of such Emergency Rule.

(e) Upon taking any action in response to an Emergency, Tera will document the 

decision-making process related to such action. Such documentation will be kept 

for at least five years following the date on which the Emergency ceases to exist or 

to affect Tera, and all such documentation will be provided to the CFTC upon 

request.

Rule 211 Maintenance of Books and Records

(a) TeraExchange shall keep, or cause to be kept, full, complete and systematic books 

and records, together with all pertinent data and memoranda, of all activities 

relating to the business of TeraExchange with respect to swaps, as prescribed by 

the CFTC, including, without limitation, timestamps required to be maintained 

under CFTC Regulation 43.3, complete audit trails for all Transactions on or 

otherwise subject to its Rules, investigatory files, disciplinary files, and all records 

required by CFTC Regulation Part 37, as required by CFTC Regulation 45.2.

Records kept pursuant to this Rule may be kept in electronic form, or kept in paper 

form if originally created and exclusively maintained in paper form, so long as they 

are retrievable and the information in them is reportable, as required by CFTC 

Regulation 45.2.

(b) TeraExchange shall retain all such books and records described in Rule 211(a) and

required by CFTC Regulation 45.2 or any other section of the CEA for at least five 

(5) years following the final termination of a Transaction. Records relating to 

Transactions shall be readily accessible via real time electronic access by Tera 

throughout the life of the Transaction and for two (2) years following its final 

termination, and shall be retrievable by Tera within three (3) business days through 
- 24 -

the remainder of the period following final termination of the Transaction during 

which it is required to be kept, pursuant to CFTC Regulation 45.2(e)(1).

(c) All books and records kept pursuant to this Rule, including audit trail data and 

reconstructions, shall be made available to the CFTC in a form and manner that is 

acceptable to the CFTC, and shall be open to inspection and examination upon 

request by any representative of the CFTC, the Department of Justice, The 

Securities and Exchange Commission, and any other prudential regulator as 

authorized by the CFTC. Copies of all such records shall be provided, at the 

expense of Tera, to any representative upon request, by electronic means, hard 

copy, or both, as requested by the CFTC, except that copies of records originally 

created and exclusively maintained in paper form may be provided in hard copy 

only.

Rule 212 Information-Sharing Agreements

a) Tera will enter into information-sharing agreements or other arrangements or 

procedures necessary to establish and enforce rules that will allow Tera to obtain 

any necessary information to perform any monitoring of activity on TeraExchange

and which allow Tera to carry out such international information-sharing 

agreements as the CFTC may require.

b) Tera will provide any information in its possession to the CFTC, in a form and 

manner of its approval, upon proper request.

c) Tera will enter into information-sharing agreements, and share information with,

other regulatory organizations, data repositories, and third-party data reporting 

services as required by the CFTC or as otherwise necessary and appropriate to 

fulfill its self-regulatory and reporting responsibilities.

Rule 213 [Reserved]

Rule 214 Prohibited Use of Data Collected for Regulatory Purposes

Tera shall not use for business or marketing purposes any Proprietary Data that Tera 

collects or receives, from or on behalf of any Person, for the purpose of fulfilling its 

regulatory obligations; provided, however, that Tera may use such Proprietary Data for 

business or marketing purposes if the Person from whom it collects or receives such 

Proprietary Data clearly consents to Tera’s use of such Proprietary Data in such manner. 

Tera shall not condition access to its markets or market services on a Person’s consent to 

Tera’s use of Proprietary Data for business or marketing purposes. Where necessary for 

regulatory purposes, Tera may share such Proprietary Data with the CFTC or one or more 

SEFs, DCMs or DCOs registered with the CFTC pursuant to Rule 211.
- 25 -

CHAPTER 3 PARTICIPANTS

Rule 301 Eligibility Criteria for Becoming a Participant

(a) To be eligible for admission as a Participant, an applicant must demonstrate to the 

satisfaction of Tera that it:

Is an ECP;

Is of good reputation and business integrity;

Maintains adequate financial resources and credit, and has adequate capacity to 

meet its financial obligations;

Is validly organized, in good standing, and authorized by its governing body 

and, if relevant, documents of organization, to trade financial products of a type 

consistent with Instruments;

Has not filed for bankruptcy;

Is not a SEF Official, agent or Affiliate of Tera;

Holds all registrations required under Applicable Law, if any;

Is not subject to statutory disqualification under Section 8a(2) of the CEA; 

Is not an ISV or automated trading system; and

Satisfies any other criteria that Tera may reasonably require from a Participant.

(b) Each Executing Firm that is acting as agent for an Account Holder or Customer 

must provide Tera with all information necessary for Tera to establish Accounts for 

such Account Holder or Customer and provide Tera with written representations or 

proof of authority to place Orders and execute Trades on Tera on behalf of or in the 

name of such Account Holder or Customer and verify the status of such Account 

Holder or Customer as an ECP.

(c) Once admitted, the Participant, Account Holder or Customer shall continue to 

comply with all applicable eligibility criteria in this Rule 301.

(d) Each Account Holder must be either a Clearing Firm of a Clearing House where 

the Clearable Instruments are cleared or have a clearing account with a Clearing 

Firm with respect to such Clearable Instrument and, through its Executing Firm, 

provide Tera with evidence of such relationship.

(e) Each Executing Firm that is acting as agent for an Account Holder must ensure that 

each such Account Holder has established a clearing account with a Clearing Firm 

of the Clearing House accepting for clearance the Clearable Instruments traded on 

Tera.
- 26 -

(f) Participants that do not have a relationship with a Clearing Firm as set forth in 

subsection (d) or (e) of this Rule 301 are prohibited from entering Orders on Tera.

(g) Upon request of Tera, each Participant shall promptly provide to Tera such 

information about its Authorized Traders as Tera requests, including but not limited 

to, the names and dates of birth of such Authorized Traders.

Rule 302 Authorized Traders

(a) Each Participant shall designate one or more Authorized Traders, who will be 

responsible for all SEF Activity conducted on behalf of the Participant.

(b) Each Authorized Trader of a Participant:

Must be a natural person;

Must satisfy any other requirements as may be prescribed by Tera from time to 

time.

Must have a Trader ID.

(c) A Participant that authorizes a third party to trade for its Account on a discretionary 

basis pursuant to a power of attorney or other written delegation of authority is 

considered controlled by the third party to whom trading authority has been 

assigned. Each Participant must identify at least one specific natural person as its 

Authorized Trader with respect to such Account.

(d) Without limiting the foregoing, each Authorized Trader will consent, in a form 

satisfactory to Tera, to abide by the Tera Rules and Applicable Law prior to 

accessing Tera, and each Participant will ensure on an ongoing basis that:

None of its Authorized Traders is subject to a disqualification pursuant to any 

Applicable Law (unless an appropriate exemption has been obtained with 

respect thereto);

Each of its Authorized Traders will be technically proficient in using Tera’s

facility; and

Each of its Authorized Traders will conduct its business in accordance with the 

Tera Rules.

(e) By agreeing to become an Authorized Trader, an individual agrees to be bound by 

the duties and responsibilities of an Authorized Trader and to be subject to, and 

comply with, the Tera Rules and Obligations. Among other duties and 

responsibilities that Tera may impose, an Authorized Trader must ensure that any 

SEF Activity conducted under any Trader ID assigned to him or her complies with 

all Tera Rules and Obligations.
- 27 -

(f) To nominate an Authorized Trader, a Participant must follow the procedures 

established by Tera. Tera may establish criteria that individuals must fulfill to 

become an Authorized Trader. Tera will not accept the registration as an Authorized 

Trader of any individual who is a SEF Official.

(g) Tera will promptly notify a Participant in Writing of the approval of nominated 

Authorized Traders or if Tera declines to approve the nomination.

(h) Tera may, in its sole discretion revoke or suspend the designation of an Authorized 

Trader and shall promptly notify the Participant in Writing of such action. Upon 

such notification Tera will disable access of such Authorized Trader to Tera.

(i) To request the termination of the designation of an Authorized Trader, the 

Participant or the Authorized Trader must notify Tera following the procedures 

established by Tera. Tera, in its sole discretion, may postpone the effective time 

and date of the termination of the Authorized Trader if Tera considers it necessary 

to avoid any adverse impact on the market and/or other Participants, for the 

protection of other Participants or in Tera’s best interest. Based on the information 

provided to, and other information gathered by, Tera regarding the request to 

terminate the designation of an Authorized Trader, Tera will determine whether to:

Accept the request to terminate the designation;

Postpone the effective date of termination of the designation; and/or

Impose any terms or conditions before or after the effective date of termination 

of the designation.

Rule 303 Participant Application Process

(a) Any Person who desires to become a Participant shall:

Submit a signed EULA;

Agree in Writing to abide by the Tera Rules and Applicable Law;

Provide such information and documentation as Tera may, acting in good faith,

reasonably request; and

Follow any other procedure established by Tera.

(b) Additionally, any Participant organized or located outside of the United States may 

appoint a third party as agent for service of process pursuant to CFTC Regulation 

15.05.

(c) In considering an application from a potential Participant, Tera may require 

additional information from the applicant, or conduct an investigation to verify 

information submitted by the applicant, or both.
- 28 -

(d) If Tera decides to admit an applicant as a Participant, it shall promptly notify the 

applicant and state in such notice the date on which the applicant shall become a 

Participant.

(e) Tera may deny, condition, or terminate Participant status of any Person if:

Such Person is unable to satisfactorily demonstrate its ability to satisfy the 

Eligibility Criteria as set forth in Rule 301(a) to become or remain a Participant;

or

Such Person is unable to satisfactorily demonstrate its capacity to adhere to all 

applicable Tera Rules.

(f) If Tera decides to decline or condition an application for admission as a Participant, 

or terminate a Person’s status as a Participant, Tera shall promptly notify such 

Person (the “Affected Person”) thereof in a Writing sent to the address provided by 

the applicant or maintained in the Tera registry of Participants. Such Affected 

Person may, within seven (7) calendar days, request in Writing that Tera provide 

the reasons for the denial, conditioning or termination of Participant status. Within 

fourteen (14) calendar days after receiving such Written request, Tera shall send in 

Writing to the Affected Person the reasons for the denial, conditioning or 

termination. Within fourteen (14) calendar days of receiving Tera’s written 

response, the Affected Person may request in Writing that Tera reconsider its 

determination, and may provide any relevant representations or other information 

that such Affected Person believes to be relevant to the reconsideration.

Rule 304 Limitations on Trading Privileges

Tera may at any time revoke, suspend, limit, condition, restrict or qualify the Trading 

Privileges of any Participant with or without notice to such Participant if, in the sole 

discretion of Tera, such action is in the commercially reasonable interest of Tera.

Rule 305 Assessments and Fees

Tera shall set the times and amounts of any assessments or fees to be paid by Participants, 

which assessments or fees shall be paid to Tera when due. Such fees and assessments shall 

be applied consistently to Participants with similar Trading Privileges, rights, and 

Obligations under relevant documentation, governing their relationship with and access to 

Tera. If a Participant fails to pay when due any such assessments or fees levied on such 

Participant, and such payment obligation remains unsatisfied for sixty (60) days after its 

due date, Tera may suspend, revoke, limit, condition, restrict or qualify the Trading 

Privileges of such Participant as it deems necessary or appropriate.

Rule 306 Authorized Representatives

Each Participant shall designate one or more Authorized Representatives who will 

represent the Participant before Tera and its committees and receive notices on behalf of 

the Participant. The Authorized Representative shall be empowered by the Participant to 
- 29 -

act on its behalf and Tera shall be entitled to rely on the actions of the Authorized 

Representative as binding on the Participant. Each Participant must provide Tera with 

current contact and other requested information for each of its Authorized Representatives 

so that Tera is able to immediately contact the Authorized Representatives.

Rule 307 Recording of Communications

Tera and the Participants may record conversations and retain copies of electronic 

communications between SEF Officials, on the one hand, and Participants, on the other 

hand. Any such recordings may be retained by Tera or the Participant in such manner and 

for such periods of time as such parties may deem necessary or appropriate and as 

necessary to comply with any applicable CFTC Regulations.

Rule 308 Notices to Participants

Tera shall publish a Notice to Participants with respect to each addition to, modification 

of, or clarification of, the Tera Rules or of any action to implement any Tera Rules, in a 

form and manner that is reasonably designed to enable each Participant to become aware 

of and familiar with, and to implement any necessary preparatory measures to be taken by 

it with respect to, such addition or modification, prior to the effective date thereof. For 

purposes of publication in accordance with the first sentence of this Rule 308, it shall be 

sufficient (without limiting the discretion of Tera as to any other reasonable means of 

communication) if a Notice to Participants is published on Tera’s website. Any Notice to 

Participants shall also be deemed to have been made to all Authorized Traders, agents, 

advisors, managers and Supervised Persons of such Participants. The effective date shall 

be stated in the Notice itself, and if none is stated, will be a reasonable period of time under 

the circumstances. 

Rule 309 Communications between Tera and Participants

Each Participant shall advise Tera of its current phone number, fax number and e-mail address.

All communications between Tera and the Participant will be transmitted by electronic 

mail and/or posted on Tera’s website, except as otherwise specified by Tera. All 

communications made to a Participant shall also be deemed to have been made to all 

Account Holders, Authorized Traders and Supervised Persons, and agents of such 

Participant. Communications that are specific to an Order or Trade will be directed to the 

Participant, Account Holder, Authorized Trader or Supervised Person that initiated such 

Order or Transaction.

Rule 310 Application of Tera Rules and Jurisdiction

(a) By becoming a Participant, accessing the Tera System, or entering any Order or 

submitting any Instrument into the Tera System, whether directly or through an 

intermediary, and without any need for any further action, undertaking or 

agreement, a Participant, its Clearing Firm, Authorized Traders and Supervised 

Persons, and any Account Holder or Customer of any Participant, and any ISV 

agrees to:
- 30 -

Be bound by, and comply with, the Tera Rules and obligations, Instrument 

Specifications and Applicable Law, in each case to the extent applicable to it;

Become subject to the jurisdiction of Tera with respect to any and all matters 

arising from, related to, or in connection with, the status, actions or omissions 

of such Person; 

Assist Tera in complying with its legal and regulatory obligations;

Cooperate with Tera, its agents, and the CFTC in any inquiry, investigation, 

audit, examination or proceeding; and

Authorize Tera to provide information regarding such Participant, its Account 

Holders, Authorized Traders, Supervised Persons, and any Participants acting 

as agents to the CFTC or any Self-Regulatory Organization.

(b) By accessing Tera through an Executing Firm that has not provided the Account 

Holder with electronic access to the Tera System, an Account Holder agrees to 

assist Tera in complying with its legal and regulatory obligations, and thereby 

agrees without any further action, undertaking or agreement, to cooperate with Tera

and its agents in any inquiry, investigation, audit, examination or proceeding

relating to Transactions entered on Tera on its behalf; 

(c) Any Person whose Trading Privileges are revoked or terminated shall remain bound 

by the Tera Rules and Applicable Law, in each case to the extent applicable to it, 

and subject to the jurisdiction of Tera with respect to any and all matters arising 

from, related to, or in connection with, the status, actions or omissions of such 

Participant prior to such revocation or termination;

(d) Any Person that is suspended for any period remains subject to the Tera Rules, the 

Obligations and Tera’s jurisdiction throughout the period of suspension. After 

termination or revocation of the designation of a Participant, the Participant remains 

subject to the Tera Rules, the Obligations and the jurisdiction of Tera for acts done 

and omissions made while registered or acting as a Participant. Any SEF 

Proceeding relating to a Participant shall occur as if the Participant were still 

registered or acting as such;

(e) Any Person initiating or executing a transaction on or subject to the rules of Tera 

directly or through an intermediary, and any person for whose benefit such a 

transaction has been initiated or executed, and without any need for any further 

action, undertaking or agreement, consents to the jurisdiction of Tera.

Rule 311 Compliance with the Commodity Exchange Act

All Participants shall comply with the provisions of the CEA and the rules and regulations 

duly issued pursuant thereto by the CFTC, including but not limited to the filing of reports, 

maintenance of books and records, and permitting inspection and visitation by duly 

authorized representatives of the CFTC or Department of Justice.
- 31 -

Rule 312 Description of Participants’ Status

A Participant shall ensure that the form, content and context of any description of the 

Participant’s status on Tera is not inconsistent with, and does not misrepresent, the 

Participant’s capacity on Tera under the Tera Rules or the Participant’s registration, if any, 

under the CEA, or under any other Applicable Law.

Rule 313 Designated Categories of Participants

(a) Floor Broker means a Participant who executes Transactions for another Participant 

and has registered with the CFTC as a Floor Broker.

(b) Floor Trader means a Participant that executes Transactions for its own Account 

and has registered with the CFTC as a Floor Trader.

(c) Market Maker means a Participant who, pursuant to a market making agreement 

with Tera, agrees to abide by the conditions of its market making agreement on 

Tera.

Rule 314 Termination of Participants

Upon its termination as a Participant, all rights and privileges of the Participant shall 

immediately cease. Following termination, all obligations of a Participant and Tera shall 

survive and the terminated Participant shall remain bound by the Tera Rules and Applicable 

Law, in each case to the extent applicable to it, and subject to the jurisdiction of Tera with 

respect to any and all matters arising from, related to, on in connection with, the status, 

actions or omissions of such Participant prior to its termination.

Rule 315 Withdrawal of Participants

(a) To withdraw from Tera, a Participant must notify Tera following the procedures 

established by Tera. Such withdrawal shall generally be accepted and effective 

immediately upon receipt of such notice by Tera.

(b) Tera may, in its reasonable discretion, postpone the effective date of withdrawal of 

a Participant if Tera considers it necessary for the protection of other Participants 

or otherwise in the interests of Tera. In no event, however, shall the effective date 

of such withdrawal be later than the start of trading on the next Business Day. 

(c) When Tera accepts the withdrawal of a Participant, all rights and privileges of such 

Participant terminate (including, without limitation, the Trading Privileges). The 

accepted withdrawal of a Participant shall not affect the rights of Tera under the 

Tera Rules or relieve the former Participant of such Participant’s obligations under 

the Tera Rules before such withdrawal. Notwithstanding the accepted withdrawal 

of a Participant, the withdrawn Participant remains subject to the Tera Rules, the 

Obligations and the jurisdiction of Tera for acts done and omissions made while a 

Participant, and must cooperate in any SEF Proceeding under Chapter 6 as if the 

withdrawn Participant were still a Participant.
- 32 -

Rule 316 Access

(a) ECP Access: Tera shall provide impartial access to its markets and services, 

including indicative quotes or similar pricing data, to any ECP meeting the 

Eligibility Criteria set forth in Rule 301(a), provided that such Eligibility Criteria 

governing such access is applied in an impartial, transparent, fair and nondiscriminatory manner and that each ECP has first consented to Tera’s jurisdiction 

and Rules and complied with all documentation requirements prior to being granted 

access.

(b) ISV Access: Tera will provide ISVs with impartial and transparent access 

to its trading platform and its data in a fair and non-discriminatory manner. 

