LMX Labs LLC

Rulebook

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CHAPTER 1: DEFINITIONS..................................................................................................... 1

RULE 101. DEFINITIONS......................................................................................................... 1

CHAPTER 2: EXCHANGE OWNERSHIP AND GOVERNANCE.............................................. 9

RULE 201. Ownership .............................................................................................................. 9

RULE 202. Board...................................................................................................................... 9

RULE 203. Officers ...................................................................................................................10

RULE 204. Qualifications of Directors, Disciplinary Panel Members, Appeal Panel Members, 

Committee Members, Owners and Officers...............................................................................10

RULE 205. Standing Committees.............................................................................................12

RULE 206. Nominating Committee ..........................................................................................12

RULE 207. Exchange Participant Committee...........................................................................12

RULE 208. Regulatory Oversight Committee ...........................................................................13

RULE 209. Chief Regulatory Officer.........................................................................................14

RULE 210. Exchange Practices Committee.............................................................................14

RULE 211. Additional Board Committees and Exchange Panels .............................................14

RULE 212. Emergency Rules ..................................................................................................15

RULE 213. Conflicts of Interest and Misuse of Material, Non-Public Information......................16

RULE 214. Maintenance of Books and Records by the Exchange ...........................................19

RULE 215. Information-Sharing Agreements ...........................................................................19

RULE 216. [RESERVED].........................................................................................................20

RULE 217. Services Agreement with a Technology Services Provider ....................................20

CHAPTER 3: PARTICIPANTS ................................................................................................21

RULE 301. Criteria for Becoming a Participant Firm.................................................................21

RULE 302. Participant Firm Application Process......................................................................21

RULE 303. Trading Privileges of a Participant Firm, Clearing Firm, Broker Firm .......................23

RULE 304. Limitations on Access to the LMX Trading System ................................................23

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RULE 305. Dues, Assessments and Fees ...............................................................................23

RULE 306. Authorized Traders and Authorized Brokers ..........................................................24

RULE 307. [RESERVED].........................................................................................................25

RULE 308. Recording of Communications ...............................................................................25

RULE 309. Notices to Participants ...........................................................................................25

RULE 310. Communications between the Exchange and Participants.....................................26

RULE 311. Application of Rules and Jurisdiction......................................................................26

RULE 312. Description of Participant’s or Broker Firm’s Status ...............................................27

RULE 313. Withdrawal of Participant .......................................................................................27

RULE 314. Consent to Exchange Jurisdiction..........................................................................28

CHAPTER 4: OBLIGATIONS OF PARTICIPANTS.................................................................29

RULE 401. Duties and Responsibilities of Participants.............................................................29

RULE 402. Required Disclosures to the Exchange ..................................................................31

RULE 403. Inspections by the Exchange .................................................................................32

RULE 404. Minimum Financial and Related Reporting Requirements......................................32

RULE 405. Confidentiality of Financial and Other Information..................................................32

RULE 406. Authority to Impose Restrictions ............................................................................32

RULE 407. Customers .............................................................................................................33

RULE 408. Treatment of Customer Funds and Securities........................................................33

RULE 409. Disclosure Requirements.......................................................................................33

RULE 410. Information Regarding Orders................................................................................33

CHAPTER 5: TRADING PRACTICES AND BUSINESS CONDUCT.......................................34

RULE 501. Scope ....................................................................................................................34

RULE 502. Procedures ............................................................................................................34

RULE 503. Business Days and Trading Hours.........................................................................34

RULE 504. Rule Violations.......................................................................................................34

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RULE 505. Fraudulent Acts Prohibited.....................................................................................35

RULE 506. Fictitious, Wash or Non-Competitive Transactions Prohibited................................35

RULE 507. Market Disruption Prohibited..................................................................................35

RULE 508. Market Manipulation Prohibited..............................................................................35

RULE 509. Disruptive Trading Practices Prohibited .................................................................35

RULE 510. Prohibition of Misstatements..................................................................................35

RULE 511. Acts Detrimental to Welfare of Exchange Prohibited..............................................36

RULE 512. Adherence to Law..................................................................................................36

RULE 513. Supervision............................................................................................................36

RULE 514. Orders of Other Clearing Firms..............................................................................36

RULE 515. Misuse of the LMX Trading System .......................................................................36

RULE 516. Errors and Omissions in Handling Orders..............................................................36

RULE 517. Liquidity Provider Programs...................................................................................37

RULE 518. Withholding Orders Prohibited ...............................................................................37

RULE 519. Priority of Customers’ Orders.................................................................................37

RULE 520. Handling of Customer Orders ................................................................................37

RULE 521. Disclosing Orders Prohibited..................................................................................38

RULE 522. Simultaneous Buy And Sell Orders For Different Beneficial Owners ......................38

RULE 523. Wash Sales Prohibited...........................................................................................38

RULE 524. Recordkeeping Requirements for Entering Orders into the LMX Trading System ...38

RULE 525. Prearranged, Pre-Negotiated and Noncompetitive Trades Prohibited ....................41

RULE 526. Responsibility For Customer Orders ......................................................................41

RULE 527. Discretionary Orders..............................................................................................42

RULE 528. Priority of Execution...............................................................................................42

RULE 529. Average Price System ...........................................................................................42

RULE 530. Position Limits And Exemptions.............................................................................43

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RULE 531. Position Accountability...........................................................................................47

RULE 532. Reports of Large Positions and Ownership and Control Reporting.........................48

RULE 533. Position Limit, Position Accountability, Reportable Level, and Volume Threshold 

Level Table ...............................................................................................................................49

RULE 534. The LMX Trading System Access Restrictions.......................................................49

RULE 535. Identification of Authorized Traders and Authorized Brokers..................................49

RULE 536. LIMITATION OF LIABILITY, NO WARRANTIES....................................................50

RULE 537. The LMX Control Center........................................................................................52

RULE 538. The LMX Trading System Algorithms.....................................................................53

RULE 539. Trade Cancellations and Price Adjustments...........................................................53

CHAPTER 6: PRIVATELY NEGOTIATED TRANSACTIONS .................................................57

RULE 601. Block Trades...........................................................................................................57

RULE 602. Exchange of Derivatives for Related Positions.......................................................57

RULE 603. Recordkeeping Requirements for Privately Negotiated Trades ..............................57

CHAPTER 7: DISCIPLINARY RULES.....................................................................................58

RULE 701. General...................................................................................................................58

RULE 702. Inquiries and Investigation .....................................................................................59

RULE 703. Reports of Investigations .......................................................................................60

RULE 704. Opportunity to Respond.........................................................................................60

RULE 705. Review of Investigative Reports.............................................................................61

RULE 706. Notice of Charges ..................................................................................................62

RULE 707. Answer to Notice of Charges .................................................................................62

RULE 708. Service of Notice of Charges .................................................................................63

RULE 709. Settlements............................................................................................................63

RULE 710. Disciplinary Panel ..................................................................................................64

RULE 711. Convening Hearings of Disciplinary Proceedings...................................................65

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RULE 712. Respondent Review of Evidence ...........................................................................66

RULE 713. Conducting Hearings of Disciplinary Proceedings..................................................67

RULE 714. Decision of Hearing Panel .....................................................................................68

RULE 715. Sanctions................................................................................................................68

RULE 716. Appeal from Hearing Panel Decision, Summary Impositions of Fines and Other 

Summary Actions......................................................................................................................69

RULE 717. Summary Imposition of Fines.................................................................................71

RULE 718. Summary Suspensions and Other Summary Actions.............................................72

RULE 719. Rights and Responsibilities after Suspension or Termination.................................73

RULE 720. Notice to the Respondent and the Public ................................................................74

CHAPTER 8: ARBITRATION RULES.....................................................................................75

RULE 801. Disputes Subject to Arbitration...............................................................................75

RULE 802. Initiating an Arbitration Claim .................................................................................76

RULE 803. Certain Claims against the Exchange Involving Trading Systems or Services .......76

RULE 804. Claims Relating to Trade Cancellations or Price Adjustments................................77

CHAPTER 9: CLEARING........................................................................................................78

RULE 901. Clearing of Contracts .............................................................................................78

RULE 902. Criteria for Becoming a Clearing Firm ....................................................................78

RULE 903. Clearing Firm Application Process and Obligations................................................78

RULE 904. Clearing House Rules ............................................................................................80

RULE 905. Other Clearing Organizations.................................................................................80

RULE 906. Settlement Prices...................................................................................................81

RULE 907. Clearing Fees ........................................................................................................81

RULE 908. Transfers of Trades ...............................................................................................81

RULE 909. Concurrent Long and Short Transactions...............................................................82

RULE 910. Substitution.............................................................................................................82

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CHAPTER 10: MISCELLANEOUS..........................................................................................83

RULE 1001. Exchange personnel – Trading and Misuse of Material, Non- ...............................83

RULE 1002. Gifts and Gratuities ...............................................................................................84

RULE 1003. Market Data ..........................................................................................................84

RULE 1004. Extension or Waiver of Rules................................................................................84

RULE 1005. Effect of Amendment, Repeal or New Rule...........................................................84

RULE 1006. Governing Law, Jurisdiction and Dispute Resolution.............................................85

CHAPTER 11: CONTRACT SPECIFICATIONS......................................................................86

RULE 1101. Contract Specifications .........................................................................................86

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CHAPTER 1: DEFINITIONS

RULE 101. DEFINITIONS

When used in this Rulebook the following terms shall have the respective meanings as follows:

“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.

“Appeal Panel” means a panel comprised of a chair and two individuals appointed by the Board 

to consider appeals under Chapter 7.

“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 Broker” means a person who is either employed or is an agent of a Broker Firm and 

who is authorized to utilize LMX pursuant to the applicable Authorized Broker User ID Request 

Form.

“Authorized Representative” means any natural person who is employed and authorized by a 

Participant to represent the Participant in Exchange matters pursuant to Rule 308.

“Authorized Trader” means a person who is either employed or is an agent of a Clearing Firm or 

a Participant Firm and who is authorized to utilize LMX pursuant to the applicable User ID Request 

Form.

“Block Trade” means a privately negotiated futures or options transaction in a Contract that meets 

(i) certain quantity thresholds and (ii) is permitted to be executed off the centralized market 

pursuant to these Rules. 

“Board” means the Board of Managers of LMX, which manages the Exchange and is constituted 

from time to time in accordance with the Operating Agreement.

“Broker Firm” means a person who is acting as a broker or performing an equivalent agency 

function on behalf of another person. The Clearing Firm is responsible for approving Broker Firms 

for such person pursuant to the applicable User ID Request Form.

“Business Day” means, in a given commodity, any day on which a settlement price is determined.

“Chief Executive Officer” means the individual appointed by the Board as the Exchange’s chief 

executive officer.

“CFTC” or “Commission” means the U.S. Commodity Futures Trading Commission or any 

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successor regulatory body.

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

“Chief Regulatory Officer” means the individual appointed by the Board as the Exchange’s chief 

regulatory officer.

“Clearing Firm” or “Clearing Member” means an entity meeting the requirements of, and approved 

for, clearing membership at the Clearing House that is authorized pursuant to the Clearing House 

Rules to clear trades in any or all of the Contracts and that meets the qualification of the Exchange 

pursuant to Rule 902. A Clearing Firm is authorized to access LMX to effect transactions. A 

Clearing Firm may trade for its own proprietary account or an account on behalf of its Customer 

(e.g., as a broker). A Clearing Firm may trade on behalf of a Customer with an account at a 

different Clearing Firm acting as a broker or performing an equivalent agency function. The 

different Clearing Firm is responsible for approving the Clearing Firm for such Customers 

pursuant to the applicable form to the LMX Clearing Firm Agreement. The term “Clearing Firm” 

collectively refers to all Authorized Traders of a Clearing Firm authorized to utilize LMX. A 

Clearing Firm must be a CFTC-registered FCM.

“Clearing House” means the clearing organization(s) as the Exchange may designate in the future 

to provide clearing services with respect to any or all of its Contracts. To the extent that the 

Exchange designates multiple clearing organizations to provide clearing services at any given 

time, the term Clearing Houses shall refer to any clearing organization designated to provide such 

services with respect to the Contract or Clearing Firm in question.

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

interpretation, stated policy, or instrument corresponding to any of the foregoing, in each case as 

adopted or amended from time to time by the Clearing House.

“Commodity Exchange Act” or “CEA” means the Commodity Exchange Act, as amended from 

time to time.

“Contract” means any contract, agreement, or transaction approved for trading on the Exchange 

and pursuant to the Rules.

“Contract Market” has the meaning set forth in CFTC Regulation 1.3.

“Contract Specifications” means, with respect to any Contract, the rules or other trading protocols 

containing specifications for such Contract, as adopted, amended, supplemented or otherwise 

modified from time to time by the Exchange.

“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 

contract, or otherwise. The terms “controlling” or “controlled” shall have meanings correlative to 

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the foregoing.

“Customer” means a person who is, but is not limited to, a customer of a Clearing Firm, Participant 

Firm, or Broker Firm.

“Customer Account” means an account carried by a Clearing Firm on behalf of a Participant or 

Customer.

“Daily Settlement Price” or “Settlement Price” means the official daily closing price for a Contract 

calculated each Business Day, as determined in accordance with Rule 906, and used for all open 

positions at the close of the daily settlement cycle.

“Derivatives Clearing Organization” has the meaning attributed to such term by Section 1a(9) of 

the CEA.

“Director” means any member of the Board.

“Disciplinary Panel” means the panel appointed by the Board at the recommendation of the Chief 

Regulatory Officer to act in an adjudicative role and fulfill various adjudicative responsibilities and 

duties described in Chapter 7.

“Eligible Contract Participant” has the meaning set forth in Section 1a(18) of the CEA, as 

amended.

“Emergency” means the occurrences or circumstances which, in the opinion of the Board, require 

immediate action, and which threaten, or may threaten, the fair and orderly trading in, or the 

settlement or integrity of, any Contract, including, without limitation, the following:

(a) any circumstance that may materially affect the performance of a Contract, including failure 

of the Clearing system;

(b) any action taken by any United States or foreign regulatory, self-regulatory, judicial, arbitral, 

or governmental (whether national, state or municipal) or quasi- governmental authority, or 

any agency, department, instrumentality, or sub-division thereof; or other Person 

exercising, or entitled to exercise any administrative, executive, judicial, legislative, police, 

regulatory or taxing authority or power; or any other Contract Market, clearing house, board 

of trade, or other exchange or trade association (foreign or domestic) that may have a direct 

impact on trading on the Exchange or the settlement legality or enforceability of any 

Contract;

(c) any actual, attempted or threatened corner, squeeze, congestion, manipulative activity or 

undue concentration of positions in a Contract;

(d) any circumstance that may have a severe, adverse effect upon the Functions and facilities 

of the Exchange, including, but not limited to, acts of God, fire, flood or other natural 

disasters, bomb threats, acts of terrorism or war, severely inclement weather, or failure or 

malfunction of all or a portion of the LMX Trading System, or other system breakdowns or 

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interruptions such as power, computer, communication or transportation systems or the 

Internet;

(e) the bankruptcy or insolvency of any Clearing Firm or the imposition of any injunction or other 

restraint by any government agency, clearing house, court or arbitrator upon a Clearing 

Firm which may affect the ability of a Clearing Firm to trade in or perform on a Contract;

(f) any circumstance in which it appears to the Board that a Clearing Firm or any other Person:

(A) has failed to perform on a Contract;

(B) is insolvent; or

(C) is in a financial or operational condition or is conducting business such that the 

Clearing Firm or Person cannot be permitted to continue in business without 

jeopardizing the safety of Customer funds, Participants, other Clearing Firms, 

the Exchange or the Clearing House; or

(g) any other unusual, unforeseeable or adverse circumstance as determined by the Exchange.

“Emergency Rules” has the meaning set forth in Rule 212(a).

“Exchange Control Center” or “ECC” means the Exchange Control Center, a technical support 

center established and maintained by LMX to provide technical support and control over the 

operations of the LMX Trading System.

“Exchange Activity” means business for which a Clearing Firm, FCM-Broker, Participant, 

Participant-Broker, is subject to the LMX Rules, which is purportedly conducted subject to the 

LMX Rules, or which should have been conducted subject to the LMX Rules.

“Exchange of Derivatives for Related Positions” or “EDRP” or “Exchange of Futures for Related 

Positions” or “EFRP” has the meaning set forth in Rule 602.

“Exchange Official” means any Director or Officer of, or individual employed directly by, the 

Exchange or any individual rendering similar services to the Exchange under an administrative or 

similar agreement.

“Exchange Practices Committee” means the committee of the Board constituted in accordance 

with Rule 210.

“Exchange Proceeding” and “Exchange Proceedings” have the meanings attributed to such terms 

in Rule 213(a).

“Future” means any Contract for the purchase or sale of any commodity for future delivery.

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

“Government Agency” means any governmental entity (including the United States, a State, or a 

foreign government).

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“Holdings” means the holding company if LMX, or any successor thereto.

“Independent Software Vendor” or “ISV” means any Person that offers services that provide 

access to the LMX Trading System. In order to provide access to the LMX Trading System the 

ISV must enter into a Participant Firm Agreement with the Exchange and be approved by the 

Exchange.

“Interested Person” has the meaning attributed to such term in Rule 213(a).

“Introducing Broker” or “IB” has the meaning set forth in Section 1a(31) of the CEA and includes 

a Broker Firm.

“Joint Audit Committee” means a voluntary, cooperative organization comprised of 

representatives of U.S. futures exchanges and regulatory organizations, including the Exchange. 

The Joint Audit Committee’s primary responsibility is to oversee the implementation and 

functioning of all terms and conditions of the Joint Audit Agreement and to determine the practices 

and procedures to be followed by each Designated Self-Regulatory Organization in the conduct 

of audits and financial reviews of FCMs.

“Joint Compliance Committee” means an information sharing organization whose members 

include compliance officials from all U.S. Designated Contract Markets, including the Exchange.

“Liquidity Provider” means a Participant that has entered into a Liquidity Provider Agreement.

“LMX” or “Exchange” means LMX Labs, LLC, or any successor thereto.

“LMX Rules” or “Rulebook” means all rules adopted, all Notices to Participants published by the 

Exchange, and the Clearing Firm Agreement, the Participant Firm Agreement, the Broker Firm 

Access Agreement, interpretations, orders, resolutions, advisories, statements of policy, 

decisions, manuals and directives of LMX, and all amendments thereto.

“LMX Trading System” means the LMX electronic trade execution system that is used for trading 

Contracts, including any licensed software that is a part thereof from time to time, and any 

successor electronic trading system thereto.

“Market Regulation Department” means all Exchange Officials and/or agents of the Exchange 

that assist the Exchange in the implementation, surveillance and enforcement of the LMX Rules 

and other Obligations.

“NFA” means the National Futures Association.

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

Participants as described in Rule 309.

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“Obligation” means each Rule of the Exchange, order or procedure issued by the Exchange, 

including Notice to Participants, and other requirement implemented by the Exchange under the 

LMX Rules, including each term of a Contract, as well as any contractual obligations between a

Clearing Firm, Participant, Broker Firm, and the Exchange, including the Participant 

Documentation.

“Officer” has the meaning attributed to such term in Rule 203.

“Other Trading Hours” or “OTH” means the times available for trading block trades and EDRP’s 

when the public auction market is closed.

“Operating Agreement of LMX” or “Operating Agreement” means the Amended and Restated 

Limited Liability Company Agreement of LMX LABS LLC, dated as of February 26, 2020, as the 

same may be amended from time to time.

“Option” means any Option to buy or sell any Contract traded subject to the LMX Rules.

“Order” means either a bid or an offer for a Contract. The following Order types are available on 

the LMX Trading System and may be amended from time to time:

(i) Market means a simple order to buy or sell immediately executed at the best price 

currently available in the system.

(ii) Limit means a simple order executed when a specific price is met.

(iii) Stop means a market order whose activation is dependent upon a specific rate 

being reached or surpassed (e.g., a stop order to buy becomes a market order in 

the system when the market rate is at or above the stop price, while a stop order 

to sell becomes a market order in the system when the market rate is at or below 

the stop price).

(iv) Stop Limit means an order that is similar to Stop Loss order with a difference that 

it activates a Limit order when market rate condition of the stop price is met.

“Order Qualifiers” means the following order duration qualifiers supported by the LMX Trading 

System. An Order eligible to be entered into the LMX Trading System that does not contain a 

duration qualifier will be cancelled if not filled during the trading day in which it was received or, if 

it was received between trading days, during the next trading day. An Order may specify one of 

the following duration qualifiers:

(i) “Good Till Cancel” (GTC) means an Order that will remain in the market until 

executed or manually cancelled.

(ii) “Immediate or Cancel” (IOC) means an Order that will either be immediately 

executed or cancelled.

(iii) “Good Till Date” (GTD) type of order that is active until its specified date.

“Participant” means a Clearing Firm, Broker Firm, or Participant Firm; any person who is either 

employed or is an agent of a Clearing Firm, Broker Firm, or Participant Firm; an ISV; or any Person 

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initiating or executing a transaction on or subject to the Rules of the Exchange directly or through 

an intermediary, or any person who is authorized to access or utilize LMX pursuant to the 

applicable User ID.

“Participant Documentation” means the agreements (together with any applicable schedules, 

exhibits or appendices thereto required by the Exchange) in form and substance acceptable to 

the Exchange, that are required to be executed and delivered to the Exchange before a Person 

may access the LMX Trading System, including, but not limited to the LMX Participant Firm 

Agreement; LMX Clearing Firm Agreement; the LMX Broker Firm Access Agreement; and the 

User ID Request Form, as applicable and amended from time to time by the Exchange.

“Participant Firm” means a person that is authorized under an LMX Participant Firm Agreement 

(the “Participant Firm Agreement”) to have access to LMX (e.g., a customer of a Clearing Firm 

enters orders directly into the Exchange’s trade matching system for execution through the use 

of a user identification in the Participant Firm’s name). A Participant Firm may trade for its own 

proprietary account. In certain cases, a Participant Firm may trade for an account on behalf of its 

Customer. A Participant Firm may also trade on behalf of a Customer with an account at a 

Clearing Firm other than the Participant Firm’s Clearing Firm acting as a broker or performing an 

equivalent agency function. The Clearing Firm is responsible for approving Participant Firms for 

such Customers pursuant to the applicable form to the LMX Clearing Firm Agreement. The term 

“Participant Firm” collectively refers to all Participants and Authorized Traders of a Participant 

Firm authorized to utilize LMX.

“Person” means a natural person or an entity.

“Proprietary Account” has the meaning ascribed to it by CFTC Regulation § 1.3. 

“Public Director” means an individual with the qualifications set forth in Rule 202(e).

“Public Individual” means an individual that is determined by the Board or Chief Regulatory 

Officer, as applicable, to have no “material relationship” with the Exchange, as such term is used 

in Rule 202(e).

“Regular Trading Hours” or “RTH” means those hours designated for public auction trading of the 

relevant product as determined by the Exchange from time to time.

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

with Rule 208.

“Request for Quote” or “RFQ” means an electronic message disseminated on the LMX Trading 

System for the purpose of soliciting bids or offers for a specific Contract. An RFQ initiates an order 

book open to all Participants for trading of a specific Contract.

“Rule” or “Rules” means the Participant Documentation, Rulebook, interpretations, orders, 

resolutions, advisories, notices, statements of policy, decisions, manuals, and directives of the 

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Exchange.

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

such term in CFTC Regulation § 1.3 and, in addition, shall include a Contract Market, Derivatives 

Clearing Organization, and registered futures association.

“Supervised Persons” means any directors, officers, employees or agents of any Participant, 

including but not limited to Authorized Traders and Authorized Brokers.

“Technology Services Agreement” means the agreement(s) between the Exchange and the 

Technology Services Provider whereby technology services are provided to the Exchange.

“Technology Services Provider” means the organization, if any, which provides technology 

services to the Exchange pursuant to a Technology Services Agreement

“Trade” means any purchase or sale of any Contract made on the Exchange.

“Trading Hours” means, for any Business Day, the hours as may be published by the Exchange 

in a Notice to Participants from time to time.

