Attachment —Rule Amendment

(Additions are underlined, deletions are struck through)

1. Rule Ill-6 is removed and reserved:

Ill-6. Reserved Limitations-of Trading Privileges

2. Rule VII-16 is amended to read as follows:

VII-16. Appeal from Disciplinary Panel Decision, Summary Impositions of Fines
and Other Summary Actions

(a) Each respondent found by the Disciplinary Panel to have violated a Rule
of the Exchange or a provision of Applicable Law or who is subject to any
summary fine imposed pursuant to Rule VII-17 or any summary action
imposed pursuant to Rule Vil-17 may appeal the decision within 20
Business Days of receiving the order of the disciplinary proceedings or the
notice of summary action, as the case may be, by filing a notice of appeal
with the Compliance Director. While an appeal is pending, the effect of
the order of disciplinary proceedings or the summary action (including any
sanctions, remedies or costs imposed thereby) shall be suspended;

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Frequently Asked Questions
Summary Denial of Access

Thank you for your interest in trading on Cantor Exchange (“CX”). Below are some
questions that are frequently asked regarding trading on CX.

When might CX take summary action to deny access to a party?

CX may take summary action to deny, condition or limit a party’s access to the Trading
System or to the Exchange when such action is in the best interests of the public or the
Exchange. The Exchange may take action to summarily limit or deny access in
response to any activity or conduct that threatens a fundamental interest of the
Exchange or the markets that it operates, including, among other things, serious harm
to the market's physical infrastructure, to the operations of the market, or to the
reputation of the Exchange. Without limitation, examples may include a Participant or
Authorized Trader hacking any of the Exchange’s electronic systems or acting in a
manner that would compromise the integrity of those systems; failing to abide by
fundamental norms of trading, such as refusing to assist exchange personnel in
resolving out-trades or providing necessary trade information; misusing confidential
trading information of others; or obstructing an Exchange investigation.

ls a summary denial of action permanent?

No. A summary denial of access is limited to 60 days, and can be renewed for another
60 days. Permanent revocation of Trading Privileges cannot occur under summary
procedures.

Will | be notified of the grounds for a summary action?

Yes. A notice is provided soon after a summary denial of access has been issued, or if
practicable, before. The notice details the reason for the action, the duration, and
notifies the recipient of the right to appeal and the appeal process.

Can a summary denial of access be reversed?

Yes, either through the appeal process or through a request to the Exchange to
reconsider based upon changed circumstances.

Who decides to invoke a summary denial of access?
The Compliance Director or the Compliance Director's Designee.

May CX deny access to a Participant without cause, simply as a matter of its discretion
or for business reasons?

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CERTIFICATIONS PURSUANT TO SECTION Se OF THE COMMODITY EXCHANGE
ACT, 7 U.S.C. §7A-2 AND COMMODITY FUTURES TRADING COMMISSION RULE 40.6,
17 CFR. §40.6

I hereby certify that:

(1) the amended Rules above comply with the Commodity Exchange Act, and the
Commodity Futures Trading Commission’s regulations thereunder; and

(2) concurrent with this submission, Cantor Futures Exchange, L.P. posted on its
website: (a) a notice of pending certification of the above Rules with the
Commission; and (b) a copy of this submission.

Brolboeed—
pce eucnoertaee

Title: CLO
Date: May 5, 2017

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provided however, any summary sanction entered under Rule VII-18 shall
continue in effect during the appeal.
(b) *****
(g) 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
Compliance Director_or the Compliance Director's Designee, 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 on why the evidence was not introduced
during the disciplinary proceeding or when imposing the summary action.
(h) ** ***
(i) Arbitrary, capricious, or an abuse of the discretion of the Disciplinary
Panel, of the Compliance Director, or the Compliance Director's Designee, as the
case may be;
(ii) ns

3. Rule VII-18 is amended to read as follows:
Vil-18. Summary Suspensions and Other Summary Actions

(a) Notwithstanding anything in the Rules of the Exchange to the contrary, the
Compliance Director or the Compliance Director's Designee, upon a good faith
determination that there are substantial reasons to believe that such immediate action is
necessary to protect the public or the best interests of the Exchange, may order that
any party be denied access to the Trading System or the Exchange, or summarily
suspend, revoke, limit, condition, restrict or qualify the Trading Privileges of a
Participant or Authorized Trader, and may take other summary action against any
Participant or Authorized Trader in accordance with the Rules of the Exchange;
provided, however, thatthe Compliance Director or the Compliance Director’s Designee
in issuing an order denying access, may permit such party to enter Orders solely for the
purpose of liquidating the Open Contract Positions of such Participant while the
applicable suspension, limitation, condition, restriction or qualification of access is in
effect.

(b) Promptly after an order is issued pursuant to paragraph (a), the party shall be
informed of the action taken, the reasons for the action, the effective date and duration
of the action. The party shall also be informed of his or her right to appeal the action
under Rule VII-16. Whenever practicable, the Compliance Department, acting on behalf
of the Compliance Director, shall provide such notice prior to taking the action.