A Person seeking to act as an ISV may apply to connect to the Tera System, 

and shall be permitted to do so by Tera, provided that the ISV meets the 

following criteria initially and on an on-going basis:

the ISV applies for connection on a form prescribed by Tera and provides such 

supporting documentation as required by Tera;

the ISV satisfies the definition of Eligible Contract Participant and ensures that 

each Person that uses the ISV to access TeraExchange is either a Participant or 

an Account Holder or Customer of a Participant authorized as such in 

accordance with the Tera Rules;

the ISV shall be duly organized, existing and in good standing under the laws 

of its jurisdiction of organization and, if required to be registered in any capacity 

under Applicable Law, it has duly registered in such capacity and such 

registration is in effect;

the ISV satisfies Tera’s technological integrity requirements, including system 

compatibility requirements, security protocols and technical specifications for 

connection to the Tera System as may be specified by Tera from time to time;

and,

connecting the ISV does not and will not adversely affect Tera’s ability to 

comply with CEA and CFTC Regulations.

CHAPTER 4 OBLIGATIONS OF PARTICIPANTS

Rule 401 Information to be Provided by Participants

(a) Each Participant, including a Participant that is an Executing Firm, and any 

Authorized Trader or Account Holder or Customer of a Participant, shall provide 

such information as may be reasonably requested by Tera from time to time, 

including but not limited to, such information as may be requested during the 

Participant onboarding process about the Participant, its Authorized Traders, and 

where applicable, its Account Holders or Customers. Tera shall obtain information 

including, but not be limited to, the following:
- 33 -

Legal Entity name;

Legal Entity Identifier, if available;

An indication of whether the Participant or Account Holder is a Swap Dealer;

An indication of whether the Participant or Account Holder is a Major Swap 

Participant with respect to the Instrument with respect to which the Order is 

placed;

An indication of whether the Participant or Account Holder is a Financial 

Entity;

An indication of whether the Participant or Account Holder is a U.S. person;

If Participant or Account Holder is not a U.S. person, the name and contact 

information for an agent for service of process; and

For individuals identified as Authorized Traders, name, date of birth, and 

regulatory registration number, if applicable.

(b) Each Participant and Authorized Trader, and any Account Holder or Customer of a 

Participant, must keep complete and accurate books and records, including records 

of its trading activity on Tera, activity in the commodity underlying any Instrument, 

activity in the index or instrument used as a reference price for any Transaction,

and activity in related markets, in such form and manner and for such period as 

required by CFTC Regulations and Applicable Law, and must make its books and 

records available, upon request, to TeraExchange, its agents, and the CFTC.

Rule 402 Duties and Responsibilities of Participants

Each Participant, acting on behalf of itself and as agent for any other Participants or 

Account Holder, shall

(a) Ensure that Tera’s facilities are used in a responsible manner and are not used for 

any improper purpose;

(b) Ensure that Tera’s facilities are used to only conduct SEF Activity;

(c) Ensure that all SEF Activity conducted by the Participant, its agents, Authorized 

Traders and Supervised Persons is performed in a manner consistent with the Tera 

Rules and their respective Obligations;

(d) Comply with all Tera Rules and Obligations and act in a manner consistent with 

each Tera Rule and Obligation;

(e) Observe high standards of integrity, market conduct, commercial honor, fair 

dealing, and just and equitable principles of trade while conducting or attempting 
- 34 -

to conduct any SEF Activity, or any aspect of any business connected with or 

concerning Tera;

(f) Not knowingly mislead or conceal any material fact or matter in any dealings or 

filings with Tera or in response to any SEF Proceeding;

(g) Keep all Authorized Trader’s Trader IDs, account numbers and passwords 

confidential;

(h) Be fully liable for all trading losses, Orders and Transactions in Instruments 

effected by Participant or for Participant’s Account;

(i) Be responsible for promptly informing Tera of any material changes to Eligibility 

Criteria information provided to Tera by the Participant; and

(j) Keep, or cause to be kept, complete and accurate books and records, including, 

without limitation, all books and records required to be maintained pursuant to the 

CEA, the CFTC Regulations or the Tera Rules, for at least five (5) years after the 

termination of the Instrument and required to be readily accessible during the first 

two (2) years of the five-year period, and make such books and records available 

for inspection upon request by any representative of Tera, the CFTC or other 

relevant regulatory or governmental body.

Rule 403 Representations and Required Disclosures to Tera

At the time of each use of Tera, each Participant shall be deemed to represent to Tera that 

it is an ECP, and that none of the events listed below has occurred with respect to 

Participant, and each Participant shall immediately notify the Compliance Department 

upon becoming aware that any of the following events has occurred:

(a) Any material change to the contact information provided to Tera by the Participant;

(b) Any damage to, or failure or inadequacy of, the systems, facilities or equipment of 

the Participant needed to effect Transactions pursuant to the Tera Rules or to timely 

perform the Participant’s financial obligations under or in connection with 

Instruments;

(c) Any refusal of admission of the Participant for membership in any Self-Regulatory 

Organization, SEF, DCM, or DCO;

(d) Any expulsion, suspension or fine in excess of $50,000 (whether through an 

adverse determination, voluntary settlement or otherwise) imposed on the 

Participant by any Self-Regulatory Organization, SEF, DCM, DCO or relevant 

regulatory or governmental body;

(e) Any revocation, suspension or conditioning of any registration or license of a 

Participant necessary to conduct SEF Activity granted by any Governmental 

Agency;
- 35 -

(f) The commencement of any judicial, administrative, or regulatory proceeding or 

investigation involving the Participant, or the imposition of any fine, cease and 

desist order, denial of trading privileges, censure or other sanction or remedy 

(whether through an adverse determination, voluntary settlement or otherwise) 

imposed by any relevant regulatory or governmental body;

(g) Any indictment or conviction of, or any confession of guilt or plea of guilty or nolo 

contendere by any principals or senior officers of the Participant or Supervised 

Persons for any felony or misdemeanor involving, arising from, or related to, the 

purchase or sale of any commodity, futures contract, Instrument, option, security, 

securities futures product or other financial instrument, or involving or arising from 

fraud or moral turpitude;

(h) The existence of any circumstances that would disqualify the Participant from 

registration with the CFTC;

(i) The Participant or a 10% or greater owner of the Participant becoming the subject 

of a petition for bankruptcy;

(j) The appointment of a receiver, trustee or administrator for the Participant or a 10% 

or greater owner of the Participant;

(k) The presentment of a petition, or the passing of a resolution, for the Participant’s 

or a 10% or greater owner of the Participant winding-up;

(l) The commencement of proceedings for the Participant’s or the 10% or greater 

owner of the Participant dissolution; or

(m) The occurrence of an event of insolvency with respect to the Participant or the 10% 

or greater owner of the Participant.

Rule 404 Inspections by Tera

(a) Tera shall have the right with such prior reasonable advance notice as is practicable 

under the circumstances, in connection with determining whether all Tera Rules 

and Obligations are being, will be, or have been complied with by the Participant, 

along with its Clearing Firm, Authorized Traders, Supervised Persons, any Account 

Holder or Customer of a Participant, and any other Person using the Trader ID or 

login credentials linked to the Participant, to:

Inspect systems, equipment and software of any kind operated by the 

Participant in connection with SEF Activity, wherever located; and

Access, either physically or electronically, the systems, equipment, software, 

and the premises on which the systems, equipment, and software are located, 

any data stored in any of the systems or equipment, during the regular business 

hours and the Trading Hours of Tera; and/or
- 36 -

Copy or reproduce any data to which Tera has access under this Rule.

(b) Each Participant, along with its Clearing Firm, Authorized Traders, Supervised 

Persons, any Account Holder or Customer of a Participant, and any other Person 

using the Trader ID or login credentials linked to the Participant shall provide any 

outsourced provider of regulatory services contracted by Tera with the same access 

to their books and records and offices as they are required to provide to Tera under 

the Tera Rules and Applicable Law.

(c) The Compliance Department may require a Participant, Account Holder or 

Customer of a Participant, or Authorized Trader to furnish (periodically or on a 

particular occasion) information concerning such Person’s activity on Tera or open 

trading positions, Instruments to which such Person is a party, or any other 

information related to the Person’s SEF Activity.

Rule 405 Pre-Execution Credit Checks

(a) Cleared Transactions.

At the time of submitting an Order for any Clearable Instrument, whether for 

itself or for an Account Holder or Customer, each Participant shall specify, in 

advance, on an order by order basis, the applicable Clearing Firm for the 

intended Transaction, which may be the relevant party to the Transaction if such 

party is self-clearing, or a designated Clearing Firm if the relevant party is nonself-clearing.

Prior to the execution of an Order for any Clearable Instrument by a Participant, 

or Account Holder or Customer of a Participant, that is non-self-clearing, Tera 

will facilitate pre-execution credit screening by or on behalf of the designated 

Clearing Firm to ensure all Orders for cleared Transactions entered on or 

pursuant to the Tera Rules, by it or on its behalf, meet the risk-based limits 

established by such Clearing Firm, in accordance with CFTC Regulation 1.73, 

for its Accounts. No Order will be exposed to the market for execution prior to 

an affirmative determination, on an order by order basis, that the Order 

successfully meets the risk-based limits established by the applicable Clearing 

Firm for the Participant’s Account. If an Order fails to satisfy the risk-based 

limits established by the Clearing Firm, it will be rejected.

Each Participant that is self-clearing with respect to an intended Transaction is 

deemed to represent, by submitting an Order for its Account or, in the case of 

an Account Holder or Customer, causing its Executing Firm to do so, that it has 

completed pre-execution credit screening of its internal clearing risk limits for 

proprietary Accounts.

A Participant shall not enter cleared Orders for an Account greater than the 

levels set by the applicable Clearing Firm(s) for such Account(s). 
- 37 -

Tera reserves the right to suspend or terminate any Participant’s access to Tera 

at any time in the event that Participant or its Clearing Firm fails to establish 

reasonably prudent risk parameters for its Orders in such credit check system, 

as determined by Tera in its sole discretion.

(b) Uncleared Transactions.

The use of a pre-trade risk/credit filter for Orders for uncleared Transactions 

shall depend on the Instrument’s terms and conditions and the mutual 

agreement of the Transaction’s counterparties. 

Rule 406 Minimum Financial and Related Reporting Requirements

Each Participant that is registered with any Self-Regulatory Organization shall comply with 

the provisions of Applicable Law relating to minimum financial and related reporting and 

recordkeeping requirements. Such Participant shall provide to Tera at the time that it files 

with the CFTC a copy of any notice or Written report that Participant is required to file 

with the CFTC pursuant to CFTC Regulation 1.12. Additionally, a Participant, whether or 

not subject to such filing requirements, shall provide Tera with such financial information 

as Tera may reasonably require from time to time. Each Participant must notify Tera 

immediately when it or an Account Holder or Customer of the Participant ceases to be an 

ECP, and if the Participant is registered with the CFTC as a futures commission merchant, 

when it ceases to satisfy the minimum financial requirements set forth in Regulation 1.17. 

A Participant that violates the aforementioned CFTC Regulations shall be deemed to have 

violated this Rule 406 and shall not affect Transactions on TeraExchange except for 

purposes of closing open positions to the extent not prohibited by Applicable Law.

Rule 407 Confidentiality of Financial and Other Information

All information and data obtained or received by the Compliance Department from 

inspections of accounting and other records, quarterly balance sheets and declarations or 

reports on financial condition will be treated as confidential by Tera; however, this Rule does 

not supplant Rule 210 (Emergency Rules) and the Rules in Chapter 8 (Disciplinary Rules), or 

any other requirement of legal process or law.

Rule 408 Authority to Impose Restrictions

Whenever a Participant is subject to the early warning requirements set forth in the CFTC 

Regulations, including, but not limited to, CFTC Regulation 1.12, the President, or his or 

her designee, may impose such conditions or restrictions on the business and operations of 

such Participant as the President, or his or her designee, may deem necessary or appropriate 

for the protection of Participants, their Account Holders or Tera.

Rule 409 Participants or Executing Firms Accessing Tera on Behalf Others

(a) A Participant shall not enter an Order or otherwise access Tera on behalf of a 

legally distinct Customer or Account Holder unless:
- 38 -

The Participant has prior written instruction or authority from the Customer or 

Account Holders to do so;

The Customer or Account Holder has represented to the Participant that it is an 

ECP; and

The Participant will be able to comply with Tera Rules.

(b) An Executing Firm may not enter Orders into the Tera System on behalf of a 

Participant or a legally distinct Customer or Account Holder, arrange Block Trades 

pursuant to Rule 514 or report Arranged Transactions pursuant to Rule 531 unless:

The Executing Firm has prior written instruction or authority from the 

Participant, Customer or Account Holder to do so;

The Participant, Customer or Account Holder has represented that it is an ECP;

and

The Executing Firm will be able to comply with Tera Rules.

(c) If an Executing Firm provides access to the Tera System electronically either 

directly through the Tera System itself or indirectly through the Executing Firm’s 

proprietary trading system, the Executing Firm shall inform and obtain 

acknowledgement from the Participant, Customer or Account Holder of its 

agreement to be bound by the Tera Rules.

Rule 410 Verification of ECP Status

At least once per year, each Participant, and any Participant that is acting on behalf of a 

legally distinct Customer or Account Holder, must verify in a written certification to 

TeraExchange the continued status of such Participant, Customer or Account Holder as an 

ECP.

Rule 411 Disclosure Requirements

Each Participant must comply with all disclosure requirements set forth in applicable 

CFTC Regulations and any additional disclosure requirements imposed by the Tera Rules.

Rule 412 Position Liquidation Upon Default

Upon default of any Trade by a Participant or Account Holder or Customer of a Participant, 

Tera shall have the right to arrange the liquidation of all or some of the positions of such 

Participant or Account Holder or Customer of a Participant, as applicable, opened on or 

pursuant to the Rule of Tera

Rule 413 Responsibility for Mandatory Trading
- 39 -

Each Participant that is a Swap Dealer or Major Swap Participant shall be responsible for 

compliance with the mandatory trading requirement under Section 2(h)(8) of the CEA for 

any Instrument or Transaction subject to such mandatory trading requirement.

CHAPTER 5 TRADING PRACTICES AND BUSINESS CONDUCT

Rule 501 Scope

This Chapter 5 prescribes rules concerning trading practices and business conduct on Tera 

and applies to all Orders, RFQs, indications of interest and Trades in Instruments as defined 

in Chapter 1.

Rule 502 Procedures

(a) With respect to trading on or though Tera or subject to Tera Rules, Tera may adopt, 

without limitation, procedures relating to Transactions in Instruments and trading 

on Tera or subject to Tera Rules, including procedures to:

Disseminate the prices of indications of interest, bids and offers on, and Trades 

in, Instruments;

Record, and account for, Instruments and SEF Activity and regulate

administrative matters affecting Instruments and SEF Activity;

Establish limits on the number and/or size of RFQs, indications of interest or 

Orders that may be submitted by a Participant through Tera or subject to Tera 

Rules;

Establish limits on the aggregate notional amount of Instruments that may be 

held by a Participant;

Establish a limit on the maximum daily price fluctuations for any Instrument 

and provide for any related restriction or suspension of trading in the 

Instrument;

Establish minimum price quoting increments for each Instrument; and

Require a suspended or expelled Participant, or a Participant with restricted 

trading rights, to have Instruments executed for the Participant to reduce or 

eliminate any open position or exposure to future price changes for the 

Participants in any Instrument.

(b) Tera may, in its discretion and at any time, amend any procedures adopted pursuant 

to Rule 502(a), and will publish the amendments in a Notice to Participants or in 

any other manner determined appropriate by Tera.
- 40 -

Rule 503 Business Days and Trading Hours

Except as provided in Rule 210 with respect to Emergencies, Tera shall determine and 

publish a Notice to Participants listing the Business Days and holidays of Tera and the 

Trading Hours for each Instrument.

Rule 504 Supervision

A Participant shall be responsible for establishing, maintaining and administering 

reasonable supervisory procedures to ensure that any Authorized Traders acting on its 

behalf comply with Applicable Law and the Tera Rules, and such Participant may be held 

accountable for the actions of such Authorized Traders acting on its behalf.

Rule 505 Mishandling of Customer Orders

Any Participant that mishandles any Order is responsible for all remedial actions with 

respect to such Order. 

Rule 506 Trading on the Order Book

Trading on the Order Book will remain available during Business Days and Trading Hours. 

Participants may transmit anonymously displayed Orders to the Order Book for cleared 

and uncleared Instruments electronically on the Tera System or with the assistance of 

authorized Tera personnel. Orders for un-cleared instruments are anonymously displayed 

to all market participants that have signed the TeraExchange EULA, inclusive of the 

addendum that provides a universal ISDA agreement which establishes an acceptable 

bilateral credit agreement between all Participants that have agreed to the same. At the end 

of the Trading Hours for an Instrument, all unfilled bids and offers are cancelled.

Rule 507 Price-Time Priority in Order Book

Unless otherwise stated in a Notice to Participants, all Orders entered into the Tera System 

shall be executed based on a price-time priority model (first in – first out method). Under 

the price time priority model, an anonymously displayed bid (offer) Order will be matched 

with the earliest offer (bid) Order to arrive in the Order Book at the best price. If there are 

multiple bid and offer Orders that have the same price, the earliest to arrive in the Order 

Book will be the offer (bid) Order to which the bid (offer) Order is matched. 

Rule 508 Electronic and Voice-Assisted Order Entry

(a) Electronic Order Entry. Each Participant entering an Order electronically with 

respect to any Instrument traded on Tera must provide, without limitation:

Participant or Authorized Trader identification;

Trading Account details;

Instrument description, including expiration date;
- 41 -

Price;

Quantity or notional amount;

Order type; and

CTI codes.

(b) All Orders in connection with Required Transactions or Permitted Transactions 

shall be entered into the Order Book or Request for Quote via the Tera System or 

other such Tera approved application interface.

(c) Voice-Assisted Order Entry. 

Participants may contact authorized Tera personnel for assistance in entering, 

modifying or removing Orders into the Order Book. Requests for assistance 

may be made on such telephone lines, electronic mail or instant messaging 

channels as Tera shall specify from time to time. 

Tera personnel must carry out the instructions of a Participant upon receipt and 

must make a record of the time at which the request for assistance was made. 

All communications between a Participant and Tera personnel will be recorded 

and maintained by Tera as part of the Tera audit trail. Tera personnel assisting 

Participants in the entry, modification or withdrawal of Orders shall have a 

unique User ID for the purpose of carrying out such instructions.

(d) Audit Trail Requirements.