“Trading Privileges” means the right granted to a Participant to transmit Orders for certain or all 

Contracts through the LMX Trading System.

“Transaction” means any purchase or sale of any Contract made on the Exchange.

“Write,” “Written” or “Writing” means printing, lithography, photography, and other modes of 

representing or reproducing words or data in a visible form, including electronic transmissions.

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

(i) the headings are for convenience only and do not affect the construction of the 

LMX Rules;

(ii) all references to time are to local time in Chicago, Illinois except where expressly 

provided otherwise;

(iii) words denoting a singular number include the plural number where the context 

permits and vice versa;

(iv) where the context permits or requires, any pronoun shall include the corresponding 

masculine, feminine and neuter forms;

(v) references to statutory provisions include those provisions as amended, and any 

rules or regulations promulgated thereunder.

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CHAPTER 2: EXCHANGE OWNERSHIP AND GOVERNANCE

RULE 201. Ownership

LMX is a Delaware Limited Liability Company. The LMX Operating Agreement governs the 

management and operation of LMX. The equity interest in LMX is owned by a holding company.

RULE 202. Board

(a) The Board shall manage the day to day business operations of the Exchange. 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 related to the day to day business operations of the 

Exchange.

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

by vote at a meeting, by unanimous written consent without a meeting, or as otherwise 

set forth in the LMX Operating Agreement.

(c) At all times, at least 35% of the Directors shall be Public Directors. Each Director (including 

Public Directors) shall be appointed in accordance with the LMX Operating Agreement, 

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) Each Director is entitled to indemnification pursuant to the LMX Operating Agreement with 

respect to matters relating to the Exchange or otherwise relating to Holdings.

(e) To qualify as a Public Director, an individual must be found, by action of the Board, to 

have no material relationship with the Exchange. The Board must make such finding upon 

the nomination or appointment of the Director and as often as necessary in light of all 

circumstances relevant to such Director, but in no case less than annually.

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

decision-making of the Director. In making the finding specified in this Rule, the Board 

need not consider previous service as a Director of the Exchange to constitute a “material 

relationship.” A Director shall be considered to have a “material relationship” with the 

Exchange if any of the following circumstances exist or have existed within the past year:

(1) Such Director is an Officer or an employee of the Exchange, or an officer or an 

employee of an Affiliate of the Exchange;

(2) Such Director is a Participant or Owner of the Exchange;

(3) Such Director is a director, an officer, or an employee of a Participant or Owner of 

the Exchange;

(4) Such Director is an officer of another entity, which entity has a compensation 

committee (or similar body) on which any Officer of the Exchange serves;

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

employee, or a director, receives more than $100,000 in combined annual 

payments for legal, accounting, or consulting services from the Exchange or its 

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Affiliate, any member of the Exchange, or any Affiliate of such member. 

Compensation for services as a Director of the Exchange or as a director of an 

Affiliate thereof does not count toward the $100,000 payment limit, nor does 

deferred compensation for services rendered prior to becoming a Director, so long 

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

(6) Notwithstanding Rule 202(e)(5), in the case of a public director that is a member 

of the Regulatory Oversight Committee or the Exchange Participant Committee, 

such public director accepts, directly or indirectly, any consulting, advisory, or other 

compensatory fee from the Exchange or its Affiliate or any member of the 

Exchange or the member’s Affiliate, other than deferred compensation for service 

rendered prior to becoming a member of the Regulatory Oversight Committee or 

the Exchange Committee, provided that such compensation is in no way 

contingent, conditioned, or revocable. This Rule 202(e)(6) does not apply to 

compensation received in the public director’s capacity as a member of the 

Regulatory Oversight Committee or Exchange Participant Committee.

(f) Any of the relationships set forth in Rule 202(e)(1) through Rule 202(e)(6) apply to the 

“immediate family” of such director, i.e., spouse, parents, children, and siblings, in each 

case, whether by blood, marriage, or adoption, or any person residing in the home of the 

director or that of his or her “immediate family.”

(g) A Public Director of any Exchange specified in Rule 202 may also serve as a public 

director of an Affiliate of the Exchange if he or she otherwise meets the requirements set 

forth in Rule 202(e)(1) through Rule 202(e)(6).

RULE 203. Officers

(a) The Board shall appoint a Chief Executive Officer, a Chief Regulatory Officer, and such 

other officers of the Exchange (all of the foregoing, collectively, the “Officers”) as it may 

deem necessary or appropriate from time to time, in accordance with the Operating 

Agreement.

(b) Any Officer may also be a director, officer, partner or employee of the Exchange or any of 

its Affiliates.

(c) The Officers shall have such powers and duties in the management of the Exchange as 

the Board may prescribe from time to time.

(d) Each Director and Officer is entitled to indemnification pursuant to the Operating 

Agreement with respect to matters relating to the Exchange or otherwise relating to 

Holdings.

RULE 204. Qualifications of Directors, Disciplinary Panel Members, Appeal Panel 

Members, Committee Members, Owners and Officers

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

Operating Agreement.

(b) An individual may not serve as a Director or an Officer, or serve on a committee 

established by the Board, a Disciplinary Panel or an Appeal Panel, or hold a 10% or more 

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ownership interest in the Exchange, if the individual:

(1) 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 SelfRegulatory Organization, to have committed a disciplinary offense;

(2) 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;

(3) is currently suspended from trading on a Contract Market, is 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:

(4) 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

(5) 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;

(6) 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;

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

suspension of registration by the CFTC or subject to any of the conditions set 

forth in section 8a(2) of the CEA;

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

CEA; or

(9) is currently subject to a denial, suspension or disqualification from serving on a 

disciplinary committee, arbitration panel or governing board of any self-regulatory 

organization as that term is defined in section 3(a)(26) of the Securities Exchange 

Act of 1934.

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

a Disciplinary Panel, or Appeal Panel, any individual nominated to serve in any such role, 

or any individual authorized by the Market Regulation Department to take summary 

action shall immediately notify the Chief Executive Officer if such individual meets one or 

more of the criteria in Rule 204(b).

(d) For purposes of Rule 204(b), the terms “disciplinary offense,” “final decision,” and 

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

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RULE 205. Standing Committees

(a) The Board shall initially have four standing committees: the “Nominating Committee,” the 

“Exchange Participant Committee,” “Regulatory Oversight Committee,” and the 

Exchange Practices Committee.” The Board may from time to time constitute and 

appoint in accordance with the Operating Agreement, such additional standing 

committees of the Board as it may from time to time deem necessary or advisable.

(b) Each member of such standing committees must be a Director, one of whom the Board 

shall designate as the chairperson of each standing committee.

(c) Each standing committee shall assist in the supervision, management and control of the 

affairs of the Exchange within its particular area of responsibility, subject to the authority 

of the Board.

(d) Subject to the authority of the Board, each standing committee shall determine the 

manner and form in which its proceedings shall be conducted. Each standing committee 

may act only by the decision of an absolute majority in number of the members of such 

committee, by vote at a meeting or by unanimous written consent without a meeting. The 

Board has the authority to overrule the decisions of a standing committee.

RULE 206. Nominating Committee

(a) The Nominating Committee of the Board shall consist of three Directors appointed from 

time to time by the Board, two of which shall be Public Directors (i.e., at least 51% Public 

Directors). The Nominating Committee shall be chaired by a Public Director.

(b) The Nominating Committee shall have the authority to:

(1) Identify individuals qualified to serve on the Board, consistent with the criteria that 

the Board require and any composition requirement that the Commission 

promulgates; and

(2) Administer a process for the nomination of individuals to the Board.

(c) The Nominating Committee reports to the Board.

RULE 207. Exchange Participant Committee

(a) The Exchange Participant Committee of the Board shall consist of three Directors 

appointed from time to time by the Board, two of which shall be Public Directors (i.e. at 

least 35% Public Directors).

(b) The Exchange Participant Committee shall:

(1) Determine the standards and requirements for initial and continuing Participant 

eligibility;

(2) Review appeals of staff denials of Participant applications; and

(3) Approve rules that would result in different categories or classes of Participants 

receiving disparate access to the Exchange.

(c) In reviewing appeals of staff denials of Participant applications, the Exchange 

Participation Committee shall not uphold any staff denial if the relevant application meets 

the standards and requirements that such Committee sets forth.

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(d) The Exchange Participant Committee shall not, and shall not permit the Exchange to, 

restrict access or impose burdens on access in a discriminatory manner, within each 

category or class of Participants or between similarly-situated categories or classes of 

Participants.

(e) The Exchange Participant Committee reports to the Board.

RULE 208. Regulatory Oversight Committee

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

appointed from time to time by the Board (i.e. 100% Public Directors).

(b) Each member of the Regulatory Oversight Committee shall serve for a term of two 

calendar years from the date of their appointment or for the remainder of their term as a 

Public Director, and 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 Public Director. A member of the Regulatory Oversight 

Committee may serve for multiple terms.

(c) The Regulatory Oversight Committee shall oversee the Exchange’s regulatory program 

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. It shall make such recommendations to the Board as will, in its judgment, best 

promote the interests of the Exchange. The Regulatory Oversight Committee shall also 

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

the Board may delegate to it from time to time.

(d) Without limiting the generality of the foregoing, the Regulatory Oversight Committee shall 

have authority to:

(1) Monitor the regulatory program of the Exchange for sufficiency, effectiveness, 

and independence;

(2) Oversee all facets of the regulatory program, including:

(i) Trade practice and market surveillance; audits, examinations, and other 

regulatory responsibilities with respect to Participants (including 

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

practice, recordkeeping, and other requirements); and the conduct of 

investigations;

(ii) Reviewing the size and allocation of the regulatory budget and resources, 

and the number, hiring, termination, and compensation of regulatory 

personnel;

(iii) Supervising the Chief Regulatory Officer of the Exchange, who will report 

directly to the Regulatory Oversight Committee;

(iv) Recommending changes that would ensure fair, vigorous, and effective 

regulation; and

(v) Reviewing all regulatory proposals prior to implementation and advising 

the Board as to whether and how such changes may impact regulation.

(vi) Require the preparation of an annual report assessing the Exchange’s 

self-regulatory program for the Board and the Commission, which sets 

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forth the regulatory program’s expenses, describes its staffing and 

structure, catalogues disciplinary actions taken during the year, and 

reviews the performance of disciplinary committees and panels, among 

other areas.

(e) The Regulatory Oversight Committee reports to the Board.

RULE 209. Chief Regulatory Officer

(a) It shall be the duty of the Chief Regulatory Officer to enforce the Rules.

(b) The Chief Regulatory Officer shall have available to it at all times the resources of the 

Market Regulation Department and such other Exchange resources as may be 

necessary to conduct investigations of alleged rule violations and market conditions.

(c) The Chief Regulatory Officer shall report to, and shall be supervised by, the Regulatory 

Oversight Committee.

(d) The Chief Regulatory Officer shall have the authority to inspect the books and records of 

all Participants and the authority to require any Participant to appear before him or her 

and produce its books and records and answer questions regarding alleged violations of 

LMX Rules, at the time, place and in the manner it designates. The Chief Regulatory 

Officer may also delegate such authority to staff of the Market Regulation Department. 

RULE 210. Exchange Practices Committee

(a) The Exchange Practices Committee of the Board shall consist of four Directors appointed 

from time to time by the Board, two of which shall be Public Directors (i.e. at least 35%).

(b) The Exchange Practices Committee shall be responsible for:

(1) establishing and modifying from time to time Contract specifications and trading 

protocols and conventions for the Exchange,

(2) establishing and modifying position limits,

(3) designating and modifying from time to time products eligible for listing on the 

Exchange and

(c) In addition, the Exchange Practices Committee shall have such other powers and 

perform such other duties as set forth in the LMX Rules and as the Board may delegate 

to it from time to time.

RULE 211. Additional Board Committees and Exchange Panels

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

appoint, in accordance with the Operating Agreement, special committees of the Board 

and designate their composition, responsibilities and powers. Each member of such 

special committees must be a Director and at least 35% of the members shall be Public 

Directors.

(b) The Exchange may create panels of the Exchange, for such purposes as may from time 

to time be necessary or advisable. Members of each such panel may be Directors, 

Participants (if individuals) or any of a Participants Supervised Persons (if an entity) or 

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such other individuals as may be qualified to serve on such panel.

(c) Except as otherwise specifically provided in the Rules, the members of any additional 

committee or panel shall be appointed as determined by the Board. The Board shall 

designate the chairperson of such additional committee or panel.

(d) Each additional committee or panel shall assist in the supervision, management and 

control of the affairs of the Exchange within its particular area of responsibility.

(e) Subject to the authority of the Board, each additional committee or panel shall determine 

the manner and form in which its proceedings shall be conducted. Each additional 

committee or panel may act only by the decision of an absolute majority in number of the 

members of such committee or panel, either by vote at a meeting or by unanimous written 

consent without a meeting.

RULE 212. 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 the Exchange, the Board, any committee of 

the Board, the Chief Executive Officer, or any other Officer to take actions necessary or 

appropriate to respond to the Emergency, including, but not limited to, the following 

actions:

(1) suspending or curtailing trading or limiting trading to liquidation only (in whole or 

in part);

(2) extending or shortening the last trading date for Contracts;

(3) providing alternative settlement mechanisms;

(4) ordering the liquidation of Contracts, the fixing of a Settlement Price, or the 

reduction of positions;

(5) extending, limiting or changing the Trading Hours;

(6) temporarily modifying or suspending any provision of the LMX Rules or 

Obligations;

(7) requiring Participants to meet special margin requirements;

(8) imposing or modifying price limits; 

(9) imposing or modifying position limits;

(10) ordering the transfer of open positions and margin of any Contract;

(11) altering any Contract’s settlement terms or conditions; and/or

(12) carrying out any Emergency actions through the Exchange’s 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 enforcement of such Emergency Rule at a duly convened meeting. 

Directors may attend such a meeting by teleconference. If the Chief Executive Officer 

determines that Emergency Rules must be implemented with respect to an Emergency 

before a meeting of the Board can reasonably be convened, then the Chief Executive 

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Officer 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 Chief Executive Officer must convene a 

meeting as soon as practicable.

(c) Whenever the Exchange, the Board, any committee of the Board, or the Chief Executive 

Officer takes actions necessary or appropriate to respond to an Emergency a duly 

authorized representative of the Exchange, where possible, will posted an announcement 

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

Executive Officer determines that the Emergency has been reduced sufficiently to allow 

the Exchange to resume normal functioning, any such actions responding to an 

Emergency will be terminated.

(d) The Exchange 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, the Exchange will notify the CFTC as soon as possible or reasonably 

practicable, but in all cases such notification will take place no later than twenty-four hours 

after the implementation, modification, or termination of an Emergency Rule. 

Notwithstanding the foregoing, the Exchange will certify any Emergency Rule to the 

Commission.

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

decision-making process related to such action, including how any conflicts of interest 

were managed and minimized, including the extent to which the DCM considered the 

effect of its emergency action on the underlying markets and on markets that are linked 

or referenced to the contract market and similar markets on other trading venues. Such 

documentation will be kept for at least five years following the date on which the 

Emergency ceases to exist or to affect the Exchange, and all such documentation will be 

provided to the CFTC upon request.

RULE 213. Conflicts of Interest and Misuse of Material, Non-Public Information

(a) No Director, Officer, Disciplinary Panel member or other Person authorized to exercise 

the Exchange’s authority concerning any inquiry, investigation, disciplinary proceeding or 

any appeal from a disciplinary proceeding, summary suspension, other summary actions, 

“disciplinary committee” or “oversight panel” (both as defined in Commission Regulation 

1.69) (any such action, an “Exchange Proceeding” and, collectively, “Exchange 

Proceedings”), significant action, or Emergency action taken pursuant to Rule 212 (each 

such Exchange Proceeding or Emergency action, a “Self-Regulatory Action”) will 

knowingly participate in such body’s deliberations or voting in any matter involving a SelfRegulatory Action where such member has a “material conflict of interest” (each, an 

“Interested Person”), except as described in Rule 213(d). For purposes of this Section 

213(a), the term “significant action” means (1) any action or Rule change that addresses 

a specific Emergency or (1) any change in margin level that is designed to respond to 

extraordinary market conditions or that otherwise is likely to have a substantial effect on 

prices in any Contract.

(b) For purposes of Rule 213(a), a “material conflict of interest” means a Director, Officer, 

Disciplinary Panel Member or other Person:

(1) being named as a respondent or potential respondent in the Self-Regulatory

Action;

(2) being an employer, employee, fellow employee or an Affiliate of a respondent or 

potential respondent in the Self-Regulatory Action;

(3) having any significant, ongoing business relationship with a respondent or 

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potential respondent in the Self-Regulatory Action, excluding relationships limited 

to executing Contracts opposite each other or to clearing Contracts through the 

same Clearing Firm;

(4) having a family relationship with a respondent or potential respondent in a SelfRegulatory Action (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-in-law, 

brother-in-law or sister-in-law);

(5) having a direct and substantial financial interest in the result of the deliberations 

or vote based upon either exchange or non-exchange positions (as referenced in 

Section 1.69 of the CFTC Regulations), other than a direct or indirect equity or 

other interest in Holdings, that could reasonably be expected to be affected by 

the action, as determined pursuant to Rule 213(c)(2) below. A direct and 

substantial financial interest includes positions in Contracts in accounts of, 

controlled by, or affiliated with the Interested Person or in 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; and/or

(6) any other circumstance that gives rise to a conflict between the Director’s, 

Officer’s, Disciplinary Panel Member’s or Other Person’s exercise of authority 

concerning any Self-Regulatory Action and his or her personal interests.

(c) Disclosure, Procedure, and Determination

(1) Prior to consideration of any Self-Regulatory Action, each member of the 

deliberating body who chooses to participate in any deliberations or vote will 

disclose to the Chief Regulatory Officer whether such member has one of the 

relationships listed in Rule 213(b) above.

(2) In addition to the information set forth in Rule 213(c)(1) above, for any matter 

involving the relationship set forth in Rule 213(b)(5), each member of the 

deliberating body who chooses to participate in any deliberations or vote will 

disclose to the Chief Regulatory Officer position information (including information 

regarding positions held by such member, positions held by individuals of such 

member’s family and positions held by a firm with which such member is affiliated) 

that is known to such member with respect to any particular month or months that 

are under consideration, and any other positions which the deliberating body 

reasonably expects could be affected by the significant action, as follows:

i. gross positions held at the Exchange in such member’s personal accounts 

or “controlled accounts,” as defined in Commission Regulation 1.3(j);

ii. gross positions held at the Exchange in proprietary accounts, as defined 

in Commission Regulation 1.17(b)(3), at such member’s affiliated firm;

iii. gross positions held at the Exchange in accounts in which such member 

is a principal, as defined in Commission Regulation 3.1(a);

iv. net positions held at the Exchange in Customer accounts, as defined in 

Commission Regulation 1.17(b)(2), at such member’s affiliated firm; and

v. any other types of positions, whether maintained at the Exchange or 

elsewhere, held in such member’s personal accounts or the proprietary 

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accounts of such member’s affiliated firm, that the Exchange reasonably 

expects could be affected by the significant action.

(3) The Chief Regulatory Officer will determine whether any member of the relevant 

deliberating body who chooses to participate in any deliberations or vote in a SelfRegulatory Action is subject to a conflicts restriction under this Rule 213(a).

i. For any matter involving the relationships listed in Rule 213(b) above, 

such determination will be based upon a review of the following 

information:

a. information provided by such member pursuant to Rule 213(c)(1); 

and

b. any other source of information that is held by and reasonably 

available to the Exchange.

(4) In addition to the review of the information set forth in Rule 213(c)(3) above, for 

any matter involving the relationship set forth in Rule 213(b)(5), such 

determination will be based upon a review of the following information:

i. the most recent large trader reports and clearing records available to the 

Exchange;

ii. information provided pursuant to Rule 213(c)(2); and,

iii. any other source of information that is held by and reasonably available 

to the Exchange taking into consideration the exigency of the significant 

action being contemplated.

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

voting pursuant to Rule 213(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 deliberating body, after considering the factors specified below, 

determines that such participation would be consistent with the public interest; provided 

however, that before reaching any such determination, the deliberating body will fully 

consider the position information specified in Rule 213(c)(2) above which is the basis of 

such member’s substantial financial interest in the Self-Regulatory Action that is being 

contemplated. In making its determination, the deliberating body will consider:

(1) whether such member’s participation in the deliberations is necessary to achieve 

a quorum; and;

(2) whether such member has unique or special expertise, knowledge or experience 

in the matter being considered.

(e) The minutes of any meeting to which the conflicts determination procedures set forth in 

this Rule 213 apply will reflect the following information:

(1) the names of all members of the relevant deliberating body who attended such 

meeting in person or who otherwise participated in such meeting

(2) the name of any member of the relevant deliberating body who voluntarily 

recused himself or herself or was required to abstain from deliberations or voting 

on a matter and the reason for the recusal or abstention, if stated;

(3) information on the position information that was reviewed for each member of the 

relevant deliberating body; and

(4) any determination made in accordance with Rule 213(d) above.

(f) If a determination is made that all Directors are Interested Persons with respect to a matter 

subject to a vote by the Board, the Chief Executive Officer will appoint a panel of 

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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, nonpublic 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 the Exchange 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 213(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 213(g), the terms “material information” and “nonpublic 

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

RULE 214. Maintenance of Books and Records by the Exchange

(a) The Exchange shall keep, or cause to be kept, complete and accurate books and records 

of accounts of the Exchange, including, without limitation, all books and records required 

to be maintained pursuant to the CEA, and the CFTC Regulations.

(b) The Exchange shall retain all such books and records for at least five (5) years, and shall 

make such books and records readily accessible for inspection by the CFTC and the 

United States Department of Justice during the first two (2) years of such five-year period.

RULE 215. Information-Sharing Agreements

(a) The Exchange may enter into information-sharing agreements or other arrangements or 

procedures to coordinate surveillance with other markets on which financial instruments 

related to the Contracts trade. As part of any information-sharing agreements or other 

arrangements or procedures adopted pursuant to this Rule, the Exchange may:

(1) provide market surveillance reports to other markets;

(2) share information and documents concerning current and former Participants with 

other markets;

(3) share information and documents concerning ongoing and completed 

investigations with other markets; and/or

(4) require its current or former Participants to provide information and documents to 

the Exchange at the request of other markets with which the Exchange has an 

information- sharing agreement or other arrangements or procedures.

(b) The Exchange may enter into any arrangement with any Person or body (including, 

without limitation, the CFTC, the NFA, any Self-Regulatory Organization, any exchange, 

market, or clearing organization, foreign regulatory authority, the Joint Audit Committee, 

or the Joint Compliance Committee) if the Exchange considers such arrangement to be in 

furtherance of the Exchange’s purpose or duties under the Rules or any law or regulation.

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(c) The Exchange may disclose to any Person or entity information concerning or associated 

with a Participant or other Person that the Exchange believes is necessary and 

appropriate in exercising a legal or regulatory function, whether or not a formal 

arrangement governing the disclosure exists or a request for information was made.

RULE 216. [RESERVED] 

RULE 217. Services Agreement with a Technology Services Provider

(a) The Exchange may contract with a Technology Services Provider to provide certain 

technology services to the Exchange pursuant to a Technology Services Agreement. In 

accordance with a Technology Services Agreement, a Technology Services Provider may 

perform certain functions under the LMX Exchange Rules and the Exchange may provide 

information to the Technology Services Provider in connection with the performance by 

the Technology Services Provider of those functions. The Exchange conducts reviews to 

verify that the Technology Services Provider is performing certain technology services to 

the Exchange pursuant to a Technology Services Agreement.

(b) The Exchange shall retain ultimate decision-making authority with respect to any functions 

that are contracted to a Technology Services Provider.

