Exhibit L-1 

DCM Core Principles Regulatory Compliance 

CONTRACT MARKET CORE PRINCIPLES EXPLANATIONS AND REFERENCES TO 

RELEVANT 

DOCUMENTS, RULES AND AGREEMENTS 

Sec. 5(a) Applications - “A board of trade applying to the 

Commission for designation as a contract market shall 

submit an application to the Commission that includes any 

relevant materials and records the Commission may require 

consistent with the Act.” 

The Form DCM and narratives and documents attached 

thereto constitute the application of Electron Exchange DCM, 

LLC (the “Exchange” or “EX DCM”) for designation as a 

contract market (“Form DCM”) and contain relevant materials 

and records as required by the Commission. 

Core Principle 1 - Designation as Contract Market: 

(A) In General.—To be designated, and maintain a 

designation, as a contract market, a board of trade shall 

comply with— 

(i) any core principle described in this subsection; 

and 

(ii) any requirement that the Commission may 

impose by rule or regulation pursuant to section 

8a(5). 

(B) Reasonable Discretion Of Contract Market.— 

Unless otherwise determined by the Commission by rule or 

regulation, a board of trade described in subparagraph (A) 

shall have reasonable discretion in establishing the manner in 

which the board of trade complies with the core principles 

described in this subsection. 

See the EX Rulebook (the “Rulebook”; each rule thereof, a 

“Rule”) (Exhibit M-1) and the Market Oversight Manual (Exhibit 

O-1) and other Exhibits submitted as part of Form DCM. 
2 

CONTRACT MARKET CORE PRINCIPLES EXPLANATIONS AND REFERENCES TO 

RELEVANT 

DOCUMENTS, RULES AND AGREEMENTS 

Core Principle 2 - Compliance with Rules: 

(A) In General.—The board of trade shall establish, 

monitor, and enforce compliance with the rules of the 

contract market, including— 

(i) access requirements; 

(ii) the terms and conditions of any contracts 

to be traded on the contract market; and 

(iii) rules prohibiting abusive trade practices 

on the contract market. 

(B) Capacity of Contract Market.—The board of 

trade shall have the capacity to detect, investigate, and 

apply appropriate sanctions to any person that violates any 

rule of the contract market. 

(C) Requirement of Rules.—The rules of the contract 

market shall provide the board of trade with the ability and 

authority to obtain any necessary information to perform any 

function described in this subsection, including the capacity to 

carry out such international information-sharing agreements 

as the Commission may require. 

See the Rulebook (Exhibit M-1) and the Operations and 

Compliance Manual (Exhibit O-1), and other Exhibits 

submitted with Form DCM, as follows: 

(A)(i) Access requirements can be found in Chapter 3 

of the Rulebook. 

(A)(ii) Chapter 9 of the Rulebook has been reserved for adding 

contract terms and conditions rules for each contract the 

Exchange will list for trading. 

(A)(iii) Rules prohibiting abusive trading are found in Chapter 6 

of the Rulebook. 

(B) The Exchange has entered into a Regulatory Services 

Agreement with the National Futures Association (“NFA”) 

(Exhibit N-1) to detect rule violations and can investigate, and 

sanction persons as provided in Chapter VII of the Rulebook. 

The Exchange will also staff a control desk to conduct real-time 

surveillance of trading. 

(C) Rule 2.12 provides for regulatory cooperation and 

authorizes the Exchange to enter into information sharing 

agreements as necessary. 
3 

CONTRACT MARKET CORE PRINCIPLES EXPLANATIONS AND REFERENCES TO 

RELEVANT 

DOCUMENTS, RULES AND AGREEMENTS 

Core Principle 3 - Contracts Not Readily Subject to 

Manipulation: The board of trade shall list on the contract 

market only contracts that are not readily susceptible to 

manipulation. 

The Exchange will submit rules setting out the terms and 

conditions of contracts in accordance with Part 40. Rules 

submitted for self-certification under 17 C.F.R. § 40.2 will 

include a narrative that addresses market structure and the 

reasons the Exchange believes the contract is not readily 

susceptible to manipulation. 

Similarly, any contract for which the Exchange seeks 

Commission approval under 17 C.F.R. § 40.3 will also 

include a narrative that addresses market structure and the 

reasons the Exchange believes the contract is not readily 

susceptible to manipulation. 