Participants that directly connect to, or that provide connectivity to, 

TeraExchange are responsible for maintaining, or causing to be maintained, an 

Order routing/front-end audit trail (“Audit Trail”) for all electronic Orders, 

including Order entry, modification, cancellation and responses to such 

messages, entered into Tera through any gateway to Tera. The Audit Trail must 

contain all Order receipt, Order entry, Order modification, and response/receipt 

times to the highest level of precision achievable by the operating system, in 

accordance with CFTC requirements for electronic Orders and no more than 

one second for non-electronic Orders. The times captured must not be able to 

be modified by the Person entering the Order. The data must also contain all 

FIX Tag information and fields which should include, but is not limited to the 

following: A record of all fields relating to Order entry, including transaction 

date, product, SEF code, expiration month, quantity, Order Type, Order 

Qualifier, price, buy/sell indicator, stop/trigger price, Order number, unique 

transaction number, account number, session ID, operator ID, host Order 

number, trader Order number, Clearing Firm, type of action, action status code, 

customer type indicator, origin, and timestamps. For executed Orders, the Audit 

Trail must record the execution time of the Swap along with all fill information. 
- 42 -

(i) Participants must maintain Audit Trail information as required by Applicable 

Law and must have the ability to produce this data in a standard format upon 

request of the Chief Compliance Officer, his designee or the Regulatory 

Oversight Committee. 

(ii) A Participant whose customer is itself a Participant may agree with such 

customer that it is the customer’s obligation to maintain the Audit Trail for such 

customer’s Orders. Any such agreement shall be in writing, and a copy of such 

agreement shall be provided to TeraExchange. 

(iii) No less than annually, Tera shall conduct a review of all Participants and 

Persons and firms subject to its jurisdiction and recordkeeping rules to verify 

compliance with Tera’s audit trail and recordkeeping requirements. Such 

reviews shall include, but are not limited to, reviews of randomly selected 

samples of front-end audit trail data for order routing systems; a review of the 

process by which user identifications are assigned and user identification 

records are maintained; a review of usage patterns associated with user 

identifications to monitor for violations of user identification rules; and reviews 

of account numbers and customer type indicator codes in trade records to test 

for accuracy and improper use.

Rule 509 Position Accountability

(a) To reduce the threat of market manipulation or congestion, Tera shall adopt for 

each of the contracts of the facility, as is necessary and appropriate, position 

limitations or position accountability levels for speculators pursuant to CFTC 

regulation 37.600. Any such limitation or accountability level shall be published in 

a Notice to Participants. A Participant who holds or controls aggregate positions 

exceeding those specified in such notice shall when so ordered by the Tera:

Provide in a timely manner all applicable information regarding the nature of 

the position, trading strategy, and hedging information;

Refrain from increasing the position that exceed the levels specified in the 

Position Accountability limitations published by Tera; and

Liquidate such positions in a timely and orderly manner.

(b) For purposes of this Rule, all positions in accounts for which a Person, by power of 

attorney or otherwise, directly or indirectly controls trading shall be included with 

the positions held by such Person. The provisions of this Rule shall apply to 

positions held by two or more Persons acting pursuant to an expressed or implied 

agreement or understanding, as if the positions were held by a single Person.
- 43 -

Rule 510 Order Types

Orders shall be placed on Tera in the form of limit orders or market orders as described 

below. Participants shall use appropriate symbols or indicators as specified in applicable 

Tera procedures from time to time. 

Limit Order: A Limit Order is an Order to buy a specified quantity of a security 

at or below a specified price, or an Order to sell a specified quantity at or above 

a specified price. A Limit Order is good until cancelled and residual volume 

from a partially filled Limit Order will be retained until executed unless 

otherwise specified.

Market Order: A Market Order is an Order that is executed at the best price or 

prices available in the Order Book at the time the Order is placed and until the 

Order is filled.

Rule 511 Bunched Orders and Orders Eligible for Post-Execution Allocation

(a) Only the following categories of Participants may place a Bunched Order on Tera 

or that is subject to Tera Rules:

A commodity trading advisor registered with the CFTC pursuant to the CEA or 

excluded or exempt from registration under the CEA or CFTC Regulations, 

except for entities exempt under CFTC Regulation 4.14(a)(3);

An investment adviser registered with the SEC pursuant to the Investment 

Advisers Act of 1940 or with a state pursuant to applicable state law or excluded 

or exempt from registration under the Investment Advisers Act of 1940 or 

applicable state law or rule;

A bank, insurance company, trust company, or savings and loan association 

subject to federal or state regulation;

A foreign adviser that exercises discretionary trading authority solely over the 

accounts of non-U.S. persons, as defined in CFTC Regulation 4.7(a)(1)(iv);

A Futures Commission Merchant registered with the CFTC pursuant to the 

CEA; or

An Introducing Broker registered with the CFTC pursuant to the CEA.

(b) Bunched Orders must be allocated and recorded in accordance with applicable 

CFTC Regulation 1.35, or any successor regulation thereto, and consistent with the 

NFA Interpretative Notice 9029 related to Compliance Rule 2-10 or any successor 

regulation.
- 44 -

Rule 512 Orders Entered Prior to SEF Opening

Orders entered into the Tera System prior to the opening of Trading Hours shall be entered 

pursuant to procedures established by Tera from time to time in a Notice to Participants.

Rule 513 Identification of Authorized Traders

Each Authorized Trader shall be identified to Tera, in the manner prescribed by Tera, and 

shall be subject to Tera Rules. It is the duty of the Participant to ensure that Authorized 

Trader (and Trader ID) registration, as applicable, is current and accurate at all times. Each 

individual must use a Trader ID to access Tera. In no event may a Person enter an Order 

or permit the entry of an Order by an individual using a Trader ID other than the 

individual’s own Trader ID.

Rule 514 Block Trades

(a) Block Trades shall be permitted to the extent consistent with CFTC Regulations 

and the Tera Rules.

(b) The following shall govern Block Trades:

Each party to a Block Trade must qualify as an “eligible contract participant”, 

as that term is defined in Section 1a(18) of the CEA and CFTC Regulations.

A Block Trade must be for a quantity that is at or in excess of the applicable 

minimum block size established by the CFTC pursuant to Regulation 43.6. 

Spread trades may be executed as Block Trades, provided that the quantity of 

each leg of the spread meets the minimum quantity for each respective maturity. 

When the applicable minimum block size or cap size for a publicly reportable 

swap transaction is denominated in a currency other than U.S. dollars, 

TeraExchange will use a currency exchange rate that is widely published within 

the preceding two business days from the date of execution of the Trade to 

determine whether it meets the Block Trade qualification. Orders may not be 

aggregated for different accounts in order to achieve the minimum Block Trade 

size unless done by a Person who:

(1) A commodity trading advisor registered (or exempt from registration) under 

the CEA, or a principal thereof who has discretionary trading authority or 

directs client accounts; an investment advisor registered (or exempt from 

registration) under the Investment Advisors Act of 1940 who has 

discretionary trading authority or directs client accounts and satisfies the 

criteria of §4.7(a)(2)(v) of the CFTC Regulations; or, a foreign person 

performing a similar role or functions as the persons described in 

§43.6(h)(6)(i)(A) or (B) and is subject as such to foreign regulation, and

(2) Has more than $25,000,000 in total assets under management.
- 45 -

The parties to a Transaction with a notional amount at or in excess of the 

applicable minimum block size must notify Tera of the election to have to 

Transaction treated as a Block Trade. Tera will notify the applicable SDR of 

the Block Trade election when transmitting swap transaction and pricing data 

and Required Swap Creation Data in accordance with Rule 704.

The price at which a Block Trade is executed must be fair and reasonable in 

light of (i) the size of the Block Trade, (ii) the prices and sizes of other 

transactions in the same contract at the relevant time, (iii) the prices and sizes 

of transactions in other relevant markets, including the related swap markets, at 

the relevant time, and (iv) the circumstances of the markets or the parties to the 

Block Trade.

(c) Block Trades must be entered using the Tera System in a manner prescribed from 

time to time by Tera.

(d) A Participant, Authorized Trader or Executing Firm must receive instructions from 

a Customer or Account Holder or obtain the Customer’s or Account Holder’s prior 

consent in writing before entering into a Block Trade with that Customer or 

Account Holder. Such instruction or consent may be provided in the power of 

attorney or similar document by which the Customer or Account Holder provides 

the Participant, Authorized Trader or Executing Firm with discretionary trading 

authority or the authority to direct the trading in its account.

(e) A Reporting Counterparty must transmit all swap transaction and pricing data, 

including the actual notional or principal amount, required to be reported under 

CFTC Regulation Part 43 for any Block Trade to Tera as soon as technologically 

practicable, but in any event no later than 10 minutes following its execution. 

Following receipt, Tera will transmit the swap transaction and pricing data to the 

relevant SDR as soon as technologically practicable. The SDR will be responsible 

for delaying the public dissemination of swap transaction and pricing data relating 

to any Block Trade, and for dissemination of rounded notional or principal 

amounts, in accordance with the timeframe and requirements set forth in CFTC 

Regulation Part 43.

(f) Block Trade prices will not trigger unexecuted Orders in the Order Book.

(g) Any Block Trade in violation of these requirements shall constitute conduct which 

is inconsistent with just and equitable principles of trade.

Rule 515 Risk Controls

(a) Tera may, in its sole discretion, reject any Order.

(b) Tera shall have the right to take any action to reduce the potential of market 

disruption, including, but not limited to, market restrictions that pause or halt 

trading in market conditions prescribed by Tera if such action is in the best interest 

of the Instrument markets.
- 46 -

(c) Tera shall have the right in its sole discretion to cancel Trades executed at prices 

outside of the No-Bust Range. The price of a Swap shall be within the “No-Bust 

Range” if such price is not more than 15% higher or lower than the price of the last 

trade in such Swap or, if such Swap has not previously been traded on that Business 

Day, not more than 15% higher or lower than the prior Business Day’s settlement 

price for such Swap. 

(d) If an Instrument is fungible with, linked to or a substitute for a financial instrument 

trading on another trading venue, including any trading venue regulated by the SEC 

(a “Linked Instrument”), and such other trading venue has placed risk controls on 

such financial instrument, Tera shall have the right to place similar risk controls on 

the Linked Instrument.

Rule 516 Use of Trading Privileges

No Participant may use its Trading Privileges or access Tera in any way that could be 

expected to bring disrepute upon such Participant or Tera.

Rule 517 Priority of Customers’ Orders

No Participant shall enter an Order into Tera for its own Account, an Account in which he 

has a direct or indirect financial interest or an account over which he has discretionary 

trading authority, including, without limitation, an Order allowing discretion as to time and 

price, when such Participant is in possession of any Order in the same Instrument from 

another Participant that Tera is capable of accepting.

Rule 518 Adherence to Law

(a) No Participant, Customer, Authorized Representative, Authorized Trader, 

Introducing Broker or Supervised Person shall engage in conduct in violation of 

Applicable Law, the Tera Rules, CFTC Regulations, the Rules of any SEF, or the 

Rules of any Designated Contract Market, Derivatives Clearing Organization or 

Self-Regulatory Organization that has jurisdiction over such Participant, Customer, 

Authorized Representative, Authorized Trader, Introducing Broker or Supervised 

Person or, with respect to SEF Activity, the laws, rules or regulations of any 

relevant Governmental Agency.

(b) Without limiting subsection (a) of this Rule,

Each Participant that is an FCM or a Clearing Firm must comply with all 

requirements of Applicable Law regarding the treatment of Customer funds and 

Customer Orders; and

Each Participant, Customer or Account Holder must comply with all margin 

requirements established by each relevant Clearing House and by each relevant 

Clearing Firm, if applicable, as well as any margin requirements set forth by 

CFTC Regulations or Applicable Law.
- 47 -

Rule 519 Rule Violations

(a) It shall be an offense for a Person subject to Tera’s jurisdiction to violate any Tera 

Rule regulating the conduct or business of a Participant, or any agreement made 

with Tera, or to engage in fraud, dishonorable or dishonest conduct, or in conduct 

which is inconsistent with just and equitable principles of trade.

(b) Any Person subject to Tera’s jurisdiction shall, upon request, assist Tera in any 

investigation into potential violations of the Tera Rules or the CEA. Such 

assistance, which must be made in good faith and in a timely manner that is 

reasonable under the circumstances, may include but not be limited to, requiring 

any Participant to produce documents, to answer questions from Tera or its 

designee, and/or to appear in connection with an investigation.

(c) If a Person subject to Tera’s jurisdiction has actual or constructive notice of a 

violation of Tera Rules in connection with the use of Tera by a Participant and the 

Person fails to take appropriate action, the Person may be found to have committed 

an act detrimental to the interest or welfare of Tera.

Rule 520 Fraudulent Acts Prohibited

No Person subject to Tera’s jurisdiction shall engage in, or attempt to engage in any 

fraudulent act or engage in, or attempt to engage in any manipulative device, scheme or 

artifice to defraud, deceive, trick or mislead in connection with or related to any SEF 

Activity including, without limitation, front running, fraudulent trading, money passes, 

trading ahead of Account Holder or Customer Orders, trading against Account Holder or 

Customer Orders or accommodation trading.

Rule 521 Fictitious, Wash or Non-Competitive Transactions Prohibited

(a) No Person subject to Tera’s jurisdiction shall create fictitious Transactions or wash 

Transactions or execute any such Order with knowledge of its nature. No Person 

subject to Tera’s jurisdiction shall place or accept Orders in the same Instrument 

where the Person knows or reasonably should know that the purpose of the Orders 

is to avoid taking a bona fide market position exposed to market risk (Transactions 

commonly known or referred to as wash sales). Orders for different accounts with 

common beneficial ownership that are entered with the intent to negate market risk 

or price competition shall also be deemed to violate the prohibition on wash trades. 

Additionally, no Person subject to Tera’s jurisdiction shall knowingly execute or 

accommodate the execution of such Orders by direct or indirect means.

(b) No Person subject to Tera’s jurisdiction shall engage in a non-competitive 

transaction except with respect to Block Trades affected pursuant to Rule 514 or 

Permitted Transactions Arranged by an Executing Firm pursuant to Rule 531.

Rule 522 Market Disruption Prohibited
- 48 -

No Person subject to Tera’s jurisdiction shall enter data or other information into the Tera 

System for the purposes of upsetting the equilibrium of the market in any Instrument or 

creating a condition in which prices do not or will not reflect fair market value.

Rule 523 Disruptive Trading Practices Prohibited

No Person subject to Tera’s jurisdiction shall engage in any trading practice or conduct that 

constitutes a “disruptive trading practice”, as such term is described in Section 4c(a)(5) of 

the CEA or in interpretive guidance issued by the CFTC, in relation to the trading of any 

Instrument. The following are prohibited:

(a) Violating Bids and Offers. No Participant, Authorized Trader, Executing Firm, or 

Account Holder or Customer of a Participant, via the Order Book, shall buy or 

attempt to buy an Instrument on Tera at a price that is higher than the lowest 

available price offered for such Instrument or sell an Instrument on Tera at a price 

that is lower than the highest available price bid for such Instrument.

(b) Orderly Execution of Transactions during the Closing Period. No Participant, 

Authorized Trader, Executing Firm, or Account Holder or Customer of a 

Participant shall engage in any conduct that demonstrates reckless or intentional 

disregard for the orderly execution of Transactions during the Closing Period, 

including, but not limited to, conduct commonly known as “banging” or “marking” 

the close.

(c) Spoofing. No Participant, Authorized Trader, Executing Firm, or Account Holder 

or Customer of a Participant shall intentionally engage in any conduct that is, is the 

character of, or is commonly known to the trade as “spoofing,” including, but not 

limited to:

Bidding and offering with the intent to cancel the bid or offer before execution;

Submitting or cancelling bids or offers to overload the quotation system;

Submitting or cancelling bids or offers to delay another Participants’ execution 

of Transactions;

Submitting or cancelling multiple bids or offers to create an appearance of false 

market depth; and

Submitting or cancelling bids or offers with intent to create artificial price 

movements upwards or downwards.

Rule 524 Market Manipulation Prohibited

No Person subject to Tera’s jurisdiction shall engage in any conduct that manipulates or 

attempts to manipulate the price in any Instrument, including, without limitation, engaging 

in activity in violation of CEA sections 9(a)(2), 4c(a)(5), and Commission Regulations 

180.1(a) and 180.2.
- 49 -

Rule 525 Misstatements Prohibited

No Person subject to Tera’s jurisdiction shall knowingly make any misstatement of a 

material fact to Tera, any SEF Official, any Board committee or SEF panel, the Compliance 

Department and/or agents of Tera or to any Participant, or knowingly omit to state a 

material fact necessary in order to make the statements made, in light of the circumstances 

under which they were made, not misleading.

Rule 526 Acts Detrimental to Welfare of Tera Prohibited

It shall be an offense for any Person subject to Tera’s jurisdiction to engage in any act that 

is detrimental to Tera’s operations or its’ ability to comply with Applicable Law. 

Rule 527 Misuse of Tera Prohibited

Misuse of Tera is strictly prohibited. No Person subject to Tera’s jurisdiction shall (i)

willfully or negligently engage in unauthorized use of Tera; (ii) assist any Person in 

obtaining unauthorized access to Tera; (iii) trade on Tera without an agreement and an 

established account in good standing with a Derivatives Clearing Organization or a 

Clearing Firm; (iv) alter the equipment associated with Tera; (v) interfere with the 

operation of Tera; (vi) intercept or interfere with information provided by or to Tera; (vii) 

or in any way to use Tera in a manner contrary to the Tera Rules.

Rule 528 Withholding Orders Prohibited

(a) Any Participant entering Orders on Tera for any legally distinct Account Holders 

or Customers shall not withhold or withdraw from the market any Order, or any 

part of an Order, for the benefit of any Person other than such Account Holders or 

Customers.

(b) A Participant must enter immediately into Tera all Orders received from any legally 

distinct Account Holders or Customers that are executable immediately. If a 

Participant cannot immediately enter into Tera an Order received from such legally 

distinct Account Holder or Customer, the Participant must enter the Order into Tera 

as soon as practicable, and must immediately create an electronic record as 

provided in Rule 508(a).

Rule 529 Pre-discussed or Cross Trades 

(a) No Person subject to Tera’s jurisdiction in possession of any legally distinct 

Account Holder’s or Customer’s Order shall knowingly take, directly or indirectly, 

the opposite side of such Order for its own account, an account in which it has a 

direct or indirect financial interest, or an account over which it has discretionary 

trading authority.

(b) No Person subject to Tera’s jurisdiction in possession of Orders from more than 

one legally distinct Account Holder or Customer shall knowingly cause such Orders 
- 50 -

to execute against one another on Tera, or shall enter a pre-discussed Transaction 

into the Tera System, except as provided in paragraph (c).

(c) The foregoing restriction shall not apply to Transactions executed pursuant to Rule 

514 (Block Trades), Rule 536 (Cleared Error Trade Correction) or to Orders:

From a Participant which is a broker or dealer seeking to execute against an 

Account Holder’s Order for its own account, or alternatively seeking to execute 

two Account Holder’s Orders against one another, provided, in either case, that 

one side of the transaction has been exposed to other Participants as a firm quote 

available for execution on the Order Book for a minimum of 15 seconds before 

the second side of the transaction has been submitted for execution.

