AEGIS SEF, LLC

Exhibit M‐1

Initially Filed (12/16/2020)

Revised (2/2/2021)

   

AEGIS-SEF RULEBOOK 

AEGIS SEF, LLC – Swap Execution Facility Rulebook

EffectiveDate:[February 1 or August 1], 2021*

(* The applicable Effective Date will depend on the CFTC Staff’s response to the request for a No‐Action

Letter submitted by AEGIS SEF, LLC on December 16, 2020.)

THIS SWAP EXECUTION FACILITY RULEBOOK OF AEGIS SEF, LLC IS SUBJECT TO

CHANGE WITHOUT NOTICE. THE RULES HEREIN, AND ANY REVISIONS TO BE MADE,

ARE CONDITIONAL UNTIL APPROVED OR DEEMED APPROVED BY THE COMMODITY

FUTURES TRADING COMMISSION.

© Copyright 2020 by AEGIS SEF, LLC (“AEGIS‐SEF”).

ALL RIGHTS RESERVED UNDER U.S. AND FOREIGN LAW, TREATIES AND CONVENTIONS.  AUTOMATIC LICENSE – PERMISSION OF

THE COPYRIGHT OWNER, AEGIS‐SEF IS GRANTED FOR REPRODUCTION BY DOWNLOADING FROM A COMPUTER AND PRINTING

ELECTRONIC COPIES OF THE WORK SOLELY FOR THE PURPOSE OF NEGOTIATING, TRADING AND EXECUTING TRANSACTIONS ON

THE AEGIS‐SEF PLATFORM ADMINISTERED BY AEGIS SEF, LLC, A WHOLLY‐OWNED SUBSIDIARY OF AEGIS HEDGING SOLUTIONS,

LLC (“AEGIS‐HS”).  NO AUTHORIZED COPY MAY BE SOLD.  WHEN USED AS A REFERENCE, ATTRIBUTION TO THE COPYRIGHT

OWNER IS REQUESTED.  By making this available, neither AEGIS‐HS nor AEGIS‐SEF offers legal advice, and all users are urged to

consult with their own legal counsel to ensure that their regulatory compliance and commercial objectives will be achieved and

legal interests protected.  This document may be periodically reviewed and revised after publication in response to market

developments and comments received.  The foregoing should not be construed as a warranty or assurance that further

revisions will be forthcoming, or of the timeliness or comprehensiveness of such revisions. No claim is made to material

copyrighted by others.
AEGIS SEF, LLC

AEGIS SEF, LLC (“AEGIS‐SEF”), IN ACCORDANCE WITH THE REQUIREMENTS OF PART 37 OF

THE REGULATIONS OF THE COMMODITY FUTURES TRADING COMMISSION (“CFTC”)

APPLICABLE TO ANY SWAP EXECUTION FACILITY (“SEF”), HEREBY PROVIDES THIS RULEBOOK

(“AEGIS‐SEF RULEBOOK”), WHICH SETS FORTH THE RULES APPLICABLE TO EACH

PARTICIPANT, AUTHORIZED USER, BROKER FIRM, OR INDEPENDENT SOFTWARE VENDOR

(“ISV”) THAT USES THE TRADING PLATFORM OWNED AND OPERATED BY AEGIS‐SEF

(“AEGIS‐SEF PLATFORM”).

BY (1) BECOMING A PARTICIPANT AUTHORIZED TO USE THE AEGIS‐SEF PLATFORM, (2)

ACCESSING THE AEGIS‐SEF PLATFORM, (3) ENTERING ANY ORDER OR TRANSACTION INTO

THE AEGIS‐SEF PLATFORM, OR (4) SUBMITTING ANY CONTACT INFORMATION INTO THE

AEGIS‐SEF PLATFORM, WHETHER DIRECTLY OR THROUGH AN INTERMEDIARY, AND

WITHOUT ANY NEED FOR ANY FURTHER ACTION, UNDERTAKING OR AGREEMENT, A

PARTICIPANT, ITS AUTHORIZED USER(S), BROKER FIRMS, THE CLIENTS AND CUSTOMERS OF

ANY PARTICIPANT, ANY SPONSORED PERSON, AND ANY ISV AGREE:  

(I) TO BE BOUND BY, AND COMPLY WITH, THE RULES AND THE OBLIGATIONS IN THIS AEGIS‐

SEF RULEBOOK, APPLICABLE LAW, AND THE APPLICABLE PARTICIPANT AGREEMENT OR

BROKER FIRM AGREEMENT (SEE THE FORMS OF SUCH AGREEMENTS AVAILABLE ON AEGIS‐

SEF WEBSITE AVAILABLE AT: www.aegis‐hedging.com), IN EACH CASE TO THE EXTENT

APPLICABLE TO SUCH PERSON;

(II) TO BECOME SUBJECT TO THE JURISDICTION OF AEGIS‐SEF WITH RESPECT TO ANY AND

ALL MATTERS ARISING FROM, RELATED TO, OR IN CONNECTION WITH, THE STATUS,

ACTIONS OR OMISSIONS OF SUCH PERSON IN ANY WAY RELATED TO AEGIS‐SEF;

(III) TO PERMIT AEGIS‐SEF, AND ANY REGULATORY SERVICES PROVIDER AUTHORIZED TO

ACT ON BEHALF OF AEGIS‐SEF, TO ACCESS ANY AND ALL INFORMATION RELEVANT TO

ACTIVITIES RELATED TO THE BUSINESS OF AEGIS‐SEF;

(IV) TO ASSIST AEGIS‐SEF IN COMPLYING WITH ITS LEGAL AND REGULATORY OBLIGATIONS,

COOPERATE WITH AEGIS‐SEF AND THE CFTC IN ANY INQUIRY, INVESTIGATION, AUDIT,

EXAMINATION OR PROCEEDING; AND  

(V) TO AUTHORIZE AEGIS‐SEF TO PROVIDE INFORMATION REGARDING SUCH PERSON TO

ANY REGULATORY SERVICES PROVIDER, THE CFTC OR ANY SELF‐REGULATORY

ORGANIZATION, SUCH AS THE NATIONAL FUTURES ASSOCIATION (“NFA”).
AEGIS SEF, LLC

i

TABLEOF CONTENTS

Page

SECTION I. DEFINITIONS.............................................................................................................. 1

