crypto.com | Derivatives North America

200 West Jackson Blvd., Suite 1400

Chicago, IL 60606

20230117(1)

January 17, 2023

Via CFTC Portal Submissions

Mr. Christopher Kirkpatrick

Secretary of the Commission

Office of the Secretariat

Commodity Futures Trading Commission

3 Lafayette Centre 

1155 21st Street, N.W. 

Washington D.C. 20581

RE: Rule Certification: Nadex Amends Position Limits for its Bitcoin and Ether 

Cryptocurrency Touch Bracket Variable Payout Contracts- Submission 

Pursuant to Commission Regulation §40.6(a)

Dear Mr. Kirkpatrick:

Pursuant to Section 5c(c)(1) of the Commodity Exchange Act, as amended (the 

“Act”), and §40.6(a) of the regulations promulgated by the Commodity Futures Trading 

Commission (the “Commission”) under the Act, North American Derivatives Exchange, Inc. 

(“Nadex”) d/b/a crypto.com | Derivatives North America hereby submits to the Commission 

its intent to adjust the position limits for its Bitcoin and Ether Cryptocurrency Touch Bracket 

Variable Payout Contracts from 100 to 10 lots for Direct Trading Members, and from 

100,000 to 10,000 (on a per strike basis) for market makers quoting markets in these 

contracts pursuant to a Nadex Market Maker Agreement. Nadex is making these 

amendments to bring the position limits in line with sizes it anticipates retail traders would 

typically trade of a newly launched contract, while being cognizant of the overall capital 

usage and exposure of the market makers. 

DCM Core Principles

Nadex has identified the following Designated Contract Market (“DCM”) Core 

Principle as potentially being impacted by the amendments discussed herein: Core Principle 

5 Position Limits or Accountability; Core Principle 7 Availability of General Information.

Core Principle 5 (Position Limits or Accountability), implemented by Commission 

Regulation 38.300, requires a DCM to establish position limits for speculators. Nadex is 

lowering its position limits to align with the anticipated levels it retail Members will trade 

in these newly launched contracts, and to prevent a reduction in overall liquidity in the event 

its direct trading Members should approach the current levels, forcing the market makers to 

reduce their own exposure by dropping out of the markets. Therefore, the amendments to 
2

the position limits will not negatively impact Nadex’s ability to comply with this Core 

Principle.

Core Principle 7 (Availability of General Information), implemented by Regulation 

38.400, requires the DCM make available to the public accurate information concerning the 

terms and conditions of the contracts of the contract market. Nadex currently makes its 

Rulebook available to the public on its website and will continue to do so following the 

effective date of this submission. The Rulebook contains the contract specifications for all 

contracts, including each contract’s position limits which will be updated as discussed herein 

and republished on the Nadex website. Accordingly, these amendments will not negatively 

affect Nadex’s ability to comply with this Core Principle.

DCO Core Principles

Nadex has not identified any Derivatives Clearing Organization (“DCO”) Core 

Principles as potentially being impacted by the amendments discussed herein.

A complete index of the DCM and DCO Core Principles that indicates whether the 

Core Principle is applicable and addressed in the text of this submission is attached in Exhibit 

A. These Rule changes have been outlined in Exhibit B. The amendments to the Rulebook 

are set forth in Exhibit C. Any deletions are stricken out while the amendments and/or 

additions are underlined.

Nadex hereby certifies that the additions contained herein comply with the Act, as 

amended, and the Commission Regulations adopted thereunder. No substantive opposing 

views were expressed to Nadex with respect to any of these actions.

Nadex hereby certifies that notice of these amendments was posted on its website at 

the time of this filing.

In accordance with the 10-day review period set forth in Commission Regulation 

40.6(b), this self-certification will become effective January 30, 2023. 

Should you have any questions regarding the above, please do not hesitate to contact 

me by telephone at (312) 884-0927 or by email at jaime.walsh@nadex.com.