Notwithstanding the foregoing, a Participant shall not be in violation of this rule 

due to Cross Trades executed by two Participants trading for the same account, 

or for separate accounts of the same Beneficial Ownership, where neither 

Participant has knowledge of the other’s Order and there is no coordination or 

prearrangement of the Cross Trade, provided that the relevant Participants shall 

be responsible, upon the request of TeraExchange, to demonstrate to the 

reasonable satisfaction of Tera, that neither Participant had knowledge of the 

other’s Order. For the avoidance of doubt, no delay in entering both sides of a 

pre-discussed Permitted Transaction or of a Cross Trade of a Permitted 

Transaction through TeraExchange is required. No Person shall enter a prediscussed Permitted Transaction or Cross Trade in a Permitted Transaction for 

illegal or improper purposes.

Rule 530 Disclosing Orders Prohibited

No Person shall disclose another Person’s Order except to a designated SEF Official or the 

CFTC, and no Person shall solicit or induce another Person to disclose Order information. 

No Person shall take action or direct another to take action based on non-public Order 

information, however acquired.

Rule 531 Arranged Transactions

(a) Notwithstanding any provision of Rule 529 to the contrary, Tera shall execute 

Permitted Transactions between Participants, Account Holders or both that have 

been arranged by an Executing Firm and submitted to the Tera System in 

accordance with this Rule.

(b) The Executing Firm shall provide Tera with evidence in a form and manner 

acceptable to Tera that the Participant or Account Holder consents to the Executing 

Firm acting on the Participant or Account Holder’s behalf.

(c) The Executing Firm shall record such information as required by the Tera entry 

screen regarding the details of the arranged transaction as soon as practicable, but 

in no event more than 15 minutes, following agreement of the Participants to the 

terms of the transaction.
- 51 -

(d) The Executing Firm shall indicate whether the transaction is intended to be cleared 

or intended to be uncleared.

For Transactions intended to be cleared, the fields relating to account number 

and Clearing Participant shall automatically be populated and the transaction 

shall be in accordance with the provisions of Chapter 6 of the Tera Rules.

Subject to Rule 537, the Executing Firm shall not disclose, directly or indirectly,

the identity of a counterparty to a Transaction that is pre-arranged or prenegotiated anonymously and intended to be cleared.

For Transactions intended to be uncleared, the Executing Firm, prior to 

reporting the arranged transaction to Tera for execution under this rule, shall 

obtain a representation from each of the applicable Participants or Account 

Holders that the Participant or Account Holder has in place credit arrangement 

documentation as to the other party, including as applicable arrangements for 

the exchange of collateral.

(e) The Executing Firm shall keep full, complete and systematic records relating to the 

Transactions as required by CFTC Rule 1.35; and shall make available access to 

such records upon the request of Tera.

(f) The Transaction may not be entered into for illegal or improper purposes and must 

comply with the trading practice and business conduct rules of this Chapter. Upon 

request by Tera, the Executing Firm must demonstrate that a Transaction complies 

with this Rule and Applicable Law.

Rule 532 Voice-Assisted and Electronic Request for Quote Trading

(a) Electronic RFQ Trading. A Participant may solicit a bid, an offer or both, for a 

specific Instrument by entering an RFQ into the Tera System, which shall provide 

that each Participant solicited shall receive the RFQ solicitation with equal priority.

The requestor may submit the RFQ on an anonymous or disclosed basis. 

An RFQ must be sent by the requestor;

(1) For Required Transactions, to three or more recipients not affiliated with 

the requestor. In the event that Participants receiving an RFQ are affiliated 

with one another, only one such Participant shall be counted toward the 

minimum required number of market participants. Participants that are 

owned or controlled by the requestor shall not be counted toward the 

minimum required number of market participants.;

(2) For Permitted Transactions, to one or more recipients not affiliated with the 

requestor.

The RFQ recipient may respond to an RFQ by sending the requestor a 

responsive quote, which is firm and actionable. 
- 52 -

At the same time that the RFQ requestor receives the first response to the RFQ 

for a Required Transaction, Tera shall communicate to the requestor any bid or 

offer pertaining to the same Instrument resting on the Order Book. Tera 

provides the RFQ requestor the ability to execute against any of the bids or 

offers responding to the RFQ, including the bid or offer resting on the Order 

Book.

The RFQ requestor may execute against a responsive quote or a bid or offer on 

the Order Book. 

If the RFQ requestor does not execute the responsive quote within a pre-defined 

period of time set by the parties, the RFQ session ends.

By executing a responsive quote, the RFQ recipient agrees that it shall result in 

a Transaction. 

(b) Voice-Assisted RFQ Trading. Tera provides Participants voice-assisted RFQ 

functionality so that they may enter RFQs and receive responsive quotes via voice 

communication with Tera personnel. A Participant may, for a specific Instrument, 

solicit a bid, an offer or both from other Tera Participants, by contacting authorized 

Tera personnel on such telephone lines, electronic mail or instant messaging 

channels as Tera shall specify from time to time for such purpose. In carrying out 

such solicitations by telephone, electronic mail or instant messaging, the authorized 

Tera personnel shall provide each Participant solicited with equal priority.

The requestor may instruct that the RFQ be on an anonymous or disclosed basis. 

The RFQ must be communicated by authorized Tera personnel;

(1) For Required Transactions, to three or more recipients not affiliated with 

the requestor. In the event that Participants receiving an RFQ are affiliated 

with one another, only one such Participant shall be counted toward the 

minimum required number of market participants. Participants that are 

owned or controlled by the requestor shall not be counted toward the 

minimum required number of market participants.;

(2) For Permitted Transactions, to one or more recipients not affiliated with the 

requestor.

At the same time that authorized Tera personnel provide the RFQ requestor with 

the first response to the RFQ for a Required Transaction, such authorized Tera 

personnel shall communicate to the requestor any firm bid or offer pertaining 

to the same Instrument resting on the Order Book. The RFQ requestor may 

execute against any of the bids or offers responding to the RFQ, including the 

bid or offer resting on the Order Book. 

Upon execution, authorized Tera personnel shall enter the trade details into the 

Tera System. Tera personnel must make a record of the time at which the RFQ 
- 53 -

request was made as well as the responses received and transmitted to the 

requestor. All communications between Tera Personnel and requestors and Tera 

Personnel and recipients will be recorded and maintained by Tera.

(c) Indications of Interest.

For Permitted Transactions only, a liquidity provider (as defined by Tera) has 

the ability to display an indication of interest on Tera. An indication of interest 

is an advertisement to all Participants of the liquidity provider’s interest in 

dealing at a specific price, size, direction and tenor. 

An indication of interest is only an advertisement of the liquidity provider’s 

interest to deal; it is not executable. 

A Participant may trigger an RFQ, in accordance with the above RFQ protocols,

to that liquidity provider based on the indication of interest. 

Rule 533 Disputes

Any dispute between an Account Holder and an Executing Firm or between two 

Participants arising out of or in connection with the solicitation or acceptance of any Order 

for execution of an Instrument, or the execution of any Instrument, shall be resolved by 

and pursuant to the arbitration rules of the NFA or such other Self-Regulatory Organization

as the parties may agree. 

Rule 534 Trade Cancellation and Price Adjustment

(a) Tera has the authority to adjust Trade prices or cancel Trades when, in its absolute 

and sole discretion, it believes such action is necessary to mitigate market 

disrupting events caused by the improper or erroneous use of the electronic trading 

system or by system defects.

(b) Tera may, in its absolute and sole discretion, adjust Trade prices or cancel any 

Trade if it determines that allowing a Trade to stand as executed may have a 

material adverse effect on the integrity of the market, including, but not limited to, 

Trades executed at prices outside of the No-Bust Range as set forth in Rule 515.

(c) Trades that are price-adjusted shall be inserted into Tera’s official time and sales 

records at the adjusted Trade price. Cancelled Trade prices and any prices that have 

been adjusted shall be cancelled from Tera’s official time and sales records. Notice 

of price adjustments and cancellations will be posted to Tera’s website.

Rule 535 Trade Review, Correction and Notification

(a) Tera may determine to review a Trade based on its independent analysis of market 

activity or upon request for review by a Participant. Upon deciding to review a 

Trade, Tera will promptly notify the counterparties that the Trade is under review.
- 54 -

(b) If a Participant believes that a Trade was erroneously executed or rejected from 

clearing due to an operational or clerical error or omission, it may request a review 

of the Transaction by providing Tera with a description of the alleged error existing 

in the executed Trade or which caused the Trade to be rejected from clearing, the 

Unique Swap Identifier for the Trade in question and any additional information 

reasonably requested by Tera.

A request for review of a Trade rejected from clearing must be made by a 

Participant, in writing and including the information required in Rule 535(b), 

within 30 minutes from the issuance of the notice of rejection by the relevant 

Clearing House.

A request for review of an alleged error in an existing Trade must be made by 

a Participant, in writing and including the information required in Rule 535(b), 

no later than the end of the Business Day following the date of execution of the 

Trade in question.

(c) Upon receipt by Tera of a written request for review of a Transaction, including the 

information required in Rule 535(b), Tera will review its electronic audit trail to 

determine if Tera correctly executed the Trade. Such review will be completed:

With respect to a Trade rejected from clearing for non-credit reasons, promptly 

following the receipt of the request for review, error description and associated 

Unique Swap Identifier, or

With respect to a Cleared Error Trade (defined below), on the same Business 

Day if Tera received such request for review prior to 12:00 noon on any 

Business Day, or

By the end of the following Business Day if such request was received:

(1) On or after 12:00 noon on any Business Day, or

(2) On any day that is not a Business Day.

(d) If the review described in this Rule reveals that the Trade was correctly executed 

by Tera, then no adjustment shall be made in the Accounts of any Participants.

(e) If, after review, Tera affirmatively determines that the Trade was (i) erroneously 

executed, (ii) involved an Instrument not required to be cleared pursuant to the 

clearing mandate in Section 2(h)(1) of the CEA, and (iii) was not designated to be 

submitted voluntarily for clearing to a Clearing House, then, no later than three 

Business Days after the erroneous Trade was executed, the Participants involved in 

the erroneous Trade may mutually agree to cancel the erroneous Trade or, subject 

to the Tera Rules, to correct or adjust the erroneous Trade price. 

(f) If, after review, Tera affirmatively determines that the Trade was (i) erroneously 

executed, (ii) involved an Instrument intended to be cleared pursuant to the clearing 
- 55 -

mandate in Section 2(h)(1) of the CEA, or (iii) was submitted voluntarily for 

clearing to a Clearing House, correction of the erroneous Trade shall be made 

pursuant to Rule 536 below.

(g) Notwithstanding anything to the contrary in this Rule, if Tera determines in its sole 

discretion that the execution of any erroneous Trade was the result of Orders being 

incorrectly processed by Tera, or any other cause beyond the control of any 

Participant, then Tera may cancel such Trade in the Accounts of all affected 

Participants.

Rule 536 Cleared Error Trade Correction

(a) In accordance with CFTC Regulation 37.9(e), this Rule 536 shall apply where an 

operational or clerical error or omission made by Tera, one of the counterparties, 

or an agent of the counterparty, (i) results in the rejection of a Trade submitted for 

clearing or (ii) is identified after the Trade has been cleared (a “Cleared Error 

Trade”).

(b) If Tera affirmatively determines that a Trade has been rejected from clearing by a 

Clearing House due to an operational or clerical error or omission made by Tera, 

one of the counterparties, or an agent of the counterparty, a new transaction, with 

terms and conditions that match the terms and conditions of the original transaction, 

other than any such error or omission and time of execution, may be executed and 

submitted for clearing without having been executed pursuant to the methods set 

forth in CFTC Regulation 37.9(a)(2).

If Tera is able to determine how to correct the error or omission, it may execute 

a new Trade without obtaining the consent of the counterparties to the original 

Transaction.

If Tera is unable to determine how to correct the error or omission, it may either 

(x) seek guidance on how to address the error or omission from the 

counterparties, which guidance may not be implemented without the consent of 

both counterparties, or (y) elect not to correct the error, in which case the 

original Transaction will be deemed void ab initio.

A new Trade correcting a Trade rejected from clearing due to operational or 

clerical error or omission must, subject to the Tera Rules, including Rule 405, 

be executed on Tera and submitted for clearing as quickly as technologically 

practicable following the relevant Clearing Firm receipt of notice of rejection 

from a Clearing House, but, in any event, no later than one hour from the 

issuance of the notice.

If the new Trade that corrects the errors in the original Trade is also rejected for 

clearing it shall be deemed void ab initio and the counterparties will not be 

provided a second opportunity to submit a new correcting Trade.
- 56 -

(c) If Tera affirmatively determines that a Trade is being carried on the books of a 

Clearing House in error, and that the correction of such Cleared Error Trade would 

not adversely impact market integrity, facilitate market manipulation or other 

illegitimate activity, or otherwise violate the CEA, CFTC Regulations or Tera 

Rules, in order to “reverse and resubmit” the Trade in error, trades to offset and 

correct the swaps carried in error on the books of the Clearing House, with terms 

and conditions that match the terms and conditions of the original transaction, other 

than any such error or omission and time of execution, may be executed and 

submitted for clearing without having been executed pursuant to the methods set 

forth in CFTC Regulation 37.9(a)(2).

If Tera is able to determine how to correct the error or omission, it may execute 

offsetting and correcting trades without obtaining the consent of the 

counterparties and submit such trades to the relevant Clearing House for 

clearing.

If Tera is unable to determine how to correct the error or omission, it may seek 

guidance on how to address the error or omission from the counterparties to the 

Cleared Error Trade on how to address the error, and, in such case, shall only 

execute offsetting and correcting trades and submit such trades to the relevant 

Clearing House after obtaining consent from both counterparties.

New trades offsetting and correcting a Cleared Error Trade must, subject to the 

Tera Rules, including Rule 405, be executed on Tera and submitted for clearing 

no later than three days after the Cleared Error Trade was executed.

(d) If, prior to a review and affirmative determination by Tera, the counterparties agree 

that a Trade has been rejected from clearing by a Clearing House, or a Cleared Error 

Trade has occurred, as the result of an operational or clerical error or omission and

further agree how to appropriately correct the error in a way that will not adversely 

impact market integrity, facilitate market manipulation or other illegitimate 

activity, or otherwise violate the CEA, CFTC Regulations, or the Tera Rules, the 

counterparties to the Trade rejected from clearing or Cleared Error Trade may enter 

into offsetting and/or correcting trades to correct the operational or clerical error or 

omission without the prior notification and approval of Tera. 

A new Trade correcting the error or omission in a Trade that has been rejected 

from clearing by a Clearing House, with terms and conditions that match the 

terms and conditions of the original transaction, other than any such error or 

omission and time of execution, must, subject to the Tera Rules, including Rule 

405, be executed on Tera and submitted for clearing within one hour of the 

issuance of notice of rejection from the relevant Clearing House.

New trades offsetting and correcting a Cleared Error Trade, with terms and 

conditions that match the terms and conditions of the original transaction, other 

than any such error or omission and time of execution, must, subject to the Tera 

Rules, including Rule 405, be executed on Tera and submitted for clearing as 
- 57 -

soon as technologically practicable but in no case later than twenty-four hours 

following the execution of the Cleared Error Trade.

Upon electing to correct a Trade that has been rejected from clearing by a 

Clearing House, or to offset and correct a Cleared Error Trade, prior to an 

affirmative determination by Tera that an operational or clerical error or 

omission has occurred, a counterparty to the Transaction must, at the time the 

offsetting and/or correcting Trade is made, provide to Tera:

(1) The information required in Rule 535(b);

(2) A representation that the rejected Trade or Cleared Error Trade resulted 

from or contained operational or clerical errors or omissions; and

(3) The material terms of the rejected Trade or Cleared Error Trade, offsetting 

Trade and correcting Trade.

Tera will perform an ex post facto review of the rejected Trade or Cleared Error 

Trade, offsetting Trade and correcting Trade within one Business Day of the 

date of execution of the offsetting Trade and correcting Trade. Such ex post 

facto review will include a review of Tera’s electronic audit trail and the facts 

and circumstances surrounding the rejected Trade or Cleared Error Trade, and 

a review of whether the offsetting Trade and correcting Trade adversely 

impacted market integrity, facilitated market manipulation or other illegitimate 

activity, or otherwise violated the CEA, CFTC Regulations, or the Tera Rules.

(1) Following the ex post facto review, Tera will make an affirmative 

determination as to whether an operational or clerical error or omission did 

exist resulting in the rejected Trade or Cleared Error Trade and whether it 

was appropriately corrected by the counterparties.

(2) If Tera makes an affirmative determination that an operational or clerical 

error or omission resulting in the rejected Trade or Cleared Error Trade did 

not exist appropriate disciplinary action will be taken against the 

counterparties in accordance with Chapter 8 of the Tera Rules.

(e) Upon the execution of any offsetting and/or correcting Trade, Tera shall report, as 

soon as technologically practicable, to the relevant SDR the following, as 

applicable:

Cancellation of the original trade under Part 43 of the CFTC Rules;

A Part 45 termination indicating that the original Trade rejected from clearing

is void ab initio; and 

Swap transaction and pricing data and Required Swap Creation Data pursuant 

to Parts 43 and 45 for any offsetting and/or correcting Trade.
- 58 -

Rule 537 Post Trade Anonymity

(a) In accordance with CFTC Regulation § 37.9(f), it is prohibited for any Participant 

or Account Holder or Customer of a Participant to disclose, directly or indirectly, 

including through a third-party service provider, the identity of a counterparty for 

swaps executed, pre-arranged or pre-negotiated anonymously on or pursuant to the 

rules of a SEF and intended to be cleared.

(b) Prohibition on post-trade name give-up shall not apply to non-anonymous 

executions, uncleared products, or package transactions that include a component 

transaction that is not a swap intended to be cleared. 

CHAPTER 6 CLEARING

Rule 601 Mandatory Clearing

(a) All Required Transactions and all Permitted Transactions, except as provided under 

Rule 608, entered into Tera or subject to the Tera Rules shall be cleared through a 

Clearing House in accordance with applicable Clearing House Rules and in 

conformity with the CEA, CFTC Regulations and the Rules specifically provided 

in this Chapter 6.

(b) Tera will route Transactions intended for clearing to the Clearing House designated 

in the Instrument Specification for the Clearable Instrument in a manner acceptable 

to the Clearing House and will coordinate with each Clearing House to which it 

submits Transactions for clearing to develop rules and procedures to facilitate 

prompt, efficient, and accurate Transaction processing in accordance with CFTC 

Regulation 39.12(b)(7).

Rule 602 Clearing Accounts

For each Transaction a Participant expects to enter into on Tera or subject to Tera Rules, 

the Participant or an Account Holder of the Participant must establish a clearing account 

with the Clearing House or with a Clearing Firm that is a member of the Clearing House, 

in each case, designated in the Instrument Specification for such Clearable Instrument.