1.1 Account Administrator...................................................................................................... 1

1.2 AEGIS or AEGIS Hedging Solutions, LLC ..................................................................... 1

1.3 AEGIS-SEF or AEGIS SEF, LLC .................................................................................... 1

1.4 AEGIS-SEF Platform ....................................................................................................... 1

1.5 AEGIS-SEF Rulebook ...................................................................................................... 1

1.6 Affiliate ............................................................................................................................. 1

1.7 All-or-None Order ............................................................................................................ 1

1.8 Appeal Panel ..................................................................................................................... 1

1.9 Applicable Law ................................................................................................................. 1

1.10 Audit Trail ........................................................................................................................ 1

1.11 Authorized User ................................................................................................................ 1

1.12 Bespoke SEF Contract ...................................................................................................... 1

1.13 BFH Transaction ............................................................................................................... 2

1.14 Block Trade ...................................................................................................................... 2

1.15 Board................................................................................................................................. 2

1.16 Broker Firm ...................................................................................................................... 2

1.17 Broker Firm Agreement .................................................................................................... 2

1.18 Business Day .................................................................................................................... 2

1.19 CCO or Chief Compliance Officer ................................................................................... 2

1.20 CEA or Commodity Exchange Act .................................................................................. 2

1.21 CEU or Commercial End-User ......................................................................................... 2

1.22 CFTC or Commission ....................................................................................................... 2

1.23 CFTC Regulations ............................................................................................................ 2

1.24 Commodity Type .............................................................................................................. 2

1.25 Contract Market ................................................................................................................ 2

1.26 Contract Specifications ..................................................................................................... 2

1.27 Contract Term ................................................................................................................... 3

1.28 Control .............................................................................................................................. 3

1.29 Counterparty ..................................................................................................................... 3

1.30 CTA or Commodity Trading Advisor .............................................................................. 3

1.31 CTI or Customer Type Indicator ...................................................................................... 3

1.32 Customer ........................................................................................................................... 3

1.33 Customer Account ............................................................................................................ 3

1.34 DCO or Derivatives Clearing Organization ...................................................................... 3

1.35 Designated Participant ...................................................................................................... 3

1.36 Director ............................................................................................................................. 3

1.37 Disciplinary Proceedings .................................................................................................. 3

1.38 Disciplinary Offense ......................................................................................................... 3

1.39 Disciplinary Panel ............................................................................................................. 3

1.40 ECP or Eligible Contract Participant ................................................................................ 3

1.41 Eligible Affiliate of a CEU ............................................................................................... 3

1.42 Emergency ........................................................................................................................ 3
AEGIS SEF, LLC

ii

1.43 Emergency Rules .............................................................................................................. 4

1.44 End-User Exception .......................................................................................................... 4

1.45 Expiry ............................................................................................................................... 4

1.46 FCM or Futures Commission Merchant ........................................................................... 4

1.47 Financial Counterparty ..................................................................................................... 4

1.48 Governmental Authority ................................................................................................... 5

1.49 Hearing Panel .................................................................................................................... 5

1.50 Hedging-Affiliate Exception ............................................................................................. 5

1.51 Hedging Contract .............................................................................................................. 5

1.52 IB or Introducing Broker .................................................................................................. 5

1.53 Insolvency and Insolvent .................................................................................................. 5

1.54 ISO or Independent Systems Operator ............................................................................. 6

1.55 ISV or Independent Software Vendor............................................................................... 6

1.56 Last Trading Day .............................................................................................................. 6

1.57 LEI or Legal Entity Identifier ........................................................................................... 6

1.58 Limit Order ....................................................................................................................... 6

1.59 Liquidity Provider ............................................................................................................. 6

1.60 Market Order .................................................................................................................... 6

1.61 Market Regulation Department ........................................................................................ 6

1.62 Nominating Committee .................................................................................................... 6

1.63 Officer ............................................................................................................................... 6

1.64 Order ................................................................................................................................. 6

1.65 Order Book ....................................................................................................................... 6

1.66 Operating Agreement ........................................................................................................ 7

1.67 OTOB SEF Contract ......................................................................................................... 7

1.68 Participant ......................................................................................................................... 7

1.69 Participant Agreement ...................................................................................................... 7

1.70 Pass-Through Swap .......................................................................................................... 7

1.71 Pass-Through Swap Counterparty .................................................................................... 7

1.72 Pass-Through Swap Offset ............................................................................................... 7

1.73 Permitted Transaction ....................................................................................................... 7

1.74 Person ............................................................................................................................... 7

1.75 Position Transfer ............................................................................................................... 8

1.76 Posting Participant ............................................................................................................ 8

1.77 President ........................................................................................................................... 8

1.78 Proprietary Account .......................................................................................................... 8

1.79 Proprietary Information .................................................................................................... 8

1.80 Regulatory Oversight Committee ..................................................................................... 8

1.81 Regulatory Services Agreement ....................................................................................... 8

1.82 Regulatory Services Provider ........................................................................................... 8

1.83 Request for Quote Function or RFQ Function .................................................................. 8

1.84 Requesting Participant ...................................................................................................... 8

1.85 Required Transaction ........................................................................................................ 8

1.86 Respondent ....................................................................................................................... 9

1.87 Review Panel .................................................................................................................... 9

1.88 RFQ .................................................................................................................................. 9

1.89 Rules ................................................................................................................................. 9
AEGIS SEF, LLC

iii

1.90 SD or Swap Dealer ........................................................................................................... 9

1.91 SEF or Swap Execution Facility ....................................................................................... 9

1.92 SEF Contract ..................................................................................................................... 9

1.93 SEF Official ...................................................................................................................... 9

1.94 SEF Participant Committee .............................................................................................. 9

1.95 SEF Requirements ............................................................................................................ 9

1.96 Self-Regulatory Organization ........................................................................................... 9

1.97 Settlement Price ................................................................................................................ 9

1.98 Stop Limit Order ............................................................................................................. 10

1.99 Stop Order ....................................................................................................................... 10

1.100 Supervised Persons ....................................................................................................... 10

1.101 Swap or swap ................................................................................................................ 10

1.102 Trade Risk Limit ........................................................................................................... 10

1.103 Trading Privileges ......................................................................................................... 10

1.104 Trading Hours ............................................................................................................... 10

1.105 Transaction ................................................................................................................... 10