 Sincerely, 

 Jaime M. Walsh

 Head of Legal 
3

EXHIBIT A

Designated Contract Market (“DCM”) Core Principles

Core 

Principle 

Number

Core Principle Name Addressed in or Not 

Applicable to SelfCertification

1 Designation as Contract Market Not applicable (designation 

granted)

2 Compliance with Rules N/A; not impacted by this 

submission

3 Contracts Not Readily Subject to 

Manipulation

N/A; the contract structure 

will not change and 

imposing/lowering position 

limits does not increase the 

chance for manipulation

4 Prevention of Market Disruption N/A; not impacted by this 

submission

5 Position Limitations or 

Accountability

Addressed

6 Emergency Authority Not applicable (Nadex 

Rulebook, 2.4 Emergency 

Rules)

7 Availability of General Information Addressed

8 Daily Publication of Trading 

Information

N/A; not impacted by this 

submission

9 Execution of Transactions N/A; not impacted by this 

submission

10 Trade Information N/A; not impacted by this 

submission

11 Financial Integrity of Transactions N/A; not impacted by this 

submission, all trades are 

fully collateralized

12 Protection of Markets and Market 

Participants

N/A; not impacted by this 

submission
4

13 Disciplinary Procedures Not applicable (Nadex 

Rulebook, Chapter 9 Rule 

Enforcement)

14 Dispute Resolution Not applicable (Nadex 

Rulebook, 10.2 – 10.4 

Arbitration)

15 Governance Fitness Standards Not applicable (Nadex 

Rulebook, 2.2 Service 

Restrictions, 11.2 Service 

and Disciplinary History)

16 Conflicts of Interest Not applicable (Nadex 

Rulebook, 2.6 Voting, 2.9 

Trading Limitations, 11.1 

Non-Public Information, 

11.3 Voting)

17 Composition of Governing Boards of 

Contract Markets

Not applicable (internal 

review and appointment of 

directors)

18 Recordkeeping N/A; not impacted by this 

submission

19 Antitrust Considerations Not applicable

20 System Safeguards Not applicable (internal 

controls and policies in 

place)

21 Financial Resources Not applicable (capital 

requirements and quarterly 

reporting compliant)

22 Diversity of Boards of Directors Not applicable (not public 

company, internal review 

and appointment of 

directors)

23 Securities and Exchange Commission Not applicable
5

Derivatives Clearing Organization (“DCO”) Core Principles

Core 

Principle 

Number

Core Principle Name Addressed in or Not 

Applicable to SelfCertification

A Compliance Not applicable

B Financial Resources Not applicable (capital 

requirement and quarterly 

reporting compliant)

C Participant and Product Eligibility N/A; not impacted by this 

submission

D Risk Management N/A; not impacted by this 

submission

E Settlement Procedures N/A; not impacted by this 

submission

F Treatment of Funds Not applicable (Nadex 

Rulebook Chapter 8 

Member Funds)

G Default Rules and Procedures N/A; not impacted by this 

submission

H Rule Enforcement Not applicable (Nadex 

Rulebook, Chapter 9 Rule 

Enforcement, 10.2 – 10.4 

Arbitration)

I System Safeguards Not applicable (internal 

controls and policies in 

place)

J Reporting Not applicable (Nadex 

Rulebook Chapter 8 

Member Funds)

K Recordkeeping N/A; not impacted by this 

submission

L Public Information Not applicable (Nadex 

Rulebook Chapter 8 

Member Funds)
6

M Information Sharing N/A; not impacted by this 

submission

N Antitrust Considerations Not applicable

O Governance Fitness Standards Not applicable (Nadex 

Rulebook, 2.2 Service 

Restrictions, 11.2 Service 

and Disciplinary History, 

internal review and 

appointment of directors)

P Conflicts of Interest Not applicable (Nadex 

Rulebook, 2.6 Voting, 2.9 

Trading Limitations, 11.1 

Non-Public Information, 

11.3 Voting)

Q Composition of Governing Boards Not applicable (internal 

review and appointment of 

directors)