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CHAPTER 3: PARTICIPANTS

RULE 301. Criteria for Becoming a Participant Firm

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

satisfaction of the Exchange that it:

(1) is of good reputation and business integrity;

(2) maintains adequate financial resources and credit;

(3) is of the age of majority in the individual’s state of residence (if an individual);

(4) is validly organized, in good standing, and authorized by its governing body and, 

if relevant, documents of organization, to trade Contracts (if an entity);

(5) has not filed for bankruptcy;

(6) is not prohibited from using the services of the Exchange for any reason 

whatsoever;

(7) holds all registrations, including any Introducing Broker, Futures Commission 

Merchant, Supervisory Person and/or Associated Person registration and meets 

the minimum financial standards required under Applicable Law, including, but 

not limited to the requirements set forth in CFTC Regulation 1.17 any Introducing 

Broker, Futures Commission Merchant, Supervisory Person and/or Associated 

Person registration, as applicable if any;

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

(9) satisfies any other criteria that the Exchange may require from a Participant.

(b) Once admitted, the Participant Firm shall continue to comply with all applicable eligibility 

criteria in Rule 301(a). The Exchange evaluates and monitors a Participant Firm’s 

compliance with the criteria set forth in this Rule 301.

(c) To the extent a Participant Firm is a Participant on LMX that is or was an Exempt Board 

of Trade subject to the CFTC’s jurisdiction, then such Participant Firm shall be a 

Participant Firm on LMX, as long as such Participant Firm complies with Rule 301(b).

(d) Each Participant Firm must establish a clearing relationship with a Clearing Firm and shall 

immediately notify LMX if it ceases to be a clearing customer of such Clearing Firm. 

Participant understands that it will be denied access to the LMX Trading System unless 

Participant has obtained and delivered to LMX the applicable documentation from an 

authorized signatory of such Clearing Firm. Participant Firm also understands that LMX 

may restrict, suspend or terminate Participant Firm’s access to LMX or the LMX Trading 

System at the direction of the Clearing Firm. Participant Firm also understands that it may 

be permitted direct electronic access (i.e., a customer of a Clearing Firm enters orders 

directly into the Exchange’s trade matching system for execution through the use of a user 

identification in the Participant Firm’s name) and the Exchange provides the Clearing Firm 

with and requires the Clearing Firm to use pre-trade controls that enable the Clearing Firm 

to implement appropriate financial risk limits.

RULE 302. Participant Firm Application Process

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

(1) enter into a Participant Firm Agreement;

(2) establish a clearing relationship with a Clearing Firm;

(3) ensure that a Clearing Firm has submitted such documentation as set forth in 

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Rule 902;

(4) enter into a User License Agreement with the Clearing House, if applicable;

(5) agree to abide by the Rules and Applicable Law;

(6) provide such information and documentation as may be requested by the 

Exchange, and follow the procedures established by the Exchange for admission; 

and,

(7) any Participant Firm organized or located outside of the United States shall enter 

into a written agreement acceptable to the Exchange appointing a third party as 

its U.S. agent for service of process for purposes of CFTC Regulation 15.05, and 

shall provide the Exchange with a copy of the agreement.

(b) In considering an application from a potential Participant Firm, the Exchange may require 

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

submitted by the applicant, or both.

(c) If the Exchange decides to admit an applicant as a Participant Firm, it shall promptly notify 

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

Participant Firm.

(d) The Exchange may deny, condition or terminate Participant Firm status of any Person:

(1) If such Person is unable to satisfactorily demonstrate its ability to satisfy the 

eligibility criteria to become or remain a Participant Firm;

(2) If such Person is unable to satisfactorily demonstrate its capacity to adhere to all 

applicable Rules;

(3) If such Person would bring the Exchange into disrepute as determined by the 

Exchange in its sole discretion; or,

(4) for such other causes as the Exchange may reasonably determine.

(e) If the Exchange decides to decline or condition an application for admission as a 

Participant Firm, or terminate a Person’s status as a Participant Firm, the Exchange shall 

promptly notify such Person (the “Affected Person”) thereof in a writing sent to the address 

provided by the applicant in the Exchange application form or maintained in the Exchange 

registry of Participant Firms. Such Affected Person may, within seven (7) calendar days, 

request in writing that the Exchange provide the reasons for the denial, conditioning or 

termination of Participant Firm status. Within fourteen (14) calendar days after receiving 

such written request, the Exchange shall send a written response to the Affected Person 

setting forth the reasons for the denial, conditioning or termination. Within fourteen (14) 

calendar days of receiving the Exchange’s written response, the Affected Person may 

request in writing that the Exchange Participant Committee reconsider the determination.

(f) Within twenty-eight (28) calendar days of receiving either the request for reconsideration, 

the Exchange Participant Committee shall either confirm, reverse or modify the denial, 

conditioning or termination of the Affected Person as a Participant Firm, and shall promptly 

notify the Affected Person accordingly in writing. The Exchange Participant Committee 

may, within its discretion, schedule a hearing (in-person or by teleconference); request 

additional information from the Affected Person; or, establish any other process that it 

believes is necessary and appropriate to consider the request for reconsideration.

(g) The Exchange Participant Committee’s decision is the final action of the Exchange and is 

not subject to appeal within the Exchange.

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RULE 303. Trading Privileges of a Participant Firm, Clearing Firm, Broker Firm

(a) A Participant (i.e., a Participant Firm, Clearing Firm, and Broker Firm) must execute such 

Participant Documentation as required from time to time by the Exchange, and such 

Participant Documentation must remain in effect for the Participant to maintain its Trading 

Privileges.

(b) Admission as a Participant only entitles the Participant to the Trading Privileges and does 

not confer any right of ownership in, or right to attend or vote at meetings of, the Exchange, 

or right to share in the profits, of the Exchange. A Participant may not transfer or assign 

its status as a Participant without the prior written consent of the Exchange, and any 

purported transfer or assignment without the Exchange’s prior consent is not binding on 

the Exchange.

(c) All rights and privileges of a Participant terminate upon, and all obligations of a Participant 

shall survive, the death or incapacity of the Participant (if an individual) or the dissolution 

of the Participant (if an entity).

RULE 304. Limitations on Access to the LMX Trading System

(a) The Exchange may at any time revoke, suspend, limit, condition, restrict or qualify a 

Participant’s Trading Privileges and/or ability to access the LMX Trading System, if in the 

sole discretion of the Exchange, such action is in the best interests of the Exchange. 

Specifically, the Exchange may revoke, suspend, limit, condition, restrict or qualify a 

Participant’s Trading Privileges and/or ability to access the LMX Trading System, if the 

Participant fails to meet the criteria set forth in Rule 301.

(b) A Clearing Firm may at any time revoke the authorization of any Participant guaranteed 

by it with or without prior notice to such Participant. For purposes of the relationship 

between the relevant Clearing Firm and the Exchange, and the obligations of such 

Clearing Firm to the Exchange, any such revocation shall become effective upon the 

receipt of written notice thereof by the Exchange. Upon such receipt, the Trading 

Privileges of the Participant subject thereto shall be automatically terminated, and such 

Participant must obtain another guarantee from a Clearing Firm before its Trading 

Privileges will be reinstated.

RULE 305. Dues, Assessments and Fees

(a) The Exchange shall have the authority to set the amounts and times of payment for any 

dues, assessments or fees (including LMX Trading System fees, clearing fees, brokerage 

and/or any transaction surcharges) to be paid by Participants.

(b) Each Participant agrees to pay such dues, assessments, and fees as are published by the 

Exchange in a Fee Circular, on the Exchange’s website or as otherwise agreed between 

the Exchange and a Participant. Each Participant agrees to pay such dues, assessments, 

and fees when due. The Exchange may change fees charged to Participant without 

notice.

(c) If a Participant fails to pay when due any such dues, assessments or fees levied on such 

Participant, and such payment obligation remains unsatisfied for thirty days after its due 

date, the Exchange may suspend, revoke, limit, condition, restrict or qualify the 

Participant’s Trading Privileges and/or ability to otherwise access the LMX Trading System 

as it deems necessary or appropriate.

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RULE 306. Authorized Traders and Authorized Brokers

(a) Each Participant who is not a natural Person shall designate one or more Authorized 

Trader(s) or Authorized Broker (s), who will be responsible for Exchange Activity 

conducted on behalf of the Participant. An Authorized Trader may also be a Participant in 

his or her individual capacity, but may not knowingly act as a counterparty in any capacity 

to any Order that he or she has placed as an Authorized Trader or Authorized Broker on 

behalf of another Participant or in his or her individual capacity.

(b) 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 LMX Rules and Obligations. Among other duties and responsibilities that the 

Exchange may impose, an Authorized Trader must:

(1) have the authority, at the Exchange’s request, to adjust or withdraw any Order 

submitted under any user ID assigned to him or her; and

(2) ensure that any Exchange Activity conducted under any user ID assigned to him 

or she complies with all LMX Rules and Obligations.

(c) To designate an Authorized Trader or Authorized Broker, a Participant must follow the 

procedures established by the Exchange. The Exchange may establish criteria that 

individuals must fulfill to become an Authorized Trader.

(d) By agreeing to become a Broker Firm that person agrees to be bound by the duties and 

responsibilities of a Broker Firm, agrees to be subject to, and comply with, the LMX Rules 

and Obligations, agrees that it will obtain an agreement from each other Authorized Broker 

that it will comply with and be subject to, the LMX Rules when accessing LMX, and Broker 

Firm shall be responsible to LMX for any failures to comply with LMX Rules by any 

Authorized Broker, to the same extent that Broker Firm would be liable. Among other 

duties and responsibilities that the Exchange may impose, a Broker Firm:

(1) must enter into the applicable Participant Documentation;

(2) must agree to effect transactions for the account of a Participant or Customer in 

Contracts via the LMX Trading System;

(3) must have the authority, at the Exchange’s request, to adjust or withdraw any 

Order submitted under any user ID assigned to him or her;

(4) must ensure that any Exchange Activity conducted under any user ID assigned 

to him or her complies with all LMX Rules and Obligations;

(5) must have and maintain during all necessary regulatory approvals and/or licenses 

to operate as Broker Firm or as an Authorized Broker on LMX, including any 

Introducing Broker, Futures Commission Merchant, Supervisory Person and/or 

Associated Person registrations, and compliance with the minimum financial 

standards required under Applicable Law as applicable; and,

(6) agree to such other terms and conditions as may be established by LMX from 

time to time.

(e) The Exchange will promptly notify a Participant Firm or Clearing Firm in writing of the 

approval of designated Authorized Trader(s) or Authorized Broker(s) or if the Exchange 

declines to approve the nomination of an Authorized Trader or Authorized Broker.]

(f) The Exchange will maintain a list of all designated Authorized Traders, Broker Firms or 

Authorized Brokers for each Participant.

(g) The Exchange may, in its sole discretion revoke or suspend the designation of an 

individual as Authorized Trader, Authorized Broker, or Broker Firm and shall promptly 

notify the Participant or Clearing Firm of such action.

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(h) To request the termination of the designation of an individual as Authorized Trader or, 

Authorized Broker, or Broker Firm, the Participant must follow the procedures established 

by the Exchange. The Exchange may, in its sole discretion, refuse to accept a request to 

terminate the registration of an Authorized Trader , Authorized Broker, or Broker Firm, or 

may postpone the effective date of the termination of registration if the Exchange 

considers it necessary for the protection of Participant’s or in the Exchange’s best interest. 

Based on the information provided to, and other information gathered by, the Exchange 

regarding the request to terminate the registration of an Authorized Trader , Authorized 

Broker, or Broker Firm, the Exchange will determine whether to:

(1) accept the request to terminate the designation

(2) postpone the effective date of termination of the designation, and/or

(3) impose any terms or conditions before or after the effective date of termination of 

the designation.

RULE 307. [RESERVED] 

RULE 308. Recording of Communications

The Exchange may record conversations and retain copies of electronic communications 

between Exchange Officials, on one hand, and Participants, their Authorized Traders, Supervised 

Persons, Authorized Brokers or other agents, on the other hand. Any such recordings may be 

retained by the Exchange in such manner and for such periods of time as the Exchange may 

deem necessary or appropriate. The Exchange will retain such recording in compliance with 

CFTC Regulations.

RULE 309. Notices to Participants, Information Available on LMX Website and Other 

Communications

(a) The Exchange shall publish a notice with respect to each addition to, modification of, or 

clarification of, the LMX Rules or of any action to implement any LMX Rules on the 

Exchange’s website or via an electronic mail distribution 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 (each a “Notice to Participants”). For purposes of publication in 

accordance with the first sentence of this Rule 310, it shall be sufficient (without limiting 

the discretion of the Exchange as to any other reasonable means of communication) if a 

Notice to Participants is published on the Exchange’s website.

(b) Any Notice to Participants shall also be deemed to have been made to all Authorized 

Traders, Broker Firms, and Supervised Persons.

(c) For the avoidance of doubt, the following information will be made available on the LMX 

website: (1) the rules, regulations and mechanisms for executing transactions on or 

through the facilities of the DCM, and the rules, regulations and mechanisms for 

executing transactions on or through the facilities of the DCM; (2) Rule amendments or 

other changes to previously-disclosed information; (3) the Rules and specifications 

describing the operation of the Exchange’s: (i) electronic matching platform or (ii) trade 

execution facility; and (4) regulatory submissions.

(d) Any communication with the CFTC and any information required to be transmitted or 

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made available to Participants and the public, including information on the Exchange’s 

Website or otherwise, will to the best of the belief and knowledge of the Exchange be 

accurate and complete and will not omit material information. 

(e) The Exchange will confirm that the Rulebook posted on its Website is accurate, complete, 

current and readily accessible to the public. In addition, the Exchange will publish or post 

in its Rulebook, all new or amended rules, both substantive and non-substantive, on the 

date of implementation of such new or amended rule, on the date a new product is listed, 

or on the date any changes to previously-disclosed information take effect.

RULE 310. Communications between the Exchange and Participants

(a) Each Participant must provide the Exchange with its current electronic mail address and 

telephone number and the electronic mail address and telephone number of any of its 

Authorized Traders and immediately (and in any event within 24 hours) update this 

information whenever it changes.

(b) Each Broker Firm must provide the Exchange with its current electronic mail address and 

telephone number and the electronic mail address and telephone number of any of its 

Authorized Traders and immediately (and in any event within 24 hours) update this 

information whenever it changes.

(c) All communications between the Exchange and the Participant or Broker Firm will be 

transmitted by electronic mail and/or posted on the Exchange’s website, except as 

otherwise specified by the Exchange.

(d) The Participant shall be responsible for conveying such communications to all Authorized 

Traders, Supervised Persons, and Broker Firms.

(e) The Broker Firm shall be responsible for conveying such communications to all Authorized 

Broker.

(f) Each Participant will be responsible for promptly reviewing and, if necessary, responding 

to all electronic communications from the Exchange to the Participant or any of its 

Authorized Traders, its other Supervised Persons, or Broker Firm.

(g) Each Broker Firm will be responsible for promptly reviewing and, if necessary, responding 

to all electronic communications from the Exchange to the Broker Firm or any of its 

Authorized Broker.

(h) All communications made to Participants shall also be deemed to have been made to all 

Authorized Traders and Supervised Persons.

(i) All communications made to Broker Firms shall also be deemed to have been made to all 

Authorized Brokers.

RULE 311. Application of Rules and Jurisdiction

(a) By becoming a Participant and by accessing, or entering any Order or submitting any 

Contract into the LMX Trading System, and without any need for any further action, 

undertaking or agreement, a Participant, its Authorized Traders, Supervised Persons, 

Broker Firms , and Authorized Broker agree:

(1) to be bound by, and comply with, the LMX Rules and obligations, the Clearing 

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

(2) to become subject to the jurisdiction of the Exchange and the Clearing House 

with respect to any and all matters arising from, related to, or in connection with, 

the status, actions or omissions of such Person, and

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(3) to assist the Exchange in complying with its legal and regulatory obligations, 

cooperate with the Exchange and the CFTC in any inquiry, investigation, audit, 

examination or proceeding, and authorizes the Exchange to provide information 

regarding it to the CFTC or any Self-Regulatory Organization.

(b) Any Participant whose Trading Privileges and/or ability to otherwise access the LMX 

Trading System are revoked or terminated shall remain bound by the LMX Rules, the 

Clearing House Rules and Applicable Law, in each case to the extent applicable to it, and 

subject to the jurisdiction of the Exchange and the Clearing House 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.

(c) An Authorized Trader or Authorized Broker who is suspended for any period remains 

subject to the LMX Rules, the Obligations and the Exchange’s jurisdiction throughout the 

period of suspension. After revocation or termination of the designation of an Authorized 

Trader or Authorized Broker, the Authorized Trader or Authorized Broker remains subject 

to the LMX Rules, the Obligations and the jurisdiction of the Exchange for acts done and 

omissions made while registered as an Authorized Trader. Any Exchange Proceeding 

relating to an Authorized Trader or Authorized Broker shall occur as if the Authorized 

Trader or Authorized Broker were still registered as such.

RULE 312. Description of Participant’s or Broker Firm’s Status

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

status on the Exchange to Customers is not inconsistent with, and does not misrepresent, the 

Participant’s capacity on the Exchange under the LMX Rules or the Participant’s registration, if 

any, under the CEA, or under any other Applicable Law.

RULE 313. Withdrawal of Participant

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

procedures established by the Exchange.

(b) The Exchange may, in its reasonable discretion, refuse to accept a Participant’s 

withdrawal request or may postpone the effective date of withdrawal of a Participant if the 

Exchange considers it necessary for the protection of other Participants or otherwise in 

the interests of the Exchange.

(c) Based on the information provided to, and other information gathered by, the Exchange 

regarding a Participant’s withdrawal request, the Exchange will determine whether to (i) 

accept the withdrawal request; (ii) postpone the effective date of the withdrawal; and/or 

(iii) impose any terms or conditions before or after the effective date of withdrawal.

(d) If the Exchange refuses to accept a Participant’s withdrawal request or postpones the 

effective date of withdrawal of a Participant, the Exchange may waive the obligation to pay 

some or all of the fees, costs and charges that the Exchange would have imposed during 

the period after the date on which the requested withdrawal would have otherwise taken 

effect.

(e) When the Exchange accepts the withdrawal of a Participant, all rights and privileges of 

such Participant terminate (including, without limitation, the Trading Privileges and ability 

to access the LMX Trading System). The accepted withdrawal of a Participant shall not 

affect the rights of the Exchange under the LMX Rules or relieve the former Participant of 

its Obligations under the LMX Rules, to perform all contracts involving any Contracts 

entered into by such, or to pay any Exchange fees, costs, or charges incurred, before the 

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withdrawal. Notwithstanding the accepted withdrawal of a Participant, the withdrawn 

Participant remains subject to the LMX Rules, the Obligations and the jurisdiction of the 

Exchange for acts done and omissions made while a Participant, and must cooperate in 

any Exchange Proceeding under Chapter 7 as if the withdrawn Participant were still a 

Participant.

RULE 314. Consent to Exchange Jurisdiction

Any Person initiating or executing a transaction on or subject to the Rules of the Exchange directly 

or through an intermediary, and any Person for whose benefit such a transaction has been 

initiated or executed, expressly consents to the jurisdiction of the Exchange and agrees to be 

bound by and comply with the Rules of the Exchange in relation to such transactions, including, 

but not limited to, rules requiring cooperation and participation in investigatory and disciplinary 

processes.

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CHAPTER 4: OBLIGATIONS OF PARTICIPANTS

RULE 401. Duties and Responsibilities of Participants

(a) Each Participant (i.e., Participant Firm and Clearing Firm) shall (and shall cause all of its 

Authorized Traders, Authorized Brokers, and Supervised Persons):

(1) use the LMX Trading System in a responsible manner and not for any improper 

purpose;

(2) use the LMX Trading System only to conduct Exchange Activity;

(3) conduct all Exchange Activity in a manner consistent with the LMX Rules and 

Obligations;

(4) comply with all LMX Rules and Obligations and act in a manner consistent with 

each Rule of the Exchange and Obligation;

(5) comply with all Clearing House Rules, to the extent applicable to it, and act in a 

manner consistent with the Clearing House Rules, to the extent applicable;

(6) comply with all NFA Rules, to the extent applicable to it, and act in a manner 

consistent with the NFA Rules, to the extent applicable;

(7) observe high standards of integrity, market conduct, commercial honor, fair 

dealing, and just and equitable principles of trade while conducting or attempting 

to conduct any Exchange Activity, or any aspect of any business connected with 

or concerning the Exchange;

(8) not knowingly mislead or conceal any material fact or matter in any dealings or 

filings with the Exchange or in response to any Exchange Proceeding;

(9) keep any User IDs, account numbers and passwords related to the LMX Trading 

System confidential;

(10) be fully liable for: all trading losses, all Orders, all transactions in Contracts 

effected by Participant, all transactions effected on LMX and for any use of the

LMX Trading System made by Participant or Participant’s Authorized Traders, 

and all trades even if the Orders received via the LMX Trading System: (1) were 

entered as a result of a failure in the security controls and/or credit controls, other 

than due to the gross negligence of LMX, or (2) were entered by an unknown or 

unauthorized user;

(11) use the Exchange’s pre-trade controls that enable the Clearing Firm to implement 

appropriate financial risk limits for Participant Firms;

(12) employ practices to monitor and enforce compliance with risk limits;

(13) be responsible for promptly informing the Exchange of any material changes to 

the information provided to the Exchange by the Participant pursuant to Rule 301; 

and,

(14) keep, or cause to be kept, complete and accurate books and records, including, 

without limitation, trading records in underlying commodity and derivatives 

markets related to the LMX Contract, records of and documents related to data 

submitted by the Market Participant or Affiliate to an instrument or index to which 

an Exchange contract settles, all books and records required to be maintained 

pursuant to the CEA, the CFTC Regulations or the LMX Rules, for at least five 

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(5) years, and make such books and records readily accessible for inspection by 

a representative of the Exchange, the CFTC or the United States Department of 

Justice during the first two (2) years of such five-year period.

(b) Each Broker Firm shall (and shall cause all of its Authorized Brokers to):

(1) use the LMX Trading System in a responsible manner and not for any improper 

purpose;

(2) use the LMX Trading System only to conduct Exchange Activity;

(3) conduct all Exchange Activity in a manner consistent with the LMX Rules and 

Obligations;

(4) comply with all LMX Rules and Obligations and act in a manner consistent with 

each Rule of the Exchange and Obligation;

(5) comply with all Clearing House Rules, to the extent applicable to it, and act in a 

manner consistent with the Clearing House Rules, to the extent applicable;

(6) comply with all NFA Rules, to the extent applicable to it, and act in a manner 

consistent with the NFA Rules, to the extent applicable;

(7) observe high standards of integrity, market conduct, commercial honor, fair 

dealing, and just and equitable principles of trade while conducting or attempting 

to conduct

(8) any Exchange Activity, or any aspect of any business connected with or 

concerning the Exchange;

(9) not knowingly mislead or conceal any material fact or matter in any dealings or 

filings with the Exchange or in response to any Exchange Proceeding;

(10) keep any User IDs, account numbers and passwords related to the LMX Trading 

System confidential;

(11) be responsible for promptly informing the Exchange of any material changes to 

the information provided to the Exchange by the Participant pursuant to Rule 307; 

and, 

(12) keep, or cause to be kept, complete and accurate books and records, including, 

without limitation, trading records in underlying commodity and derivatives 

markets related to the LMX Contract, records of and documents related to data 

submitted by the Market Participant or Affiliate to an instrument or index to which 

an Exchange contract settles, all books and records required to be maintained 

pursuant to the CEA, the CFTC Regulations or the LMX Rules, for at least five 

(5) years, and make such books and records readily accessible for inspection by 

a representative of the Exchange, the CFTC or the United States Department of 

Justice during the first two (2) years of such five-year period.

(c) The Exchange will conduct annual reviews of compliance with the Exchange’s audit trail 

and recordkeeping requirements set forth in the Rules by all Participants that are 

responsible for, or in control of, the creation of audit trail records. 

(1) Such Participants will be subject to investigation for possible disciplinary action 

pursuant to the Rules, including sanctions for audit train violations. 