1.106 User ID .......................................................................................................................... 10

SECTION II. GOVERNANCE & OWNERSHIP................................................................................. 10

2.1 Composition of the Board; Board Powers. ..................................................................... 10

2.2 Officers. .......................................................................................................................... 11

2.3 Eligibility/Fitness. ........................................................................................................... 11

2.4 Standing Committees. ..................................................................................................... 12

2.5 Confidentiality. ............................................................................................................... 13

2.6 Conflicts of Interest. ........................................................................................................ 13

2.7 Maintenance of Books and Records by AEGIS-SEF. ..................................................... 15

2.8 Information-Sharing Arrangements. ............................................................................... 15

2.9 Regulatory Services Providers and Technology Services Providers. ............................. 16

2.10 Use of Proprietary Data and Personal Information. ........................................................ 16

2.11 Chief Compliance Officer. .............................................................................................. 17

SECTION III. ACCESS BY PARTICIPANTS, AUTHORIZED USERS AND BROKER FIRMS ............... 17

3.1 Jurisdiction. ..................................................................................................................... 17

3.2 Participants. ..................................................................................................................... 18

3.3 Requirements for Participants. ........................................................................................ 18

3.4 Minimum Financial Requirements. ................................................................................. 20

3.5 Duties and Responsibilities of Participants. .................................................................... 20

3.6 Authorized Users. ........................................................................................................... 21

3.7 Duties and Responsibilities of Authorized Users. ........................................................... 22

3.8 Broker Firms Accessing the AEGIS-SEF Platform. ....................................................... 23

3.9 Required Notices. ............................................................................................................ 23

3.10 Account Administrators. ................................................................................................. 23

3.11 Access Requirements and Terms. ................................................................................... 24

3.12 Dues and Fees. ................................................................................................................ 24

3.13 Inspections by AEGIS-SEF. ........................................................................................... 24

3.14 Liquidity Provider Program. ........................................................................................... 25

3.15 Broker Firms. .................................................................................................................. 25
AEGIS SEF, LLC

iv

SECTION IV. TRADING OPERATIONS........................................................................................ 25

4.1 Trading Hours and Operation. ........................................................................................ 25

4.2 Contract Specifications. .................................................................................................. 27

4.3 Use of User IDs. .............................................................................................................. 28

4.4 Trading Procedures. ........................................................................................................ 28

4.5 Required Transactions. ................................................................................................... 29

4.6 Permitted Transactions.................................................................................................... 29

4.7 Execution Methods for Permitted Transactions: Order Book ......................................... 29

4.8 Execution Methods for Permitted Transactions: RFQ Function ..................................... 32

4.9 Credit and Risk Limits. ................................................................................................... 33

4.10 Confirmation of Transactions. ........................................................................................ 33

4.11 Block Trades. .................................................................................................................. 34

4.12 Position Transfers. .......................................................................................................... 36

4.13 Trade Cancellations; Trade Reviews. ............................................................................. 36

4.14 Settlement; Clearing. ...................................................................................................... 37

4.15 Recordkeeping; Audit Trail. ........................................................................................... 37

4.16 Information Regarding Orders. ....................................................................................... 37

4.17 Disaster Recovery; Business Continuity. ........................................................................ 38

4.18 Part 45 Reporting. ........................................................................................................... 38

4.19 Publication of Trading Information. ............................................................................... 40

4.20 Trade Practice Surveillance, Market Monitoring and Financial Surveillance; Information 

Security; Business Continuity-Disaster Recovery Planning and Resources; and Anti-Money 

Laundering and Anti-Terrorism (KYC). .................................................................................... 40

SECTION V. CONTRACTS TO BE TRADED.................................................................................... 41

5.1 Listing Procedures for Participants Seeking to List a New OTOB SEF Contract. ......... 41

5.2 Swaps Not Readily Susceptible to Manipulation. ........................................................... 41

SECTION VI. CODE OF CONDUCT............................................................................................. 42

6.1 Ethical Standards. ........................................................................................................... 42

6.2 Sound Trading Practices. ................................................................................................ 43

6.3 Priority of Customer Orders. ........................................................................................... 45

6.4 Trading Against Customer Orders. ................................................................................. 45

6.5 Crossing Orders. ............................................................................................................. 46

6.6 Withholding of Customer Orders Prohibited. ................................................................. 46

6.7 Priority of Execution. ...................................................................................................... 46

6.8 Responsibility for Customer Orders. .............................................................................. 47

6.9 Money Passing, Pre-Arranged, Pre-Negotiated and Noncompetitive Trades Prohibited. 47

6.10 Disciplinary Procedures; Termination of Connection. ................................................... 48

6.11 Position Limits and Accountability. ............................................................................... 48

6.12 Aggregation of Positions. ............................................................................................... 48

6.13 Information Disclosure and Documentation. .................................................................. 48

6.14 Compliance, Trade Practices Monitoring and Surveillance, and Markets Monitoring. .. 49

SECTION VII. DISCIPLINE AND ENFORCEMENT......................................................................... 50

7.1 General. ........................................................................................................................... 50

7.2 Inquiries and Investigation. ............................................................................................. 51
AEGIS SEF, LLC

v

7.3 Reports of Investigations. ............................................................................................... 52

7.4 Review of Investigative Reports. .................................................................................... 53

7.5 Notice of Charges. ........................................................................................................... 54

7.6 Answer to Notice of Charges. ......................................................................................... 55

7.7 Service of Notice of Charges. .......................................................................................... 56

7.8 Settlements. ..................................................................................................................... 56

7.9 Hearing Panel. ................................................................................................................. 57

7.10 Convening Hearings of Disciplinary Proceedings. ......................................................... 58

7.11 Respondent Review of Evidence. .................................................................................... 58

7.12 Conducting Hearings of Disciplinary Proceedings. ........................................................ 59

7.13 Decision of Hearing Panel. ............................................................................................. 60

7.14 Sanctions. ........................................................................................................................ 61

7.15 Costs. .............................................................................................................................. 62

7.16 Appeal from Hearing Panel Decision. ............................................................................ 62

7.17 Summary Imposition of Fines Relating to Submission of Records. ................................ 64

7.18 Emergency Disciplinary Proceedings. ............................................................................ 64

7.19 Rights and Responsibilities after Suspension or Termination......................................... 65

7.20 Notice to the Respondent, the CFTC, and the Public. ..................................................... 66

SECTION VIII. ARBITRATION....................................................................................................... 66