(c) Unless timely notice of appeal is filed pursuant to Rule VII-16, the summary action
will become final upon the expiration of 20 Business Days after the notice of action is
served on the respondent.

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No. As is clear from the answers to these FAQs, CX does not interpret its rule as
providing it unfettered discretion to deny a party access. Denial of access is a serious
disciplinary matter and will be used only to address serious threats of harm to the
public, the market or to the Exchange.

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Cantor Futures Exchange, L.P.
Rule Amendment Submission 2017-02
May 5, 2017

1. The text of the rule changes to the Rulebook of Cantor Futures Exchange, L.P. (“CX” or
“Exchange”) is attached. Additions are underlined and deletions are stricken through. These
amendments have been approved by Cantor Futures Exchange, L.P. Capitalized terms, unless
otherwise defined herein shall possess the meaning(s) ascribed in the Cantor Futures Exchange,
L.P. Rulebook.

2. The proposed effective date is ten business days after receipt by the Commodity Futures
Trading Commission of this submission.

8: Attached, please find a certification that: (1) these rules comply with the Commodity
Exchange Act, and the Commission’s regulations thereunder; and (2) concurrent with this
submission, Cantor Futures Exchange, L.P. posted on its website: (i) a notice of pending
certification of the rule submissions with the Commission; and (ii) a copy of this submission.

4, A concise explanation and analysis of the operation, purpose, and effect of the amended
rules appear below.

5: There were no opposing views expressed regarding these amended rules.

CONCISE EXPLANATION AND ANALYSIS OF THE OPERATION, PURPOSE, AND
EFFECT OF THE CERTIFIED RULE AND ITS COMPLIANCE WITH APPLICABLE,
PROVISIONS OF THE ACT, INCLUDING CORE PRINCIPLES AND THE COMMISSION’S
REGULATIONS THEREUNDER

Pursuant to Commission Rule 40.6(a)(7)(vi), the following is a concise explanation and analysis
of the operation, purpose, and effect of the amended rules.

CX is deleting Rule III-6 and amending CX rule VII-18 to clarify the use and operation of
summary authority to deny access by any Participant or Authorized Trader to the exchange. CX
Rule III-6 empowers the Board of Directors of the Exchange to suspend, revoke, limit, condition,
restrict or qualify the Trading Privileges of a Participant or its Authorized Traders if such action
is in the “best interests” of the Exchange. This provision is intended only to be used in instances
requiring immediate action, such as to preserve the integrity of the Trading System, or of the

market. CX has never invoked this authority.

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(d) At the request of the Exchange or the Clearinghouse, a respondent against whom a
summary action is brought pursuant to this Rule VIl-18 must provide books and records
over which the respondent has access or control and must furnish information to, or
appear or testify before, the Exchange or the Clearinghouse in connection with the
enforcement of any Rule of the Exchange or Rule of the Clearinghouse.

(e) A respondent whose Trading Privileges are suspended, limited, conditioned,
restricted or qualified pursuant to this Rule VIl-18 may apply for reinstatement by filing
with the Compliance Department a written request stating the applicant's reasons for
“seeking reinstatement. The Exchange will not consider a respondent's request for
reinstatement if the respondent (i) persists in the conduct which was the subject of the
order denying access; (ii) owes any fines, fees, charges or costs to the Exchange, (iii)
continues to fail to appear at disciplinary proceedings without good cause or (iv)
continues to impede the progress of disciplinary proceedings.

(f) Within a reasonable period after the filing of a request for reinstatement, the Appeals
Panel will conduct a hearing to consider the request. At the hearing for reinstatement,
the respondent will present its, his or her case supporting the reinstatement and the
Compliance Department, acting on behalf of the Compliance Director may, in its
discretion, present its case opposing or supporting the reinstatement and each may
present relevant and admissible evidence and facts and call, examine witnesses. At the
hearing for reinstatement, the Exchange may require any Participant or any Authorized
Trader to appear as witnesses and produce evidence if the Appeals Panel determines
that the evidence is relevant.

(g) As promptly as reasonably possible after a reinstatement hearing, the Appeals Panel
will issue an order reinstating, denying the reinstatement, or placing conditions on the
reinstatement of the Trading Privileges, or association with a Participant, of the
respondent. The order will include a brief summary of the evidence introduced at the
reinstatement hearing; and, if applicable, findings of fact and conclusions not contained
in the Appeals Panel's initial order issued pursuant to Rule VII-16. The Appeals Panel's
order may not be appealed.

(h) Any decision to deny access pursuant to paragraph (a) shall not remain in effect for
more than 60 days unless the Compliance Director or the Compliance Director's
Designee, upon further consideration of the circumstances giving rise to the order
denying access, issues a separate order denying access for an additional period of
time, not to exceed 60 days. The party must be notified thereof prior to issuance of the
second order, unless prior notice is impracticable. Such notice must meet the
standards provided in paragraph (b). At any time, a party subject to an action under this
Rule VIl-18, may petition the Compliance Director or the Compliance Director's
Designee to reconsider an access denial pursuant to this Rule based upon materially
changed circumstances.