(2) Annual reviews will be conducted by the Compliance Function in accordance with 

Commission Regulations and will include, but will not be limited to, reviews of 

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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 402. Required Disclosures to the Exchange

(a) Each Participant shall immediately notify the Market Regulation Department upon 

becoming aware of any of the following events:

(1) any material change to the contact information provided to the Exchange;

(2) any damage to, or failure or inadequacy of, the systems, facilities or equipment 

of the Participant to effect transactions pursuant to the LMX Rules or to timely 

perform the Participant’s financial obligations under or in connection with 

Contracts;

(3) any refusal of admission to, or withdrawal by the Participant of any application for 

membership in, any Self-Regulatory Organization, Contract Market or Derivatives 

Clearing Organization;

(4) any expulsion, suspension or fine in excess of $5,000 (whether through an 

adverse determination, voluntary settlement or otherwise) imposed on the 

Participant by any Self-Regulatory Organization;

(5) any denial or withdrawal of any application for any registration or license by or 

from any Governmental Agency, and any revocation, suspension or conditioning 

of any registration or license granted by any Governmental Agency;

(6) the commencement of any judicial or administrative proceeding against 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 Governmental 

Agency;

(7) any indictment or conviction of, or any confession of guilt or plea of guilty or nolo 

contendere by, the Participant or (or, if the Participant is an entity, by any of its 

principals or senior officers) for any felony or misdemeanor involving, arising from, 

or related to, the purchase or sale of any commodity, Futures contract, Option, 

security, securities futures product or other financial instrument, or involving or 

arising from fraud or moral turpitude;

(8) the Participant becoming the subject of a petition for bankruptcy;

(9) the appointment of a receiver, trustee or administrator for the Participant;

(10) the presentment of a petition, or the passing of a resolution, for the winding-up of 

Participant;

(11) the commencement of proceedings for the dissolution of Participant; or

(12) the occurrence of an event of insolvency with respect to the Participant.

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RULE 403. Inspections by the Exchange

(a) The Exchange ( or other authorized representatives), shall have the right, in connection 

with determining whether all LMX Rules and Obligations are being, will be, or have been 

complied with by the Participant, to:

(1) inspect systems, equipment and software operated by the Participant in 

connection with Exchange Activity, wherever located;

(2) access 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 the Exchange, without prior notice to Participants; and/or

(3) copy or reproduce any data to which the Exchange has access under this Rule.

(b) [RESERVED].

(c) The Market Regulation Department may require a Participant to furnish (periodically or on 

a particular occasion) information concerning the Participant’s Exchange Activity. For a 

Participant, such information includes but is not limited to, the Participant’s open trading 

positions or Contracts to which the Participant is a party.

RULE 404. Minimum Financial and Related Reporting Requirements

(a) Each Participant, which includes each Clearing Firm, that is registered with any 

Government Agency, including the CFTC and the U.S. Securities and Exchange 

Commission, or a Self- Regulatory Organization shall comply with CFTC Regulation 1.17, 

applicable Clearing House Rules and other Applicable Law, including but not limited to the 

rules and regulations such Government Agency imposes on a Participant, which includes 

each Clearing Firm, relating to minimum financial and related reporting and recordkeeping 

requirements. Upon request by the Exchange, Participant shall produce such records 

related to this Rule 404(a).

(b) A copy of any notice or written report that a Participant, which includes an FCM, IB or any 

Clearing Firm, is required to file with the CFTC pursuant to CFTC Regulations 1.10 and 

1.12 shall be concurrently provided to the Exchange.

(c) The Exchange conducts surveillance related Rule 404.

(d) A Participant that violates any provision of Applicable Law (including CFTC Regulations) 

shall be deemed to have violated this Rule 404.

RULE 405. Confidentiality of Financial and Other Information

All information and data obtained or received by the Market Regulation Department from 

inspections of accounting and other records, quarterly balance sheets and declarations or reports 

on financial condition will be treated as confidential by the Exchange; however, this Rule does not 

supplant Rule 213 and the Rules in Chapter 7, or any other requirement of legal process or law.

RULE 406. Authority to Impose Restrictions

Whenever a Participant is subject to the early warning requirements set forth in CFTC Regulation 

§ 1.12, the Exchange may impose such conditions or restrictions on the business and operations 

of such Participant or as the Exchange may deem necessary or appropriate for the protection of 

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Customers, other Participants, or the Exchange.

RULE 407. Customers

(a) No Participant shall carry an account for a Customer unless the Participant has entered 

into a written agreement with the Customer containing such terms as may from time to 

time be prescribed in these Rules.

(b) Without prejudice to the generality of paragraph (a) of this Rule 407, each written 

agreement with a Customer must incorporate into every Contract carried for the Customer 

all the terms of the LMX Rules insofar as they are applicable to that Contract.

(c) No Person shall engage in soliciting or accepting an Order for the Contract for a Participant 

or Customer unless the has entered into a written agreement with the Participant or 

Customer obtaining such terms as may from time to time be prescribed in these Rules.

RULE 408. Treatment of Customer Funds and Securities

Each Participant that is required to be registered with any Government Agency, including the 

CFTC and the U.S. Securities and Exchange Commission, or Self-Regulatory Organization shall 

comply with the provisions of Applicable Law, including but not limited to the rules and regulations 

such Government Agency imposes on a Participant relating to the treatment of Customer funds 

and the maintenance of books and records with respect thereto. Specifically, each Clearing Firm 

must comply with the regulations of the applicable Government Agency and the rules of the 

Clearing House, including, but not limited to rules related to the protection of customer funds, 

including the segregation of customer and proprietary funds, the custody of customer funds, the 

investment standards for customer funds, intermediary default procedures and related 

recordkeeping. This includes, but is not limited to CFTC Regulations 1.20(a) and 1.25. The 

Exchange conducts surveillance related this Rule 408, including through its membership in the 

Joint Audit Committee. Any Participant that violates any of the aforementioned CFTC Regulations, 

Clearing House Rules, and other Applicable Law shall be deemed to have violated this Rule 408.

RULE 409. Disclosure Requirements

Each Participant must comply with all disclosure requirements set forth in applicable CFTC and 

NFA Rules and Regulations. Any such disclosure may be combined with a disclosure regarding 

the existence of financial interests held by the Participant in the Exchange or any other exchange.

RULE 410. Information Regarding Orders

(a) The Exchange will make information regarding Orders (including prices bid or offered), 

trades and any other matters it may deem appropriate available to Participants and other 

Persons at such times and in such manner (whether through the LMX Trading System, a

ticker, financial information services or otherwise) as it may consider necessary or 

advisable from time to time.

(b) Each Participant or other Person receiving any such information through the LMX Trading 

System may redistribute such information only to such extent and in such manner as may 

be permitted by the Exchange from time to time.

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CHAPTER 5: TRADING PRACTICES AND BUSINESS CONDUCT

RULE 501. Scope

This Chapter 5 applies to all transactions in Contracts, except as otherwise specifically provided 

in Chapter 6.

RULE 502. Procedures

(a) With respect to trading on or though the LMX Trading System, the Exchange may adopt, 

without limitation, procedures relating to transactions in Contracts and trading on the LMX 

Trading System, including procedures to:

(1) determine the Daily Settlement Price of a Contract;

(2) disseminate the prices of bids and offers on, and trades in, Contracts;

(3) record, and account for, Contracts and Exchange Activity;

(4) perform market surveillance and regulation on matters affecting Contracts and 

Exchange Activity;

(5) establish limits on the number and/or size of Orders that may be submitted by a 

Participant through the LMX Trading System;

(6) establish limits on the number of Contracts that may be held by a Customer or 

Participant;

(7) establish a limit on the maximum daily price fluctuations for any Contract and 

provide for any related restriction or suspension of trading in the Contract; and,

(8) require a suspended or expelled Participant, or a Participant with restricted 

trading rights, to have Contracts executed for the Participant to reduce or 

eliminate any open position or exposure to future price changes for the Participant 

in any Contract.

(b) The Exchange 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 Participant or in 

any other manner determined appropriate by the Exchange.

RULE 503. Business Days and Trading Hours

Except as provided in Rule 212 with respect to Emergencies, the Exchange shall determine and 

publish a Notice to Participants listing the Business Days and Holidays of the Exchange and the 

Trading Hours for each Contract.

RULE 504. Rule Violations

It shall be a violation for a Participant (or any of its Authorized Traders, Authorized Brokers, or 

Supervised Persons) to violate any Rule or any agreement made with the Exchange, or to engage 

in fraud, dishonorable or dishonest conduct, or in conduct which is inconsistent with just and 

equitable principles of trade.

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RULE 505. Fraudulent Acts Prohibited

No Participant (or any of its Authorized Traders, Authorized Brokers, or Supervised Persons) shall 

engage in any fraudulent act or engage in any scheme to defraud, deceive, trick or mislead in 

connection with or related to any Exchange Activity or other activity related to the Clearing House.

RULE 506. Fictitious, Wash or Non-Competitive Transactions Prohibited

No Participant (or any of its Authorized Traders, Authorized Brokers, or Supervised Persons) shall 

create fictitious transactions, wash transactions, or non-competitive transactions except, in the 

case of noncompetitive transactions, as otherwise authorized by the LMX Rules, or execute any 

such Order with knowledge of its nature as a fictitious transaction, wash transaction, or noncompetitive transaction.

RULE 507. Market Disruption Prohibited

Orders entered into the LMX Trading System for the purpose of upsetting the equilibrium of the 

market in any Contract or creating a condition in which prices do not or will not reflect fair market 

values are prohibited, and any Participant (or any of its Authorized Traders, Authorized Brokers, 

or Supervised Persons) who makes or assists in entering any such Order with knowledge of the 

purpose thereof or who, with such knowledge, in any way assists in carrying out any plan or 

scheme for the entering of any such Order, will be deemed to have engaged in an act detrimental 

to the Exchange.

RULE 508. Market Manipulation Prohibited

No Participant (or any of its Authorized Traders, Authorized Brokers, or Supervised Persons) shall 

attempt to manipulate or manipulate the market in any Contract.

RULE 509. Disruptive Trading Practices Prohibited

No Participant (or any of its Authorized Traders, Authorized Brokers, or Supervised Persons) shall 

engage in any trading, practice, or conduct that constitutes a “disruptive practice,” as such term 

is defined by the CEA or CFTC Regulations.

RULE 510. Prohibition of Misstatements

No Participant (or any of its Authorized Traders, Authorized Brokers, or Supervised Persons) shall 

make any knowing misstatement of a material fact to the Exchange, any Exchange Official, or 

any Board committee or Exchange panel.

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RULE 511. Acts Detrimental to Welfare of Exchange Prohibited

No Participant (or any of its Authorized Traders, Authorized Brokers, or Supervised Persons) shall 

engage in any act that is detrimental to the Exchange.

RULE 512. Adherence to Law

No Participant (or any of its Authorized Traders, Authorized Brokers, or Supervised Persons) shall 

engage in conduct that is a violation of the Act or CFTC Regulations.

RULE 513. Supervision

A Participant shall establish, maintain and administer reasonable supervisory procedures to 

monitor the compliance of Authorized Traders, Authorized Brokers, and Supervised Persons with 

the LMX Rules and any applicable provisions of the Act or CFTC and such Participant may be 

held accountable for the actions of such Authorized Traders or Supervised Persons.

RULE 514. Orders of Other Clearing Firms

No Clearing Firm shall accept or submit any Order for or on behalf of another Clearing Firm, 

without the prior written consent of such other Clearing Firm. If such Order results in a transaction, 

the Clearing Firm accepting the Order must send promptly a duplicate confirmation of the 

transaction to the Clearing Firm from whom the prior written consent is required pursuant to this 

Rule.

RULE 515. Misuse of the LMX Trading System

Misuse of the LMX Trading System is strictly prohibited. It shall be deemed an act detrimental to 

the Exchange to permit unauthorized use of the LMX Trading System, to assist any Person in 

obtaining unauthorized access to the LMX Trading System, to trade on the LMX Trading System 

without an agreement and an established account with a Clearing Firm, to alter the equipment 

associated with the LMX Trading System (except with the Exchange’s consent), to interfere with 

the operation of the LMX Trading System, to intercept or interfere with information provided 

thereby, or in any way to use the LMX Trading System in a manner contrary to the LMX Exchange 

Rules.

RULE 516. Errors and Omissions in Handling Orders

(a) A Participant who inadvertently, through error or omission, fails to execute an Order at the 

time it should have been executed may, upon discovery of such error or omission, execute 

such Order at the best obtainable price. Such Order shall be competitively executed and 

should be executed in the next available trading session for the applicable listed Contract, 

but in any event must be executed no later than the close of the next trading day and shall 

be reported to the Customer at the price at which actually executed. If such price is to the 

advantage of the Customer, the Customer shall receive the benefit thereof; if not, the 

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Customer shall receive such monetary adjustment as will afford the Customer the 

equivalent of the price at which such Order should and could have been executed.

(b) Any Clearing Firm receiving such report and adjustment with respect to an Order of a 

Customer shall report to such Customer the execution at the price reported to such 

Clearing Firm and make the same monetary adjustment for the account of such Customer. 

Full details of all transactions consummated hereunder shall be promptly provided to the 

Market Regulation Department upon request.

(c) This Rule 516 shall not be construed to contravene any instructions received from a 

Customer respecting any Order prior to its execution, but shall be construed to permit 

execution of Orders under the conditions prescribed without prior instructions from the 

Customer.

RULE 517. Liquidity Provider Programs

(a) The Exchange may from time to time establish programs that provide Participants with 

financial incentives for meeting trading volume or liquidity thresholds as may be 

established by the Exchange.

(b) All Participants are eligible to become Liquidity Providers, provided the Participant can 

meet the Liquidity Provider obligations.

RULE 518. Withholding Orders Prohibited

Any Participant entering Orders on the LMX Trading System shall not withhold or withdraw from 

the market any Order, or any part of an Order, for the benefit of any Person other than for the 

Customer for whom the Participant is placing the Order.

RULE 519. Priority of Customers’ Orders

No Participant shall enter an Order into the LMX Trading System for his 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 unsubmitted Customer Order that the LMX Trading 

System is capable of accepting.

RULE 520. Handling of Customer Orders

(a) General Prohibition - No Participant in possession of a Customer 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) Exceptions - The foregoing restriction shall not apply to the following:

(1) Transactions executed pursuant to Rules 601 and 602;

(2) On the LMX Trading System, a Participant may knowingly trade against a 

Customer Order for its own account, an account in which it has a direct or indirect 

financial interest, an account over which it has discretionary trading authority, or 

a Proprietary Account of its employer, only if the Customer Order has been 

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entered immediately upon receipt and has first been exposed on the LMX Trading 

System for a minimum of 5 seconds in the case of Futures Orders or for a 

minimum of 15 seconds in the case of Options Orders.

(3) Transactions where the Customer has consented in writing no more than 12 

months prior to the transaction to waive the application of Rule 520 as long as 

the Participant has clearly notified the Customer that the Participant will 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.

RULE 521. Disclosing Orders Prohibited

No Participant shall disclose another Customer’s Order to buy or sell except to a designated 

Exchange Official or the CFTC, and no Participant shall solicit or induce another Participant to 

disclose Order information. No Person shall take action or direct another to take action based on 

non-public Order information, however acquired. The mere statement of opinions or indications 

of the price at which a market may open or resume trading does not constitute a violation of this 

rule.

RULE 522. Simultaneous Buy And Sell Orders For Different Beneficial Owners

On the LMX Trading System, opposite Orders for different beneficial owners that are 

simultaneously placed by a Participant with discretion over both accounts may be entered into 

the LMX Trading System, provided that one Order is exposed for a minimum of 5 seconds in the 

case of Futures Orders or a minimum of 15 seconds in the case of Options Orders. An Order 

allowing for price and/or time discretion, if not entered immediately upon receipt, may be 

knowingly entered opposite another Order entered by the same firm only if this other Order has 

been entered immediately upon receipt and has been exposed on the LMX Trading System for a 

minimum of 5 seconds for Futures Orders or a minimum of 15 seconds for Options Orders.

RULE 523. Wash Sales Prohibited

No Person shall place or accept buy and sell Orders in the same product and expiration month, 

and, for a put or call Option, the same strike price, 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). Buy and sell 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 shall knowingly execute or accommodate the execution of such Orders 

by direct or indirect means.

RULE 524. Recordkeeping Requirements for Entering Orders into the LMX Trading System

(a) General Requirements.

(1) Each Authorized Trader or Authorized Broker entering Orders into the LMX 

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Trading System shall input for each Order:

i. the user ID assigned him by the Exchange,

ii. the price or yield, quantity, product, maturity or expiration month or date, 

CTI code and account number (except as provided in Section (d)), and, 

for Options, put or call and strike price.

iii. The Authorized Trader’s or Authorized Broker’s user ID must be present 

on each Order entered.

(2) With respect to Orders received by an Authorized Trader or Authorized Broker 

that are capable of being immediately entered into The LMX Trading System, no 

record other than that set forth above need be made. However, if an Authorized 

Trader or Authorized Broker receives an Order that cannot be immediately 

entered into The LMX Trading System, the Authorized Trader must prepare a 

written Order and include the account designation, date, an electronic timestamp 

reflecting the time of receipt and other information required pursuant to section 

(a) above. The Order must be entered into The LMX Trading System when it 

becomes executable.

(b) Electronic Audit Trail Requirements for Electronic Order Routing/Front-End Systems.

(1) Clearing Firms guaranteeing a connection to The LMX Trading System are 

responsible for maintaining or causing to be maintained the Order routing/frontend audit trail for all electronic Orders, including Order entry, modification, 

cancellation and responses to such messages (referred to as the “Electronic Audit 

Trail”), entered into the LMX Trading System through any gateway to the LMX 

Trading System.

(2) The Electronic Audit Trail must be maintained for a minimum of 5 years, and 

Clearing Firms must have the ability to produce this data in a standard format 

upon request of the Market Regulation Department. This Electronic 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, but at least to the hundredth of a second. 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, Exchange 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 trade along with all fill information.

(3) In the case where the guaranteeing Clearing Firm has a direct connect Customer 

that is another Clearing Firm, the Clearing Firm may notify the Customer Clearing 

Firm in writing that it is their obligation to maintain the Electronic Audit Trail. It 

shall be the duty of the Customer Clearing Firm to maintain an Electronic Audit 

Trail pursuant to this rule.

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(c) Bunched Orders and Orders Eligible for Post Execution Allocation.

(1) Bunched Orders must be allocated and recorded in accordance with CFTC 

Regulation 1.35(a-1)(5) and the NFA’s Interpretative Notice related to 

Compliance Rule 2-10.

(2) Bunched Orders may be entered using a series designation or suspense account 

number provided that:

i. the Order is being placed by an account manager for multiple accounts 

eligible for post execution allocation or

ii. a written, pre-determined allocation scheme that defines the series has 

been provided to the futures commission merchant accepting or clearing 

the Order prior to the time that such Order is entered. In the latter case, if 

such information has not been provided to the futures commission 

merchant prior to the time of Order entry, each specific account number 

must be entered into the LMX Trading System. Additionally, for all such 

bunched Orders executed on the LMX Trading System, the final account 

specific allocations must be submitted to the LMX Trading System no later 

than the end of each trading day.

(3) Bunched Orders for non-discretionary accounts may be entered through the LMX 

Trading System; however, only the following Order Types may be bunched: same 

priced limit Orders, same priced stop Orders and market Orders received prior to 

the opening of the LMX Trading System trading session. Such nondiscretionary 

Orders may only be bunched in the following instances:

i. Each Order underlying the bunched Order must be reduced to writing and 

include the information required pursuant to Section (a)(1) above;

ii. Allocation of the executions for the bunched Orders must be fair and 

equitable in accordance with the NFA’s Interpretative Notice related to 

Compliance Rule 2-10; and

iii. In circumstances where the Order is bunched the Participant accepting 

the Order must, contemporaneously with the Order placement, transmit 

the individual account numbers and quantities associated with the 

bunched Order to the Clearing Firm. Such transmission shall be 

maintained by the Clearing Firm along with the bunched Order.

(d) Customer Type Indicator (CTI) Codes.

Each Clearing Firm must identify each transaction executed on the LMX Trading System 

on the record of transactions submitted to the Exchange with the correct customer type 

indicator (CTI) code. The CTI codes are as follows:

(1) CTI 1- Transactions initiated and executed by a member for his own account, for 

an account he controls or for an account in which he has ownership or financial 

interest. CTI 1 is not applicable to LMX because the Exchange does not have 

members or a trading floor.

(2) CTI 2- Transactions executed for the proprietary account of a Clearing Firm or 

non- Clearing member firm (i.e., a Participant Firm trading for its own account 

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held at a Clearing Firm).

(3) 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.

(4) CTI 4- Any transaction not meeting the definition of CTI 1, 2 or 3.

RULE 525. Prearranged, Pre-Negotiated and Noncompetitive Trades Prohibited

(a) No Person shall prearrange or pre-negotiate any purchase or sale or noncompetitively 

execute any transaction, except in accordance with Sections (b) and (c) below.

(b) The foregoing restriction shall not apply to block trades affected pursuant to Rule 601 and 

EDRP affected pursuant to Rule 602.

(c) Pre-Execution Communications Regarding the LMX Trading System Trades.

Parties may engage in pre-execution communications with regard to transactions 

executed on the LMX Trading System where one party (the first party) wishes to be 

assured that a contra party (the second party) will take the opposite side of the Order 

subject to the following restrictions:

(1) A party may not engage in pre-execution communications with other market 

participants on behalf of another party unless the party for whose benefit the trade 

is being made has previously consented to permit such communications.

(2) Parties to pre-execution communications shall not:

i. disclose to a nonparty the details of such communications or

ii. enter an Orderto take advantage of information conveyed during such 

communications except in accordance with this rule.

(3) The first party’s Order must be entered into the LMX Trading System first and the 

second party’s Order may not be entered into the LMX Trading System platform 

until a period of 5 seconds has elapsed from the time of entry of the first Futures 

Order or a period of 15 seconds for Options Orders.

RULE 526. Responsibility For Customer Orders

(a) Standard of Responsibility.

(1) A Participant shall exercise due diligence in the handling and execution of 

Customer Orders. Failure to act with due diligence shall constitute negligence. In 

the case of a dispute as to whether a Participant has exercised due diligence, the 

appropriate arbitration or disciplinary committee is authorized to determine 

whether the Participant was negligent and, if so, whether an adjustment is due to 

the Customer.

(2) A Participant is prohibited from directly or indirectly guaranteeing the execution 

of an Order or any of its terms such as the quantity or price. A Participant may 

only report an execution that has been effected through the LMX Trading System 

or has been executed under Chapter 6. This Rule 527(a) shall not be construed 

to prevent a Participant from assuming or sharing in the losses resulting from an 

error or the mishandling of an Order.

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(b) Liability for Negligence. A Participant may not adjust the price at which an Order was 

executed or be held responsible for executing or failing to execute an Order unless such 

Participant was negligent or is settling a bona-fide dispute regarding negligence. A 

Participant may not compel an adjustment from another Participant in the absence of a 

bona-fide dispute regarding negligence. Participants and Clearing Firms shall document 

all adjustments. Participants and Clearing Firms shall make and retain a record which 

contains the date the adjustment was received, the name of the Participant making the 

adjustment, the account to which the adjustment was credited, the amount of the 

adjustment, the Order number and the reason for the adjustment. Such records must be 

provided to the Market Regulation Department upon request.

RULE 527. Discretionary Orders

No Participant shall submit a Discretionary Order to the LMX Trading System for any account of 

another Person, without the prior specific written consent of such other Person to the exercise of 

such discretion, provided, however, that the restrictions set forth in this subparagraph shall not 

apply to a Discretionary Order for: (i) an account of that Person’s spouse, parent, parent of a 

spouse, brother, sister, child, or spouse of a child; or (ii) a Proprietary Account of the Participant.

RULE 528. Priority of Execution

Non-discretionary Customer Orders received by a Participant, an Authorized Trader or Authorized 

Broker shall be entered into The LMX Trading System in the sequence received. Nondiscretionary Orders that cannot be immediately entered into The LMX Trading System must be 

entered when the Orders become executable in the sequence in which the Orders were received.

RULE 529. Average Price System

(a) Application of Average Prices. A proprietary average price system (“APS”) developed by 

a Participant or Clearing Firm allows a Participant or Clearing Firm to confirm to Customers 

an average price when multiple execution prices are received on an Order or series of 

Orders for the same instrument. An Order or series of Orders executed for the same 

instrument during the same trading day at more than one price may be averaged pursuant 

to APS only if each Order is for the same account or group of accounts and for the same 

instrument, or for the same instrument, maturity, put/call and strike price for Options.