R Legal Risk Not applicable (Nadex 

Rulebook Chapter 6)
7

EXHIBIT B

Rule Asset Duration/Close Time Action Effective 

Date

12.24 Bitcoin 

Cryptocurrency 

Touch Bracket

Variable Payout 

Contracts

All Contracts Amend Position Limits 01/30/2023

12.25 Ether

Cryptocurrency 

Touch Bracket 

Variable Payout 

Contracts

All Contracts Amend Position Limits 01/30/2023
8

EXHIBIT C

Amendment of Rules 12.24, 12.25

(The following Rule amendments are underlined and deletions are stricken out)

RULE 1.1 - 12.3 [UNCHANGED] 

RULE 12.24 BITCOIN CRYPTOCURRENCY “TOUCH BRACKET” VARIABLE 

PAYOUT CONTRACTS

(a) SCOPE – These Rules shall apply to the Class of Contracts referred to as the 

Bitcoin Cryptocurrency (“Bitcoin”) Touch Bracket Variable Payout Contracts, referred to as 

a ‘Touch Bracket”, issued by Nadex. 

(b) UNDERLYING – The Underlying for this Class of Contracts is the spot bitcoin 

cryptocurrency as reported in the ICE® Cryptocurrency Data1aggregated by Blockstream®

Corporation2and distributed by ICE Data® Connectivity and Feeds, Inc.3, herein referred to 

as “IDCF BIT”, quoted in US dollars.

(c) SOURCE AGENCY – The Source Agency is Nadex.

(d) TYPE – The Type of Contract is a Variable Payout Contract.

(e) PAYOUT CRITERION – The Payout Criterion for each Contract will be set by 

Nadex at the time the Variable Payout Contracts are initially issued. For the Bitcoin Touch 

Brackets, the Payout Criteria for the Contracts will be set as follows: 

(i) WEEKLY BITCOIN TOUCH BRACKET VARIABLE PAYOUT 

CONTRACTS, Expiration is the earlier of (a) 4:15PM ET on the Last Trade 

Day of the contract listing, or (b) when the Bitcoin Index Value is equal to or 

1

ICE® is a registered mark of IntercontinentalExchange, Inc. (“ICE”). Nadex is not 

affiliated with ICE or ICE Data Connectivity and Feeds, Inc., and the Bitcoin 

Cryptocurrency “Touch Bracket” Variable Payout Contracts are not sponsored, endorsed, 

sold or promoted by ICE or ICE Data Connectivity and Feeds, Inc. in any way.

2 Blockstream® is a registered mark of Blockstream Corporation (“Blockstream”). Nadex is 

not affiliated with Blockstream and the Bitcoin Cryptocurrency “Touch Bracket” Variable 

Payout Contracts are not sponsored, endorsed, sold or promoted by Blockstream.

3

ICE® is a registered mark of IntercontinentalExchange, Inc. (“ICE”) and ICE Data® is a 

registered mark of Intercontinental Exchange Holdings, Inc (“ICE Holdings”). Nadex is not 

affiliated with ICE, ICE Holdings, or ICE Data Connectivity and Feeds, Inc., and the Bitcoin 

Cryptocurrency “Touch Bracket” Variable Payout Contracts are not sponsored, endorsed, 

sold or promoted by ICE, Ice Holdings, or ICE Data Connectivity and Feeds, Inc. in any 

way.
9

greater than the Ceiling, or equal to or less than the Floor. Nadex shall list a 

set of four (4) Touch Bracket Variable Payout Contracts, each referred to as 

a ‘Touch Bracket’, that open at 6:00PM ET on the first Trade Day of the 

week, with overlapping ranges, which conform to the Payout Criteria listed 

below.

(1) CONTRACT 1: The Ceiling shall be X + 400; The Floor shall be 

X – 100.

(2) CONTRACT 2: The Ceiling shall be X + 300; The Floor shall be 

X – 200.