8.1 In General. ...................................................................................................................... 66

8.2 Participant, Authorized User, or Broker Firm Initiating an Arbitration Claim. ............. 66

8.3 Penalties. ......................................................................................................................... 67

SECTION IX. MISCELLANEOUS ................................................................................................. 67

9.1 Trading by SEF Officials Prohibited; Misuse of Material, Non-Public Information. ..... 67

9.2 Market Data. ................................................................................................................... 68

9.3 Recording of Communications. ...................................................................................... 69

9.4 Confidentiality. ............................................................................................................... 69

9.5 Force Majeure. ................................................................................................................ 70

9.6 Extension or Waiver of Rules. ........................................................................................ 70

9.7 Effect of Amendment, Repeal or New Rule. .................................................................. 70

9.8 Signatures. ....................................................................................................................... 70

9.9 Governing Law; Legal Proceedings. ............................................................................... 71

9.10 LIMITATION OF LIABILITY; NO WARRANTIES. .................................................. 71

SECTION X. CONTRACT SPECIFICATIONS FOR OTOB SEF CONTRACTS ...................................... 73

10.1 Natural Gas Swaps – Contract Specifications. ............................................................... 73

10.2 WTI Crude Swaps – Contract Specifications. ................................................................ 74

10.3 Other OTOB SEF Contracts – Contract Specifications. ................................................. 76
AEGIS SEF, LLC

1

SECTION I. DEFINITIONS

1.1 Account Administrator.  Has the meaning set forth in Rule 3.10.1.  

1.2 AEGIS or AEGIS Hedging Solutions, LLC.  The managing member of AEGIS SEF, LLC.  AEGIS is itself

registered with the CFTC as a CTA.

1.3 AEGIS‐SEF or AEGIS SEF, LLC.  A Delaware limited liability company, which isregistered with the CFTC

as a SEF.

1.4 AEGIS‐SEF Platform.    The swap trading platform operated by AEGIS‐SEF, which comprises the

following swap transaction execution methods: (i) the Order Book, which is an electronic trading

facility operated by AEGIS‐SEF to provide Participants, Authorized Users, and Broker Firms with the

ability to execute Permitted Transactions from the interaction of multiple bids and multiple offers

as described in Rule 4.7, (ii) the RFQ Function, which is a request for quote system operated by

AEGIS‐SEF to permit Participants, Authorized Users and Broker Firms to execute Permitted

Transactions as described in Rule 4.8, and (iii) various other execution methods for Permitted

Transactions as notified by AEGIS‐SEF to Participants, Authorized Users and Broker Firms from time

to time.

1.5 AEGIS‐SEF Rulebook.  The swap trading platform operated by AEGIS SEF.

1.6 Affiliate.  A Person who directly or indirectly, controls, is controlled by, or is under common control

with another Person.

1.7 All‐or‐None Order.  Has the meaning given to it in Rule 4.7.8(c).

1.8 Appeal Panel.  A panel comprised of a chair and two individuals appointed by the Board to consider

appeals under Section VII.

1.9 Applicable Law.  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.

1.10 Audit Trail.  Has the meaning set forth in Rule 4.15.1.

1.11 Authorized User.  A natural person who is either employed by or is an agent of a Participant or a

Broker Firm and who is authorized by AEGIS‐SEF as an Authorized User in accordance with Rule 3.6.

3.6.

1.12 Bespoke SEF Contract.  A Bespoke SEF Contract is a SEF Contract requested using the RFQ Function

under Rule 4.8, in which the Requesting Participant is: (i) a Commercial End‐User that is eligible for

and has elected the End‐User Exception with respect to such Bespoke SEF Contract, (ii) an Eligible

Affiliate of a CEU that is eligible for and has elected the Hedging Affiliate Exception with respect to

such Bespoke SEF Contract, or (iii) a Financial Counterparty that is a Pass‐Through Swap

Counterparty seeking such Bespoke SEF Contract as a Pass‐Through Swap Offset.  The terms and

conditions of the swap transaction underlying any such Bespoke SEF Contract must be a Permitted

Transaction and a Hedging Contract, but such swap transaction is otherwise not restricted to the

Contract Specifications specified for OTOB SEF Contracts in Section X of the AEGIS‐SEF Rulebook.
AEGIS SEF, LLC

2

1.13 BFH Transaction.   A “bona fide hedging transaction or position” as defined in CFTC Regulations

Section 150.1, as set forth in Position Limits for Derivatives, Final Rule, 86 Fed. Reg. 3236, at 3463‐

3464, published January 14, 2021 (“2021 Position Limits Final Rule”).

1.14 Block Trade.    A privately‐negotiated transaction in a SEF Contract that, if and when AEGIS‐SEF

modifies its AEGIS‐SEF Platform to offer any SEF Contract that includes any Required Transactions,

will be permitted to be executed off of the AEGIS‐SEF Platform and reported into the Order Book in

accordance with Rule 4.11.

1.15 Board.  The Board of Directors of AEGIS‐SEF, or, initially, the Board of Directors of AEGIS Hedging

Solutions, LLC, which is the managing member of AEGIS‐SEF.

1.16 Broker Firm. An Introducing Broker, Interdealer Broker, a Commodity Trading Advisor, or an FCM

that has signed the Broker Firm Agreement provided by AEGIS‐SEF and is authorized to act as a

broker or perform agency functions on the AEGIS‐SEF Platform on behalf of one or more

Participants.

1.17 Broker Firm Agreement. An agreement between AEGIS‐SEF and a Broker Firm that must be signed

in order for said Broker Firm to have access to the AEGIS‐SEF Platform for the submission of Orders,

transmission of RFQs, access to information, execution of SEF Contracts, or entry of information

onto the AEGIS‐SEF Platform, all on behalf of one or more Participants.

1.18 Business Day. Any day on which the AEGIS‐SEF Platform is open for trading.

1.19 CCO or Chief Compliance Officer.  The individual appointed by the President of AEGIS‐SEF to serve

as AEGIS‐SEF’s chief compliance officer.

1.20 CEA or Commodity Exchange Act. The Commodity Exchange Act, as it may be amended from time

to time, which is found at (7 U.S.C. Section 1, et seq.).