(b) Requirements for APS Trades. The requirements enumerated below must be met for APS 

transactions.

(1) The Customer must have requested average price reporting.

(2) Each individual trade must be submitted to the Exchange at the executed price.

(3) A Participant or Clearing Firm must compute and confirm the weighted 

mathematical average price, as set forth in Section (c).

(4) A Participant or Clearing Firm must possess the records to support the 

calculations and allocations to Customer Accounts and must maintain these 

records pursuant to CFTC regulations.

(5) A Participant or Clearing Firm must ensure that its proprietary trades are not 

averaged with Customer APS trades.

(c) Computation of Average Price. Upon receipt of an execution or match at multiple prices 

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for an APS Order, the weighted mathematical average must be computed by:

(1) multiplying the number of instruments purchased or sold at each execution price 

by that price;

(2) adding the results together; and,

(3) dividing by the total number of instruments.

An average price for a series of Orders will be computed based on the average prices of 

each Order in that series. The actual average price or the average price rounded to the 

next price increment may be confirmed to Customers. If a Participant or Clearing Firm 

confirms the rounded average price, the Participant or Clearing Firm must round the 

average price up to the next price increment for a buy Order or down to the next price 

increment for a sell Order. The residual created by the rounding process must be paid to 

the Customer. APS may produce prices that do not conform to whole cent increments. In 

such cases, any amounts less than one cent may be retained by the Participant or Clearing 

Firm.

(d) Disclosure. Each Participant or Clearing Firm that confirms an average price to a 

Customer must indicate on the confirmation and monthly statement that the price 

represents an average price.

RULE 530. Position Limits And Exemptions

(a) The position limit levels applicable to those Contracts with position limits are set forth in 

the Position Limit, Position Accountability and Reportable Level Table in Rule 533.

(b) A Person seeking an exemption from position limits must apply to the Market Regulation 

Department on forms provided by the Exchange. In order to obtain an exemption from 

position limits, a Person must:

(1) Provide a description of the exemption sought, including whether the exemption 

is for bona fide hedging positions as defined in CFTC Regulation 1.3 or any other 

applicable CFTC Regulation, risk management positions or arbitrage/spread 

positions;

(2) Provide a complete and accurate explanation of the underlying exposure related 

to the exemption request;

(3) Agree to promptly provide, upon request by the Market Regulation Department, 

information or documentation regarding the Person’s financial condition;

(4) Agree to comply with all terms, conditions or limitations imposed by the Market 

Regulation Department with respect to the exemption;

(5) Agree that the Market Regulation Department may modify or revoke the 

exemption at any time;

(6) Agree to initiate and liquidate positions in an orderly manner; and,

(7) Agree to promptly submit a supplemental statement to the Market Regulation 

Department whenever there is a material change to the information provided in 

the most recent application.

(c) A Person intending to exceed position limits, including limits established pursuant to a 

previously approved exemption, must file the required application and receive approval 

from the Market Regulation Department prior to exceeding such limits. Notwithstanding 

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the foregoing, a Person who establishes an exemption-eligible position in excess of 

position limits and files the required application with the Market Regulation Department 

shall not be in violation of this Rule 532 provided the filing occurs within one (1) Business 

Day after assuming the position.

(d) In the event the positions in excess of the limits are not deemed to be exemption-eligible, 

the applicant and Clearing Firm will be in violation of speculative limits for the period of 

time in which the excess positions remained open.

(e) The Market Regulation Department shall, on the basis of the application and any 

requested supplemental information, determine whether an exemption from position limits 

shall be granted. The Market Regulation Department may approve, deny, condition or limit 

any exemption request based on factors deemed by the Market Regulation Department 

to be relevant, including, but not limited to, the applicant’s business needs and financial 

status, as well as whether the positions can be established and liquidated in an orderly 

manner.

(f) Nothing in this Rule 530 shall in any way limit:

(1) the authority of the Exchange to take emergency action; or

(2) the authority of the Market Regulation Department to review at any time the 

positions owned or controlled by any Person and to direct that such position be 

reduced to the position limit provided for in Rule 532.

(g) A Person who has received written authorization from the Market Regulation Department 

for an exemption from position limits must annually file an updated application on the date 

which is one year following the approval date of the most recent application. Failure to file 

an updated application will result in expiration of the exemption.

(h) Eligible Exemptions

(1) Bona Fide Hedging Positions.

The Market Regulation Department may grant exemptions from position limits for 

bona fide hedge positions as defined by CFTC Regulation §1.3(z)(1) or any other 

applicable CFTC Regulation. Approved bona fide hedgers may be exempted from 

Emergency Rules that reduce position limits or restrict trading.

(2) Risk Management Positions.

The Market Regulation Department may grant exemptions from the position limits 

for risk management positions. For the purposes of this Rule, risk management 

positions are defined as Futures and Options positions which are held by or on 

behalf of an entity or an affiliate of an entity which typically buys, sells or holds 

positions in the underlying cash market, a related cash market, or a related overthe-counter market and for which the underlying market has a high degree of 

demonstrated liquidity relative to the size of the positions and where there exist 

opportunities for arbitrage which provide a close linkage between the Futures or 

Options market and the underlying market in question. Exemptions related to 

indexed positions in the over-the-counter market may include corresponding 

commodity index-based Futures and Options and/or individual commodity Futures 

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and Options used as components in replicating an index.

(3) Arbitrage and Spread Positions. The Market Regulation Department may grant 

exemptions from the position limits for arbitrage, intracommodity spread, 

intercommodity spread, and eligible Option/Option or Option/Futures spread 

positions.

(i) Aggregation of Positions.

(1) Positions to be Aggregated. The position limits in Rule 533 shall apply to all 

positions in accounts for which a Person by power of attorney or otherwise directly 

or indirectly owns the positions or controls the trading of the positions. The 

position limits in Rule 533 shall also apply to positions held by two or more 

Persons acting pursuant to an expressed or implied agreement or understanding, 

the same as if the positions were held by, or the trading of the positions was done 

by, a single Person.

(2) Ownership of Accounts. Except as set forth in Rule 530(j) below, any Person 

holding positions in more than one account, or holding accounts or positions in 

which the Person by power of attorney or otherwise directly or indirectly has a 

10% or greater ownership or equity interest, must aggregate all such accounts or 

positions, unless such Person is a pool participant in a commodity pool. The 

foregoing exception for pool participants shall not apply if the Person is a 

commodity pool operator, controls the commodity pool’s trading decisions, or has 

an ownership or equity interest of 25% or more in a commodity pool whose 

operator is exempt from registration with the CFTC.

(j) Limited Exceptions to Aggregation for Independently Controlled Positions.

(1) Positions carried for an eligible entity as defined in CFTC Regulation 150.1(d) in 

the separate account or accounts of independent account controllers as defined 

in CFTC Regulation 150.1(e) shall not be aggregated for position limit purposes 

provided that the positions are not held in the spot month during such time that a 

spot month position limit is applicable. If an independent account controller is 

affiliated with the eligible entity or another independent account controller, each 

of the affiliated entities must comply with the requirements set forth in CFTC 

Regulation 150.3(4)(i)(A-D).

(2) Positions held by Futures Commission Merchants or their separately organized 

Affiliates in Customer discretionary accounts or in guided account programs shall 

not be aggregated for position limit purposes provided that the accounts are 

controlled by independent traders and meet the standards set forth in CFTC 

Regulation 150.4(d). 

(3) Any Person claiming an exemption from position limits under this Rule 532 must, 

upon request by the Market Regulation Department, provide any information 

deemed necessary to support the exemption.

(k) Violations.

(1) No Person shall exceed the position limits set forth in the Rules, unless an 

exemption is granted by the Market Regulation Department.

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(2) The Market Regulation Department and the Exchange Practices Committee shall 

have the authority to enforce the LMX Rules regarding position limits

(3) Any Person making a bid or offer that would, if accepted, cause such Person to 

exceed the applicable position limits shall be in violation of this Rule 530.

(4) If a position exceeds position limits as a result of an Option assignment, the 

Person who owns or controls such position shall be allowed one Business Day to 

liquidate the excess position without being considered in violation of the limits. 

Additionally, if, at the close of trading, a position that includes Options exceeds 

position limits when evaluated using the delta factors as of that day’s close of 

trading, but does not exceed the limits when evaluated using the previous day’s 

delta factors, then the position shall not constitute a position limit violation.

(5) A Clearing Firm shall not be in violation of this Rule if it carries positions for a 

Customer in excess of the applicable position limits for such reasonable period of 

time, generally not exceed one Business Day, as the Clearing Firm may require 

to investigate and liquidate the excess Customer positions.

(6) A Customer who exceeds the position limits as a result of maintaining positions 

at more than one Clearing Firm shall be deemed to have waived confidentiality 

regarding his positions and the identity of the Clearing Firms at which they are 

maintained. A Clearing Firm carrying such positions shall not be in violation of 

this Rule if, upon notification by the Market Regulation Department, it liquidates 

its pro-rata share of the position in excess of the limits or otherwise ensures the 

Customer is in compliance with the limits within a reasonable period of time, 

generally not exceed one Business Day.

(7) Violations, Sanctions and Appeals

i. First Violation. The first position limit violation by a Participant will result in 

a warning letter issued by the Market Regulation Department, with a copy 

provided to the carrying Clearing Firm(s). In circumstances where the 

carrying Clearing Firm has also committed a position limit violation as set 

forth in this Rule 530 by carrying such positions, a warning letter will be 

issued to the Clearing Firm(s).

ii. Second Violation, Sanctions and Appeals.

(a) A second position limit violation by a Participant within 24 months 

of the issuance of a warning letter will result in the imposition of an 

automatic fine by the Market Regulation Department to the 

Participant as set forth below and the issuance of a cease and 

desist order.

(b) The automatic fine for a position exceeding the applicable limit by 

up to 25% shall be $5,000.

(c) The automatic fine for a position exceeding the applicable limit by 

more than 25% shall be $15,000.

iii. Referral to the Chief Regulatory Officer.

(a) Any third or subsequent position limit violation within 24 months of 

the issuance of a warning letter shall be referred by the Market 

Regulation Department to the Chief Regulatory Officer for 

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consideration of the issuance of charges.

(b) Notwithstanding Rule 532(k)(5)(iv)(a), the Market Regulation 

Department, in its sole discretion, may refer any position limit 

violation it deems egregious to the Chief Regulatory Officer for 

consideration of the issuance of charges.

iv. Appeal. Parties may, within 10 Business Days of being provided notice of 

sanctions issued pursuant to this section, request an appeal to the 

Exchange Practices Committee.

(a) Upon receiving a written request for appeal, the Chair of the 

Exchange Practices Committee shall determine solely upon the 

written request for appeal and any written response of the Market 

Regulation Department, whether there is a reasonable basis to 

conclude that the appellant might be able to meet one of the 

standards identified in subsection b below that would permit the 

Exchange Practices Committee to set aside, modify or amend the 

appealed decision. If the Chair determines that such a reasonable 

basis exists, a hearing will be held. The Exchange Practices 

Committee Chair’s determination of whether to hold a hearing on 

an appeal shall be final. If a hearing is held the Chair shall allow 

the filing of briefs in connection with the appeal.

(b) The Exchange Practices Committee shall not set aside, modify or 

amend the appealed decision unless it determines by a majority 

vote that the decision was:

(i) Arbitrary, capricious, or an abuse of the Market Regulation 

Department’s discretion;

(ii) In excess of the Market Regulation Department’s authority 

or jurisdiction; or,

(iii) Based on a clearly erroneous application or interpretation 

of LMX Rules.

(c) If a hearing is held, the Exchange Practices Committee shall issue 

a written decision which shall include a statement of findings with 

respect to the decision from which the appeal was taken and the 

Exchange Practices Committee’s determination that such initial 

decision is affirmed, set aside, modified or amended in whole or in 

part and, with respect to any initial decision that is not affirmed in 

whole, the Exchange Practices Committee’s determination of the 

order or penalty to be imposed, if any, and the effective date. The 

decision of the Exchange Practices Committee shall be final and 

may not be appealed.

RULE 531. Position Accountability

(a) A Participant who holds or controls, or a Participant or Clearing Firm that carries for 

another Person, aggregate positions in excess of those specified in the Position 

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Accountability column in the Table in Rule 533, shall:

(1) Provide, in a timely manner upon request by the Market Regulation Department, 

information regarding the nature of the position, trading strategy, and hedging 

information, if applicable.

(2) Be deemed to have consented, when so ordered by the Exchange, not to further 

increase the positions which exceed the levels specified in the Position 

Accountability column in the Table in Rule 533.

(3) Initiate and/or liquidate such positions in an orderly manner.

(b) For purposes of this rule, all positions in accounts for which a Participant, by power of 

attorney or otherwise, directly or indirectly controls trading shall be included with the 

positions held by such Participant. The provisions of this rule shall apply to positions held 

by two or more Participants acting pursuant to an expressed or implied agreement or 

understanding, the same as if the positions were held by or the trading of the positions 

was controlled by a single Participant.

RULE 532. Reports of Large Positions and Ownershipand Control Reporting

(a) Large Trader Reporting

(1) Clearing Firms shall submit to the Exchange a daily report of all positions at or 

above the Reportable Futures Level as set forth in the Table in Rule 533 (“Large 

Trader Report”).

(2) Positions at or above the Reportable Futures Level in a discrete Commodity Code 

trigger reportable status. For a person in reportable status in a discrete 

Commodity Code, all positions, regardless of size, in the same discrete 

Commodity Code must be reported.

(3) All Large Trader Reports shall be submitted in a form acceptable to the Market 

Regulation Department. The Exchange may require that more than one Large 

Trader Report be submitted daily. The Regulatory Oversight Committee or the 

Market Regulation Department may require reports from any Clearing Firm on a 

lesser number of positions than reflected in the Table in Rule 533.

(b) Ownership and Control Reporting

(1) Clearing Firms must provide the Market Regulation Department with the required 

CFTC Form 102A and/or Form 102B identifying the owner, any controlling parties 

and any additional required information for each reportable account. A reportable 

account for the purposes of this Rule 532(b)(1) is an account at or above the 

Reportable Futures Level and/or the Volume Threshold Reportable Level as 

identified in the table in Rule 533.

(2) The applicable Form 102A and/or Form 102B must be submitted to the Market 

Regulation Department no later than 9:00 am Eastern Time on the Business Day 

following the date on which the account becomes reportable. Additionally, 

Clearing Firms must submit a revised form reflecting any material changes to the 

information previously provided to the Market Regulation Department within three 

Business Days of such changes becoming effective. In the absence of any 

material changes, the Exchange may require electronic submission of a new 

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Form 102A and/or Form 102B on an annual basis for the maintenance of accurate 

records.

RULE 533. Position Limit, Position Accountability, Reportable Level, and Volume 

Threshold Level Table

The reportable levels for all Contracts covering Position Limit, Position Accountability, Reportable 

Level, and Volume Thresholds will be made available to Market Participants. 

RULE 534. The LMX Trading System Access Restrictions

(a) All Participants permissioned to connect to the LMX Trading System, including direct 

connections of Participants, to the extent permitted by the Exchange, must be guaranteed 

by a Clearing Firm that assumes financial responsibility for Participant. With respect to 

transactions given up to other Clearing Firms, such guarantee is effective only until such 

time that the other Clearing Firm accepts the trade. A trade given up to another Clearing 

Firm will be deemed to have been accepted by such Clearing Firm if the trade is not 

rejected by the close of business on the business day following the trade date. The 

acceptance of a trade by a Clearing Firm shall not relieve any Participant, Authorized 

Trader, or Clearing Firm of the duty to act in accordance with the Rules.

(b) All individuals entering Customer Orders in other than a clerical capacity must have 

appropriate industry registration. Customer Orders may be entered only from the premises 

of an entity registered to conduct Customer business.

(c) Clearing Firms shall assist the Exchange in any investigation into potential violations of 

the LMX Rules or the CEA which occur through or with respect to a LMX Trading System 

connection guaranteed by the Clearing Firm. Such assistance must be timely and may 

include, but not be limited to, requiring any Participant or Customer to produce documents, 

to answer questions from the Exchange, and/or to appear in connection with an 

investigation. Upon request by the Exchange, Clearing Firms shall suspend or terminate 

a Participant’s or Customer’s access if the Exchange determines that the actions of the 

Participant or Customer threaten the integrity or liquidity of any Contract or violate any 

LMX Rule or the CEA, or if the Customer fails to cooperate in an investigation.

(d) If a Clearing Firm has actual or constructive notice of a violation of LMX Rules in 

connection with the use of the LMX Trading System by a Participant or Customer for which 

it has authorized a direct connection and the Clearing Firm fails to terminate the 

connection, the Clearing Firm may be found to have committed an act detrimental the 

Exchange.

RULE 535. Identification of Authorized Traders and Authorized Brokers

Each Authorized Trader or Authorized Broker shall be identified to the Exchange, in the manner 

prescribed by the Exchange, and shall be subject to LMX Rules. If user IDs are required to be 

registered with the Exchange, it is the duty of the Clearing Firm to ensure that registration is 

current and accurate at all times. Each individual must use a unique user ID to access the LMX 

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Trading System. In no event may a Person enter an Order or permit the entry of an Order by an 

individual using a user ID other than the individual’s own unique user ID.

RULE 536. LIMITATION OF LIABILITY, NO WARRANTIES

(a) EXCEPT AS PROVIDED BELOW, AND EXCEPT IN INSTANCES WHERE A PARTY 

HAS BEEN FINALLY ADJUDICATED TO HAVE ENGAGED IN WILLFUL OR WANTON 

MISCONDUCT, IN WHICH CASE THE PARTY FOUND TO HAVE ENGAGED IN SUCH 

CONDUCT CANNOT AVAIL ITSELF OF THE PROTECTIONS IN THIS RULE 536, 

NEITHER THE EXCHANGE (INCLUDING ITS SUBSIDIARIES AND AFFILIATES, 

CLEARING HOUSE, AND ANY TECHNOLOGY SERVICES PROVIDER AND 

CONTRACTORS PROVIDING SERVICES TO THE EXCHANGE), NOR ANY OF THEIR 

RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES, AGENTS, CONSULTANTS, 

AND LICENSORS (THE “DISCLAIMING PARTY” OR “DISCLAIMING PARTIES”) 

SHALL BE LIABLE TO ANY PERSON FOR ANY LOSSES, DAMAGES, COSTS OR 

EXPENSES (INCLUDING, BUT NOT LIMITED TO, LOSS OF PROFITS, LOSS OF USE, 

AND DIRECT, INDIRECT, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE 

DAMAGES), ARISING FROM:

(1) ANY FAILURE, MALFUNCTION, FAULT IN DELIVERY, DELAY, OMISSION, 

SUSPENSION, INACCURACY, INTERRUPTION, TERMINATION, OR ANY 

OTHER EVENT, IN CONNECTION WITH THE FURNISHING, PERFORMANCE, 

OPERATION, MAINTENANCE, USE OF OR INABILITY TO USE ALL OR ANY 

PART OF ANY OF THE SYSTEMS AND SERVICES OF THE EXCHANGE, OR 

SERVICES, EQUIPMENT OR FACILITIES USED TO SUPPORT SUCH 

SYSTEMS AND SERVICES, INCLUDING WITHOUT LIMITATION 

ELECTRONIC ORDER ENTRY/DELIVERY, TRADING THROUGH ANY 

ELECTRONIC MEANS, ELECTRONIC COMMUNICATION OF MARKET DATA 

OR INFORMATION, WORKSTATIONS USED BY PARTICIPANTS AND 

AUTHORIZED TRADERS, PRICE REPORTING SYSTEMS AND ANY AND ALL 

TERMINALS, COMMUNICATIONS NETWORKS, CENTRAL COMPUTERS, 

SOFTWARE, HARDWARE, AND FIRMWARE RELATING THERETO; OR

(2) ANY FAILURE OR MALFUNCTION, FAULT IN DELIVERY, DELAY, OMISSION, 

SUSPENSION, INACCURACY, INTERRUPTION OR TERMINATION, OR ANY 

OTHER EVENT, OF ANY SYSTEM OR SERVICE OF THE EXCHANGE, 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

(3) ANY ERRORS OR INACCURACIES IN INFORMATION PROVIDED BY THE 

EXCHANGE OR ANY OR ANY OF THE EXCHANGE’S SYSTEMS, SERVICES 

OR FACILITIES; EXCEPT FOR INCORRECT ORDER STATUSING 

INFORMATION AS PROVIDED IN RULE 539 (THE LMX CONTROL CENTER); 

OR

(4) ANY UNAUTHORIZED ACCESS TO OR UNAUTHORIZED USE OF ANY OF 

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THE EXCHANGE’S SYSTEMS, SERVICES, EQUIPMENT OR FACILITIES BY 

ANY PERSON. THE FOREGOING LIMITATION OF LIABILITY 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. THE FOREGOING 

LIMITATION OF LIABILITY SHALL BE SUBJECT TO THE CEA AND 

REGULATIONS THEREUNDER.

(b) NOTWITHSTANDING SUBSECTION (a), ( c),(e), or (f) OF THIS RULE 536, IN NO 

EVENT SHALL THE PLATFORM TECHNOLOGY SERVICES PROVIDER BE LIABLE 

TO ANY PERSON NOR SHALL ANY PERSON BRING ANY LEGAL ACTION 

(WHETHER IN TORT, NEGLIGENCE, OR BREACH OF CONTRACT) FOR ANY 

LOSSES, DAMAGES, COSTS OR EXPENSES INCLUDING, BUT NOT LIMITED TO 

LOSS OF PROFITS, LOSS OF USE, DIRECT, SPECIAL, PUNITIVE, INDIRECT, 

INCIDENTAL OR CONSEQUENTIAL DAMAGES, ARISING FROM THE USE OF THE 

PLATFORM. THE TERM PLATFORM TECHNOLOGY SERVICES PROVIDER 

REFERS TO THE SPECIFIC TECHNOLOGY SERVICES PROVIDER PROVIDING 

SERVICES AT THE INCEPTION OF THE EXCHANGE AS A DESIGNATED 

CONTRACT MARKET.

(c) THERE ARE NO EXPRESS OR IMPLIED WARRANTIES OR REPRESENTATIONS 

(INCLUDING BUT NOT LIMITED TO WARRANTIES OF MERCHANTABILITY AND 

FITNESS FOR A PARTICULAR PURPOSE OR USE) PROVIDED BY THE 

DISCLAIMING PARTY OR DISCLAIMING PARTIES RELATING TO ANY SYSTEMS OR 

SERVICES OF THE EXCHANGE OR SERVICES, EQUIPMENT OR FACILITIES USED 

TO SUPPORT SUCH SYSTEMS OR SERVICES, INCLUDING THE LMX TRADING 

SYSTEM.

(d) ANY DISPUTE ARISING OUT OF THE USE OF SYSTEMS OR SERVICES OF THE 

EXCHANGE OR SERVICES, EQUIPMENT, OR FACILITIES USED TO SUPPORT 

SUCH SYSTEMS OR SERVICES IN WHICH THE DISCLAIMING PARTY OR 

DISCLAIMING PARTIES IS A PARTY SHALL BE ARBITRATED PURSUANT TO 

CHAPTER 8. ANY ARBITRATION SHALL BE BROUGHT WITHIN THE PERIOD 

PRESCRIBED BY CHAPTER 8. ANY OTHER ACTIONS, SUITS OR PROCEEDINGS 

AGAINST THE DISCLAIMING PARTY OR DISCLAIMING PARTIES MUST BE 

BROUGHT WITHIN TWO YEARS FROM THE TIME THAT A CAUSE OF ACTION HAS 

ACCRUED. THIS PARAGRAPH ( d) SHALL IN NO WAY BE CONSTRUED TO LIMIT A 

PARTY’S OBLIGATION TO ARBITRATE ITS CLAIM OR TO CREATE A CAUSE OF 

ACTION AND SHALL NOT AUTHORIZE AN ACTION THAT WOULD OTHERWISE BE 

PROHIBITED BY LMX RULES. IF FOR ANY REASON, A COURT OF COMPETENT 

JURISDICTION FINDS THAT A DISPUTE IS NOT ARBITRABLE, SUCH DISPUTE MAY 

ONLY BE LITIGATED IN THE COUNTY OF COOK IN THE STATE OF ILLINOIS AND 

WILL BE GOVERNED BY THE LAWS OF THE STATE OF ILLINOIS WITHOUT 

REGARD TO ANY PROVISIONS OF ILLINOIS LAW THAT WOULD APPLY THE 

SUBSTANTIVE LAW OF A DIFFERENT JURISDICTION.