In presenting its analysis, the Exchange will rely on guidance in 

Appendix C to Part 38 in meeting this Core Principle for new 

product listings. 
4 

CONTRACT MARKET CORE PRINCIPLES EXPLANATIONS AND REFERENCES TO 

RELEVANT 

DOCUMENTS, RULES AND AGREEMENTS 

Core Principle 4 - Prevention of Market Disruption: 

The board of trade shall have the capacity and responsibility to 

prevent manipulation, price distortion, and disruptions of the 

delivery or cash-settlement process through market 

surveillance, compliance, and enforcement practices and 

procedures, including— 

(A) methods for conducting real-time monitoring of 

trading; 

and 

(B) comprehensive and accurate trade reconstructions. 

The Exchange will implement practices and procedures to 

monitor trading to prevent manipulation, price distortion and 

disruptions of trading and the settlement process. The 

Exchange intends to coordinate with the NFA to address 

market actions found to be a violation of the rules through 

the NFA’s ongoing trade practice surveillance activities. The 

Exchange has also developed and implemented a Compliance 

Manual (Exhibit O-1) with written policies and procedures to 

address protections against market disruptions. 

(A) The Exchange will staff a control desk to conduct 

real-time surveillance of trading during market hours as 

provided in the Operations and Compliance Manual. 

(B) All orders placed by Participants and any subsequent 

trade executions will be stored in the Exchange’s transaction 

database such that a complete history of orders and 

transactions may be reconstructed. 
5 

CONTRACT MARKET CORE PRINCIPLES EXPLANATIONS AND REFERENCES TO 

RELEVANT 

DOCUMENTS, RULES AND AGREEMENTS 

Core Principle 5 - Position Limitations or Accountability: 

(A) To reduce the potential threat of market 

manipulation or congestion (especially during trading in the 

delivery month), the board of trade shall adopt for each 

contract of the board of trade, as is necessary and appropriate, 

position limitations or position accountability for speculators. 

(B) For any contract that is subject to a position 

limitation established by the Commission pursuant to section 

4a(a), the board of trade shall set the position limitation of 

the board of trade at a level not higher than the position 

limitation established by the Commission. 

The Exchange will include position accountability thresholds or 

position limits in the rules setting out the terms and 

conditions for a contract that it will file under 17 C.F.R. § 40.2 

or § 40.3. These will be included in the terms and conditions of 

each contract. 

For any contract that is subject to a position limitation 

established by the Commission pursuant to CEA § 6a(a) 

(currently set out in 17 C.F.R. § 150.2), the Exchange will set a 

position limit at a level not higher than the position limitation 

established by the Commission. The Exchange does not 

anticipate that any contracts to be listed initially will be 

subject to Commission position limits. 

The Exchange will monitor compliance with the position 

limits and reportable position thresholds. 

Core Principle 6 - Emergency Authority: The board of trade, 

in consultation or cooperation with the Commission, shall 

adopt rules to provide for the exercise of emergency 

authority, as is necessary and appropriate, including the 

authority— 

(A) to liquidate or transfer open positions in any 

contract; 

(B) to suspend or curtail trading in any contract; and 

(C) to require market participants in any contract to 

meet special margin requirements. 

Procedures and guidelines for the exercise of emergency 

authority by the Exchange are set forth in Rule 2.7, which 

authorizes the board or officers of the Exchange to act as they 

deem necessary to meet the emergency at hand. Among other 

things, Rule 2.7 requires the Exchange to notify the 

Commission of any emergency action taken, or proposed to be 

taken, and to document its decision-making process and 

reasons for using its emergency action authority. 
6 

CONTRACT MARKET CORE PRINCIPLES EXPLANATIONS AND REFERENCES TO 

RELEVANT 

DOCUMENTS, RULES AND AGREEMENTS 

Core Principle 7 - Availability of General Information: The 

board of trade shall make available to market authorities, 

market participants, and the public accurate information 

concerning— 

(A) the terms and conditions of the contracts of the 

contract market; and 

(B) 

(i) the rules, regulations, and mechanisms for 

executing transactions on or through the facilities 

of the contract market; and 

(ii) the rules and specifications describing the 

operation of the contract market’s— 

(I) electronic matching platform; or 

(II) trade execution facility. 