1.21 CEU or Commercial End‐User.  A Person that is not a “financial entity” as defined in CEA Section

2(h)(7)(C)(i), is using the Transaction to hedge or mitigate commercial risk as defined in CFTC

Regulation Section 50.50(c), and provides or causes to be provided to a registered Swap Data

Repository or, if no registered Swap Data Repository is available, the Commission, the information

specified in CFTC Regulation Section 50.50(b), or any successor regulation thereto.

1.22 CFTC or Commission. The Commodity Futures Trading Commission.

1.23 CFTC Regulations. The regulations of the CFTC, as they may be amended from time to time, which

are found in Chapter 1 of Title 17 of the Code of Federal Regulations.

1.24 Commodity Type.  The category of asset class for a SEFContract.

1.25 Contract Market.  Has the meaning set forth in CFTC Regulation Section 1.3.

1.26 Contract Specifications.  The terms and conditions, rules or other trading protocols, for each OTOB

SEF Contract as set forth and made available, from time to time, either in Section X, Contract

Specifications of OTOB SEF Contracts, of this AEGIS‐SEF Rulebook, or on the AEGIS‐SEF website.
AEGIS SEF, LLC

3

1.27 Contract Term.  The length of the settlement period for a SEF Contract, including, but not limited to,

monthly, weekly and daily SEF Contracts.

1.28 Control.   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 the foregoing.

1.29 Counterparty.  A Participant or a Participant’s Customer that is a party to a Transaction and whose

Legal Entity Identifier is reported by AEGIS‐SEF to an SDR as a party to a Transaction.

1.30 CTA or Commodity Trading Advisor.  Has the meaning set forth in CEA Section 1a(12) and CFTC

Regulation Section 1.3.

1.31 CTI or Customer Type Indicator.   Has the meaning set forth in Rule 4.15.3 and CFTC Regulation

Section 1.35(g).

1.32 Customer.  A Participant that is a customer of a Broker Firm.

1.33 Customer Account.  An account carried by a Participant or a Customer.

1.34 DCO or Derivatives Clearing Organization. Has the meaning attributed to such term by CEA Section

1a(15).

1.35 Designated Participant.  A Participant designated as a recipient in an RFQ submitted by a Requesting

Participant using the RFQ Function of the AEGIS‐SEF Platform, in which the Requesting Participant

seeks an indicative quote from one or more Designated Participants for a bid to purchase or an offer

to sell a SEF Contract, that is both a Permitted Transaction and a Hedging Contract, subject to the

provisions of Rule 4.8 applicable to such RFQ Function.

1.36 Director. An individual serving on the Board.

1.37 Disciplinary Proceedings. Any inquiry, investigation, disciplinary proceeding,summary imposition of

fines, summary suspension or other summary action conducted pursuant to Section VII of the Rules.

1.38 Disciplinary Offense. Has the meaning set forth in CFTC Regulation Section1.63(a)(6).

1.39 Disciplinary Panel. Either or both of a Review Panel and a Hearing Panel, as required by the context.

1.40 ECP or Eligible Contract Participant. Has the meaning set forth in CEA Section 1a(18) and CFTC

Regulation Section 1.3.  

1.41 Eligible Affiliate of a CEU. An Affiliate of a CEU that is eligible for and elects the Hedging Affiliate

Exception with respect to a SEF Contract.

1.42 Emergency.  The occurrences or circumstances which, in the opinion of the Board or an Officer,

require immediate action to be taken in accordance with Rule 4.1.3, and which threaten, or may

threaten, the fair and orderly trading in, orthe settlement or integrity of, any SEF Contract, including,

without limitation, the following:

(a) any circumstance that may materially affect the performance of a SEF Contract;
AEGIS SEF, LLC

4

(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 SEF, 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 AEGIS‐SEF Platform or the settlement legality or enforceability of

any SEF Contract;

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

activity or undue concentration of positions in a SEF Contract;

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

facilities of AEGIS‐SEF, 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 AEGIS‐SEF Platform, or

other system breakdowns or interruptions such as power, computer,

communication or transportation systems or the internet;

(e) the bankruptcy or insolvency of any Participant or the imposition of any injunction

or other restraint by any government agency, court or arbitrator upon a Participant

which may affect the ability of a Participant to trade in or perform on a SEF Contract;

(f) any circumstance in which it appears to the Board that any Person:

(i) has failed to perform on a SEF Contract;

(ii) is insolvent; or

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

the Person cannot be permitted to continue in business without

jeopardizing the safety of Participants or the AEGIS‐SEF Platform; or

(g) any other unusual, unforeseeable or adverse circumstance as determined by AEGIS‐

SEF.

1.43 Emergency Rules.  Has the meaning set forth in Rule 4.1.3.

1.44 End‐User Exception.  The exception, under CEA Section 2(h)(7)(A), as amended from time to time,

to the mandatory clearing requirement for Swaps under CEA Section 2(h)(1)(A).

1.45 Expiry.  An OTOB SEF Contract with a specific date of expiration.

1.46 FCM or Futures Commission Merchant.  Has the meaning set forth in CEA Section 1a(28) and CFTC

Regulations Section 1.3.

1.47 Financial Counterparty.  Means(i) a Swap Dealer or (ii) any otherswap provider whose swap dealing

activity is not greater than the applicable “de minimis” threshold for registration as a SD under the

definition of SD in CFTC Regulation Section 1.3.
AEGIS SEF, LLC

5

1.48 Governmental Authority.    Any domestic or foreign government (or political subdivision),

governmental or regulatory authority, agency, court, commission or other governmental or

regulatory entity (including any Self‐Regulatory Organization).

1.49 Hearing Panel.  Means a Disciplinary Panel that will, pursuant to the procedures set forth in Section

VII, adjudicate disciplinary cases following the issuance of a notice of charges authorized by the

Review Panel and execute other duties as provided for in Section VII. The members of the Hearing

Panel will be appointed in accordance with Rule 7.9.

1.50 Hedging‐Affiliate Exception.  The exception, under CEA Section 2(h)(7)(D), as amended from time

to time, to the mandatory clearing requirement for Swaps under CEA Section 2(h)(1)(A).