Rule 603 Clearing Firm Guarantee

(a) Each Participant that is not a Clearing Firm must obtain prior authorization from a 

Clearing Firm that will guarantee Participant’s Transactions in Instruments that are 

intended to be cleared, or enter into an appropriate arrangement with a Person that 

has such an authorization from a Clearing Firm. Each such guarantee or other 

arrangement must be in form and substance satisfactory to, and approved by, 

TeraExchange. A Clearing Firm must guarantee and assume financial responsibility 
- 59 -

for all Instruments of each Participant guaranteed by it. Where such Participant 

utilizes the services of multiple Clearing Firms, a Clearing Firm shall only be 

responsible to the extent that it has been designated to clear a particular Transaction.

(b) A Clearing Firm may at any time revoke any authorization granted and guarantee 

made by it to any Participant in accordance with paragraph (a) above, by providing 

written notice of such revocation to TeraExchange. The guarantee will remain in 

effect until the non-Clearing Firm has liquidated or transferred all of the 

Participant’s positions and funds, as applicable, to another Clearing Firm.

(c) Upon notice that a Clearing Firm has revoked any authorization granted and 

guarantee made by it to any Participant pursuant to Rule 603(b), the Trading 

Privileges of the Participant will immediately be suspended and will not be 

reinstated until the Participant obtains new authorization from a Clearing Firm that 

will guarantee such Participant’s Transactions in accordance with Rule 603(a).

Rule 604 Clearing House Rules

(a) The clearing services provided by a Clearing House with respect to any Clearable 

Instrument, and the rights and obligations of purchasers and sellers under cleared 

Instruments (including rights and obligations in respect of clearing and settlement, 

variation payments and performance at maturity), shall be governed by the Clearing 

House Rules of such Clearing House.

(b) The Clearing House Rules shall prevail in the event of any conflict or inconsistency 

between these Rules and such Clearing House Rules with respect to any 

responsibilities or obligations of a Clearing Firm under such Clearing House Rules. 

Each Clearing Firm is bound by the Clearing House Rules of any Clearing House 

of which such Clearing Firm is a member.

Rule 605 Other Clearing Organizations

Each Clearing Firm must be a member of at least one Clearing House at all times. Tera 

may designate an additional clearing organization as a Clearing House from time to time. 

Whenever Tera designates a new Clearing House, a Clearing Firm may become a member 

of such Clearing House and clear Instruments through the Clearing House.

Rule 606 Clearing Fees

Clearing fees shall be assessed against a Clearing Firm for each side of a Transaction traded 

on, cleared by or processed through a Clearing House as such Clearing House may from 

time to time prescribe. Such clearing fees may be incorporated into the exchange fees 

assessed pursuant to Rule 305 as disclosed by Tera.
- 60 -

Rule 607 Clearing and Finality

(a) Tera does not guarantee that Orders executed on Tera and submitted for clearing 

will actually be cleared or otherwise result in completed and binding Transactions. 

Participants acknowledge through their use of Tera that

Orders entered into Tera are intended to result in binding Transactions once 

accepted for clearing;

All obligations under such Transactions shall be enforceable against Participant 

solely by the relevant Clearing Firm and/or Clearing House;

The finality and binding status of any Transaction resulting from an Order 

executed on Tera shall be determined by reference to the relevant Clearing Firm 

documentation and Clearing House Rules; and

Tera is not a party to any cleared Transaction.

(b) Except as provided in Rule 536, in the event that an Order is executed on Tera and 

submitted to the relevant Clearing House for clearing but subsequently rejected by 

the relevant Clearing Firm or Clearing House, upon receipt of a clearing rejection 

notice from the relevant Clearing Firm or Clearing House such Transaction shall 

be deemed void ab initio and neither the parties thereto nor Tera shall have any 

further responsibility for such Transaction under these Rules. For the avoidance of 

doubt, at no time shall the submission by a Participant of an Order into Tera, or the 

execution of such Order against another Order on Tera, result in any transactionspecific performance obligations directly between the Participant and:

Any other Participant that has entered an Order into Tera, including any Order 

that is executed and sent for clearing contemporaneously with the first 

Participant’s Order; or 

Tera, other than the payment of associated fees in connection with cleared 

Transactions.

Rule 608 Uncleared Transactions

(a) A Permitted Transaction involving an Instrument that (i) is not required to be 

cleared pursuant to the clearing mandate in Section 2(h)(1) of the CEA and (ii) is 

not designated to be submitted voluntarily for clearing to a Clearing House will be 

an uncleared Transaction. Uncleared Transactions may only be entered into by 

counterparties, including any Participant, Executing Firm, Account Holder, 

Customer, Swap Dealer and Major Market Participant having previously 

established trading relationship documentation in place consistent with the 

requirements of Applicable Law.
- 61 -

(b) Counterparties to a Permitted Transaction that has been reported to Tera by an 

Executing Firm for execution under Rule 531 may agree that such transactions shall 

be uncleared.

(c) Notwithstanding anything to the contrary in Rule 705(b), the Primary Economic 

Terms specific to the transaction agreed by the counterparties on Tera with respect 

to an uncleared Transaction shall be reflected by Tera in a written communication 

(the “Trade Communication”) sent by Tera to the applicable Participants or 

Account Holders through the Executing Firm. The Trade Communication, together 

with any underlying previously negotiated freestanding documents and agreements 

(including, without limitation, ISDA master agreements, other master agreements, 

terms supplements, master confirmation agreements, and incorporated industry 

definitions) governing such Transaction existing at the time of such commitment to 

which the participants are party (the “Terms Incorporated by Reference”) shall, 

taken together for purposes of CFTC Regulation 37.6(b), comprise all of the terms 

of such transaction and serve as a confirmation of such transaction. Counterparties 

shall maintain all records of such previously negotiated freestanding agreements in 

accordance with CFTC NAL 17-17, expiring on the effective date of revised CFTC 

regulations. Each Trade Communication is deemed to incorporate the Terms 

Incorporated by Reference and in the event of any conflict between the Trade 

Communication and the Terms Incorporated by Reference, the Trade 

Communication shall prevail to the extent of any inconsistency. The Trade 

Communication shall state the same.

Upon request by Tera, counterparties to a transaction shall provide to Tera any 

underlying previously negotiated freestanding agreements between the 

counterparties.

Upon request by the CFTC to Tera, counterparties to a transaction shall provide 

Tera with any underlying previously negotiated freestanding agreements 

between the counterparties and such documents shall be furnished to the CFTC 

as soon as they are available.

CHAPTER 7 RECORDKEEPING AND REPORTING

Rule 701 Records to be Maintained by Clearing Firms

(a) A Participant acting as a Clearing Firm is responsible for maintaining or causing to 

be maintained records for all Orders, including Order entry, modification, 

cancellation and responses to such messages (referred to as the “Records”), entered 

into Tera. The Records must be maintained for a minimum of five years after the 

termination of the Instrument and be readily accessible during the first two (2) years 

of the five-year period, and Participants must have the ability to produce this data 

upon request of the Chief Compliance Officer, his designee or the Regulatory 

Oversight Committee.
- 62 -

(b) The Records must contain in addition to information required by subsection (a) of 

this Rule 701, all Order receipts, Order entry, Order terms, a unique account 

identifier (that relates back to the account(s) owner(s)), Order modification, and 

response receipt times at least to a second. The Records must also contain all data 

relating to Order entry, including Transaction date, Instrument, applicable SEF 

codes, maturity date or tenor, quantity, Order type, Order qualifier, price, buy/sell 

indicator, trigger price, Order number, unique Transaction number, Account 

number, Clearing Firm, type of action, customer type indicator, origin, and 

timestamps. For executed Orders the Record must contain the execution time of the 

trade along with all fill information.

Rule 702 Customer Type Indicator (CTI) Codes

(a) Each Participant must identify each Transaction submitted to Tera with the correct 

customer type indicator code (a “CTI” code). The CTI codes are as follows:

CTI 1 - Transactions initiated and executed by an individual member for his 

own account, for an Account he controls or for an Account in which he has 

ownership or financial interest.

CTI 2 - Transactions executed for the Proprietary Account of a clearing member 

or non-clearing member firm.

CTI 3 - Transactions where an individual member or Authorized Trader 

executes for the personal account of another individual member, for an account 

the other individual member controls or for an Account in which the other 

individual member has ownership or financial interest.

CTI 4 - Any Transaction not meeting the definition of CTI 1, 2 or 3.

Rule 703 Records of Trading Activity on Tera and Related Transactions

As required by CFTC Regulation 37.404, each Participant, Customer or Account Holder 

of a Participant, or Authorized Trader must create and maintain records of its trading 

activity on Tera, including records of its activity in the commodity underlying any 

Instrument, activity in any index or instrument used as a reference price, and activity on 

related markets and must make such records available, upon request, to Tera, its agents, 

and the CFTC.

Rule 704 Reporting to SDR

(a) Consistent with CFTC Regulation Part 43 and Appendix A to Part 43, and CFTC 

Regulation Part 45 Appendix 1, Tera will report swap transaction and pricing data, 

including the actual notional or principal amount of each Trade and an actual 

description of the underlying asset, and all Required Swap Creation Data, to a

registered SDR of Tera’s choice as soon as technologically practicable after a

publicly reportable swap transaction, including any Block Trade, has been executed 

on or pursuant to the Rules of TeraExchange. In reporting data to an SDR, Tera 
- 63 -

shall use the facilities, methods, or data standards provided or required by the 

relevant SDR to which Tera is reporting.

Tera will report swap transaction and pricing data and Required Swap Creation 

Data for a Trade to a single SDR. Thereafter, all Required Swap Creation Data

and all required swap continuation data reported for the Trade shall be reported 

to that same SDR (or its successor in the event that it ceases to operate). As 

soon as technologically practicable after execution, Tera shall transmit to both 

counterparties to the Trade, and to the Derivatives Clearing Organization, if 

any, that will clear the Trade, both:

(1) The identity of the SDR to which the swap transaction and pricing data is 

reported by Tera; and

(2) The Unique Swap Identifier for the swap, created pursuant to CFTC 

Regulation 45.5.

Tera shall, to the nearest second, timestamp the receipt of swap transaction and 

pricing data from a Reporting Counterparty and the transmittal of such data to 

an SDR for public dissemination. Records of all such timestamps will be 

maintained for a period of five years from the execution of the publicly 

reportable swap transaction.

Tera shall not disclose swap transaction or pricing data for any Trade executed 

on or pursuant to the Rules of TeraExchange prior to public dissemination of 

such data by an SDR in accordance with CFTC Regulations.

TeraExchange reports such information to the following SDRs:

Interest Rate Swaps CME; DTCC

Non-Deliverable and Cash Settled 

Forwards

CME

(b) Each Participant and Authorized Trader:

Authorizes Tera to send swap transaction pricing data and Required Swap 

Creation Data on its behalf and, if applicable, on behalf of its Customers and 

Account Holders to the relevant SDR as per this Rule 704 and further agrees to 

take all such actions as are deemed necessary or required by such SDR to 

facilitate or confirm such authorization; and

Consents to the maintenance of such swap transaction and pricing data and 

Required Swap Creation Data by the relevant SDR designated in accordance 

with Rule 704.
- 64 -

(c) Each Participant or Authorized Trader that enters an Order or RFQ into 

TeraExchange must provide Tera with sufficient information to enable it to report 

all Required Swap Creation Data as provided in CFTC Regulation Part 45, 

including without limitation:

The Legal Entity Identifier of such Participant or Authorized Trader;

A yes/no indication of whether such Participant or Authorized Trader is a Swap 

Dealer with respect to the product with respect to which the Order or RFQ is 

placed;

A yes/no indication of whether such Participant or Authorized Trader is a Major 

Swap Participant with respect to the product with respect to which the Order or 

RFQ is placed;

A yes/no indication of whether such Participant or Authorized Trader is a 

Financial Entity as defined in CEA Section (2)(h)(7)(C);

A yes/no indication of whether the Participant or Authorized Trader is a U.S. 

Person;

If applicable, an indication that the Participant or Authorized Trader will elect 

the end-user clearing requirement exception in CEA Section (2)(h)(7) for any 

Trade resulting from the Order or RFQ; and

If the Trade will be allocated:

(1) An indication that the Trade will be allocated.

(2) The Legal Entity Identifier of the agent.

(d) Tera shall use the unique LEI for each counterparty to a Trade executed on or 

pursuant to the Tera Rules in all of its recordkeeping and all of its swap data 

reporting pursuant to CFTC Regulation Part 45.

(e) Tera shall use the Unique Product Identifier according to the system designated by 

the CFTC, or if no such system has been designated, the internal product identifier 

or product description used by the SDR to which a Trade is reported, in all of its 

records and all of its swap data reporting pursuant to Regulation 45.

(f) Tera shall include the Unique Swap Identifier for a swap in all of its records and all 

of its swap data reporting concerning a Trade in that swap, from the time it creates 

or receives the Unique Swap Identifier, throughout the existence of the Trade and 

for as long as records are required by the CEA or CFTC Regulations to be kept by 

Tera concerning the Trade, regardless of any life cycle events or any changes to 

state data concerning the trade, including, without limitation, any changes with 

respect to counterparties to or ownership of the Trade.
- 65 -

Tera generates and assigns a Unique Swap Identifier for each swap executed on 

or pursuant to its Rules at, or as soon as technologically practicable following, 

the time of execution of the swap, and prior to the reporting of Required Swap 

Creation Data. The Unique Swap Identifier is a single data field combining (i) 

the unique alphanumeric code assigned to Tera by the CFTC for the purpose of 

identifying Tera with respect to Unique Swap Identifier creation and (ii) an 

alphanumeric code generated and assigned to the swap by the automated 

systems of TeraExchange, which shall be unique with respect to all such codes 

generated and assigned by TeraExchange.

In compliance with CFTC Regulation 45.5(a)(2), Tera will transmit the Unique 

Swap Identifier electronically as follows:

(1) To the SDR to which Tera reports Required Swap Creation Data following 

a Trade, as part of that report;

(2) To each counterparty to a Trade, as soon as technologically practicable after 

execution of the Trade;

(3) To the Derivatives Clearing Organization, if any, to which the Trade is 

submitted for clearing, as part of the Required Swap Creation Data 

transmitted to the DCO for clearing purposes.

(g) The Reporting Counterparty for each swap shall be established pursuant to the 

CFTC Regulation 45.8 and in accordance with compliant industry practice. If both 

counterparties to a swap are equal in the hierarchy, the Reporting Counterparty for 

such swap shall be determined in accordance with ISDA’s “Dodd Frank Act – Swap 

Transaction Reporting Party Requirements” document dated July 15, 2013, 

summarized as follows:

For rates asset class, the Reporting Counterparty will be determined in 

accordance with the ISDA Dodd-Frank Act – Swap Transaction Reporting 

Party Requirements, the relevant portion of which is attached to this Rulebook 

as Annex A;

For credit asset class, the Reporting Counterparty is the seller of protection;

For foreign exchange, commodity and equity asset class: the Reporting 

Counterparty is the liquidity provider. A “liquidity provider” is a Person that: 

(i) for RFQ, provided the responses to an RFQ that led to the reported Trade; 

or (ii) for an Order Book, provided the first quote that led to the reported Trade.

(h) Correcting Data Reported to SDR 

If a Reporting Counterparty to a Trade becomes aware of an error or omission 

in the swap transaction and pricing data or the Required Swap Creation Data

which was reported by TeraExchange to an SDR with respect to such Trade, 

either through its own initiative or through notice by the other party to the swap, 
- 66 -

the Reporting Counterparty shall promptly notify Tera of the need to correct the 

original data transmitted to the SDR and submit corrected data to 

TeraExchange.

If TeraExchange becomes aware of an error or omission in the swap transaction 

and pricing data or the Required Swap Creation Data reported by TeraExchange 

to an SDR, any other registered entity or swap counterparty, or to the CFTC 

with respect to a Trade, or receives notification from the Reporting 

Counterparty of an error or omission, TeraExchange shall promptly report such 

errors or omissions to the SDR, any other registered entity or swap 

counterparty, or to the CFTC and submit corrected data to the same SDR, any 

other registered entity or swap counterparty, or to the CFTC as soon as 

technologically practicable after discovery of any such error or omission.

Tera shall not submit or agree to submit a cancellation or correction for the 

purpose of re-reporting swap transaction and pricing data in order to gain or 

extend a delay in public dissemination of accurate swap transaction or pricing 

data or to otherwise evade the reporting requirements of Part 43 of CFTC 

Regulations.

(i) In the event that a registered SDR is unable to receive and hold in queue swap 

transaction and pricing data, Tera shall halt communications with the SDR until 

notice is received that the SDR has resumed normal operations. Upon receipt of 

such notice Tera shall immediately resume reporting of swap transaction and 

pricing data.

Rule 705 Enforceability

(a) Transactions entered pursuant to the Rules shall not be void, voidable, subject to 

rescission, otherwise invalidated, or rendered unenforceable as a result of:

A violation by Tera of the provisions of section 5h of the CEA or any CFTC 

regulations; or

Any CFTC proceeding that:

(1) Alters or supplements a rule, term or condition under section 8a(7) or which 

declares an emergency under section 8a(9) of the CEA;

(2) Requires Tera to alter or supplement a specific term or condition, trading 

rule or procedure; or

(3) Requires Tera to adopt a specific term or condition, trading rule or 

procedure, or to take or refrain from taking a specific action.

(b) Tera shall provide Participants with a Written record of all Principal Economic 

Terms of each Transaction, which shall legally supersede any previous agreement 

and serve as confirmation of all terms of the Transaction. Such confirmation shall 
- 67 -

occur promptly at the time of execution, provided, however, that Tera may omit 

from such confirmation specific identifiers for accounts included in Bunched 

Orders meeting the applicable requirements of section 1.35(b)(5) of the CEA.

CHAPTER 8 DISCIPLINARY RULES

Rule 801 General

(a) All Participants, Authorized Traders, Supervised Persons, Account Holders or 

Customers of Participants, Clearing Firms, Executing Firms, and any other Person 

using the Trader ID or login credentials linked to a Participant, shall be subject to 

Tera’s jurisdiction and disciplinary rules and as such must cooperate with Tera and 

its agents in any inquiry, investigation, audit, examination or proceeding relating to 

Transactions entered on Tera on its behalf. 

(b) All Participants are subject to this Chapter 8 if they, or with respect to a Participant, 

any other Person using any Trader ID and/or login credentials linked to the 

Participant, are alleged to have violated, to have aided and abetted a violation, to 

be violating, or to be about to violate, any Tera Rule or any provision of Applicable 

Law for which Tera possesses disciplinary jurisdiction.

(c) Tera, through the Compliance Department, the Disciplinary Panels and the Appeals 

Panel, will conduct inquiries, investigations, disciplinary and appeals proceedings, 

summary impositions of fines, summary suspensions or other summary actions in 

accordance with this Chapter 8.

(d) No Director will interfere with or attempt to influence the process or resolution of 

any inquiry, investigation, disciplinary or appeals proceeding and summary 

imposition of fines, summary suspension or other summary action, except to the 

extent provided under the Tera Rules with respect to a proceeding in which the 

Director is a member of the relevant panel.