(e) THE DISCLAIMING PARTY OR DISCLAIMING PARTIES, MAY, IN ITS SOLE 

DISCRETION, ASSUME RESPONSIBILITY FOR DIRECT, OUT-OF-POCKET LOSSES 

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DIRECTLY CAUSED BY THE GROSS NEGLIGENCE OF LMX MARKET OPERATIONS 

OR OTHER EXCHANGE STAFF AND/OR ORDER STATUS ERRORS PROVIDED BY 

LMX MARKET OPERATIONS OR AN EXCHANGE SYSTEM, EQUIPMENT, SERVICE 

OR FACILITY. NOTWITHSTANDING THE ABOVE, i) THE EXCHANGE’S TOTAL 

COMBINED AGGREGATE OBLIGATIONS SHALL NOT EXCEED $1,000 FOR ANY 

SINGLE CLAIM, AND $10,000 FOR ALL CLAIMS. ANY DISPUTED CLAIM PURSUANT 

TO THIS PARAGRAPH ( e) MUST BE ARBITRATED PURSUANT TO CHAPTER 8 

(f) IN NO EVENT SHALL THE DISCLAIMING PARTY OR DISCLAIMING PARTIES TOTAL 

COMBINED AGGREGATE LIABILITY FOR ALL CLAIMS ARISING OUT OF ANY 

FAILURES, MALFUNCTIONS, FAULTS IN DELIVERY, DELAYS, OMISSIONS, 

SUSPENSIONS, INACCURACIES, INTERRUPTIONS, TERMINATIONS, OR ANY 

OTHER CAUSES, IN CONNECTION WITH THE FURNISHING, PERFORMANCE, 

OPERATION, MAINTENANCE, USE OF OR INABILITY TO USE ALL OR ANY PART 

OF ANY OF THE EXCHANGE’S SYSTEMS OR SERVICES, OR SERVICES, 

EQUIPMENT OR FACILITIES USED TO SUPPORT SUCH SYSTEMS AND SERVICES, 

OR THE NEGLIGENCE OF EXCHANGE STAFF EXCEED $50,000 IN ANY GIVEN 

CALENDAR YEAR. IF THE NUMBER OF ALLOWED CLAIMS 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. NOTWITHSTANDING ANY OF THE FOREGOING 

PROVISIONS, THIS RULE 536 WILL IN NO WAY LIMIT THE LIABILITY OF ANY 

PERSON ARISING FROM ANY VIOLATION BY SUCH PERSON OF THE CEA OR THE 

COMMISSION REGULATIONS THEREUNDER.

RULE 537. The LMX Control Center

(a) Customer Support.

(1) The LMX Control Center (“ECC”) provides The LMX Trading System customer 

support and problem management only to Clearing Firms, Participants and 

Authorized Traders.

(2) In order to be eligible for ECC support, such Persons must be identified on a 

Participant as an authorized contact with the ECC (“Authorized Contacts”). The 

ECC provides customer support via a specified telephone number and during 

specified hours.

(3) ECC employees may not always be available to assist Authorized Contacts.

(4) Persons other than Authorized Contacts must contact their Clearing Firms to 

make support requests.

(b) ECC Communications.

(1) As provided in Rule 537, the Exchange shall not be liable for any loss resulting 

from any inability to communicate with the ECC.

(2) The liability of the Exchange for the negligent acts of ECC staff shall be subject 

to the limitations and conditions of Rule 537.

(3) In no event, however, shall the Exchange be liable for the negligence of the ECC 

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if the Person claiming to have suffered a loss could have secured the support it 

sought from ECC through its own administrative terminal, its Clearing Firm’s 

terminal or an Independent Software Vendor’s (“ISV”) terminal.

(4) For purposes of this rule, a Person is deemed able to take action through its own 

administrative terminal, a Clearing Firm’s terminal or an ISV’s terminal unless 

such terminal was inoperative or such terminal service was interrupted at the time 

the ECC took action.

(c) Order Status

(1) A Person who believes he has received an incorrect Order status or does not 

receive an appropriate status shall immediately notify the ECC. Additionally, such 

Person shall take any necessary and appropriate market action to mitigate any 

potential losses arising from the incorrect Order status or lack of appropriate 

Order status immediately after the Person knew or should have known that the 

Order status information was incorrect or should have been received. Any liability 

of the Exchange for incorrect Order status shall be subject to the limitations and 

conditions of Rule 537.

(2) Notwithstanding the above, the Exchange shall not be liable for losses related to 

incorrect Order status information if the Exchange provides prior notification that 

an Exchange system, service or facility may produce such incorrect information 

and also provides notification of a means to obtain correct Order status 

information from such system, service or facility. In the event that the ECC and 

an Exchange system, service or facility provide conflicting information relating to 

an Order status, a Customer may only reasonably rely on the information received 

from the ECC. Any liability of the Exchange shall be subject to the liability caps 

and conditions of Rule 537.

RULE 538. The LMX Trading System Algorithms

The LMX trading system and matching algorithm is designed to provide a fair, transparent, and 

efficient market to Participants. The Exchange will use a price-time priority matching algorithm 

for its Central Limit Order Book “CLOB” providing a fully inclusive, real-time, and accurate market 

data to all Participants. Information concerning the matching algorithm is made available on the 

LMX Labs website https://www.lmxlabs.com 

RULE 539. Trade Cancellations and Price Adjustments

(a) Exchange Control Center Authority Regarding Trade Cancellations and Price 

Adjustments

(1) The Exchange Control Center (“ECC”) has authority to adjust trade prices or 

cancel (bust) trades when such action is necessary to mitigate market disrupting 

events caused by the improper or erroneous use of the LMX Trading System or 

by system defects.

(2) Notwithstanding any other provisions of this Rule, the ECC may adjust trade 

prices or bust any trade if the ECC determines that allowing the trade to stand as 

executed may have a material, adverse effect on the integrity of the market.

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(3) All decisions of the ECC shall be final.

(b) Review of Trades

(1) The ECC may determine to review a trade based on its independent analysis of 

market activity or upon request for review by a user of the LMX Trading System. 

A request for review must be made within 15 minutes of the execution of the trade.

(2) The ECC shall determine whether or not a trade will be subject to review. In the 

absence of a timely request for review, during volatile market conditions, upon 

the release of significant news, or in any other circumstance in which the ECC 

deems it to be appropriate, the ECC may determine, in its sole discretion, that a 

trade shall not be subject to review.

(3) Upon deciding to review a trade, the ECC will promptly issue an alert to all 

Participants via the LMX Trading System or electronic mail indicating that the 

trade is under review.

(c) Price Adjustments and Cancellations

(1) In reviewing a trade, the ECC will first determine whether the trade price is within 

the No Bust Range for futures or within the Bid/Ask Reasonability Allowance for 

options, as described in Rule 539(g). The Bid/Ask Reasonability Allowance for an 

option is the maximum width of the bid/ask range which will be considered 

reasonable for use in applying the parameters necessary to establish the No Bust 

Range for the option.

(2) In applying the No Bust Range, the ECC shall determine the fair value market 

price for that contract at the time the trade under review occurred. The ECC may 

consider any relevant information, including, but not limited to, the last trade price 

in the contract or a better bid or offer price on the LMX Trading System, a more 

recent price for a different maturity date, the price of the same or related contract 

established in another venue or another market, the market conditions at the time 

of the trade, the theoretical value of an option based on the most recent implied 

volatility and responses to a Request for Quote (RFQ).

(3) Trade Price Inside the No Bust Range. If the ECC determines that the price of 

the trade is inside the No Bust Range, the ECC will issue an alert indicating that 

the trade shall stand.

(4) Trade Price Outside the No Bust Range

i. Futures Contracts

If the ECC determines that a trade price is outside the No Bust Range for 

a futures contract, the trade price shall be adjusted to a price that equals 

the fair value market price for that contract at the time the trade under 

review occurred, plus or minus the No Bust Range. In the event there are 

multiple parties, prices and/or contracts involved in the transactions at 

issue, the ECC has the authority, but not the obligation, to bust rather than 

price adjust such transactions. The ECC will issue an alert regarding its 

decision.

ii. Option Contracts

If the ECC determines that a trade price is outside the applicable No Bust 

Range for an option contract, the trade price shall be adjusted. In the case 

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of a buy (sell) error, the price will be adjusted to the determined ask (bid) 

price set forth in the Bid/Ask Reasonability Allowance in Section G plus 

(minus) the No Bust Range. In the event there are multiple parties, prices 

and/or contracts involved in the transactions at issue, the ECC has the 

authority, but not the obligation, to bust rather than price adjust such 

transactions. The ECC will issue an alert regarding its decision.

iii. Busted trade prices and any prices that have been adjusted shall be 

cancelled in the Exchange’s official record of time and sales. Trades that 

are price adjusted shall be inserted in the time and sales record at the

adjusted trade price.

(d) Alternative Resolution by Agreement of Parties

(1) With the approval of the ECC, parties to a trade that is price adjusted may instead 

mutually agree to cancel the trade.

(2) With the approval of the ECC, parties to a trade that is busted may instead 

mutually agree to price adjust the trade to a price consistent with the adjustment 

provisions of Rule 539(c).

(3) Subject to section (d)(1) and (d)(2), parties to a trade that is cancelled or price 

adjusted may mutually agree to a cash adjustment provided that such 

adjustments are reported to the ECC and the parties maintain a record of the 

adjustment.

(4) An executed trade may not be reversed via transfer except where such trade is 

determined by ECC to be outside of the No Bust Range but not reported timely, 

subject to agreement of the parties and approval of the ECC. Any such transfer 

must occur at the original trade price and quantity; however the parties may 

mutually agree to a cash adjustment.

(e) Liability for Losses Resulting from Price Adjustments or Cancellations

(1) A party entering an order that results in a price adjustment or trade bust shall be 

responsible for demonstrated claims of realized losses incurred by persons 

whose trade prices were adjusted or busted provided, however, that a claimant 

shall not be entitled to compensation for losses incurred as a result of the 

claimant’s failure to take reasonable actions to mitigate the loss.

(2) A claim for a loss pursuant to this section must be submitted to the Exchange on 

an Exchange claim form within one business day of the event giving rise to the 

claim. The Exchange will reject any claim that is not filed in a timely manner and 

such decisions shall be final. Eligible claims shall be forwarded by the Exchange 

to the party responsible for the order(s) that resulted in a trade bust or a price 

adjustment and to the Clearing Firm through which the trade was placed. Such 

party, or the Clearing Firm on behalf of the party, shall, within ten business days 

of receipt of the claim, admit or deny responsibility in whole or in part. Failure to 

respond to the claim within ten business days shall be considered a denial of 

liability.

(3) To the extent that liability is admitted, payment shall be made within ten business 

days. Unless otherwise agreed upon in writing by the parties, failure to make the 

payment within ten business days shall be considered a denial of liability for 

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purposes of this rule. A copy of any such written agreement must be provided to 

the Exchange.

(4) To the extent that liability is denied, the party making the claim may submit the 

claim for arbitration pursuant to Chapter 8 of the Rules. Such claims must be 

submitted to the ECC within ten business days of the date the party was issued 

notification that liability was denied.

(f) Schedule of Administrative Fees

When ECC busts or price adjusts a trade, the party responsible for entering the order 

into the LMX Trading System that gave rise to the trade bust or price adjustment shall 

pay an administrative fee to the Exchange in the amount of $500 for each such 

occurrence.

(g) LMX Entity No Bust Ranges will be made available on the LMX website 

https://www.lmxlabs.com.

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CHAPTER 6: PRIVATELY NEGOTIATED TRANSACTIONS

RULE 601. Block Trades

(a) The Exchange shall designate the products in which block trades shall be permitted and 

determine the minimum quantity thresholds for such transactions.

(b) Products designated for Block Trades.

None.

RULE 602. Exchange of Derivatives for Related Positions

(a) The Exchange shall designate the products in which Exchange of Derivatives for Related 

Position (“EDRP”) are permitted.

(b) EDRPs Permitted

None.

RULE 603. Recordkeeping Requirements for Privately Negotiated Trades

All Orders executed in accordance with Rule 601 and 602, unless otherwise exempted by Rule, 

are subject to the following recordation requirements.

(a) At the time of execution, every Order received from a Customer must be in the form of a 

written or electronic record and include an electronic timestamp reflecting the date and 

time such Order was received and must identify the specific account(s) for which the 

Order was placed.

(b) Such record shall also include an electronic timestamp reflecting the date and time such 

Order was executed or cancelled.

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CHAPTER 7: DISCIPLINARY RULES

RULE 701. General

(a) All Participants shall be subject to the Exchange’s jurisdiction. All Participants are subject 

to this Chapter 7 if they, or with respect to a Participant, any other Person using any of 

its User IDs, are alleged to have violated, to have aided and abetted a violation, to be 

violating, or to be about to violate, any Rule of the Exchange or any provision of 

Applicable Law for which the Exchange possesses disciplinary jurisdiction.

(b) The Exchange, through the Market Regulation Department and the Disciplinary Panel, 

will conduct inquiries, investigations, disciplinary proceedings and appeals from 

disciplinary proceedings, summary impositions of fines, summary suspensions or other 

summary actions in accordance with this Chapter 7.

(c) No Exchange Official, Director, or Officer will interfere with or attempt to influence the 

process or resolution of any inquiry, investigation, disciplinary proceeding, appeal from a 

disciplinary proceeding, summary imposition of fines, summary suspension or other 

summary action (collectively “Disciplinary Action”), except to the extent provided under 

the LMX Rules with respect to a proceeding in which the Director is a member of the 

relevant Appeal Panel. 

(d) Any Participant may be represented by counsel during any Disciplinary Action pursuant 

to this Chapter 7.

(e) Participant Liability – Individual and Joint Liability/Controlling Person Liability

(1) The Exchange 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 (A) Authorized Trader or 

Authorized Broker authorized by such Participant, (B) other Supervised Person 

of such Participant, (C) other Person using a User ID of such Participant or (D) 

other agent or representative of such Participant, in each case, that constitute a 

violation as if such violation were that of the Participant.

(2) The Exchange may hold an Authorized Trader or Authorized Broker liable for, 

and impose sanctions against such Authorized Trader or Authorized Broker, for 

such Authorized Trader’s or Authorized Broker’s own acts and omissions that 

constitute a violation as well as or for the acts and omissions of any other agent 

or representative of such Authorized Trader or Authorized Broker that constitute 

a violation as if such violation were that of the Authorized Trader or Authorized 

Broker.

(f) Ex Parte Communications.

(1) A Person subject to a disciplinary proceeding or an appeal from a disciplinary 

proceeding (and any counsel or representative of such Person) and the Market 

Regulation Department (and any counsel or representative of the Market 

Regulation Department) shall not knowingly make or cause to be made an ex 

parte communication relevant to the merits of a disciplinary proceeding or 

an appeal from a disciplinary proceeding to any member of the Disciplinary 

Panel or the Appeal Panel hearing such proceeding.

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(2) Members of a Disciplinary Panel or Appeal Panel shall not knowingly make or 

cause to be made an ex parte communication relevant to the merits of a 

disciplinary proceeding or an appeal from a disciplinary proceeding to any Person 

subject to such proceeding (and any counsel or representative of such Person) 

and the Market Regulation Department (and any counsel or representative of the 

Market Regulation Department).

(3) Any Person who receives, makes or learns of any communication that is 

prohibited by this rule shall promptly give notice of such communication and any 

response thereto to the Market Regulation Department and all parties to the 

proceeding to which the communication relates.

(4) 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 702. Inquiries and Investigation

(a) The Market Regulation Department will investigate any matter within the Exchange’s 

jurisdiction of which it becomes aware. The Market Regulation Department will 

commence an investigation upon the receipt of a request from Commission staff or upon 

the discovery or receipt of information by the Exchange that, in the judgment of the 

Market Regulation Department indicates a possible basis for finding that a violation has 

occurred or will occur. The Market Regulation Department will determine the nature and 

scope of its inquiries and investigations in its sole discretion and will function 

independently of any commercial interests of the Exchange.

(b) The Market Regulation Department has the authority to:

(1) initiate and conduct inquiries and investigations;

(2) prepare investigative reports and make recommendations concerning initiating 

disciplinary proceedings;

(3) prosecute alleged violations within the Exchange’s disciplinary jurisdiction; and,

(4) represent the Exchange on appeal from any disciplinary proceeding, summary 

imposition of fines, summary suspension or other summary action.

(c) Each Participant:

(1) is obligated to appear and testify and respond in writing to interrogatories within 

the time period required by the Market Regulation Department in connection with:

i. any LMX Rule;

ii. any inquiry or investigation; or

iii. any preparation by and presentation during a Disciplinary Action;

(2) is obligated to produce books, records, papers, documents or other tangible 

evidence in its, his or her possession, custody or control within the time period 

required by the Market Regulation Department in connection with:

i. any LMX Rule;

ii. any inquiry or investigation; or

iii. any preparation by and presentation during a Disciplinary Action; and

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(3) may not impede or delay any Disciplinary Action.

RULE 703. Reports of Investigations

(a) The Market Regulation Department will maintain a log of all investigations and their 

disposition. The Market Regulation 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 the Exchange’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.

(b) Any written report of investigation (“Investigative Report”) will include the reasons for 

initiating the investigation (including a summary of the complaint, if any), all relevant facts 

and evidence gathered, Market Regulation Department staff’s analysis and conclusions, 

the Participant’s disciplinary history at the Exchange, and the recommendation of the 

Market Regulation Department. For each potential respondent, the Market Regulation 

Department will recommend either:

(1) closing the investigation without further action;

(2) settlement;

(3) summary action;

(4) the preparation and service of a notice of charges for instituting a disciplinary 

proceeding; or,

(5) resolving the investigation through an informal disposition, including the issuance 

of a warning letter. An informal disposition (including the issuance of a warning 

letter) will not constitute a finding of a violation or a sanction, however, the 

investigative report must include a copy of any warning letter and no more than 

one warning letter for the same potential violation may be issued to the same 

Participant during a rolling 12-month period.

(c) The Investigative Report will be provided to the Chief Regulatory Officer for a 

determination as to whether the Investigative Report is complete. The Chief Regulatory 

Officer will then provide the completed Investigative Report to the Review Panel of the 

Disciplinary Panel.

RULE 704. Opportunity to Respond

(a) After completing its investigation report, the Market Regulation Department may, upon 

approval of the Chief Regulatory Officer, notify each potential respondent that the Market 

Regulation Department has recommended formal disciplinary charges against the 

potential respondent.

(b) The Market Regulation 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 Market Regulation Department.

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RULE 705. Review of Investigative Reports

(a) Review of Investigative Reports by the Chief Regulatory Officer

(1) Within 30 days of the receipt of a completed Investigative Report, the Chief 

Regulatory Officer will review the completed Investigation Report to determine 

whether a reasonable basis exists to believe that a violation within the Exchange’s 

jurisdiction has occurred or is about to occur.

(2) If the Chief Regulatory Officer determines that additional investigation or 

evidence is needed to decide whether a reasonable basis exists to believe that a 

violation within the Exchange’s jurisdiction has occurred or is about to occur, the 

Chief Regulatory Officer will direct the Market Regulation Department to conduct 

further investigation.

(3) Upon receiving the completed Investigative Report or after receiving additional 

information upon the completion of an investigation, the Chief Regulatory Officer 

will determine for each potential respondent whether to authorize:

i. the informal disposition of the investigation (by issuing a warning letter or 

otherwise) because disciplinary proceedings are unwarranted in which 

case the Chief Regulatory Officer shall provide a written explanation ; or

ii. the closing of the investigation without any action because no reasonable 

basis exists to believe that a violation within the Exchange’s jurisdiction 

has occurred or is about to occur in which case the Chief Regulatory 

Officer shall provide a written explanation ; or,

iii. the commencement of disciplinary proceedings because a reasonable 

basis exists to believe that a violation within the Exchange’s jurisdiction 

has occurred or is about to occur.

(b) Review of Investigative Reports by the Review Panel of the Disciplinary Panel.

(1) After receiving a completed Investigation Report pursuant to Rule 703, a Review 

Panel must promptly review the report and, within 30 days of such receipt, must 

take one of the following actions:

i. If the Review Panel determines that additional investigation or evidence 

is needed, it must promptly direct the Market Regulation Department to 

conduct further investigation.

ii. If the Review Panel determines that no reasonable basis exists for finding 

a violation or that prosecution is otherwise unwarranted, it may direct that 

no further action be taken. Such determination must be in writing, and 

must include a written statement setting forth the facts and analysis 

supporting the decision and the Chief Regulatory Officer shall provide the 

written statement .

iii. If the Review Panel determines that a reasonable basis exists for finding 

a violation and adjudication is warranted, it must direct that the person or 

entity alleged to have committed the violation be served with a notice of 

charges and proceed in accordance with the rules of Chapter 7.

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(2) A failure of the Disciplinary Panel to act within the time prescribed in Rule 705(b) 

shall not prevent the Chief Regulatory Officer from acting pursuant to Rule 705(a). 

The Chief Regulatory Officer shall inform the Regulatory Oversight Committee of 

any such failure of the Disciplinary Panel to act.

(3) Any conflict between the actions of the Chief Regulatory Officer pursuant to Rule 

705(a) and the Disciplinary Panel pursuant to Rule 705(b) shall be resolved by 

the Regulatory Oversight Committee.

RULE 706. Notice of Charges

(a) If the Chief Regulatory Officer or Review Panel authorizes disciplinary proceedings 

pursuant to Rule 705(a)(3)(iii) or 703(b)(1)(iii), the Market Regulation Department will 

prepare, and serve in accordance with Rule 708, a notice of charges.

(b) A notice of charges will:

(1) state the acts, practices or conduct that the respondent is alleged to have 

engaged in;

(2) state the LMX Rule or provision of Applicable Law alleged to have been violated 

or about to be violated;

(3) state the proposed sanctions;

(4) advise the respondent of its right to a hearing;

(5) advise the respondent that he has the right to be represented by legal counsel or 

any other representative of its choosing in all succeeding stages of the 

disciplinary process; provided, however, that the respondent may not be 

represented by any member of the Exchange’s Board or Disciplinary Panel, any 

employee of the Exchange, or any person substantially related to the underlying 

investigations, such as material witness or other respondents;

(6) 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;

(7) 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; and

(8) advise the respondent that any allegation in the notice of charges that is not 

expressly denied will be deemed to be admitted.

RULE 707. 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 by the Chief Regulatory Officer.

(b) To answer a notice of charges, the respondent must in writing:

(1) specify the allegations that the respondent denies or admits;

(2) specify the allegations that the respondent does not have sufficient information to 

either deny or admit;

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(3) specify any specific facts that contradict the notice of charges;

(4) specify any affirmative defenses to the notice of charges; and

(5) sign and serve the answer on the Chief Regulatory Officer.

(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 

general denial by the respondent, without more, will not satisfy the requirements of 

paragraph (b) above.

RULE 708. Service of Notice of Charges

(a) Any notice of charges or other documents to be served pursuant to this Chapter 7 may 

be served upon the respondent and service shall be deemed complete either personally 

or by leaving the same at his or her place of business; 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 the Exchange.

(b) Any notice of charges or other documents contemplated to be served pursuant to this 

Chapter 7 may be served upon the respondent and service shall be deemed complete 

via electronic mail to the electronic mail address as it appears on the books and records 

of the Exchange.

RULE 709. Settlements

(a) A respondent or potential respondent may at any time propose in writing an offer of 

settlement related to anticipated or instituted disciplinary proceedings.