Rule 3.6(f) provides that the Rulebook, all amendments 

thereto and notices and policies thereunder, as well as the 

specifications for all contracts from time to time traded on the 

Exchange, will be publicly available on the Exchange’s website. 

The Exchange web address will be 

www.elextronx.com when it becomes operational. 

Core Principle 8 - Daily Publication of Trading 

Information: The board of trade shall make public daily 

information on settlement prices, volume, open interest, and 

opening and closing ranges for actively traded contracts on 

the contract market. 

Rule 4.9 requires that the Exchange shall make public daily 

information on pricing, current volume and open interest for 

actively traded contracts. This information will be published to 

the Exchange website, the address of which will be 

www.elextronx.com. 

The Exchange will publish additional reports from time to 

time in accordance with, and as specified in, the applicable 

Contract Rules. 
7 

CONTRACT MARKET CORE PRINCIPLES EXPLANATIONS AND REFERENCES TO 

RELEVANT 

DOCUMENTS, RULES AND AGREEMENTS 

Core Principle 9 - Execution of Transactions: 

(A) The board of trade shall provide a competitive, 

open, and efficient market and mechanism for executing 

transactions that protects the price discovery process of 

trading in the centralized market of the board of trade. 

(B) The rules of the board of trade may authorize, for 

bona fide business purposes— 

(i) transfer trades or office trades; 

(ii) an exchange of— 

(I) futures in connection with a cash 

commodity transaction; 

(II) futures for cash commodities; or 

(III) futures for swaps; or 

(iii) a futures commission merchant, acting as 

principal or agent, to enter into or confirm the 

execution of a contract for the purchase or sale 

of a commodity for future delivery if the 

contract is reported, recorded, or cleared in 

accordance with the rules of the contract market 

or a derivatives clearing organization. 

The Rulebook establishes trading rules to ensure fair and 

equitable trading, and equal access by all participants. 

Participants and their Authorized Users (as defined in the 

Rulebook) will have access to the Exchange’s trading platform, 

including information regarding prices, bids and offers. Orders 

will be executed competitively in accordance with the 

principles set forth in Rule 4.4. 

Rule 6.1(r) provides that all pre-negotiated and pre-arranged 

transactions that are not expressly permitted are prohibited. 

Chapter 6 of the Rulebook also contains other rules to 

prevent trading-related abuses, such as wash trading, 

accommodation trades, and trading ahead. 

The NFA, pursuant to the Regulatory Services Agreement 

(Exhibit N- 1), will maintain systems and surveillance 

procedures to detect abuses such as wash trading, 

accommodation trades, trading ahead and other types of 

market manipulation or fraud. 

At present, the Exchange does not expect to provide for 

negotiated off-exchange transactions in the contracts it will 

list for trading. To the extent that such transactions are 

introduced at a later time, the Rulebook will be amended to 

include provisions for such transactions. 
8 

CONTRACT MARKET CORE PRINCIPLES EXPLANATIONS AND REFERENCES TO 

RELEVANT 

DOCUMENTS, RULES AND AGREEMENTS 

Core Principle 10 - Trade Information: The board of trade 

shall maintain rules and procedures to provide for the 

recording and safe storage of all identifying trade information 

in a manner that enables the contract market to use the 

information— 

(A) to assist in the prevention of customer and 

market abuses; and 

(B) to provide evidence of any violations of the rules 

of the contract market. 

The Exchange will comply with § 1.31 regarding document 

retention, including the requirement that all records which 

relate to the terms of transactions made or to be made on or 

subject to the Rules of the Exchange must be kept for a 

minimum of five years, or in the case of swaps, the life of the 

swap plus five years. 

In addition, the NFA, the Exchange’s Regulatory Services 

Provider, will record full data entry and trade details and 

safely store audit trail data to assist in the prevention of 

customer and market abuses and provide evidence of any 

violations of the rules of the contract market. 