(e) Any Participant may be represented by counsel during any inquiry, investigation, 

disciplinary or appeals proceeding, summary imposition of fines, summary 

suspension or other summary actions pursuant to this Chapter 8.

(f) Pursuant to this Chapter 8, Tera may hold a Participant liable for, and impose 

sanctions against such Participant, for such Participant’s own acts and omissions 

that constitute a violation as well as for the acts and omissions of each

Authorized Trader of such Participant;

Other Supervised Person of such Participant;

Other Person using the Trader ID or login credentials linked to the Participant, 

or
- 68 -

Other agent or representative of such Participant, in each case, that constitute a 

violation as if such violation were that of the Participant.

(g) Pursuant to this Chapter 8, Tera may review an appeal by any applicant of Tera’s 

decision to deny or otherwise limit Trading Privileges of such applicant pursuant 

to the Tera Rules; provided, however, that any such decision by Tera to deny or 

otherwise limit applicant’s Trading Privileges shall continue in effect during such 

review.

(h) A Person subject to a disciplinary or appeals proceeding (and any counsel or 

representative of such Person) and the Compliance Department and/or the Review 

Panel (and any counsel or representative of the Compliance Department or Review 

Panel) shall not knowingly make or cause to be made an ex parte communication 

relevant to the merits of a disciplinary or appeals proceeding to any member of the 

Hearing Panel hearing such proceeding. Members of a Hearing Panel shall not 

knowingly make or cause to be made an ex parte communication relevant to the 

merits of a disciplinary or appeals proceeding to any Person subject to such 

proceeding (and any counsel or representative of such Person) and the Compliance 

Department (and any counsel or representative of the Compliance Department) or 

the Review Panel (and any counsel or representative of the Review Panel). Any 

Person who receives, makes or learns of any communication which is prohibited 

by this rule shall promptly give notice of such communication and any response 

thereto to the Compliance Department and all parties to the proceeding to which 

the communication relates. A Person shall not be deemed to have violated this rule 

if the Person refuses an attempted communication concerning the merits of a 

proceeding as soon as it becomes apparent the communication concerns the merits.

Rule 802 Inquiries and Investigations

(a) The Compliance Department will investigate any matter within Tera’s disciplinary 

jurisdiction upon receipt of a request from CFTC staff or receipt of information that 

indicates a reasonable basis for finding that a violation of the Rules may have 

occurred or will occur. The Compliance Department will determine the nature and 

scope of its inquiries and investigations within its sole discretion and will function 

independently of any commercial interests of Tera. The Compliance Department’s 

investigation must be completed within 12 months of the date when the Compliance 

Department commenced its investigation unless there are mitigating factors that 

may reasonably justify an investigation taking longer than 12 months, including 

without limitation the complexity of the investigation, the number of Participants 

or individuals involved as potential wrongdoers, the number of potential violations 

to be investigated, and the volume of documents and data to be examined and 

analyzed by the Compliance Department.

(b) The Compliance Department has the authority to:

Initiate and conduct inquiries and investigations;
- 69 -

Prepare investigative reports and make recommendations concerning initiating 

disciplinary proceedings;

Prosecute alleged violations within Tera’s disciplinary jurisdiction; and

Represent Tera on summary imposition of fines, summary suspension or other 

summary action.

(c) Each Person subject to Tera’s jurisdiction:

Is obligated, upon reasonable notice, to appear and testify and respond in 

Writing to interrogatories required by the Compliance Department in 

connection with:

(1) Any Tera Rule;

(2) Any inquiry or investigation; or

(3) Any preparation by and presentation during a disciplinary or appeals 

proceeding, summary imposition of fines, summary suspension or other 

summary action by Tera.

Is obligated, upon reasonable notice, to produce books, records, papers, 

documents or other tangible evidence in its, his or her possession, custody or 

control required by the Compliance Department in connection with:

(1) Any Tera Rule;

(2) Any inquiry or investigation; or

(3) Any preparation by and presentation during a disciplinary or appeals 

proceeding, summary imposition of fines, summary suspension or other 

summary action by Tera; and

May not impede or delay any inquiry, investigation, disciplinary or appeals 

proceeding, summary imposition of fines, summary suspension or other 

summary action.

Rule 803 Reports of Investigations

(a) The Compliance Department will maintain a log of all investigations and their 

disposition. The Compliance Department will prepare a Written report of each 

investigation, regardless of whether the evidence gathered during any inquiry or 

investigation forms a reasonable basis to believe that a violation within Tera’s 

jurisdiction has occurred or is about to occur or whether the evidence gathered 

results in closing the matter without further action or through summary action.
- 70 -

(b) Any Written report of investigation will include the reasons for initiating the 

investigation (including a summary of the complaint, if any), all relevant facts and 

evidence gathered, staff analysis, conclusions and the recommendation of the 

Compliance Department. The report must also include the Participant’s disciplinary 

history at Tera, including copies of the warning letters. For each potential 

respondent, the Compliance Department will recommend either:

Closing the investigation without further action;

Summary action;

Resolving the investigation through an informal disposition, including the 

issuance of a warning letter; or

Initiating disciplinary proceedings.

(c) An informal disposition (including the issuance of a warning letter) will not 

constitute a finding of a violation or a sanction.

Rule 804 Opportunity to Respond to Investigatory Report

(a) After completing its investigation report, the Compliance Department may, upon 

approval of the Chief Compliance Officer, notify each potential respondent that the 

Compliance Department has recommended formal disciplinary charges against the 

potential respondent.

(b) The Compliance Department may allow a potential respondent to propose a 

settlement of the matter or to submit a Written statement explaining why a 

disciplinary proceeding should not be instituted or one or more of the potential 

charges should not be brought. The potential respondent shall submit such Written 

statement within the time limit established by the Compliance Department.

Rule 805 Review of Investigative Reports

(a) The Chief Compliance Officer may, at his or her discretion, convene a Review 

Panel to review promptly each completed investigation report to determine whether 

(i) a reasonable basis exists for finding that a violation of Tera Rules within Tera’s 

jurisdiction has occurred or is about to occur, and (ii) commencing disciplinary 

proceedings in respect of such potential violation is warranted.

(b) If the Review Panel determines that additional investigation or evidence is needed 

to decide whether a reasonable basis exists to find that a violation of Tera Rules 

within the Tera’s jurisdiction has occurred or is about to occur, the Review Panel 

will promptly direct the Compliance Department to conduct further investigation.

(c) Within 30 days of receipt of a completed investigation report, or as soon as 

commercially reasonable, the Review Panel will determine for each potential 

respondent whether to authorize one of the following actions:
- 71 -

The delivery of a Notice of Charges and the commencement of disciplinary 

proceedings because a reasonable basis exists to believe that a violation Tera 

Rules within the Tera’s jurisdiction has occurred or is about to occur and 

adjudication is warranted;

The informal disposition of the investigation (by issuing a warning letter as 

more fully discussed in Rule 806) because disciplinary proceedings are 

unwarranted, in which case the Review Panel shall provide a Written 

explanation which must set forth the facts and analysis supporting the decision

to the Compliance Department; or

The closing of the investigation without any action because no reasonable basis 

exists to believe that a violation of Tera Rules within the Tera’s jurisdiction has 

occurred or is about to occur in which case the Review Panel shall provide a 

Written explanation including the facts and analysis supporting the decision to 

the Compliance Department.

(d) The Review Panel shall be comprised of three individuals, at least one of whom 

would qualify to serve as a Public Director in accordance with Rule 205(h). In 

forming a Review Panel, the Chief Compliance Officer shall draw panel members 

from the individuals appointed by the Board as potential members of Review 

Panels. No group or class of Participants may dominate or exercise disproportionate 

influence on a Review Panel, and no member of the Review Panel may participate 

in deliberations or voting on any matter in which he or she has a material conflict 

of interest in respect to the proceedings as defined in Rule 208(b). A Review Panel 

may not include any person involved in adjudicating any other stage of the same 

proceeding. If a vacancy shall occur on a Review Panel after it has begun its 

proceedings, the remaining members shall complete consideration and disposition 

of the matter. Once a Review Panel has determined the matter for which it was 

appointed and has notified the Chief Compliance Officer in writing of its decision, 

it shall be dissolved automatically. The Regulatory Oversight Committee may, at 

any time, remove any member of a Review Panel for cause.

Rule 806 Warning Letters

(a) Tera authorizes compliance staff to issue a warning letter to a person or entity under 

investigation or to recommend that a disciplinary committee take such an action. A 

warning letter issued in accordance with this Rule is not a penalty or an indication 

that a finding of a violation has been made. A copy of a warning letter issued by 

compliance staff must be included in the investigation report. No more than one 

warning letter for the same potential violation may be issued to the same person or 

entity during a rolling 12-month period.

Rule 807 Notice of Charges
- 72 -

(a) If the Review Panel authorizes disciplinary proceedings pursuant to Rule 805(c)(i), 

the Review Panel will prepare, and serve in accordance with Rule 808, a Notice of 

Charges.

(b) A Notice of Charges will:

State the acts, practices or conduct that the respondent is alleged to have 

engaged in;

State the Tera Rule or provision of Applicable Law alleged to have been 

violated or about to be violated;

State the proposed sanctions;

Advise the respondent of its right to a hearing;

State the period of time within which the respondent can request a hearing on 

the Notice of Charges, which will not be less than 20 days after service of the 

Notice of Charges;

Advise the respondent that any failure to request a hearing within the period 

stated, except for good cause, will be deemed to constitute a waiver of the right 

to a hearing;

Advise the respondent that any allegation in the Notice of Charges that is not 

expressly denied will be deemed to be admitted; and

Advise the respondent of its right to be represented by legal counsel or any other 

representative of its choosing in all succeeding stages of the disciplinary 

process.

Rule 808 Service of Notice of Charges

Any Notice of Charges or other documents contemplated to be served pursuant to this 

Chapter 8 may be served (and service shall be deemed complete) upon the respondent either 

personally or by leaving the same at his or her place of business, or by tracked delivery via 

reputable overnight courier, or by deposit in the United States mail, postage prepaid, via 

registered or certified mail addressed to the respondent at the address as it appears on the 

books and records of Tera.

Rule 809 Answer to Notice of Charges

(a) If the respondent determines to answer a Notice of Charges, the respondent must 

file answers within 20 days after being served with such notice, or within such other 

time period determined appropriate by the Review Panel.
- 73 -

(b) To answer a Notice of Charges, the respondent must in Writing:

Specify the allegations that the respondent denies or admits;

Specify the allegations that the respondent does not have sufficient information 

to either deny or admit;

Specify any specific facts that contradict the Notice of Charges;

Specify any affirmative defenses to the Notice of Charges; and

Sign and serve the answer on the Review Panel.

(c) Any failure by the respondent to timely serve an answer to a Notice of Charges will 

be deemed to be an admission to the allegations in such notice. Any failure by the 

respondent to answer one or more allegations in a Notice of Charges will be deemed 

to be an admission of that allegation or those allegations. Any allegation in a Notice 

of Charges that the respondent fails to expressly deny will be deemed to be 

admitted. A statement of a lack of sufficient information shall have the effect of a 

denial of an allegation. A general denial by the respondent, without more, will not 

satisfy the requirements of paragraph (b) above.

Rule 810 Admission or Failure to Deny Charges

(a) If respondent admits or fails to deny any of the charges, a Hearing Panel may find 

that the violations alleged in the Notice of Charges for which the respondent 

admitted or failed to deny any of the charges have been committed. The Hearing 

Panel then must take the following action:

Impose a sanction for each violation found to have been committed;

Notify the respondent in Writing of any sanction to be imposed and advise the 

respondent that it may request a hearing on such sanction within a specified 

period of time.

(b) If a respondent fails to request a hearing within 20 days as specified in the notice, 

the respondent will be deemed to have accepted the sanction.

Rule 811 Denial of Charges and Right to a Hearing

In the event a respondent denies charges, such respondent is entitled to a hearing on the 

charge that is denied. Except for good cause, the hearing must concern only those charges 

denied for which a hearing has been requested.
- 74 -

Rule 812 Settlements

(a) A respondent or potential respondent may at any time after the investigation report 

is complete propose in Writing an offer of settlement to anticipated or instituted 

disciplinary proceedings. Any offer of settlement should contain proposed findings 

and sanctions and be signed by the respondent or potential respondent and 

submitted to the Review Panel. A respondent or potential respondent may offer to 

settle disciplinary proceedings without admitting or denying the findings contained 

in the order of the disciplinary proceedings but must accept the jurisdiction of Tera 

over it and over the subject matter of the proceedings and consent to the entry of 

the findings and sanctions imposed.

(b) If a respondent or potential respondent submits an offer of settlement in accordance 

with paragraph (a) above, the Compliance Department will forward the offer to the 

Chief Compliance Officer with a recommendation on whether to accept or reject 

the offer. Any preliminary determination by the Chief Compliance Officer to accept 

the offer shall be submitted for review by the Review Panel. If the Review Panel 

agrees, then the Chief Compliance Officer shall conditionally accept an offer of 

settlement, without alteration unless the respondent agrees, and that the settlement 

will become final upon the expiration of 20 days after an order of the disciplinary 

proceedings consistent with the terms of the offer of settlement is served on the 

respondent.

(c) If an offer of settlement is accepted, the Review Panel must issue a Written decision 

specifying the rule violations it has reason to believe were committed, including the 

basis or reasons for the panel’s conclusions, and any sanction to be imposed, which 

must include full Participant restitution where Participant harm is demonstrated. If 

an offer of settlement is accepted without the agreement of the Compliance 

Department, the decision must adequately support the Review Panel’s acceptance 

of the settlement. Where applicable, the decision must also include a statement that 

the respondent has accepted the sanctions imposed without either admitting or 

denying the rule violations. Further, if the settlement is accepted the related order 

of disciplinary proceedings becomes final, the respondent’s submission of the offer 

will be deemed to constitute a waiver of the right to notice, opportunity for a hearing 

and review under the Tera Rules.

(d) If the offer of settlement of a respondent or potential respondent is not accepted by 

agreement between the Chief Compliance Officer and the Review Panel, fails to 

become final or is withdrawn by the respondent or potential respondent, the matter 

will proceed as if the offer had not been made and the offer and all documents 

relating to it will not become part of the record. Neither a respondent or potential 

respondent nor the Compliance Department may use an unaccepted offer of 

settlement as an admission or in any other manner at a hearing of disciplinary 

proceedings.

Rule 813 Hearing Panel
- 75 -

(a) The Chief Compliance Officer will appoint a Hearing Panel to conduct hearings in 

connection with any disciplinary proceedings authorized by the Chief Compliance 

Officer or a Review Panel to make findings and impose sanctions pursuant to this 

Chapter 8. 

(b) The Hearing Panel shall be comprised of three individuals, at least one of whom 

would qualify to serve as a Public Director in accordance with Rule 205(h). 

Members shall be appointed by the Board upon the recommendation of the Chief 

Compliance Officer. The chairman of the Hearing Panel shall be appointed by the 

Chief Compliance Officer. No group or class of Participants may dominate or 

exercise disproportionate influence on a Hearing Panel, and no member of the 

Hearing Panel may participate in deliberations or voting on any matter in which he 

or she has a material conflict of interest in respect to the proceedings as defined in 

Rule 208(b). A Hearing Panel may not include any members of Tera’s compliance 

staff or any person involved in adjudicating any other stage of the same proceeding. 

If a vacancy shall occur on a Hearing Panel after it has begun its proceedings, the 

remaining members shall complete consideration and disposition of the matter. 

Once a Hearing Panel has determined the matter for which it was appointed and has 

notified the Board in writing of its decision, it shall be dissolved automatically. The 

Board may, at any time, remove any member of a Disciplinary Panel for cause. 

(c) Any of the functions of Tera or the Review or Hearing Panel under this Chapter 8 

may be performed by an outsourced regulatory service provider pursuant to a 

delegation of such functions by Tera, and references to the Hearing Panel or the 

Compliance Department, as appropriate, shall be deemed to be references to such 

third party service provider. Nevertheless, Tera will retain exclusive authority in all 

substantive decisions, including, but not limited to, denials of access to the Tera 

System for disciplinary reasons. Tera will document any instances where its actions 

differ from those recommended by any outsourced regulatory service provider.

(d) Within ten days of being notified of the appointment of a Hearing Panel, a

respondent may seek to disqualify any individual on the Hearing Panel for the 

reasons identified in Tera Rules or for any other reasonable grounds, by serving 

Written notice on the Chief Compliance Officer and providing a copy thereof to the 

Hearing Panel. By not timely filing a request for disqualification, the respondent 

will be deemed to have waived any objection to the composition of a Hearing Panel. 

The President of Tera will decide the merits of any request for disqualification 

within his or her sole discretion. Any such decision will be final and not subject to 

appeal.

Rule 814 Convening Hearings of Disciplinary Proceedings

(a) All disciplinary proceedings (except for summary impositions of fines pursuant to 

Rule 821) will be conducted at a hearing before the Hearing Panel. A fair hearing 

will be conducted privately and confidentially. Notwithstanding the confidentiality 
- 76 -

of hearings, the Hearing Panel may appoint an expert to attend any hearing and 

assist in deliberations if such expert agrees to be subject to an appropriate 

confidentiality agreement.

(b) After reasonable notice to each respondent, the Hearing Panel will promptly 

convene a hearing to conduct the disciplinary proceedings with respect to such 

respondent. Parties to a disciplinary proceeding include each respondent and the 

Compliance Department.

(c) The chairman of the Hearing Panel may continue, adjourn or otherwise conduct the 

hearing, as he or she may deem appropriate. The chairman of the Hearing Panel 

will determine all procedural and evidentiary matters, including the admissibility 

and relevance of any evidence proffered. In determining procedural and evidentiary 

matters, the chairman of the Hearing Panel will not be bound by any evidentiary or 

procedural rules or law; nevertheless, the procedures for the hearing may not be so 

informal as to deny a fair hearing. Once admitted during the hearing, the Hearing 

Panel may consider, and attach the weight it believes appropriate to, evidence or 

other materials.

(d) Except for procedural and evidentiary matters decided by the chairman of the 

Hearing Panel pursuant to paragraph (c) above and Rule 816, unless each 

respondent otherwise consents, the entire Hearing Panel must be present during the 

entire hearing and any related, deliberations.

Rule 815 Respondent Review of Evidence

(a) Prior to the commencement of a hearing, each respondent will be given the 

opportunity to review all books, records, documents, papers, transcripts of 

testimony and other tangible evidence in the possession or under the control of Tera 

that the Compliance Department will use to support the allegations and proposed 

sanctions in the Notice of Charges or which the chairman of the Hearing Panel 

deems relevant to the disciplinary proceedings. Notwithstanding the foregoing, no 

respondent will have the right to review, and Tera will have no obligation to 

disclose, any information protected by attorney-client privilege.