(b) Any offer of settlement should contain proposed findings and sanctions and be signed 

by the respondent or potential respondent and submitted to the Market Regulation 

Department.

(c) 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 the Exchange over it and over the subject matter of 

the proceedings and consent to the entry of the findings and sanctions imposed.

(d) If a respondent or potential respondent submits an offer of settlement in accordance with 

paragraph (a) above, the Market Regulation Department will forward the offer to the Chief 

Regulatory Officer with a recommendation on whether to accept or reject the offer. Any 

preliminary determination by the Chief Regulatory Officer to accept the offer shall be 

submitted for review by the Disciplinary Panel. If the Disciplinary Panel agrees, then the 

Chief Regulatory Officer shall conditionally accept an offer of settlement, 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.

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(e) If an offer of settlement is accepted by the Disciplinary Panel, the panel accepting the 

offer 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 customer restitution where customer 

harm is demonstrated. If an offer of settlement is accepted without the agreement of the 

Market Regulation Department or Chief Regulatory Officer, the decision must adequately 

support the Hearing Panel’s acceptance of the settlement. If applicable, the decision 

must also include a statement that the respondent has accepted the sanctions imposed 

without either admitting or denying the rule violations.

(f) If an offer of settlement is accepted and 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 and appeal under the 

LMX Rules.

(g) If the offer of settlement of a respondent or potential respondent is not accepted by 

agreement between the Chief Regulatory Officer and the Disciplinary 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 

Market Regulation Department may use an unaccepted offer of settlement as an 

admission or in any other manner at a hearing of, or appeal from, disciplinary 

proceedings.

RULE 710. Disciplinary Panel

(a) The Disciplinary Panel shall function as a Review Panel and Hearing Panel.

(1) The Review Panel shall review completed Investigative Reports in order to 

determine whether a reasonable basis exists for finding a violation of the 

Exchange’s rules and for authorizing the issuance of notices of charges against 

persons.

(2) The Hearing Panel shall conduct hearings in connection with any disciplinary 

proceedings (except for summary impositions of fines pursuant to Rule 717), to 

make findings, render decisions, and impose sanctions pursuant to this Chapter 

7.

(b) The Board shall appoint individuals at the recommendation of the Chief Regulatory 

Officer to serve for a term of one-year, subject to reappointment by the Board, as 

potential participants on the Disciplinary Panels. The Chief Regulatory Officer shall 

recommend at least three individuals that will satisfy the conditions of a Public Individuals 

and at least three individuals who represent the diversity of market participants’ interests. 

The term of an individual that has been selected as a member of a Disciplinary Panel will 

not expire until the related proceedings are completed. Exchange staff are prohibited 

from serving on a Disciplinary Panel.

(c) The chair of any Review Panel or Hearing Panel shall be a Public Individual.

(d) The Chief Regulatory Officer shall select a separate Review Panel and Hearing Panel 

prior to the commencement of each investigative or disciplinary matter by randomly 

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selecting at least one Public Individual and the remaining individuals from the industry 

participant pools so that any group or class of industry participants is precluded from 

dominating or exercising disproportionate influence on the Disciplinary Panel being 

formed.

(e) If an individual selected is an Interested Person or if a member of the Disciplinary Panel 

later becomes an Interested Person, a replacement for such individual shall be randomly 

selected by the Chief Regulatory Officer. Individuals are prohibited from participating as 

a member of a Disciplinary Panel if such individual participated on a prior Disciplinary 

Panel proceeding in the same matter.

(f) Within 10 days of being notified of the appointment of the Disciplinary Panel, a 

respondent may seek to disqualify any individual named to the Disciplinary Panel for the 

reasons identified in Rule 213 or for any other reasonable grounds, including that such 

individual has a financial interest in the matter or that such individual participated on a 

prior Disciplinary Panel or Appeal Panel proceeding in the same matter, by serving 

written notice on the Chief Regulatory Officer. By not timely filing a request for 

disqualification, the respondent will be deemed to have waived any objection to the 

composition of a Disciplinary Panel. The Chief Regulatory Officer of the Exchange 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.

(g) No person shall serve on a Disciplinary Panel unless that person has agreed in writing 

that he or she will not publish, divulge, or make known in any manner, any facts or 

information regarding the business of any person or any other information which may 

come to his attention in his official capacity as a member of the Disciplinary Panel, except 

when reporting to the Board or to a committee concerned with such information or to the 

Market Regulation Department, when requested by the CFTC or other governmental 

agency or when compelled to testify in any judicial or administrative proceeding.

(h) All information, records, materials and documents provided to the Disciplinary Panel and 

all deliberations, testimony, information, records, materials and documents related 

thereto shall be treated as non-public and confidential and shall not be disclosed, except 

as necessary to further an Exchange investigation or as required by law.

(i) The Disciplinary Panel must not include any members of the Exchange’s Market 

Regulation Department or any person involved in adjudicating any other stage of the 

same proceeding.

RULE 711. Convening Hearings of Disciplinary Proceedings

(a) A hearing will be conducted privately and confidentially. Notwithstanding the 

confidentiality 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 Market Regulation 

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Department.

(c) The chair of the Hearing Panel may continue, adjourn or otherwise conduct the hearing, 

as he or she may deem appropriate. The chair 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 chair of the 

Hearing Panel will not be bound by any evidentiary or procedural rules or law. 

Once admitted during the hearing, the Hearing Panel may consider, and attach the 

weight it believes appropriate to, evidence or other materials. The Chief Regulatory 

Officer of the Exchange, or its designee, will provide guidance to the chair of the Hearing 

Panel on the conduct of the hearing.

(d) Except for procedural and evidentiary matters decided by the chair of the Hearing Panel 

pursuant to paragraph (c) above and Rule 712, unless each respondent otherwise 

consents, the entire Hearing Panel must be present during the entire hearing and any 

related deliberations.

RULE 712. 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 the Exchange that the Market 

Regulation Department will use to support the allegations and proposed sanctions in the 

notice of charges or which the chair of the Hearing Panel deems relevant to the 

disciplinary proceedings. Notwithstanding the foregoing, no respondent will have the right 

to review, and the Exchange 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 Market Regulation Department, the Market 

Regulation 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 Market Regulation 

Department:

(1) 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

(2) will provide the respondent with access to the information and portions of the 

documents that the Market Regulation Department intends to rely on to support 

the allegations or proposed sanctions in the notice of charges.

(d) For purposes of this Rule 712, information that could adversely affect competitive 

positions include positions in Contracts 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.

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RULE 713. Conducting Hearings of Disciplinary Proceedings

(a) At a hearing conducted in connection with any disciplinary proceedings, the Market 

Regulation 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 707, 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 Market Regulation Department and each respondent may:

(1) present evidence and facts determined relevant and admissible by the chair of 

the Hearing Panel;

(2) appear personally at the hearing;

(3) call and examine witnesses; and

(4) cross-examine witnesses called by other parties.

(c) 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 chair 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 707.

(d) Any Person entitled, or required or called upon, to attend a hearing before a Hearing 

Panel pursuant to paragraph (b)(3) above will be given reasonable notice, confirmed in 

writing, specifying the date, time and place of the hearing, and the caption of the 

disciplinary proceedings. All Participants (that are individuals), Authorized Traders and 

other Supervised Persons that are called as witnesses are required to appear at the 

hearing and, where applicable, produce evidence. The Exchange will make reasonable 

efforts to secure the presence of all other Persons called as witnesses whose testimony 

would be relevant, specifically the Exchange requires persons within its jurisdiction, who 

are called as witnesses, to participate in the hearing and to produce evidence.

(e) 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 Rule of the 

Exchange 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 707. In connection with considering apparent violations pursuant to this paragraph 

(e), the Hearing Panel may request that the Market Regulation Department provide the 

Hearing Panel with any additional information related to the violations at issue.

(f) The Hearing Panel may summarily impose sanctions on any Participant, Authorized 

Trader or other Supervised Person that impedes or delays the progress of a hearing.

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(g) The Exchange will 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 chair of the Hearing Panel may within his or her sole discretion require 

the respondent to pay the costs for transcribing the recording of the hearing.

(h) No interlocutory appeals of rulings of any Hearing Panel or chair of the Hearing Panel 

are permitted.

RULE 714. Decision of Hearing Panel

(a) As promptly as reasonable following a hearing, the Hearing Panel will issue a written 

order rendering its decision based on the weight of the evidence contained in the record 

of the disciplinary proceedings. A decision by a majority of the Hearing Panel will 

constitute the decision of the Hearing Panel.

(b) The Exchange will serve a copy of the order of the disciplinary proceedings on the 

respondent and the Market Regulation Department. The order will include:

(1) the notice of charges or summary of the allegations;

(2) the answer, if any, or a summary of the answer;

(3) a brief summary of the evidence introduced at the hearing or, where appropriate, 

incorporation by reference of the Investigation Report;

(4) findings of fact and conclusions concerning each allegation, including a complete 

explanation of the evidentiary and other basis for such findings and conclusions 

with respect to each allegation;

(5) each specific Rule of the Exchange and provision of Applicable Law that the 

respondent is found to have violated

(6) the imposition of sanctions, if any, including the basis for such sanctions and the 

effective date of each sanction; and,

(7) notice of the respondent’s right to appeal pursuant to Rule 716.

(c) Unless a timely notice of appeal is filed pursuant to Rule 716, the order of the disciplinary 

proceedings will become final upon the expiration of 20 days after the order is served on 

the respondent and provided to the Market Regulation Department.

RULE 715. Sanctions

(a) After notice and opportunity for hearing in accordance with the LMX Rules, the Exchange 

will impose sanctions if any Participant, Authorized Trader, other Supervised Person or 

other Person using any of the Participant’s User IDs is found to have violated or to have 

attempted to violate a Rule of the Exchange or provision of Applicable Law for which the 

Exchange possesses disciplinary jurisdiction. All sanctions must take into account the 

respondent’s disciplinary history. All sanctions imposed by the Exchange or the 

Disciplinary Panels must be commensurate with the violations committed and must be 

clearly sufficient to deter recidivism or similar violations by other Participants. In the 

event of demonstrated customer harm, any sanction must also include full customer 

restitution.

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(b) The Exchange may impose one or more of the following sanctions or remedies:

(1) a warning letter, provided, however, no more than one warning letter may be 

issued per rolling 12-month period for the same violation; 

(2) censure;

(3) limitation on Trading Privileges, ability to otherwise access the LMX Trading 

System, and/or other activities, functions or operations;

(4) suspension of Trading Privileges and/or ability to otherwise access the LMX 

Trading System;

(5) fine (subject to paragraph (b) below);

(6) restitution or disgorgement;

(7) termination of Trading Privileges and/or ability to otherwise access the LMX 

Trading System; or

(8) any other sanction or remedy deemed to be appropriate.

(c) The Exchange may impose a fine of up to $1,000,000 for each violation of a Rule of the 

Exchange or a provision of Applicable Law. 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. The Exchange 

has sole discretion to select the bank on whose quotations to base the prime rate. 

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.

RULE 716. Appeal from Hearing Panel Decision, Summary Impositions of Fines and Other 

Summary Actions

(a) A respondent found by the Hearing Panel to have violated (or, in the case of a Participant, 

whose Authorized Trader, Supervised Person or other Person using its User ID was 

found 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 717 or any summary action 

imposed pursuant to Rule 718 may appeal the decision within 20 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 Chief Regulatory Officer. 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, 

except as provided in Rule 701(f) with respect to any denial or limit on Trading Privileges 

or ability to otherwise access the LMX Trading System.

(b) The notice of appeal must state in writing the grounds for appeal, including the findings 

of fact, conclusions or sanctions to which the respondent objects. A respondent may 

appeal the order of disciplinary proceedings or any summary decision on the grounds 

that:

(1) the order or decision was arbitrary, capricious, an abuse of discretion, or not in 

accordance with the LMX Rules;

(2) the order or decision exceeded the authority or jurisdiction of the Hearing Panel, 

the Chief Regulatory Officer or the Exchange;

(3) the order or decision failed to observe required procedures;

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(4) the order or decision was unsupported by the facts or evidence; or

(5) the imposed sanctions, remedies or costs are inappropriate or unsupported by 

the record.

(c) The Chief Regulatory 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 be, except 

the appellant. On or before the 20th day after filing a notice of appeal, the appellant must 

file with the Chief Regulatory Officer and serve on the Market Regulation Department 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 supporting brief, the appellee 

must file and serve its brief in opposition with the Market Regulation Department. On or 

before the 10th day after the date on which the appellee serves its brief in opposition, the 

appellant must file and serve a brief in reply with the Market Regulation Department.

(d) In connection with any appeal, the Market Regulation Department will furnish to the Chief 

Regulatory 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.

(e) Within 30 days after the last submission filed pursuant to paragraph (c) above, the Board 

will appoint an Appeal Panel to consider and determine the appeal. The Board shall 

appoint individuals at the recommendation of the Chief Regulatory Officer to serve on 

the Appeal Panel for a term of one year, subject to reappointment by the Board, as 

potential participants on Appeal Panels. The Chief Regulatory Officer’s recommendation 

shall include Public Individuals. The term of an individual that has been selected as a 

member of an Appeal Panel will not expire until the related proceedings are completed. 

Individuals are prohibited from participating as a member of an Appeal Panel if such 

individual participated on a prior Disciplinary Panel or Appeal Panel proceeding in the 

same matter. Exchange staff are prohibited from serving on an Appeal Panel.

(f) The chair of the Appeal Panel shall be a Public Individual, meaning an individual that 

satisfies the conditions of a Public Director.

(g) Within 10 days of being notified of the appointment of the Appeal Panel, an appellant 

may seek to disqualify any individual named to the Appeal Panel for the reasons 

identified in Rule 213 or for any other reasonable grounds, including, but not limited that 

such individual participated on a prior Disciplinary Panel or Appeal Panel proceeding in 

the same matter, by serving written notice on the Chief Regulatory Officer. By not timely 

filing a request for disqualification, the appellant will be deemed to have waived any 

objection to the composition of an Appeal Panel. The Chief Regulatory Officer of the 

Exchange will decide the merits of any request for disqualification within his or her sole 

discretion.

(h) The Appeal Panel will hold a hearing to allow parties to present oral arguments. Any 

hearing will be conducted privately and confidentially. Notwithstanding the confidentiality 

of hearings, the Appeal Panel may appoint an expert to attend any hearing and assist in 

the deliberations if such individuals agree to be subject to appropriate confidentiality 

agreements. In determining procedural and evidentiary matters, the Appeal Panel will 

not be bound by evidentiary or procedural rules or law.

(i) The Appeal Panel will only consider on appeal the record before the Hearing Panel or, 

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in the case of a summary action, the record considered by the Chief Regulatory Officer, 

the notice of appeal, the briefs filed in support and opposition of the appeal, and any oral 

arguments of the parties. The Appeal Panel may only consider new evidence when the 

Appeals Panel determines that good cause exists as to why the evidence was not 

introduced during the disciplinary proceeding or when imposing the summary action.

(j) After completing its review, the Appeal Panel may affirm, modify or reverse any order of 

the disciplinary proceedings or summary action under appeal, in whole or in part, 

including increasing, decreasing or eliminating any sanction or remedy imposed, 

imposing any other sanction or remedy authorized by the LMX Rules, remanding the 

matter to the same or a different Hearing Panel for further disciplinary proceedings, or 

ordering a new hearing.

(k) As promptly as reasonably possible following its review, the Appeal Panel will issue a 

written decision based on the weight of the evidence before the Appeal Panel. The 

decision of the Appeal 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 of the Exchange 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.

(l) The Appeal Panel’s written order will be the final action of the Exchange and will not be 

subject to appeal within the Exchange.

RULE 717. Summary Imposition of Fines

(a) The Chief Regulatory Officer may summarily impose a fine against a Participant (on 

behalf of itself or any of its Authorized Traders, other Supervised Persons or other 

Persons using any of its User IDs) or Authorized Trader for failing:

(1) to make timely payments of original or variation margin, Options premiums, fees, 

cost, charges or fines to the Exchange or the Clearing House;

(2) to make timely and accurate submissions to the Exchange of notices, reports or 

other information required by the LMX Rules; and

(3) to keep any books and records required by the LMX Rules.

(b) The Market Regulation Department, acting on behalf of the Chief Regulatory Officer, will 

give notice of any fine imposed pursuant to this Rule 717 to each Participant or 

Authorized Trader subject thereto. The notice will specify:

(1) the violations of the LMX Rules for which the fine is being imposed;

(2) the date of the violation for which the fine is being imposed; and,

(3) the amount of the fine.

Within 20 days of serving the notice of fine, the Participant or Authorized Trader, as the 

case may be, must either pay or cause the payment of the fine or file notice of an appeal 

pursuant to Rule 716. Unless timely notice of appeal is filed pursuant to Rule 716, the fine 

will become final upon the expiration of 20 days after the notice of fine is served on the 

Participant or Authorized Trader, as the case may be.

(c) The Exchange will set the amount of any fines imposed pursuant to this Rule 717, with 

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the maximum fine for each violation not to exceed $5,000. Summary imposition of fines 

pursuant to this Rule 717 will not preclude the Exchange from bringing any other action 

against the Participant (or any of its Authorized Traders or other Supervised Persons) or 

Authorized Trader, as the case may be.

RULE 718. Summary Suspensions and Other Summary Actions

(a) Notwithstanding anything in the LMX Rules to the contrary, the Chief Regulatory Officer 

may, after consultation with the Regulatory Oversight Committee, if practicable, 

summarily suspend, revoke, limit, condition, restrict or qualify a Participant’s Trading 

Privileges and/or ability to otherwise access the LMX Trading System, and may take 

other summary action against any Participant or any of its Authorized Traders or 

Supervised Persons in accordance with the LMX Rules; provided, however, that the Chief 

Regulatory Officer must reasonably believe that the business, conduct or activities of the 

Participant or any of its Authorized Traders or Supervised Person in question is not in 

the best interests of the Exchange or the marketplace, including based on any of the 

following:

(1) statutory disqualification from registration as provided in CEA Section 8a(2) or 

(3);

(2) nonpayment of fees, costs, charges, fines or arbitration awards; or

(3) the reasonable belief that immediate action is necessary to protect the public or 

the best interests of the Exchange.

(b) Whenever practicable, the Exchange shall provide prior written notice to the party against 

whom any action in accordance with paragraph (a) shall be taken. If prior notice is not 

practicable, the Exchange will give notice at the earliest possible opportunity to the 

respondent against whom the action is brought.

(c) Unless timely notice of appeal is filed pursuant to Rule 716, 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 the Exchange, a respondent against whom a summary action is brought 

pursuant to this Rule 718 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 in connection with the enforcement of any Rule of the Exchange.

(e) A respondent whose Trading Privileges and/or ability to otherwise access the LMX 

Trading System are suspended, revoked, limited, conditioned, restricted or qualified 

pursuant to this Rule 718 may apply for reinstatement by filing with the Market Regulation 

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) owes any fines, fees, charges or costs to the Exchange, (ii) continues to 

fail to appear at disciplinary proceedings without good cause or (iii) 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 

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Market Regulation Department, acting on behalf of the Chief Regulatory Officer may, in 

its discretion, present its case opposing or supporting the reinstatement and each may 

present evidence and facts and call, examine and cross-examine witnesses. At the 

hearing for reinstatement, the Exchange may require any Participant, Authorized Trader 

or other Supervised Person 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 and/or ability to otherwise access the LMX 

Trading System 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 notice of summary action issued pursuant to Rule 718(b) 

above. The Appeals Panel’s order may not be appealed.

RULE 719. Rights and Responsibilities after Suspension or Termination

(a) When a Participant’s or Authorized Trader’s Trading Privileges and/or ability to otherwise 

access the LMX Trading System are suspended for a period of 12 months or less, none 

of its rights (including the right to hold oneself out to the public as a Participant or 

Authorized Trader, enter Orders into the LMX Trading System and receive Participant 

rates for fees, costs, and charges and deposit margin at Participant levels) will apply 

during the period of the suspension, except for the right of the Participant or Authorized 

Trader in question to assert claims against others as provided in the LMX Rules. Any 

such suspension will not affect the rights of creditors under the LMX Rules or relieve the 

Participant or Authorized Trader in question of its, his or her obligations under the LMX 

Rules to perform any Contracts entered into before the suspension, or for any Exchange 

fees, costs, or charges incurred during the suspension. The Exchange may discipline a 

suspended Participant or Authorized Trader under this Chapter 7 for any violation of a 

Rule of the Exchange or provision of Applicable Law committed by the Participant or 

Authorized Trader before, during or after the suspension.

(b) When a Participant’s or Authorized Trader’s Trading Privileges and/or ability to otherwise 

access the LMX Trading System are terminated, all of its related rights will terminate, 

except for the right of the Participant or Authorized Trader in question to assert claims 

against others, as provided in the LMX Rules. Any such termination will not affect the 

rights of creditors under the LMX Rules. A terminated Participant or Authorized Trader 

may only seek to be reinstated by applying for Trading Privileges pursuant to Rule 302.

(c) The Exchange will not consider the application of a terminated Participant or Authorized 

Trader if such Participant or Authorized Trader, as the case may be, continues to fail to 

appear at disciplinary proceedings without good cause or continues to impede the 

progress of disciplinary proceedings.

(d) A suspended or terminated Participant or Authorized Trader remains subject to the LMX 

Rules and the jurisdiction of the Exchange for acts and omissions prior to the suspension 

of termination, and must cooperate in any inquiry, investigation, disciplinary proceeding, 

appeal of disciplinary proceedings, summary suspension or other summary action as if 

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the suspended or terminated Participant or Authorized Trader still had Trading Privileges 

or ability to otherwise access the LMX Trading System.

(e) In the event of the suspension or revocation of a Participant’s Trading Privileges and/or 

ability to otherwise access the LMX Trading System, the Exchange shall seek to facilitate 

the transfer of any Customer Accounts held by such Participant to other Participants with 

Trading Privileges and/or ability to otherwise access the LMX Trading System.

RULE 720. Notice to the Respondent and the Public

The Exchange will provide written notice of disciplinary proceedings to the parties consistent with 

applicable CFTC Regulations. Whenever the Exchange suspends, expels, fines or otherwise 

disciplines, or denies any Person access to the Exchange, the Exchange will make the public 

disclosures required by CFTC Regulations.

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CHAPTER 8: ARBITRATION RULES

RULE 801. Disputes Subject to Arbitration

(a) Mandatory Arbitration of Disputes Among Participants.

(1) It is contrary to the objectives and policy of the Exchange for Participants to 

litigate Exchange-related disputes. Participants must arbitrate all disputes 

between or among themselves that relate to or arise out of any transaction on or 

subject to the LMX Rules that are based upon facts and circumstances that 

occurred at a time when the parties were Participants through the National 

Futures Association Arbitration Program. Such arbitration shall be conducted 

pursuant to the Rules and the rules of the National Futures Association Arbitration 

Program. The Code of Arbitration is located at: and the Member Arbitration Rules 

are located at: 

http://www.nfa.futures.org/nfamanual/NFAManualTOC.aspx?Section=6.

(2) Notwithstanding the foregoing, this Rule 801 does not require an employee of a 

Participant to submit to arbitration any claim that includes allegations of a violation 

of federal, state or local employment discrimination, sexual harassment, wage 

payment or benefits laws.

(b) Claims Against the Exchange or Clearing House.

(1) Claims Against the Exchange

Claims against the Exchange pursuant to the provisions of Rules 537 and/or Rule 

539 can be submitted to arbitration through the National Futures Association 

Arbitration Program or another arbitration program permitted by the CFTC 

Regulations. Such arbitration shall be conducted pursuant to the Rules and the 

rules of the arbitration Program.

(2) Claims Against the Clearing House

Claims against the Clearing House must be pursued pursuant to the rules of the 

Clearing House.

(c) Permissive Arbitrations.