The technical aspects of the capture and storage of 

information are discussed in Exhibit S. 
9 

CONTRACT MARKET CORE PRINCIPLES EXPLANATIONS AND REFERENCES TO 

RELEVANT 

DOCUMENTS, RULES AND AGREEMENTS 

Core Principle 11 - Financial Integrity of Transactions: The 

board of trade shall establish and enforce— 

(A) rules and procedures for ensuring the financial 

integrity of transactions entered into on or through the 

facilities of the contract market (including the clearance and 

settlement of the transactions with a derivatives clearing 

organization); and 

(B) rules to ensure— 

(i) the financial integrity of any— 

(I) futures commission 

merchant; and 

(II) introducing broker; and 

(ii) the protection of customer funds. 

All Contracts traded on the Exchange will be cleared by 

Electron Exchange DCO, LLC (the “Clearinghouse” or “EX 

DCO”), an affiliated entity of the Exchange, pursuant to the 

Rulebook. 

Original margin shall, in all cases, be “Fully-Collateralized”, that 

is equal to or greater than an amount equal to the maximum 

loss amount a Participant could suffer upon liquidation or 

settlement of positions and will be determined and required in 

the relevant Contract Rules. 

Furthermore, all Participants shall be required to have the 

specified amount of funds necessary for original margin on 

deposit with the Clearinghouse prior to establishing any 

position. 

As a non-intermediated market, all Participant funds will be 

held by the Clearinghouse. The Clearinghouse will maintain 

internal bookkeeping accounts for Participants in which it will 

record their funds, and it will hold Participants’ funds at one or 

more custodians in account(s) that will be appropriately titled 

as accounts holding funds of Participants. The Clearinghouse 

will hold Participants’ funds at the custodial level in accounts 

that are separate from those holding proprietary funds of the 

Clearinghouse or Exchange. 
10 

CONTRACT MARKET CORE PRINCIPLES EXPLANATIONS AND REFERENCES TO 

RELEVANT 

DOCUMENTS, RULES AND AGREEMENTS 

Core Principle 12 - Protection of Markets and Market 

Participants: The board of trade shall establish and enforce 

rules— 

(A) to protect markets and market participants from 

abusive practices committed by any party, including abusive 

practices committed by a party acting as an agent for a 

participant; and 

(B) to promote fair and equitable trading on the 

contract market. 

Chapter 6 of the Rulebook contains prohibitions against 

fraudulent acts and market manipulation. The NFA will 

provide surveillance practices and procedures to protect 

Participants and Authorized Users from abusive practices. 

The market is non- intermediated, and agency 

relationships are not permitted. 

Rule 6.1 prohibits conduct that is contrary to fair and 

equitable principles of trade or the best interests of the 

market. 

Core Principle 13 - Disciplinary Procedures: The board of 

trade shall establish and enforce disciplinary procedures that 

authorize the board of trade to discipline, suspend, or expel 

members or market participants that violate the rules of the 

board of trade, or similar methods for performing the same 

functions, including delegation of the functions to third 

parties. 

Chapter 7 of the Rulebook implements the disciplinary 

procedures required by this Core Principle. These procedures 

are consistent with the Commission’s guidance in Appendix B 

to Part 38, and the requirements of 17 C.F.R. §§ 38.700 - 

38.712. 

Core Principle 14 - Dispute Resolution: The board of 

trade shall establish and enforce rules regarding, and 

provide facilities for alternative dispute resolution as 

appropriate for, market participants and any market 

intermediaries. 

Chapter 8 of the Rulebook implements the dispute 

resolution procedures required by this Core Principle. 
11 

CONTRACT MARKET CORE PRINCIPLES EXPLANATIONS AND REFERENCES TO 

RELEVANT 

DOCUMENTS, RULES AND AGREEMENTS 

Core Principle 15 - Governance Fitness Standards: The board 

of trade shall establish and enforce appropriate fitness 

standards for directors, members of any disciplinary 

committee, members of the contract market, and any other 

person with direct access to the 

facility (including any party affiliated with any person 

described in this paragraph). 

Chapter 2 of the Rulebook implements the governance 

fitness standards required by this Core Principle. 

Core Principle 16 - Conflicts of Interest: The board of 

trade shall establish and enforce rules— 

(A) to minimize conflicts of interest in the decisionmaking process of the contract market; and 

(B) to establish a process for resolving conflicts of 

interest described in subparagraph (A). 