(3) CONTRACT 3: The Ceiling shall be X + 200; The Floor shall be 

X – 300.

(4) CONTRACT 4: The Ceiling shall be X + 100; The Floor shall be 

X – 400.

(5) DOLLAR MULTIPLIER – The Dollar Multiplier shall be 1.

(6) In each case, “X” equals the last IDCF BIT value, as reported by 

the Source Agency, rounded to the nearest 1.

(ii) Upon the early Expiration of a Touch Bracket, Nadex may list a new 

Touch Bracket with a Ceiling of X + 400 (or 100) and a Floor of X – 100 (or 

400) where X equals the Ceiling (or Floor) of the Touch Bracket that expired 

early. The newly listed Touch Bracket will have the same Last Trade Day as 

originally established for the expired Touch Bracket and the same Dollar 

Multiplier as the expired Touch Bracket. 

(f) MINIMUM TICK –The Minimum Tick size for the Bitcoin Touch Bracket 

Variable Payout Contracts shall be 1. 

(g) POSITION LIMIT –The Position Limit for the Bitcoin Touch Bracket Variable 

Payout Contracts shall be 10010 Contracts.

(h) MARKET MAKER ALTERNATIVE POSITION LIMIT – The Position Limit 

for the Bitcoin Touch Bracket Variable Payout Contracts for contracted Market Makers shall 

be 100,00010,000 Contracts per strike level. 

(i) LAST TRADING DATE – The Last Trading Date in a Series is the same date as 

the Settlement Date. 

(j) SETTLEMENT DATE – The Settlement Date of the Contract shall be the same 

date as the Expiration Date. 
10

(k) EXPIRATION DATE – The Expiration Date of the Contract shall be the date on 

which the Bitcoin Touch Bracket Expiration Value is released by the Source Agency.

(l) SETTLEMENT VALUE – The Settlement Value is the amount paid to the holder 

of either a Short or Long Variable Payout Contract on Settlement Date. The Settlement 

Value of a Variable Payout Contract is determined as described in the definition for Long 

and Short Variable Payout Contracts.

(m) BITCOIN INDEX VALUE – The Source Agency shall calculate and produce a 

Bitcoin Index Value once each second throughout the life of the Bitcoin Touch Bracket 

Contracts. That is, each second the Source Agency will calculate a Bitcoin Index Value by 

taking by taking all IDCF BIT trade prices occurring in the ten (10) seconds leading up to 

the Calculation Time, provided at least twenty-five (25) trade prices are captured during the 

ten (10) second period, removing the highest twenty (20) percent of IDCF BIT trade prices 

and the lowest twenty (20) percent of IDCF BIT trade prices from the data set4, and using 

the remaining IDCF BIT trade prices to calculate the Bitcoin Index Value for that second. 

The calculation used is a simple average of the remaining IDCF BIT trade prices in the data 

set, rounded to one decimal point past the precision of the Underlying market. In the event 

the time it takes to collect at least twenty-five (25) IDCF BIT trade prices exceeds the ten 

(10) second period, the Bitcoin Index Value will be calculated by the Source Agency by 

taking the last twenty-five (25) IDCF BIT trade prices just prior to the Calculation Time, 

removing the highest five (5) IDCF BIT trade prices and the lowest five (5) IDCF BIT trade 

prices, and using the remaining fifteen (15) IDCF BIT trade prices to calculate the Bitcoin 

Index Value. The calculation used is a simple average of all fifteen (15) IDCF BIT trade 

prices, rounded to one decimal point past the precision of the Underlying market.

(n) EXPIRATION VALUE – The Expiration Value is the Bitcoin Index Value 

released by the Source Agency at Expiration on the Expiration Date. 

(o) CONTINGENCIES – If no level is actually announced on the Expiration Date 

due to a delay, postponement or otherwise in such release announcement by the Source 

Agency, the Settlement Date will be delayed until the Underlying number is released for that 

Series.