The following may be submitted for arbitration through the National Futures Association 

Arbitration program and, in the event such a claim is submitted against a Participant, that 

Participant is required to arbitrate the dispute under these Rules, unless otherwise 

provided:

(1) claims of a Customer that is not a Participant against a Participant that relate to 

or arise out of any transaction on or subject to the LMX Rules;

(2) claims against a Participant pursuant to Rule 539;

(3) claims of a Customer that is not a Participant against a Clearing Firm responsible 

for the performance of a Contract on or subject to the LMX Rules and/or against 

a Participant in connection with such a transaction; and

(4) at the discretion of the Chief Regulatory Officer, any claim involving the interests 

of the Exchange, its Participants, their business relations or commodity futures 

trading in general not otherwise arbitrable under these rules, provided the parties 

have consented to such arbitration.

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(d) Waiver of Any Objection to Jurisdiction

Any Person who is not a Participant who submits a claim or grievance to arbitration or any 

Person who appeals any arbitration decision, or who takes any steps therein, shall be 

conclusively presumed to have voluntarily recognized and agreed to the jurisdiction of the 

National Futures Association to hear and determine the claim or appeal.

(e) Referral to the National Futures Association Arbitration Program. 

In the event that a complaint is received by the Exchange from a Customer, it shall be 

referred to the Market Regulation Department, which shall inform the Customer of the 

NFA Arbitration Program.

(f) LMX is adopting the NFA Code of Arbitration and Arbitration Rules as set forth in the 

Rule 801. Any violation of the NFA Code of Arbitration or the Arbitration Rules or related 

arbitration rules shall be a violation of this Rule 801.

RULE 802. Initiating an Arbitration Claim

(a) A claimant may initiate a claim by submitting the required documents and fees to the 

National Futures Association Arbitration Program.

(b) A claimant shall provide notice of such arbitration claim to the Exchange.

RULE 803. Certain Claims against the Exchange Involving

Trading Systems or Services

(a) General. All claims arising out of or relating to the following matters shall be arbitrated in 

accordance with the rules of this Chapter:

(1) receipt of an incorrect Order status or the failure to have received an appropriate 

Order status; or

(2) the negligence of ECC Personnel or any other Exchange staff.

Nothing in this Rule 803 or Rule 804 shall be construed to create a claim against the 

Exchange, to limit a defense available to the Exchange, or to obviate or modify any 

limitation of Exchange liability imposed by any other rule.

(b) Initial Liability Claim and Demand for Arbitration.

The initial claim of loss, including a detailed description of any loss suffered, must be made 

to the National Futures Association Arbitration Program within ten business days of the 

date of the incident that caused the loss.

(c) Related Claims.

All claims arising out of the same system failure, event or alleged negligent act shall, to 

the extent practicable in the determination of the chairman, be consolidated for a single 

hearing.

(d) Award.

(1) Any award by the National Futures Association Arbitration Panel shall be limited 

to the lesser of the actual loss or the loss that would have been incurred if the 

claimant had used its best efforts to mitigate the loss. Punitive damages, loss of 

profits, loss of use, and indirect, incidental or consequential damages shall not be 

awarded.

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(2) The decision of a majority of the National Futures Association Arbitration Panel 

shall be final and binding, and there shall be no appeal to a hearing committee of 

the Exchange. A party may move, within three business days of the award, that 

the award be corrected to remedy any miscalculation or misdescription or where 

the award is otherwise imperfect in a matter of form not affecting the merits of the 

award.

(3) A Participant directed to pay an award shall submit payment of the amount due 

directly to the Participant receiving the award. An arbitration award must be 

satisfied within 15 days of receipt of the notice of decision. If a request is made 

to correct an award pursuant to Rule 803(d)(2), the award must be satisfied within 

15 days of receipt of the corrected notice of decision.

(4) A Participant making payment must submit proof of payment to the Market 

Regulation Department no later than the business day following payment.

(5) Any Participant that fails to pay an arbitration award or submit proof of payment 

to the Exchange within the time prescribed may be subject to Rule 304 and to 

sanctions pursuant to Chapter 7.

(e) Satisfaction of Award by Exchange

(1) The Exchange shall satisfy any award against it subject to its limitation of liability 

rules and the rules respecting proration among claimants where damages 

allowed for a defined period of time exceed any limit imposed by LMX Rules.

(2) The Exchange may delay paying any award until such time as any applicable 

proration or limitation can be finally calculated.

RULE 804. Claims Relating to Trade Cancellations or Price Adjustments

All claims relating to price adjustments or trade busts pursuant to Rule 539 shall be arbitrated in 

accordance with this Chapter.

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CHAPTER 9: CLEARING

RULE 901. Clearing of Contracts

All Contracts shall be cleared through the Clearing House in accordance with the Clearing House 

Rules and in conformity with the Exchange rules specifically provided in this Chapter 9.

RULE 902. Criteria for Becoming a Clearing Firm

(a) Any Clearing Firm of the Clearing House authorized by the Clearing House under the 

Clearing House Rules may apply as a Clearing Firm of the Exchange.

(b) Applicants for Clearing Firms of the Exchange must satisfy the following criteria:

(1) be a Clearing Firm of the Clearing House in good standing

(2) meet the minimum capital requirement as determined by the Clearing House and

(3) satisfy the Clearing Firm provisions set forth in Rule 903.

(c) A Clearing Firm that seeks to effect transactions on the LMX Trading System for its own 

account or the account of its Customer must satisfy the provisions set forth in Rule 903, 

in addition to those set forth in Rule 902(b):

(d) The Exchange evaluates and monitors a Clearing Firm’s compliance with the criteria set 

forth in this Rule 902. The Exchange, through its membership in the Joint Audit 

Committee evaluates and monitors a Clearing Firm’s compliance with the criteria set forth 

in this Rule 902.

(e) The Clearing House may assist the Exchange in evaluating and monitoring a Clearing 

Firm’s compliance with these criteria. By becoming a Clearing Firm, a Clearing Firm and 

its Supervised Persons agree to cooperate with the Exchange in any such monitoring.

(f) Clearing Firms shall have the right to clear Contracts in accordance with the Clearing 

House Rules and the LMX Rules, as applicable.

RULE 903. Clearing Firm Application Process and Obligations

(a) A Clearing Firm of the Clearing House that desires to become a Clearing Firm shall apply 

using the Exchange application form, providing the information, and following the 

procedures established by the Exchange.

(b) A Clearing Firm that clears Contracts on behalf of a Participant(s) and that effects 

transactions for the Clearing Firm account and/or the Customer(s) of the Clearing Firm 

must:

(1) Register with the Exchange by submitting a Clearing Firm Agreement;

(2) Enter into a User License Agreement with the Clearing House, if applicable;

(3) Agree in writing to abide by the Rules of LMX and Applicable Law;

(4) Agree to act as a Clearing Firm for such Participant(s);

(5) Agrees that it will be financially responsible for (i) any transactions effected on 

LMX and for any use of the LMX Trading System made by Clearing Firm, Clearing 

Firm’s Authorized Traders, Participant Firm or Participant Firm’s Authorized 

Traders (ii) all Participant orders that are entered using User IDs assigned by 

LMX and for clearing any trades that are matched as a result of such orders.

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(6) Clearing Firm will be responsible to clear such trades even if the orders received 

via the LMX Trading System: exceeded Clearing Firm’s credit parameters, (b) 

were entered as a result of a failure in the security controls and/or credit controls, 

other than due to the gross negligence of LMX, (c) were entered by an unknown 

or unauthorized user.

(7) Agree that it will accept full responsibility for any transactions effected on LMX 

and for any use of the LMX Trading System made by Clearing Firm or Clearing 

Firm’s Authorized Traders.

(8) Maintain all required and necessary regulatory approvals and/or licenses to 

operate as a Clearing Firm or Authorized Trader on LMX, including any 

Introducing Broker, Futures Commission Merchant, Supervisory Person and/or 

Associated Person registrations and compliance with the minimum financial 

standards required under Applicable Law, as applicable.

(9) Employ practices to monitor and enforce compliance with risk limits for 

Participants; and,

(10) Provide such information and documentation as may be requested by the 

Exchange, and follow the procedures established by the Exchange, including any 

requirements set forth in Chapter 9. Additionally, any Clearing Firm organized or 

located outside of the United States shall enter into a written agreement 

acceptable to the Exchange appointing a third party as its U.S. agent for service 

of process for purposes of CFTC Regulation 15.05, and shall provide the 

Exchange with a copy of the agreement.

(c) If the Exchange decides to admit an applicant as a Clearing Firm, it shall promptly notify 

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

Clearing Firm.

(d) The Exchange may deny, condition or terminate the Clearing Firm status of any Person:

(1) If such Person is unable to satisfactorily demonstrate its ability to satisfy the 

eligibility criteria to become or remain a Clearing Firm;

(2) If such Person is unable to satisfactorily demonstrate its capacity to adhere to all 

applicable Rules;

(3) If such Person would bring the Exchange into disrepute as determined by the 

Exchange in its sole discretion; or,

(4) for such other cause as the Exchange may reasonably determine.

(e) If the Exchange decides to decline or condition an application for admission as a Clearing 

Firm, or terminate a Person’s status as a Clearing Firm, the Exchange shall promptly 

notify such Person (the “Affected Person”) thereof in a writing sent to the address 

provided by the applicant in the Exchange application form or maintained in the 

Exchange registry of Clearing Firm. Such Affected Person may, within seven (7) calendar 

days, request in writing that the Exchange provide the reasons for the denial, conditioning 

or termination of Clearing Firm status. Within fourteen (14) calendar days after receiving 

such written request, the Exchange shall send a written response to the Affected Person 

setting forth the reasons for the denial, conditioning or termination. Within fourteen (14) 

calendar days of receiving the Exchange’s written response, the Affected Person may 

request in writing that the Exchange Participant Committee reconsider the determination.

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(f) Within twenty-eight (28) calendar days of receiving either the request for reconsideration, 

the Exchange Participant Committee shall either confirm, reverse or modify the denial, 

conditioning or termination of the Affected Person as a Participant Firm, and shall 

promptly notify the Affected Person accordingly in writing. The Exchange Participant 

Committee may, within its discretion, schedule a hearing (in-person or by 

teleconference); request additional information from the Affected Person; or, establish 

any other process that it believes is necessary and appropriate to consider the request 

for reconsideration.

(g) The Exchange Participant Committee’s decision is the final action of the Exchange and 

is not subject to appeal within the Exchange.

(h) In the event of a default that occurs or has occurred in relation to a Clearing Firm with 

open positions in any Contract in a proprietary or customer account, each other Clearing 

Firm shall cooperate with the Clearing House, on a best-efforts basis, to accept the 

transfer of positions in such Contracts.

RULE 904. Clearing House Rules

(a) The clearing services provided by the Clearing House with respect to any Contract, and 

the rights and obligations of purchasers and sellers under cleared Contracts (including 

without limitation rights and obligations in respect of clearing and settlement, variation 

payments and performance at maturity), shall be governed by the Clearing House Rules, 

as applicable.

(b) The Clearing House provides clearing and settlement services for the Contracts, 

including the risk management infrastructure. The Exchange conducts surveillance 

related to this Rule 904.

(c) The Exchange will establish performance bond requirements from time as published by 

the Exchange in a Notice to Participants. Participants must call for Performance Bond 

from their Customers and post performance bond with the Clearing House as set forth in 

the Clearing House Rules. All performance bond collateral must be in a form acceptable 

to the Clearing House pursuant to Clearing House Rules.

(d) The Clearing House Rules shall prevail in the event of any conflict or inconsistency 

between the Rules and the Clearing House Rules with respect to any Clearing Member 

responsibilities or obligations under the Clearing House Rules. All Clearing Members are 

bound by the Clearing House Rules.

RULE 905. Other Clearing Organizations

Whenever the Exchange designates a clearing organization other than the Clearing House for 

the clearance of Contracts with respect to which there are open positions, each Clearing Firm 

shall, as of the close of business on the second Business Day prior to the effective date of such 

designation, either become a Clearing Firm of such successor clearing organization, or cause any 

such open Contracts carried by it either to be transferred to a Clearing Firm of such successor 

clearing organization or to be liquidated.

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RULE 906. Settlement Prices

The Exchange, in conjunction with the Clearing House, will determine the Settlement Price for 

Contracts. For each Contract, the Exchange shall publish a daily settlement price and information 

regarding volume, open interest and opening and closing ranges. Any settlement price shall be 

determined by the Exchange in accordance with its procedure or shall be the price determined by 

the Clearing House in accordance with the Clearing House Rules. Notwithstanding the foregoing, 

the Clearing House may modify Settlement Prices in its discretion in accordance with Clearing 

House Rules.

RULE 907. Clearing Fees

Clearing fees shall be assessed against a Clearing Firm for each side of a transaction traded on, 

cleared by or processed through the Clearing House as the Clearing House may from time to time 

prescribe. Such Clearing Fees may be incorporated into the Exchange Fees assessed pursuant 

to Rule 305.

RULE 908. Transfers of Trades

(a) Subject to the limitations of Rule 909, existing trades may be transferred either on the 

books of a Clearing Firm or from one Clearing Firm to another Clearing Firm provided:

(1) the transfer merely constitutes a change from one account to another account, 

provided the underlying beneficial ownership in said accounts remains the same; 

or

(2) an error has been made in the clearing of a trade and the error is discovered and 

the transfer is completed within two business days after the trade date.

(b) Subject to the limitations of Rule 909, Exchange Officials may, upon request by the 

Clearing Firm(s), approve a transfer of existing trades either on the books of the same 

Clearing Firm, or from the books of one Clearing Firm to the books of another Clearing 

Firm if the transfer is in connection with, or as a result of, a merger, asset purchase, 

consolidation or similar non-recurring transaction between two or more entities where 

one or more entities become the successor in interest to one or more other entities.

(c) Exchange Officials may, with the consent of the Clearing Firm(s) involved, permit the 

transfer of existing trades if, in the opinion of Exchange Officials, the situation so requires 

and such transfer is in the best interests of the Exchange.

(d) Provided that the transfer is permitted pursuant to Sections (a), (b) or (c) above, the 

transactions must be recorded and carried on the books of the receiving Clearing Firm 

at the original trade dates. Futures transactions may be transferred using either the 

original trade price or the most recent settlement price; Options transactions may be 

transferred using either the original trade price or a trade price of zero.

(e) All transfers shall be reported to the Clearing House in a form acceptable to the Exchange 

for the type of transactions involved. The proper indicator must be included in the transfer 

such that the transactions, including the transaction(s) to reverse an error, clear as 

transfers. The Clearing Firms involved shall maintain a full and complete record of all 

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transactions together with all pertinent memoranda.

RULE 909. Concurrent Long and Short Transactions

Set forth below are the procedures that must be followed for concurrent long and short positions 

and hold-open accounts.

(a) Concurrent long and short positions in the same commodity and month may be held by 

a Clearing Firm at the direction of a Customer or on behalf of an omnibus account; 

however it shall be the duty of the Clearing Firm to ascertain whether such positions are 

intended for offset or to be held open prior to final transmission of position data to the 

Clearing House.

(b) Clearing Firms which, pursuant to this rule, carry concurrent long and short positions, 

must report to the Exchange both sides as open positions.

(c) The Exchange takes no position regarding the internal bookkeeping procedures of its 

Clearing Firms which, for the convenience of a Participant or Customer, may “hold open” 

a position only on their books. However, the Clearing Firm must accurately report to the 

Exchange and the Clearing House, as appropriate, large trader positions, long positions 

eligible for delivery and open interest.

RULE 910. Substitution

For a Transaction that is both executed and submitted to the Clearing House in accordance with 

the rules governing such Transaction, the Clearing House shall, through the process of novation, 

be substituted as, and assume the position of, seller to the buyer and buyer to the seller of the 

relevant number of Contracts once the Transaction is accepted at the Clearing House pursuant 

to the Clearing House Rules and the Clearing House Manual of Operations; provided, however, 

that the timing of the clearing guarantee for Transactions pursuant to Rule 601 (Block Trades), 

Rule 603 (Exchange of Derivatives for Related Positions), and Rule 908 (Transfers of Trades) 

shall be subject to terms for privately negotiated trades pursuant to the Clearing House rules, 

specifically the Clearing House shall be substituted at the time payment of the first settlement 

variation and performance bond due for such trades pursuant to the applicable Clearing House 

Rule regarding settlement variation is confirmed by the appropriate settlement bank for both 

members. Upon such substitution, each Clearing Firm shall be deemed to have bought the 

contracts from or sold the contracts to the Clearing House, as the case may be, and the Clearing 

House shall have all the rights and be subject to all the liabilities of such Clearing Firm with respect 

to such transaction. Such substitution shall be effective in law for all purposes.

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CHAPTER 10: MISCELLANEOUS

RULE 1001. Exchange personnel – Trading and Misuse of Material, NonPublic Information

(a) Except as provided by Rules 1001(c) and 1001(d), Officers and Exchange employees 

are prohibited from buying or selling, directly or indirectly, any Contracts traded on or 

cleared by a Contract Market, swap execution facility or Derivatives Clearing 

Organization, or on any non-U.S. derivatives exchange or board of trade listing products 

substantially similar to the Contracts.

(b) The Chief Executive Officer may exempt, in whole or in part, an Officer and Exchange 

employee from the prohibitions of Rule 1001(a), if such Officer and Exchange employee 

applies in writing for an exemption and demonstrates to the satisfaction of the Chief 

Executive Officer that the Officer and Exchange employee meets all of the following 

criteria:

(1) the Officer and Exchange employee does not have access to material, non-public 

information in the course of his or her employment;

(2) the Officer and Exchange employee agrees to provide the Exchange with account 

statements and other documents relevant to the Exchange Official’s buying and 

selling of Futures Contracts directly or indirectly; and,

(3) the Officer and Exchange employee agrees to inform the Chief Executive Officer 

in writing of any material change that may affect the Exchange Official’s 

qualification for an exemption within one (1) Business Day of the change.

(c) With the Chief Executive Officer’s written approval, Rule 1001(a) does not prohibit an 

Officer and Exchange employee from participating in a pooled investment vehicle or other 

investment vehicle whose investments are directed by a third-party advisor if the 

Exchange Official has no direct or indirect control over transactions executed by the 

investment vehicles.

(d) Exchange Officials, agents and independent contractors of the Exchange are prohibited 

from disclosing material, non-public information obtained as a result of his or her 

employment, agency relationship or engagement with the Exchange where the 

Exchange Official, agent or independent contractor expected or should have reasonably 

expected that the information disclosed may assist a Person in trading any Contract, any 

Contract traded on another exchange, or any related underlying commodity or security.

(e) Rule 1001(d) shall not prohibit an Exchange Official, agent or independent contractor of 

the Exchange from disclosing material, non-public information while discharging his or 

her official duties and responsibilities, including disclosures to another Self-Regulatory 

Organization, linked exchange, court of competent jurisdiction, or a representative of any 

agency or department of the federal or state government.

(f) For the purposes of this Rule 1001, the terms “material information,” “non-public 

information,” “linked exchange,” and “pooled investment vehicle” each shall have the 

meaning set forth in CFTC Regulation 1.59(a).

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RULE 1002. Gifts and Gratuities

Except as permitted in writing by the Chief Executive Officer, no Participant shall, directly or 

indirectly, give or permit to be given anything of value, including gifts and gratuities, in excess of 

one hundred dollars ($100) per individual per year to an Exchange Official.

RULE 1003. Market Data

(a) All Participants and all employees, agents, vendors, and other Persons affiliated with the 

foregoing understand and acknowledge that the Exchange has a proprietary interest in:

(1) the price and quantity data from each and every transaction executed on the LMX 

Trading System, including the time at which the transaction was executed by, or 

submitted to, the LMX Trading System;

(2) the price and quantity data for each and every bid and offer submitted for entry 

into The LMX Trading System, including the time at which the bid and offer was 

entered into the LMX Trading System;

(3) the Daily Settlement Price of each Contract;

(4) any data and information derived from (i), (ii) and (iii) and the format and 

presentation thereof; and

(5) the transmissions and dissemination of the data and information to Participants 

any publisher of the data or information with whom the Exchange has a written 

agreement, and any other Persons.

(b) Participants may not distribute, sell or retransmit information displayed on the LMX 

Trading System to any third party. Notwithstanding the foregoing, Participants may 

distribute, sell or retransmit market data pursuant to a duly executed market data 

agreement.

RULE 1004. Extension or Waiver of Rules

If necessary and expedient, the Exchange may, in its sole discretion, waive, or extend the time 

period for performing, any act or acts designated by the LMX Rules, but only to the extent such 

waiver or extension is not inconsistent with the CEA or the CFTC Regulations.

RULE 1005. Effect of Amendment, Repeal or New Rule

(a) If an amendment or repeal of a LMX Rule or adoption of a new LMX Rule does not 

materially change the terms or conditions of a Contract and does not affect the value of 

open Contracts, then the effective date of any amendment or repeal of a LMX Rule or 

adoption of a new LMX Rule relating to Contracts is binding on all Contracts entered into 

before and after the effective date of such amendment, repeal or adoption.

(b) If an amendment or repeal of a LMX Rule or adoption of a new LMX Rule materially 

changes the terms or conditions of a Contract or affects the value of open Contracts, 

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then the amendment, repeal or new LMX Rule is binding only on Contracts listed for 

trading after the effective date of such amendment, repeal or adoption, and Contracts 

listed as of the effective date of such amendment, repeal or adoption with no open 

positions then in existence, unless otherwise specifically provided by the Board.

RULE 1006. Governing Law, Jurisdiction and Dispute Resolution

(a) The law of the State of Illinois governs the LMX Rules.

(b) Any dispute between the Exchange and a Clearing Firm or Participant arising from or in 

connection with the LMX Rules must be brought to arbitration through by the National 

Futures Association Arbitration Program or another arbitration program permitted by the 

CFTC Regulations within two (2) years from the occurrence of the event giving rise to 

the dispute. This Rule shall in no way create a cause of action nor authorize an action 

that would otherwise be prohibited by the LMX Rules.

(c) Any dispute between the Exchange and a Participant arising from or in connection with 

the LMX Rules will be settled by arbitration administered through the National Futures 

Association Arbitration Program or another arbitration program permitted by the CFTC 

Regulations. Each party to the dispute will bear its own costs and expenses in connection 

with any arbitration hereunder, as well as an equal share of the administrative fees and 

the fees of the arbitrator; provided, however, that the arbitrator will be entitled to include 

in any award a full reimbursement for the prevailing party’s costs and expenses, such 

party’s share of the administrative fees and the fees of the arbitrator, or any combination 

of any or all of the above. In the event that this Rule 1006(c) is held to be unenforceable 

in connection with any dispute, (i) exclusive jurisdiction for any such dispute will reside 

in any state or federal court sitting in the Chicago, IL metropolitan area, (ii) the Exchange 

and the Participant involved in the dispute will be presumed to have submitted to the 

personal jurisdiction of any such court, and (iii) 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. Finally, all Clearing Firms or Participants unconditionally and 

irrevocably waive any and all right to trial by jury in connection with any such dispute. 

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CHAPTER 11: CONTRACT SPECIFICATIONS

RULE 1101. 

Contract Specifications will be made available on the LMX website https://www.lmxlabs.com. 

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LMX, LLC – Legal Notice 

Certain elements of the contract design and pricing construct are patent-pending.

Futures trading is not suitable for all investors, and involves the risk of loss. Futures are a 

leveraged investment, and because only a percentage of a contract’s value is required to 

trade, it is possible to lose more than the amount of money deposited for a futures 

position. Therefore, traders should only use funds that they can afford to lose without 

affecting their lifestyles. And only a portion of those funds should be devoted to any one 

trade because they cannot expect to profit on every trade. All references to options refer 

to options on futures.

Notice to individuals located in the United Kingdom. The materials contained in this 

communication are directed only at persons with investment experience (i.e., “investment 

professionals”). Persons who do not have professional experience in matters relating to 

investments should not rely on any of the information herein. The investment activities to 

which these materials relate are only available to persons with investment experience. 

Any request to engage in the investment activities to which these materials relate, by 

persons other than those with investment experience, shall be denied.

The information within this document has been compiled by LMX for general purposes 

only. LMX assumes no responsibility for any errors or omissions. Additionally, all 

examples in this document are hypothetical situations, used for explanation purposes 

only, and should not be considered investment advice, legal advice, or the results of 

actual market experience. The information contained within this document does not 

constitute legal or investment advice.

Copyright© 2020 LMX. All rights reserved.

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