Chapter 2 of the Rulebook implements the conflicts of interest 

standards required by this Core Principle. 

Core Principle 17 - Composition of Governing Boards of 

Contract Markets: The governance arrangements of the 

board of trade shall be designed to permit consideration of 

the views of market participants. 

Chapter 2 of the Rulebook implements the conflicts of interest 

standards required by this Core Principle. Rule 2.1(c) requires 

that the board be composed of at least five members, at least 

two of whom are public directors. 

Core Principle 18 - Recordkeeping: The board of trade 

shall maintain records of all activities relating to the 

business of the contract market— 

(A) in a form and manner that is acceptable 

to the Commission; and 

The Exchange will maintain records of all activities related 

to its business for a period that is the greater of five years 

or the life of the contract plus 5 years as required by 17 

C.F.R. § 1.31. 
12 

CONTRACT MARKET CORE PRINCIPLES EXPLANATIONS AND REFERENCES TO 

RELEVANT 

DOCUMENTS, RULES AND AGREEMENTS 

(B) for a period of at least 5 years. 

Core Principle 19 - Antitrust Considerations: Unless 

necessary or appropriate to achieve the purposes of this Act, 

the board of trade shall not— 

(A) adopt any rule or taking any action that results in 

any unreasonable restraint of trade; or 

(B) impose any material anticompetitive burden on 

trading on the contract market.

The Exchange believes that its Rules avoid unreasonable 

restraints of trade and avoid the imposition of any material 

anticompetitive burden on trading for each contract to be 

traded on the Exchange. 

Access to the Exchange will not require Participants to acquire 

any equity interests in EX DCM (or EX DCO) and will be 

available to all persons on a fair, equitable, and timely basis. 

The Exchange will operate through precise and predetermined 

electronic algorithms that treat all classes of Participants 

equitably. Trade information will be disseminated both to 

Participants and to the public on a continuous basis. 
13 

CONTRACT MARKET CORE PRINCIPLES EXPLANATIONS AND REFERENCES TO 

RELEVANT 

DOCUMENTS, RULES AND AGREEMENTS 

Core Principle 20 - System Safeguards: The board of trade shall:

(A) establish and maintain a program of risk analysis 

and oversight to identify and minimize sources of 

operational risk, through the development of appropriate 

controls and procedures, and the development of 

automated systems, that are reliable, secure, and have 

adequate scalable capacity; 

(B) establish and maintain emergency procedures, 

backup facilities, and a plan for disaster recovery that allow 

for the timely recovery and resumption of operations and 

the fulfillment of the responsibilities and obligations of the 

board of trade; and 

(C) periodically conduct tests to verify that backup 

resources are sufficient to ensure continued order processing 

and trade matching, price reporting, market surveillance, and 

maintenance of a comprehensive and accurate audit trail. 

The Exchange demonstrates its compliance with this Core 

Principle in Exhibit V. 
14 

CONTRACT MARKET CORE PRINCIPLES EXPLANATIONS AND REFERENCES TO 

RELEVANT 

DOCUMENTS, RULES AND AGREEMENTS 

Core Principle 21 - Financial Resources: 

(A) In General.—The board of trade shall have 

adequate financial, operational, and managerial resources 

to discharge each responsibility of the board of trade. 

(B) Determination of Adequacy. —The financial 

resources of the board of trade shall be considered to be 

adequate if the value of the financial resources exceeds the 

total amount that would enable the contract market to cover 

the operating costs of the contract market for a 1-year period, 

as calculated on a rolling basis. 

The Exchange demonstrates its compliance with this Core 

Principle in Exhibit I. 

Core Principle 22 - Diversity Of Board of Directors: 

The board of trade, if a publicly traded company, shall 

endeavor to recruit individuals to serve on the board of 

directors and the other decision-making bodies (as 

determined by the Commission) of the board of trade from 

among, and to have the composition of the bodies reflect, a 

broad and culturally diverse pool of qualified candidates. 

Not Applicable. 

Core Principle 23 - Securities and Exchange Commission: The 

board of trade shall keep any such records relating to swaps 

defined in section 1a(47)(A)(v) open to inspection and 

examination by the Securities and Exchange Commission. 

Not Applicable.