1.51 Hedging Contract.  A SEF Contract that is a Permitted Transaction in which both Counterparties

thereto are Participants and at least one Counterparty thereto is a Participant that is also: (i) a

Commercial End‐User that is eligible for and has elected the End‐User Exception with respect to such

SEF Contract, (ii) an Eligible Affiliate of a CEU that is eligible for and has elected the Hedging‐Affiliate

Exception with respect to such SEF Contract, or (iii) a Financial Counterparty that is a Pass‐Through

Swap Counterparty for whom such SEF Contract is a Pass‐Through Swap Offset.

1.52 IB or Introducing Broker.  Has the meaning set forth in CEA Section 1a(23) and CFTC Regulation

Section 1.3.

1.53 Insolvency and Insolvent.  The occurrence of any of the following events with respect to a Person:

(a) the Person is determined to be insolvent by a Governmental Authority or Self‐

Regulatory Organization;

(b) if the Person is a member of the Securities Investor Protection Corporation, a court

of competent jurisdiction finds that the Person meets any one of the conditions set

forth in clauses (A), (B), (C) or (D) of Section 5(b)(1) of the Securities Investor

Protection Act of 1970;

(c) in the event of the entry or the making of a decree or order by a court,

Governmental Authority or other supervisory authority of competent jurisdiction:

(a) adjudging the Person as bankrupt or insolvent, (b) approving as properly filed a

petition seeking reorganization, arrangement, liquidation, dissolution, adjustment

or composition of or in respect of the Person under the Bankruptcy Code or any

other applicable federal, state or other U.S. or non‐U.S. law, including any

bankruptcy, insolvency, reorganization, liquidation, dissolution or similar law, (c)

appointing a receiver, custodian, liquidator, provisional liquidator, administrator,

provisional administrator, assignee, trustee,sequestrator or othersimilar official for

the Person or for any substantial part of its property, ordering the winding up or

liquidation of the Person’s affairs, or (e) consenting to the institution by the Person

of proceedings to be adjudicated as bankrupt or insolvent;

(d) the filing by the Person of a petition, or any case or proceeding, seeking

reorganization or relief under the Bankruptcy Code or any other applicable federal,

state or other U.S. or non‐U.S. law, including any bankruptcy, insolvency,

reorganization, liquidation, dissolution or similar law, or the consent by the Person
AEGIS SEF, LLC

6

to the filing of any such petition, case or proceeding or to the appointment of a

receiver, custodian, liquidator, provisional liquidator, administrator, provisional

administrator, assignee, trustee,sequestrator or othersimilar official for the Person

or for any substantial part of its property, or the making by the Person of an

assignment for the benefit of its creditors, or the admission by the Person in writing

of its inability to pay its debts generally as they become due, or the taking of

corporate or similar action by the Person in furtherance of the foregoing.

1.54 ISO or Independent Systems Operator.  The organization that manages the power grid and sets the

pricing against which SEF Contracts in power markets settle. As used in these Rules, the term ISO

also applies to regional transmission organizations (“RTOs”), such as PJM Interconnection, and state

reliability councils, such as the Electric Reliability Council of Texas (“ERCOT”).

1.55 ISV or Independent Software Vendor.  A Person that makes available to Participants a system or

platform offering smart order routing, front‐end trading applications, an aggregator platform or a

combination of the foregoing but that does not provide Participants the ability to effect transactions

on such system or platform.

1.56 Last Trading Day.  The last day an Expiry may be traded as set forth in the Contract Specifications.

1.57 LEI or Legal Entity Identifier.  The unique entity identifier number issued for a Person by the GMEI

Utility.

1.58 Limit Order.  Has the meaning given to it in Rule 4.7.8(b).

1.59 Liquidity Provider.    A Participant that has entered into a Liquidity Provider Agreement, which

provides Participant with certain incentives as a liquidity provider.

1.60 Market Order.  Has the meaning given to it in Rule 4.7.8(a).

1.61 Market Regulation Department. AEGIS staff responsible for functions including market operations,

trade surveillance and compliance.

1.62 Nominating Committee.  The committee of the Board constituted in accordance with Rule 2.4.2.

1.63 Officer.  Has the meaning given to it in Rule 2.2.1.

1.64 Order.  Either a bid to purchase (“Bid”) or an offer to sell (“Offer”) a Swap that is a SEF Contract, and

which is both a Permitted Transaction and a Hedging Contract; provided, that such Order is

submitted on, or subject to the Rules of, the AEGIS‐SEF Platform, including the Order Book or the

RFQ Function.

1.65 Order Book.  The order book is a form of swap execution functionality for OTOB SEF Contracts, that

are both Permitted Transactions and Hedging Contracts, which Order Book is a trading system or

platform in which all Participants on the AEGIS‐SEF Platform have the ability to enter multiple bids

to purchase and offers to sell such OTOB SEF Contracts, observe or receive bids to purchase and

offers to sell such OTOB SEF Contracts entered by other Participants, and transact on such bids to

purchase and offers to sell such OTOB SEF Contracts, as described in Rule 4.7.
AEGIS SEF, LLC

7

1.66 Operating Agreement.  The Limited Liability Company Agreement of AEGIS‐SEF, or, where explicitly

referenced, the Limited Liability Company Agreement of AEGIS Hedging Solutions, LLC, as the

managing member of AEGIS‐SEF, as such Limited Liability Company Agreement may be amended or

restated from time to time.  

1.67 OTOB SEF Contract.  An OTOB SEF Contract is a SEF Contract offered by AEGIS‐SEF for trading using

the Order Book function under Rule 4.7.  Section X of this AEGIS‐SEF Rulebook setsforth the Contract

Specifications for OTOB SEF Contracts presently offered for trading on the Order Book, which is

currently limited only to Permitted Transactions that are also Hedging Contracts, as more fully

described in Rules 4.6, 5.1 and 5.2 of this AEGIS‐SEF Rulebook.  The term “SEF Contract” includes

both OTOB SEF Contracts and Bespoke SEF Contracts and both OTOB SEF Contracts and Bespoke SEF

Contracts may be traded using AEGIS‐SEF’s RFQ Function under Rule 4.8, but only OTOB SEF

Contracts may be traded using AEGIS‐SEF’s Order Book Function under Rule 4.7.

1.68 Participant.  A Person that: (i) is (a) a Financial Counterparty, (b) a Commercial End User, or (c) an

Eligible Affiliate of a CEU, (ii) has signed a Participant Agreement, and (iii) is authorized to enter into

a Transaction for its own account using the AEGIS‐SEF Platform.