4

If 20% of the data set would result in a non-integer number of trade prices, the number of 

trade prices to be removed from the set will be rounded down. For example, if the number 

of trade prices collected during the last 10 seconds prior to the close of trading was 31, 20% 

of the data set would be 6.2 trade prices. As 6.2 is a non-integer number, the value will be 

rounded down, and the 6 highest and 6 lowest trade prices will be removed from the data 

set.
11

RULE 12. 25 ETHER CRYPTOCURRENCY “TOUCH BRACKET” VARIABLE

PAYOUT CONTRACTS

(a) SCOPE – These Rules shall apply to the Class of Contracts referred to as the 

Ether Cryptocurrency (“Ether”) Touch Bracket Variable Payout Contracts, referred to as a 

‘Touch Bracket”, issued by Nadex.

(b) UNDERLYING – The Underlying for this Class of Contracts is the spot 

Ether cryptocurrency reported in the ICE® Cryptocurrency Data5, aggregated by 

Blockstream® Corporation6and distributed by ICE Data® Connectivity and Feeds, Inc.7, 

herein referred to as “IDCF ETH”, quoted in US dollars.

(c) SOURCE AGENCY – The Source Agency is Nadex.

(d) TYPE – The Type of Contract is a Variable Payout Contract.

(e) PAYOUT CRITERION – The Payout Criterion for each Contract will be set 

by Nadex at the time the Variable Payout Contracts are initially issued. For the Ether Touch 

Brackets, the Payout Criteria for the Contracts will be set as follows: 

(i) WEEKLY ETHER TOUCH BRACKET VARIABLE PAYOUT 

CONTRACTS, Expiration is the earlier of (a) 4:15PM ET on the Last Trade Day of the 

Contract listing, or (b) when the Ether Index Value is equal to or greater than the Ceiling, or 

equal to or less than the Floor. Nadex shall list a set of four (4) Touch Bracket Variable 

Payout Contracts, each referred to as a ‘Touch Bracket’, that open at 6:00PM ET on the first 

Trade Day of the week, with overlapping ranges, which conform to the Payout Criteria listed 

below.

5

ICE® is a registered mark of IntercontinentalExchange, Inc. (“ICE”). Nadex is not 

affiliated with ICE or ICE Data Connectivity and Feeds, Inc., and the Ether Cryptocurrency 

“Touch Bracket” Variable Payout Contracts are not sponsored, endorsed, sold or promoted 

by ICE or ICE Data Connectivity and Feeds, Inc. in any way.

6 Blockstream® is a registered mark of Blockstream Corporation (“Blockstream”). Nadex is 

not affiliated with Blockstream and the Ether Cryptocurrency “Touch Bracket” Variable 

Payout Contracts are not sponsored, endorsed, sold or promoted by Blockstream.

7

ICE® is a registered mark of IntercontinentalExchange, Inc. (“ICE”) and ICE Data® is a 

registered mark of Intercontinental Exchange Holdings, Inc (“ICE Holdings”). Nadex is not 

affiliated with ICE, ICE Holdings, or ICE Data Connectivity and Feeds, Inc., and the Ether 

Cryptocurrency “Touch Bracket” Variable Payout Contracts are not sponsored, endorsed, 

sold or promoted by ICE, ICE Holdings, or ICE Data Connectivity and Feeds, Inc. in any 

way.
12

(1) CONTRACT 1: The Ceiling shall be X + 200; The Floor shall be 

X - 50.

(2) CONTRACT 2: The Ceiling shall be X + 150; The Floor shall be 

X – 100.

(3) CONTRACT 3: The Ceiling shall be X + 100; The Floor shall be 

X - 150.

(4) CONTRACT 4: The Ceiling shall be X + 50; The Floor shall be 

X – 200.

(5) DOLLAR MULTIPLIER – The Dollar Multiplier shall be 1.

(6) In each case, “X” equals the last IDCF ETH value, as reported by 

the Source Agency, rounded to the nearest 1.