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Upon reexamination of the text of the rule, CX is concerned that the applicability and procedures
of Rule III-6 might be misunderstood or misapplied in light of its broad language. Accordingly,
CX is deleting Rule III-6 and is amending CX Rule VII-18 to make clear that the rule intends
that any summary action to deny access should be taken only in instances where immediacy of
exchange action is vital; for example, to address issues relating to the integrity of the operation
of the Trading System. Therefore, any summary action taken under this rule, as clarified by the
amendment, is of limited duration and may not be used to deny or limit access indefinitely. The
amendments make clear that the respondent in a summary action under Rule III-6 has the same
full due process rights of appeal as in any disciplinary action. CX Rule VII-18 is being amended
to lodge such summary authority with the Compliance Director’s Designees, in addition to the
Compliance Director in recognition of the anticipated immediacy necessary in certain summary
denial of access situations. Such Designees may include, for example, in the absence of the
Compliance Director, the supervisor of the control desk. Finally, Rule VII-18 is being amended
explicitly to refer to the applicability of the appeal procedures of Rule VII-16, to which
clarifying technical and conforming amendments are also being made.

CX’s reexamination of Rule IJI-6 was occasioned by another exchange’s citation of CX Rule III-
6 as precedent for its rule change.1 That exchange, which like CX lists for trading binary options
using a direct participant model, stated that it was adopting a summary denial of access rule that
stands apart from the exchange’s disciplinary procedures because, like a Futures Commission
Merchant (“FCM”), it wished greater discretion in terminating trading privileges. The exchange
noted that FCMs “may restrict access or terminate its relationship with a client in its discretion,
without client recourse for disputing or reinstating his/her account or trading privileges.” In
citing CX Rule III-6 as precedent, the other exchange clearly misapprehends the intent and
operation of CX Rule III-6.

To be clear, CX rejects any notion that it may terminate a participant’s access on an informal or
discretionary basis as may a FCM. To the contrary, CX views the requirements of open access
under CFTC Rule 38.151(c) as precluding a limitation on access except for disciplinary,
emergency or similar reasons. It has always interpreted its own Rule III-6 in this manner and is
amending its rules so that market participants will have no confusion--CX exercises its summary
access denial authority only in instances where immediacy of action is necessary, such access
denials are of limited duration, and the access limitation operates within the larger disciplinary
process, with full due process rights.

Accordingly, CX is deleting Rule III-6 and is amending Rule VII-18. As amended, CX Rule VII-
18 makes clear that the Compliance Director or the director’s designees may summarily deny
access to a Participant when such an action is in the “best interests” of the exchange. This phrase
is intended to empower the Compliance Director or the director’s designees to respond to any
activity or conduct that threatens a fundamental interest of the Exchange or the markets that it
operates, including, among other things, serious harm to the market’s physical infrastructure, to
the operations of the market, or to the reputation of the Exchange, Without limitation, examples
may include a Participant or Authorized Trader hacking any of the Exchange’s electronic
systems or acting in a manner that would compromise the integrity of those systems; failing to

1 See, certification to Commodity Futures Trading Commission of rule 3.6 by NADEX, at
http://www. cftc. gov/filings/orgrules/rule04 101 7nadexdem001.pdf (“NADEX Certification”).

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abide by fundamental norms of trading, such as refusing to assist exchange personnel in
resolving out-trades or providing necessary trade information; misusing confidential trading
information of others; or obstructing an Exchange investigation.

CX has considered the Core Principles and Rules thereunder, specifically, Core Principle (2)
“Compliance with Rules.” These amendments clarify the operation of the Exchange’s self-
regulatory authority and operation. We believe that some confusion may have been created by
others as to the intended scope and use of former Rule III-6. The amendments to Rule VII-18
make clear that summary denial of access is to be used to address disciplinary, market
emergency or similar purposes. They are not similar to the discretion that a FCM may exercise
in accepting or rejecting customers. Moreover, CX’s summary access denials are of limited
duration and the respondent has full appeal rights. Accordingly, Rule VII-18 as currently
drafted, and as amended, is fully in accord with the open access requirements of Core Principle
(2) and CFTC Rule 38.151, which apply to designated contract markets, CX believes that in
addition to meeting the minimum requirements imposed by Core Principle (2) and CFTC Rule
38.151, the provisions of CX Rule VII-18 provides CX market participants with important
procedural and substantive safeguards.

Finally, in order to clarify these matters, including providing examples of conduct that might
require denial of access in the best interest of the Exchange, CX is also certifying an FAQ. The
text of the FAQ restates the information in this certification, in a different format. The FAQ
complies with the Commodity Exchange Act and the CFTC’s rules thereunder for the same
reasons as discussed herein.

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