(b) If any books, records, documents, papers, transcripts of testimony, or other tangible 

evidence contain information that could adversely affect the competitive position 

of the Person providing the information or if such information might compromise 

other investigations being conducted by the Compliance Department, the 

Compliance Department may redact, edit or code such information before 

furnishing it to the respondent.

(c) Notwithstanding anything in paragraph (b) above to the contrary, the Compliance 

Department:

Will not redact, edit or code competitive or investigative information contained 

in documents in a manner that would impair the respondent’s ability to defend 

against the allegations or proposed sanctions in the notices of charges; and
- 77 -

Will provide the respondent with access to the information and portions of the 

documents that the Compliance Department intends to rely on to support the 

allegations or proposed sanctions in the Notice of Charges.

(d) For purposes of this Rule 815, information that could adversely affect competitive 

positions include positions in Instruments currently held, trading strategies 

employed in establishing or liquidating positions, the identity of any Participant or 

Authorized Trader and the personal finances of the Person providing the 

information.

Rule 816 Conducting Hearings of Disciplinary Proceedings

(a) At a hearing conducted in connection with any disciplinary proceedings, the 

Compliance Department will present its case supporting the allegations and 

proposed sanctions in the Notice of Charges to the Hearing Panel. If a respondent 

has timely filed an answer to the Notice of Charges in accordance with Rule 809, 

the respondent is entitled to attend and participate in the hearing.

(b) At a hearing conducted in connection with any disciplinary proceedings, the 

Hearing Panel or the Compliance Department and each respondent may:

Present evidence and facts determined relevant and admissible by the chairman 

of the Hearing Panel;

Call and examine witnesses; and

Cross-examine witnesses called by other parties.

(c) Any person within Tera’s jurisdiction who is called as a witness must participate in 

the hearing and produce evidence. Tera will make reasonable efforts to secure the 

presence of all other persons called as witnesses whose testimony would be 

relevant.

(d) If the respondent fails to file an answer, has filed a general denial, or if any or all 

of the allegations in the Notice of Charges are not expressly denied in the 

respondent’s answer, the chairman of the Hearing Panel may limit evidence 

concerning any allegations not expressly denied in determining the sanctions to 

impose. If a respondent fails to file an answer but appears at the hearing, the 

respondent may not participate in the hearing (by calling or cross examining 

witnesses, testifying in defense, presenting evidence concerning the Notice of 

Charges, or otherwise) unless the Hearing Panel determines that the respondent had 

a compelling reason for failing to timely file an answer. If the Hearing Panel 

determines that the respondent had a compelling reason for failing to timely file an 

answer, the Hearing Panel will adjourn the hearing and direct the respondent to 

promptly file a Written answer in accordance with Rule 809.

(e) Any Person entitled, or required or called upon, to attend a hearing before a Hearing 

Panel pursuant to paragraph (b)(ii) above will be given reasonable notice, 
- 78 -

confirmed in Writing, specifying the date, time and place of the hearing, and the 

caption of the disciplinary proceedings. Tera will require all Participants that are 

called as witnesses to appear at the hearing and produce evidence. Tera will make 

reasonable efforts to secure the presence of all other Persons called as witnesses 

whose testimony would be relevant.

(f) If during any disciplinary proceedings the Hearing Panel determines that a 

reasonable basis exists to believe that the respondent violated or is about to violate 

a Tera Rule or a provision of Applicable Law other than the violations alleged in 

the Notice of Charges, the Hearing Panel may consider those apparent violations 

after providing the respondent with an opportunity to answer the additional 

allegations in accordance with Rule 809. In connection with considering apparent 

violations pursuant to this paragraph (f), the Hearing Panel may request that the 

Compliance Department provide the Hearing Panel with any additional 

information.

(g) The Hearing Panel may summarily impose sanctions on any Participant that 

impedes or delays the progress of a hearing.

(h) Tera may arrange for any hearing conducted in connection with disciplinary 

proceedings to be recorded verbatim, or substantially verbatim, in a manner capable 

of accurate transcription. If the respondent requests a copy of all or portions of the 

recording of a hearing, the chairman of the Disciplinary Panel may within his or 

her sole discretion order the respondent to pay the costs for transcribing the 

recording of the hearing.

(i) If the respondent has requested a hearing, a record of the hearing will be made and 

will become a part of the record of the proceeding. The record will be one that is 

capable of being accurately transcribed; however, it will not be transcribed unless 

the decision of the Hearing Panel is appealed pursuant to the Rules of Tera, the 

decision is reviewed by the CFTC pursuant to Section 8(c) of the CEA or Part 9 of 

the CFTC Regulations, or the transcript is requested by the CFTC or the respondent. 

The cost of transcribing the record of the hearing will be borne by the respondent 

who requests the transcript or whose application for the CFTC review of the 

disciplinary action has been granted. In all other instances, the cost of transcribing 

the record will be borne by Tera.

(j) No interlocutory appeals of rulings of any Disciplinary Panel or chairman of the 

Disciplinary Panel are permitted.

(k) Sanctions may be summarily imposed upon any Person within Tera’s jurisdiction 

whose actions impede the progress of a hearing.

Rule 817 Decision of Hearing Panel

(a) As promptly as reasonable following a hearing, the Hearing Panel will issue an 

order rendering its decision based on the weight of the evidence contained in the 
- 79 -

record of the disciplinary proceedings. A decision by a majority of the Hearing 

Panel will constitute the decision of the Hearing Panel.

(b) Within thirty days of the final decision of the Hearing Panel Tera will serve a copy 

of the order of the disciplinary proceedings on the respondent, the Compliance 

Department and provide notice to the CFTC. The order will include:

The Notice of Charges or summary of the charges;

The answer, if any, or a summary of the answer;

A brief summary of the evidence introduced at the hearing;

Findings of fact and conclusions concerning each charge, including an 

explanation of the evidentiary and other basis for such findings and conclusions 

with respect to each charge;

The imposition of sanctions, if any, and the effective date of each sanction; and

Notice of the respondent’s right to appeal pursuant to Rule 820.

(c) The order of the disciplinary proceedings will become final upon the expiration of 

20 days after the order is served on the respondent and a copy thereof is provided 

to the Compliance Department and the CFTC.

(d) Promptly following a hearing conducted in accordance with the Tera Rules, the 

Hearing Panel shall render a written decision based upon the weight of the evidence 

contained in the record of the proceeding and shall provide a copy to the respondent. 

The decision shall include:

The Notice of Charges or a summary of the charges;

The answer, if any, or a summary of the answer;

A summary of the evidence produced at the hearing or, where appropriate, 

incorporation by reference of the investigation report;

A statement of findings and conclusions with respect to each charge, and a 

complete explanation of the evidentiary and other basis for such findings and 

conclusions with respect to each charge;

An indication of each specific rule that the respondent was found to have 

violated; and

A declaration of all sanctions imposed against the respondent, including the 

basis for such sanctions and the effective date of such sanctions.

Rule 818 Sanctions
- 80 -

(a) After notice and opportunity for hearing in accordance with the Tera Rules, Tera 

will impose sanctions if any Participant or Person is found to have violated or to 

have attempted to violate a Tera Rule or provision of Applicable Law for which 

Tera possesses disciplinary jurisdiction. All disciplinary sanctions imposed shall be 

commensurate with the violations committed and shall be clearly sufficient to deter 

recidivism or similar violations by other market participants. All disciplinary 

sanctions, including sanctions imposed pursuant to an accepted settlement offer, 

shall take into account the respondent’s disciplinary history. In the event of 

demonstrated customer harm, any sanction must also include full customer 

restitution, except where the amount of restitution or to whom it should be provided 

cannot be reasonably determined. Tera may impose one or more of the following 

sanctions or remedies:

Censure;

Limitation on Trading Privileges or other activities, functions or operations;

Suspension of Trading Privileges;

Fine (subject to paragraph (b) below);

Restitution or disgorgement; or

Termination of Trading Privileges. 

(b) Tera may impose a fine of up to $100,000, or such other amount Tera determines 

in its sole discretion to be equitable and just under the circumstances, for each 

violation of a Tera Rule. If a fine or other amount is not paid within 30 days of the 

date that it becomes payable, then interest will accrue on the sum from the date that 

it became payable at the quoted prime rate plus three percent. Tera has sole 

discretion to select the bank on whose quotations to base the prime rate. Each 

Participant will be responsible for paying any fine or other amount imposed on, but 

not paid by, any of its Authorized Traders or Supervised Persons, or any Participant 

acting on its behalf.

Rule 819 Costs

(a) Regardless of the outcome of any disciplinary proceeding, the Disciplinary Panel 

may order a respondent to pay some or all of the costs associated with the 

disciplinary proceedings that the Disciplinary Panel believes were unnecessarily 

caused by the respondent. Costs may include costs associated with the inquiry or 

investigation, the prosecution by the Compliance Department, legal and 

professional assistance, the hearing and administrative and other expenses incurred 

by the Disciplinary Panel.

(b) The Disciplinary Panel may only award costs against Tera if the Panel concludes 

that Tera has behaved in a manifestly unreasonable manner in the commencement 

or conduct of the disciplinary proceedings in question. The Disciplinary Panel must 
- 81 -

limit any award of costs against Tera to an amount that the Panel concludes is 

reasonable and appropriate, but does not exceed the respondent’s costs for external 

legal or other external professional assistance.

(c) The Disciplinary Panel may determine the amounts and allocation of costs in any 

manner it may deem appropriate. Tera or the respondent will pay any costs ordered 

to be paid by it by the Disciplinary Panel within 30 Business Days of written notice 

of the amount imposed by the Disciplinary Panel.

Rule 820 Right to Appeal

(a) Each respondent found by the Disciplinary Panel to have violated (or, in the case 

of a Participant, whose Authorized Trader, Supervised Person or other Person using 

its Participant ID was found to have violated) a Rule or who is subject to any 

summary fine imposed pursuant to Rule 821 or any summary action imposed 

pursuant to Rule 822 may appeal the decision within 20 days of receiving the order 

of the Disciplinary Panel or the notice of summary action, as the case may be, by 

filing a notice of appeal with the Chief Compliance Officer. 

(b) Tera may appeal all or any part of a decision of the Disciplinary Panel, including

any sanctions that may or may not have been imposed by the Disciplinary Panel, 

within 20 days of receiving the order of the Disciplinary Panel, by filing a notice 

of appeal with the Chief Compliance Officer. 

(c) While an appeal is pending, the effect of the order of the Disciplinary Panel or the

summary action (including any sanctions, remedies or costs imposed thereby) shall 

be suspended. 

(d) The notice of appeal must state in writing the grounds for appeal, including the

findings of fact, conclusions or sanctions to which the appellant objects. An 

appellant may appeal the order of the Disciplinary Panel or any summary action on 

the grounds that:

The order or summary action was arbitrary, capricious, an abuse of discretion, 

or not in accordance with these Rules; 

The order or summary action exceeded the authority or jurisdiction of the

Disciplinary Panel, the Chief Compliance Officer or Tera; 

The order or summary action failed to observe required procedures;

The order or summary action was unsupported by the facts or evidence; or

The sanctions, remedies or costs which were imposed were inappropriate or 

unsupported by the record. 

(e) The Chief Compliance Officer will forward copies of any notice of appeal received 

by it to all parties to the disciplinary proceeding or summary action, as the case may 
- 82 -

be, except the appellant. On or before the 20th day after filing a notice of appeal, 

the appellant must file with the Chief Compliance Officer and serve on Tera a brief 

supporting the notice of appeal and documents supporting the brief. On or before 

the 20th day after the date on which the appellant serves its’ supporting brief, the 

appellee must file and serve its brief in opposition. On or before the 10th day after 

the date on which the appellee serves its brief in opposition, the appellant must file 

and serve on Tera a brief in reply.

(f) In connection with any appeal, Tera will furnish to the Chief Compliance Officer 

and to the respondent/appellant a transcript of the hearing, any exhibits introduced 

at the hearing, the notice of appeal and briefs filed to support and oppose the appeal. 

(g) No later than 30 days after the last submission filed pursuant to paragraph (e) of 

this Rule 820, the Chief Compliance Officer will appoint an Appeals Panel to 

consider and determine the appeal. An Appeals Panel shall be comprised of three 

individuals, none of whom shall be a member of the Compliance Department or 

have been a member of any Disciplinary Panel involved in the matters on appeal. 

No member of an Appeals Panel may have a material conflict of interest in respect 

to the proceedings defined in Rule 208(b).

(h) Within 10 days of being notified of the appointment of the Appeals Panel, an 

appellant or appellee may seek to disqualify any individual named to the Appeals 

Panel for the reasons identified in these Rules, by serving written notice on the 

Chief Compliance Officer. By not timely filing a request for disqualification, the 

appellant or appellee will be deemed to have waived any objection to the 

composition of the Appeals Panel. The Chief Compliance Officer will decide the 

merits of any request for disqualification within his or her sole discretion. Any such 

decision will be final and not subject to appeal. 

(i) The Appeals Panel may hold a hearing to allow parties to present oral arguments. 

Any hearing will be conducted privately and confidentially. Notwithstanding the 

confidentiality of hearings, the Appeals Panel may appoint an expert to attend any 

hearing and assist in the deliberations if such individual(s) agree to be subject to 

appropriate confidentiality agreements. In determining procedural and evidentiary 

matters, the Appeals Panel will not be bound by evidentiary or procedural rules or 

law. 

(j) The Appeals Panel will only consider on appeal the record before the Disciplinary 

Panel or, in the case of a summary action, the record considered by the Chief 

Compliance Officer, the notice of appeal, the briefs filed in support and opposition 

of the appeal, and any oral arguments of the parties. The Appeals Panel may only 

consider new evidence when the Appeals Panel is satisfied that good cause exists 

for why the evidence was not introduced during the disciplinary proceeding or 

when imposing the summary action. 

(k) After completing its review, the Appeals Panel may affirm, modify or reverse any 

order of the Disciplinary Panel or summary action under appeal, in whole or in part, 
- 83 -

including increasing, decreasing or eliminating any sanction or remedy imposed, 

imposing any other sanction or remedy authorized by these Rules, or remanding the 

matter to the same or a different Disciplinary Panel for further disciplinary 

proceedings or for reconsideration by the Chief Compliance Officer in the case of 

summary action. The Appeals Panel may order a new hearing for good cause or if 

the Appeals Panel deems it appropriate. 

(l) As promptly as reasonably possible following its review, the Appeals Panel will 

issue a written decision on appeal rendering its decision base d on the 

preponderance of the evidence before the Appeals Panel. The decision of the 

Appeals Panel will include a statement of findings of fact and conclusions for each 

finding, sanction, remedy and cost reviewed on appeal, including each specific Rule 

and provision of Applicable Law that the respondent is found to have violated, if 

any, and the imposition of sanctions, remedies and costs, if any, and the effective 

date of each sanction, remedy or cost. 

(m) The Appeals Panel’s written order on appeal (including findings of fact and 

conclusions and the imposition of sanctions, remedies and costs, and the effective 

date of any sanction, remedy cost) will be the final action of Tera and will not be 

subject to appeal within Tera. 

Rule 821 Summary Imposition of Fines

(a) The Chief Compliance Officer may summarily impose a fine against a Participant 

for failing:

To make timely payments of original or variation margin, fees, cost, charges or 

fines to Tera;

To make timely and accurate submissions to Tera of notices, reports or other 

information required by the Tera Rules; or

To keep any books and records required by the Tera Rules.

(b) The Compliance Department, within thirty days of a decision to summarily impose 

a fine against a Participant and acting on behalf of the Chief Compliance Officer, 

will provide Written notice of any fine imposed pursuant to this Rule 821 to each 

Participant subject thereto. The notice will specify:

The violations of the Tera Rules for which the fine is being imposed;

The date of the violation for which the fine is being imposed; and

The amount of the fine.

(c) Within 20 days of serving the notice of fine, the Participant must either pay or cause 

the payment of the fine. The fine will become final upon the expiration of 20 days 

after the notice of fine is served on the Participant.
- 84 -

(d) Tera will set the amount of any fines imposed pursuant to this Rule 821, with the 

maximum fine for each violation not to exceed $5,000. Summary imposition of 

fines pursuant to this Rule 821 will not preclude Tera from bringing any other 

action against the Participant.

Rule 822 Summary Suspensions and Other Summary Actions

(a) Notwithstanding anything in the Tera Rules to the contrary, the Chief Compliance 

Officer may, after consultation with the Regulatory Oversight Committee, if 

practicable, summarily suspend, revoke, limit, condition, restrict or qualify the 

Trading Privileges of a Participant, and may take other summary action against any 

Participant in accordance with the Tera Rules; provided, however, that the Chief 

Compliance Officer must reasonably believe that the business, conduct or activities 

of the Participant in question is not in the best interests of Tera or the marketplace, 

including based on any of the following:

Statutory disqualification from registration as provided in CEA Section 8a(2) 

or (3);

Non-payment of fees, costs, charges, fines or arbitration awards; or

The reasonable belief that immediate action is necessary to protect the public 

or the best interests of Tera.

(b) Whenever practicable, the Compliance Department, acting on behalf of the Chief 

Compliance Officer, will provide Written notice to the party against whom any 

action in accordance with paragraph (a) shall be taken within thirty days of the 

decision to take summary action. If thirty-day prior notice is not practicable, Tera 

will give notice at the earliest possible opportunity to the respondent against whom 

the action is brought. The Compliance Department, acting on behalf of the Chief 

Compliance Officer, will prepare a notice of summary action (which will state the 

action, the reasons for the action, and the effective time, date and duration of the 

action) and serve the notice on such party.

(c) The summary action will become final upon the expiration of 20 days after the 

notice of action is served on the respondent.

(d) At the request of Tera, a respondent against whom a summary action is brought 

pursuant to this Rule 822 must provide books and records over which the 

respondent has access or control and must furnish information to, or appear or 

testify before, Tera or the in connection with the enforcement of any Tera Rule.

Rule 823 Rights and Responsibilities after Suspension or Termination

(a) When the Trading Privileges of a Participant are suspended, any such suspension 

will not affect the rights of creditors under the Tera Rules or relieve the Participant 

in question of its Obligations under the Tera Rules incurred before the suspension, 

or to pay any SEF fees, costs, or charges incurred during the suspension. Tera may 
- 85 -

discipline a suspended Participant under this Chapter 8 for any violation of a Tera 

Rule or provision of Applicable Law committed by the Participant before, during 

or after the suspension.

(b) When the Trading Privileges of a Participant are terminated, all of its rights and 

Trading Privileges will terminate, except for the right of the Participant in question 

to assert claims against others, as provided in the Tera Rules. Any such termination 

will not affect the rights of creditors under the Tera Rules. A terminated Participant 

may only seek to reinstate its Trading Privileges by applying for Trading Privileges 

pursuant to Rule 302. Tera will not consider the application of a terminated 

Participant if such Participant continues to fail to appear at disciplinary or appeals 

proceedings without good cause or continues to impede the progress of disciplinary 

or appeals proceedings.