1.69 Participant Agreement.  An agreement between AEGIS‐SEF and a Participant that must be signed in

order for a Participant that is a Financial Counterparty, a Commercial End User, or an Eligible Affiliate

of a CEU, to have access to the AEGIS‐SEF Platform for the execution or entry of Transactions.

1.70 Pass‐Through Swap.  Asset forth in Paragraph (2)(i)(A) of the definition of a BFH Transaction in CFTC

Regulations Section 150.1, a “pass‐through swap” is “a swap position entered into by one person for

which the swap would qualify as a bona fide hedging transaction or position pursuant to paragraph

(1) of this definition (the bona fide hedging swap counterparty) that is opposite another person (the

pass‐through swap counterparty).”

1.71 Pass‐Through Swap Counterparty.  As set forth in Paragraphs (2)(i)(A) and (B) of the definition of a

BFH Transaction in CFTC Regulations Section 150.1, a “pass‐through swap counterparty” (i) is a party

to a Pass‐Through Swap, (ii) “is opposite to” a “person for which the [Pass‐Through S]wap would

qualify as a bona fide hedging transaction or position pursuant to paragraph (1) of th[e] definition

[of BFH Transaction],” and (iii) seeks to enter into a Pass‐Through Swap Offset that “reduces the

[Pass‐Through Swap Counterparty’s] price risks attendant to [such Pass‐Through Swap].”

1.72 Pass‐Through Swap Offset.  As set forth in Paragraph (2)(i)(B) of the definition of a BFH Transaction

in CFTC Regulations Section 150.1, a “pass‐through swap offset” “(1) is a futures contract position,

option on a futures contract position, or swap position entered into by the [P]ass‐[T]hrough [S]wap

[C]ounterparty; and (2) reduces the [P]ass‐[T]hrough [S]wap [C]ounterparty’s price risks attendant

to the [P]ass‐[T]hrough [S]wap.”    As explained in Paragraph (2)(i) of the definition of BFH

Transaction, for a Pass‐Through Swap Offset to be eligible for classification as a BFH Transaction,

such Pass‐Through Swap Offset must be paired with a Pass‐Through Swap.

1.73 Permitted Transaction.  Any Transaction involving a swap, but which does not involve any swap that

is subject to the trade execution requirement in CEA Section 2(h)(8).

1.74 Person.  Has the meaning set forth in CEA Section 1a(38) and in the CFTC Regulation Section 1.3.
AEGIS SEF, LLC

8

1.75 Position Transfer.   A Transaction in a SEF Contract that is executed by AEGIS‐SEF personnel for

administrative purposes outlined in Rule 4.12.

1.76 Posting Participant.  A Participant that submits an Order for an OTOB SEF Contract (i.e., a bid to

purchase or an offer to sell such OTOB SEF Contract) into the Order Book on the AEGIS‐SEF Platform

as a firm offer to enter into such OTOB SEF Contract with other Participants that are eligible to, and

which elect to, accept (i.e., fill) that Order using the Order Book function of the AEGIS‐SEF Platform,

as described in Rule 4.7.

1.77 President.  The individual appointed to serve as AEGIS‐SEF’s President.

1.78 Proprietary Account.  Has the meaning set forth in CFTC Regulation Section 1.3.

1.79 Proprietary Information.  Has the meaning set forth in Rule 9.2.1.

1.80 Regulatory Oversight Committee.  The committee of the Board constituted in accordance with Rule

2.4.4.

1.81 Regulatory Services Agreement.  The agreement(s), if any, between AEGIS‐SEF and any Regulatory

Service Provider(s) whereby certain functions mandated under the CEA, such as market monitoring

and trade practice surveillance, are delegated to one or more Regulatory Services Provider(s).

1.82 Regulatory Services Provider.  The National Futures Association (“NFA”) orsuch other organizations,

if any, that provide regulatory services to AEGIS‐SEF, together with any such organization’s

employees and agents.

1.83 Request for Quote Function or RFQ Function.  Another form of swap execution functionality for SEF

Contracts (which may be either OTOB SEF Contracts or Bespoke SEF Contracts), that are both

Permitted Transactions and Hedging Contracts, which RFQ Function is available on the AEGIS‐SEF

Platform under Rule 4.8, through which a Requesting Participant may submit an RFQ seeking an

indicative quote from one or more Designated Participants for a bid to purchase or an offer to sell

such SEF Contract; provided, however, that the Requesting Participant is: (i) a Commercial End‐User

that is eligible for and has elected the End‐User Exception with respect to such SEF Contract, (ii) an

Eligible Affiliate of a CEU that is eligible for and has elected the Hedging Affiliate Exception with

respect to such SEF Contract, or (iii) a Financial Counterparty that is a Pass‐Through Swap

Counterparty seeking such SEF Contract as a Pass‐Through Swap Offset; provided, further, that only

such Designated Participants will be allowed to submit an indicative bid or offer or a firm Order in

response to such RFQ; and provided, still further, that the Requesting Participant shall be informed

by AEGIS‐SEF of any relevant Order resting at that time in the Order Book on the AEGIS‐SEF Platform

that may be responsive to such RFQ, all as more fully described in Rule 4.8.

1.84 Requesting Participant.  A Participant that submits an RFQ using the RFQ Function of the AEGIS‐SEF

Platform seeking an indicative quote from one or more Designated Participants for a bid to purchase

or an offer to sell a SEF Contract, that is both a Permitted Transaction and a Hedging Contract,

subject to the provisions of Rule 4.8 applicable to such RFQ Function.

1.85 Required Transaction.    Any Transaction involving a swap that is subject to the trade execution

requirement in CEA Section 2(h)(8).  Currently, AEGIS‐SEF does not allow the trading or execution of

any SEF Contract on the AEGIS‐SEF Platform that is a Required Transaction.
AEGIS SEF, LLC

9

1.86 Respondent.  A Participant under investigation for alleged Rule violation(s) or against which charges

have been filed.

1.87 Review Panel.  Means a Disciplinary Panel that will, pursuant to the procedures set forth in Section

VII, review investigation reports submitted to it by the Market Regulation Department to determine

(a) whether a reasonable basis exists to believe that a violation of a Rule of AEGIS‐SEF has occurred

and (b) whether commencing Disciplinary Proceedings in respect of such potential violation is

warranted. The members of the Review Panel will be appointed in accordance with Rule 7.4.