(ii) Upon the early Expiration of a Touch Bracket, Nadex may list a new 

Touch Bracket with a Ceiling of X + 200 (or 50) and a Floor of X – 50 (or 200) where X 

equals the Ceiling (or Floor) of the Touch Bracket that expired early. The newly listed Touch 

Bracket will have the same Last Trade Day as originally established for the expired Touch 

Bracket and the same Dollar Multiplier as the expired Touch Bracket. 

(f) MINIMUM TICK –The Minimum Tick size for the Ether Touch Bracket 

Variable Payout Contracts shall be 1.

(g) POSITION LIMIT –The Position Limit for the Ether Touch Bracket Variable 

Payout Contracts shall be 10010 Contracts.

(h) MARKET MAKER ALTERNATIVE POSITION LIMIT – The Position 

Limit for the Ether Touch Bracket Variable Payout Contracts for contracted Market Makers 

shall be 100,00010,000 Contracts per strike level

(i) LAST TRADING DATE – The Last Trading Date in a Series is the same date 

as the Settlement Date.

(j) SETTLEMENT DATE – The Settlement Date of the Contract shall be the 

same date as the Expiration Date. 

(k) EXPIRATION DATE – The Expiration Date of the Contract shall be the date 

on which the Ether Touch Bracket Expiration Value is released by the Source Agency.

(l) SETTLEMENT VALUE – The Settlement Value is the amount paid to the 

holder of either a Short or Long Variable Payout Contract on Settlement Date. The 
13

Settlement Value of a Variable Payout Contract is determined as described in the definition 

for Long and Short Variable Payout Contracts.

(m) ETHER INDEX VALUE – The Source Agency shall calculate and produce 

a Ether Index Value once each second throughout the life of the Ether Touch Bracket 

Contracts. That is, each second the Source Agency will calculate a Ether Index Value by 

taking by taking all IDCF ETH trade prices occurring in the ten (10) seconds leading up to 

the Calculation Time, provided at least twenty-five (25) trade prices are captured during the 

ten (10) second period, removing the highest twenty (20) percent of IDCF ETH trade prices 

and the lowest twenty (20) percent of IDCF ETH trade prices from the data set8, and using 

the remaining IDCF ETH trade prices to calculate the Ether Index Value for that second. 

The calculation used is a simple average of the remaining IDCF ETH trade prices in the data 

set, rounded to one decimal point past the precision of the Underlying market. In the event 

the time it takes to collect at least twenty-five (25) IDCF ETH trade prices exceeds the ten 

(10) second period, the Ether Index Value will be calculated by the Source Agency by taking 

the last twenty-five (25) IDCF ETH trade prices just prior to the Calculation Time, removing 

the highest five (5) IDCF ETH trade prices and the lowest five (5) IDCF ETH trade prices, 

and using the remaining fifteen (15) IDCF ETH trade prices to calculate the Ether Index 

Value. The calculation used is a simple average of all fifteen (15) IDCF ETH trade prices, 

rounded to one decimal point past the precision of the Underlying market.

(n) EXPIRATION VALUE – The Expiration Value is the Ether Index Value 

released by the Source Agency at Expiration on the Expiration Date. 

(o) CONTINGENCIES – If no level is actually announced on the Expiration 

Date due to a delay, postponement or otherwise in such release announcement by the Source 

Agency, the Settlement Date will be delayed until the Underlying number is released for that 

Series.

RULES 12.26 – 12.65 [UNCHANGED]

End of Rulebook.

8

If 20% of the data set would result in a non-integer number of trade prices, the number of 

trade prices to be removed from the set will be rounded down. For example, if the number 

of trade prices collected during the last 10 seconds prior to the close of trading was 31, 20% 

of the data set would be 6.2 trade prices. As 6.2 is a non-integer number, the value will be 

rounded down, and the 6 highest and 6 lowest trade prices will be removed from the data 

set.