(c) A suspended or terminated Participant remains subject to the Tera Rules and the 

jurisdiction of Tera for acts and omissions prior to the suspension or termination, 

and must cooperate with Tera and its agents in any inquiry, investigation, audit, 

examination, disciplinary or appeals proceeding, summary suspension or other 

summary action as if the suspended or terminated Participant still had Trading 

Privileges.

(d) In the event of the suspension or revocation of the Trading Privileges of a 

Participant, Tera shall seek to facilitate the transfer of any Accounts held by such 

Participant to other Participants with Trading Privileges.

Rule 824 Notice to the Respondent and the Public

Tera will provide Written notice of disciplinary proceedings to the parties consistent with 

applicable CFTC Regulations. Whenever Tera suspends, expels, fines or otherwise 

disciplines, or denies any Person access, to Tera, Tera will make the disclosures required 

by CFTC Regulations, including the public posting, for five consecutive business days, of 

a notice containing the identity of the party against whom action was taken; a statement of 

the reasons for taking the action and the Rules which have been violated; a statement of 

the conclusions and findings made with regard to each Rule violation; the terms of the 

disciplinary action; and, the effective date of the actions taken. Thereafter, Tera will 

maintain and make available for public inspection a record of the information contained in 

the disciplinary action notice.

CHAPTER 9 MISCELLANEOUS

Rule 901 Anti-Money Laundering and Anti-Terrorism

(a) It is Tera policy:

Not to engage in or knowingly assist any money laundering or other illicit 

business, and
- 86 -

Not to engage in or knowingly assist, or be a conduit for, terrorist financing.

(b) Participants will be required to provide sufficient information for Tera to complete 

“know your customer” checks and to conduct restricted list searches, including, but 

not limited to, searches against the Specially Designated Nationals (“SDN”) and 

Blocked Persons list maintained by the Office of Foreign Assets Control of the U.S. 

Department of the Treasury (“OFAC list”).

Rule 902 Gifts and Gratuities

Except as permitted in Writing by the Chief Compliance Officer, no SEF Official may 

accept anything of value in excess of $100 from any Participant.

Rule 903 Market Data

(a) All Participants understand and acknowledge that Tera has a proprietary interest in:

The price and quantity data from each and every bid, offer, Order, Transaction, 

and modification thereof, including the time at which the Transaction was 

executed by, or submitted to, Tera and the Participant ID and the Trader ID 

under which it was entered (as well as other information identifying persons 

involved in the Transaction);

The price and quantity data of each bid and offer submitted to Tera, including 

the time at which such bid or offer was submitted to the Tera System;

Any yield curves prepared by Tera;

Any data and information derived from (i), (ii) and (iii) and the format and 

presentation thereof; and

The transmissions and dissemination of the data and information to 

Participants, any publisher of the data or information with whom Tera has a 

written agreement, and any other Persons.

Except as may be required for regulatory or self-regulatory purposes, Tera may 

only use or distribute the aforementioned data in a manner that prevents 

identification of Participants or Account Holders, their Accounts or their 

Participant ID or Trader ID.

(b) Tera may at any time restrict or establish utilization fees in respect of data described 

in Rule 903(a), with respect to all or any Participants, in order to safeguard the 

security or operations of Tera, or to preserve market, integrity, fair and orderly 

trading, or if otherwise in the public interest.

(c) Except as provided for in the Exchange User License Agreement, Participants may 

not distribute, sell or retransmit information displayed on the Tera to any third 

party.
- 87 -

(d) Notwithstanding Rule 903(b) and Rule 903(c), and pursuant to Part 43 and Part 45 

of the CFTC Regulations, the CFTC will have access to the data described in Rule 

903(a).

Rule 904 Extension or Waiver of Tera Rules

If necessary and expedient, the Chief Compliance Officer or President may, in his or her 

sole discretion, waive, or extend the time period for performing, any act or acts designated 

by the Tera Rules, but only to the extent such waiver or extension is not inconsistent with 

the CEA or the CFTC Regulations or other applicable regulations.

Rule 905 Governing Law, Jurisdiction and Dispute Resolution

(a) The law of the State of New York governs the Tera Rules regardless of the laws 

that would otherwise apply under applicable choice-of-law principles.

(b) Any dispute between Tera and a Participant arising from or in connection with the 

Tera Rules or use of Tera must be brought to arbitration pursuant to subsection (c) 

of this Rule 905 within one (1) year from the occurrence of the event giving rise to 

the dispute. This Rule 905 shall in no way create a cause of action nor authorize an 

action that would otherwise be prohibited by the Tera Rules.

(c) Any dispute between Tera and a Participant arising from or in connection with the 

Tera Rules will be settled through arbitration conducted by JAMS in the JAMS 

office located in New York, New York, and pursuant to the JAMS Commercial

Arbitration Rules.

(d) Any failure on the Part of the Participant to arbitrate a case subject to arbitration, 

or the commencement by any such Participant of a suit in any court prior to 

arbitrating a case subject to arbitration, violates these Rules and subjects such 

Participant to disciplinary proceedings pursuant to Chapter 8.

(e) In the event that this Rule 905 is held to be unenforceable in connection with any 

dispute or a claim is deemed by a court of competent jurisdiction to be not 

arbitrable:

Exclusive jurisdiction for any such dispute will reside in any state or federal 

court sitting in New York County, New York;

Tera and the Participant involved in the dispute will be presumed to have 

submitted to the personal jurisdiction of any such court;

An action to enforce any judgment or decision of such court may be brought in 

the same court or in any other court with jurisdiction or venue; and

All Participants unconditionally and irrevocably waive any and all right to trial 

by jury in connection with any such dispute.
- 88 -

Rule 906 LIMITATION OF LIABILITY, NO WARRANTIES

(a) THE SERVICES (FOR EACH INSTANCE IN THIS RULE 906, “SERVICES” 

SHALL HAVE THE MEANING AS PROVIDED IN THE EULA) ARE 

PROVIDED ON AN “AS IS,” “AS AVAILABLE” BASIS WITHOUT 

WARRANTIES OF ANY KIND AND THERE ARE NO EXPRESS OR IMPLIED 

WARRANTIES OR REPRESENTATIONS PROVIDED BY TERA 

(INCLUDING ITS SUBSIDIARIES AND AFFILIATES, AND ANY 

CONTRACTORS PROVIDING SERVICES TO TERA), NOR ANY OF THEIR 

RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES, MEMBERS, 

AGENTS, CONSULTANTS, AND LICENSORS (THE “DISCLAIMING 

PARTY” OR “DISCLAIMING PARTIES”). EACH OF THE DISCLAIMING 

PARTIES DISCLAIMS ALL WARRANTIES, CONDITIONS, GUARANTIES 

OR REPRESENTATIONS AS TO MERCHANTABILITY, FITNESS FOR A 

PARTICULAR PURPOSE OR OTHER WARRANTIES, CONDITIONS, 

GUARANTIES OR REPRESENTATIONS. PARTICIPANT IS SOLELY 

RESPONSIBLE FOR CONFIRMING THE ACCURACY AND ADEQUACY OF 

INFORMATION, SERVICES OR PROCESSES USED BY IT AND THE 

RESULTANT TRANSACTIONS OR OTHER OUTPUT THEREOF.

(b) EXCEPT FOR ANY INDEMNIFICATION OBLIGATION IN ACCORDANCE 

WITH RULE 206 HEREOF, OR A BREACH OF ITS CONFIDENTIALITY 

OBLIGATIONS SET FORTH IN RULE 208(G) AND EXCEPT WHEN THERE 

HAS BEEN A FINDING OF GROSS NEGLIGENCE, FRAUD OR WILLFUL 

MISCONDUCT (HEREINAFTER “LIMITATION EXCEPTIONS”) BY TERA, 

ITS SUBSIDIARIES OR AFFILIATES, IN NO EVENT SHALL TERA 

(INCLUDING ITS SUBSIDIARIES AND AFFILIATES), NOR ANY OF THEIR 

RESPECTIVE DIRECTORS, OFFICERS, MEMBERS, EMPLOYEES, 

AGENTS, CONSULTANTS, AND LICENSOR BE LIABLE TO ANY PERSON 

FOR ANY LOSSES, DAMAGES, COSTS OR EXPENSES, INCLUDING BUT 

NOT LIMITED TO LOSS OF PROFITS, LOSS OF USE, SPECIAL, PUNITIVE, 

INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES, ARISING 

FROM:

ANY FAULT IN DELIVERY, DELAY, OMISSION, SUSPENSION, 

INTERRUPTION, INACCURACY OR TERMINATION, OR ANY OTHER 

CAUSE, IN CONNECTION WITH THE FURNISHING, PERFORMANCE, 

OPERATION, MAINTENANCE, USE OF OR INABILITY TO USE ALL OR 

ANY PART OF THE SERVICES, TERA DATA OR OTHER 

INFORMATION MADE AVAILABLE ON THE SERVICES, OR ANY 

FACILITIES USED TO SUPPORT THE SERVICES, INCLUDING 

WITHOUT LIMITATION ELECTRONIC ORDER ENTRY/ORDER 

DELIVERY, TRANSACTIONS, TRADING THROUGH ANY 

ELECTRONIC MEANS, ELECTRONIC COMMUNICATION OF MARKET 

DATA OR INFORMATION, WORKSTATIONS USED, PRICE 

REPORTING SYSTEMS AND ANY AND ALL TERMINALS, 

COMMUNICATIONS NETWORKS, CENTRAL COMPUTERS, 
- 89 -

SOFTWARE, HARDWARE, AND FIRMWARE RELATING THERETO; 

OR

ANY FAILURE OR MALFUNCTION, FAULT IN DELIVERY, DELAY, 

OMISSION, SUSPENSION, INACCURACY, INTERRUPTION OR 

TERMINATION, OR ANY OTHER CAUSE, OF ANY SYSTEM OR 

SERVICE OF TERA OR SERVICES, EQUIPMENT OR FACILITIES USED 

TO SUPPORT SUCH SYSTEMS OR SERVICES, CAUSED BY ANY 

THIRD PARTIES INCLUDING, BUT NOT LIMITED TO, INDEPENDENT 

SOFTWARE VENDORS AND NETWORK PROVIDERS; OR

ANY FAULT IN DELIVERY, DELAY, SUSPENSION, INACCURACY OR 

ANY OTHER CAUSE OF ANY SYSTEM OR SERVICE USED BY 

CLEARING FIRM, EXECUTING FIRM OR A CLEARING HOUSE IN 

SUPPORT OF TRANSACTIONS OR CLEARING ACTIVITIES.

THE LIMITATION OF LIABILITY IN THIS RULE SHALL APPLY WHETHER 

A CLAIM ARISES IN CONTRACT, TORT, NEGLIGENCE, STRICT 

LIABILITY, CONTRIBUTION OR OTHERWISE AND WHETHER THE 

CLAIM IS BROUGHT DIRECTLY OR AS A THIRD PARTY CLAIM.

(c) NOTWITHSTANDING THE ABOVE, EXCEPT FOR LIMITATION 

EXCEPTIONS BY TERA, ITS SUBSIDIARIES OR AFFILIATES, TERA’S 

TOTAL COMBINED AGGREGATE OBLIGATIONS OR LIABILITY FOR 

PARTICIPANT OR ANY THIRD PARTY ARISING OUT OF OR IN 

CONNECTION WITH THIS AGREEMENT OR THE SERVICES PROVIDED 

HEREUNDER SHALL NOT EXCEED $100,000 (ONE HUNDRED 

THOUSAND DOLLARS) FOR ALL LOSSES SUFFERED FROM ALL 

CAUSES IN A SINGLE CALENDAR MONTH; AND $250,000 (TWO 

HUNDRED FIFTY THOUSAND DOLLARS) FOR ALL LOSSES FROM ALL 

CAUSES SUFFERED IN A SINGLE CALENDAR YEAR. ANY DISPUTED 

CLAIM PURSUANT TO THIS SUBSECTION MUST BE ARBITRATED 

PURSUANT TO RULE 905. 

IF THE NUMBER OF ALLOWED CLAIMS BY PARTICIPANT ARISING 

OUT OF ANY FAILURES OR MALFUNCTIONS ON A SINGLE DAY OR 

SINGLE MONTH CANNOT BE FULLY SATISFIED BECAUSE OF THE 

ABOVE DOLLAR LIMITATIONS, ALL SUCH CLAIMS SHALL BE

LIMITED TO A PRO RATA SHARE OF THE MAXIMUM AMOUNT FOR 

THE RESPECTIVE PERIOD.

A CLAIM AGAINST TERA SHALL ONLY BE ALLOWED IF SUCH 

CLAIM IS BROUGHT IN ACCORDANCE WITH PROCEDURES SET 

FORTH BY THE RULES.
- 90 -

(d) LIMITATION OF LIABILITY OF PARTICIPANT. EXCEPT FOR 

LIMITATION EXCEPTIONS OR A VIOLATION OF THE RULES AND 

EXCEPT FOR ITS PAYMENT OBLIGATION TO TERA: 

IN NO EVENT SHALL PARTICIPANT (INCLUDING ITS SUBSIDIARIES 

AND AFFILIATES), NOR ANY OF THEIR RESPECTIVE DIRECTORS, 

OFFICERS, MEMBERS, EMPLOYEES, AGENTS, OR CONSULTANTS BE 

LIABLE TO TERA FOR ANY LOSSES, DAMAGES, COSTS OR 

EXPENSES, INCLUDING BUT NOT LIMITED TO LOSS OF PROFITS, 

LOSS OF USE, SPECIAL, PUNITIVE, INDIRECT, INCIDENTAL OR 

CONSEQUENTIAL DAMAGES; AND 

EXCEPT FOR LIMITATION EXCEPTIONS OR A VIOLATION OF THE 

RULES, THE MAXIMUM AGGREGATE LIABILITY OF PARTICIPANT 

(INCLUDING ITS SUBSIDIARIES AND AFFILIATES AND ANY 

CONTRACTORS PROVIDING SERVICES TO THEM), OR ANY OF 

THEIR RESPECTIVE DIRECTORS, OFFICERS, MEMBERS, 

EMPLOYEES, AGENTS, OR CONSULTANTS, FOR DIRECT LOSS OR 

DAMAGE WHETHER IN CONTRACT, TORT (INCLUDING 

NEGLIGENCE AND BREACH OF STATUTORY DUTY), STRICT 

LIABILITY OR OTHERWISE ARISING OUT OF OR IN CONNECTION 

WITH USE OF SERVICES OR TRANSACTIONS SHALL BE $100,000 

(ONE HUNDRED THOUSAND DOLLARS) FOR ALL LOSSES 

SUFFERED FROM ALL CAUSES IN A SINGLE CALENDAR MONTH; 

AND $250,000 (TWO HUNDRED FIFTY THOUSAND DOLLARS) FOR 

ALL LOSSES FROM ALL CAUSES SUFFERED IN A SINGLE 

CALENDAR YEAR. ANY DISPUTED CLAIM PURSUANT TO THIS 

SUBSECTION MUST BE ARBITRATED PURSUANT TO RULE 533.

(e) THE LIMITATIONS OF LIABILITY IN THIS RULE 906 SHALL NOT 

PROTECT ANY PARTY FOR WHICH THERE HAS BEEN A FINAL 

DETERMINATION (INCLUDING EXHAUSTION OF ANY APPEALS) BY A 

COURT OR ARBITRATOR TO HAVE ENGAGED IN FRAUD OR WILLFUL 

MISCONDUCT. ADDITIONALLY, THE FOREGOING LIMITATIONS ON 

LIABILITY OF THIS RULE SHALL BE SUBJECT TO THE CEA AND THE 

REGULATIONS PROMULGATED THEREUNDER, EACH AS IN EFFECT 

FROM TIME TO TIME.

Rule 907 Effect of Amendment, Repeal, or New Rule

(a) Tera may, pursuant to the CEA and CFTC regulations, amend or repeal any Rule, 

and/or adopt new Rules. Any such amendment, repeal of a Rule, or adoption of a 

new Rule shall be binding on all Persons subject to the jurisdiction of Tera upon 

the effective date of such amendment, repeal, or adoption. 
- 91 -

(b) Any amendment, repeal of a Rule, or adoption of a new Rule shall be published in 

a Notice to Participants in the manner described in Rule 308.

CHAPTER 10 INSTRUMENT SPECIFICATIONS

Rule 1001 Instruments Listed for Trading

(a) Tera shall determine which Instruments can be traded from time to time pursuant 

to these Rules, provided that any such determination shall be submitted to the CFTC 

as required by the CEA and CFTC Regulations.

(b) Subject to compliance with the CEA and CFTC Regulations, Instruments traded on 

Tera may be cleared and uncleared.

(c) The current list of Instruments available for trading on Tera are posted on its

website and below as Annex B. 
- 92 -

Annex A Swap Transaction Reporting Party Requirements

(Excerpt from Dodd Frank Act)

Product Attribute Determination

Tiebreaker Logic

When the participant identifier tiebreaker is invoked the following processes will be used:

1a. Determining identifiers

When an entity has multiple entity identifiers (“IDs”), the following hierarchy will be used to 

determine which entity ID to use in the RP determination logic:

• LEI/CiCi is used before DTCC GTR ID which is used before an AVOX ID which is 

used before any other identifier.

1b. Identifier Tiebreaker Logic Scenarios

i. When both firms must have an LEI/CiCi then rank based on the two LEI/CiCis.

ii. When one firm has an LEI/CiCi and the other firm has a DTCC ID but does not have 

an LEI then rank based on the comparison of the LEI/CiCi to the DTCC ID.

iii. When one firm has an LEI/CiCi and the other firm has an AVOX ID but does not 

have an LEI then rank based on the comparison of the LEI/CiCi to the AVOX ID.

iv. When neither firm has an LEI/CiCi and both firms have a DTCC ID then rank based 

on the two DTCC IDs.

v. When neither firm has an LEI/CiCi and one firm has a DTCC ID and the other firm 

has only an AVOX ID then rank based on the comparison of the DTCC ID to the 

AVOX ID.
- 93 -

vi. A firm will be the RP when that firm has a DTCC ID or LEI/CiCi and the other has 

neither an LEI/CiCi nor a DTCC ID nor an AVOX ID. Please note that in all cases 

the RP will have a DTCC ID and by extension will have an LEI/CiCi.

2. Determining sort order of identifiers

• LEI/CiCi, DTCC GTR IDs, and AVOX IDs are comprised of characters from the

following set {0‐9, A‐Z}.

• For avoidance of doubt, before comparing IDs convert all IDs to UPPER CASE only.

• For comparison basis the sort order will be reverse ASCII sort order. For avoidance 

of doubt the following are sort order of precedence:

• Z, Y, X, W, V, U, T, S, R, Q, P, O, N, M, L, K, J, I, H, G, F, E, D, C, B, A, 9, 8, 7, 6,

5, 4, 3, 2, 1, 0.

3. When comparing two IDs the RP will be the firm with the first ID in the list when sorted in

reverse ASCII sort order.
- 94 -

Annex B Product Terms and Conditions