1.88 RFQ.  A request for an indicative quote on a bid to purchase or an offer to sell a SEF Contract, that is

both a Permitted Transaction and a Hedging Contract, which RFQ is submitted using the RFQ

Function of the AEGIS‐SEF Platform under Rule 4.8.

1.89 Rules.  Any rule, interpretation, stated policy, or instrument corresponding to any of the foregoing,

including the provisions of this AEGIS‐SEF Rulebook, in each case as adopted from time to time by

AEGIS‐SEF.

1.90 SD or Swap Dealer.  Has the meaning given to it in CEA Section 1a(49) and CFTC Regulation Section

1.3.

1.91 SEF or Swap Execution Facility.    Has the meaning given to it in CEA Section 1a(50) and CFTC

Regulation Section 1.3.

1.92 SEF Contract.  Any swap transaction authorized and made available by AEGIS‐SEF on the AEGIS‐SEF

Platform for the sale or purchase of a Commodity Type, which is currently limited only to Permitted

Transactions that are also Hedging Contracts, as more fully described in Rules 4.6, 5.1 and 5.2 of this

AEGIS‐SEF Rulebook.  The term “SEF Contract” includes both OTOB SEF Contracts and Bespoke SEF

Contracts and both OTOB SEF Contracts and Bespoke SEF Contracts may be traded using AEGIS‐SEF’s

RFQ Function under Rule 4.8, but only OTOB SEF Contracts may be traded using AEGIS‐SEF’s Order

Book Function under Rule 4.7.  

1.93 SEF Official.  Any Officer or employee of AEGIS‐SEF and any member of the Board, a committee

established by the Board, a Disciplinary Panel or Appeal Panel.

1.94 SEF Participant Committee.  The committee of the Board constituted in accordance with Rule 2.4.3.

1.95 SEF Requirements.  The Rules; otherrequirementsimplemented by AEGIS‐SEF pursuant to the Rules;

each term of an OTOB SEF Contract; and the participant documentation and other contractual

obligations between a Participant (including its Authorized Users) or Broker Firm and AEGIS‐SEF.

1.96 Self‐Regulatory Organization.    Has the meaning set forth in CFTC Regulation Section 1.3 and

includes any Swap Execution Facility, Contract Market, and registered futures association,

such as the NFA.  

1.97 Settlement Price.  The price for each OTOB SEF Contract based on relevant settlement prices from

reference sources for OTOB SEF Contracts; provided, that, for OTOB SEF Contracts actively traded

on the AEGIS‐SEF Order Book, the Settlement Price shall be the settlement price for the most

recently filled Bid or Offer (referred to as “Bid/Offer”) forsuch OTOB SEF Contract at the end of each

trading day.
AEGIS SEF, LLC

10

1.98 Stop Limit Order.  Has the meaning given to it in Rule 4.7.8(e).

1.99 Stop Order.  Has the meaning given to it in Rule 4.7.8(d).

1.100 Supervised Persons.  Any directors, officers, employees or agents of any Participant, including but

not limited to Authorized Users.

1.101 Swap or swap.  Has the meaning given to it in CEA Section 1a(47) and CFTC Regulation Section 1.3.

1.102 Trade Risk Limit.  A risk‐based limit established for a Participant.

1.103 Trading Privileges.  The right granted to a Participant to submit or accept Orders for: (i) OTOB SEF

Contracts using the Order Book under Rule 4.7, or (ii) either OTOB SEF Contracts or Bespoke

SEF Contracts using the RFQ Function under Rule 4.8.

1.104 Trading Hours.  For any Business Day, the hours specified on the trading calendar on the AEGIS‐SEF

website.

1.105 Transaction.  Any purchase or sale of any SEF Contract made on, or pursuant to the Rules of, the

AEGIS‐SEF Platform.

1.106 User ID.  The unique identifier included on each Order that enables AEGIS‐SEF to identify the Person

entering or accepting an Order using the Order Book or the RFQ Function on AEGIS‐SEF Platform.

Rules of Construction. The following rules of construction shall apply to this AEGIS‐SEF Rulebook:

(a) the headings are for convenience only and do not affect the meaning of the Rules;

(b) all references to time are to local time in Houston, Texas except where expressly

provided otherwise;

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

permits and vice versa;

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

masculine, feminine and neuter forms; and

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

rules or regulations promulgated thereunder.

SECTION II. GOVERNANCE & OWNERSHIP

2.1 Composition of the Board; Board Powers.

2.1.1 Initially, the Board of AEGIS Hedging Solutions, LLC, as the managing member of AEGIS‐SEF,

will be authorized to manage the day‐to‐day business operations of AEGIS‐SEF in accordance

with the Operating Agreement of AEGIS Hedging Solutions, LLC.  At any time after AEGIS‐

SEF commences operations as a SEF, AEGIS Hedging Solutions, LLC, asthe managing member

of AEGIS‐SEF may form a separate board of directors for AEGIS‐SEF, which will then have

authority to manage the day‐to‐day business operations of AEGIS‐SEF in accordance with
AEGIS SEF, LLC

11

the Operating Agreement of AEGIS‐SEF. Until such time, all references herein to the Board

shall refer to the Board of Directors of AEGIS Hedging Solutions, LLC and all references here

to the Operating Agreement shall refer to the Operating Agreement of AEGIS Hedging

Solutions, LLC.

2.1.2 The Board has the power 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 AEGIS‐SEF.

2.1.3 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 Operating Agreement.

2.1.4 Each Director shall be appointed in accordance with the 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.

2.1.5 Each Director is entitled to indemnification pursuant to the Operating Agreement with

respect to matters relating to AEGIS‐SEF.

2.1.6 The Board shall have procedures, as may be further set forth in policies that AEGIS‐SEF may

adopt, to remove a member from the Board where the conduct of such member is likely to

be prejudicial to the sound and prudent management of AEGIS‐SEF.

2.1.7 The Board shall review its performance and that of itsindividual members annually and shall

consider periodically using external facilitators for such review.

2.2 Officers.

2.2.1 The Board shall appoint a President and such other officers of AEGIS‐SEF (each, an “Officer”)

as it may deem necessary or appropriate from time to time.   The President shall appoint a

Chief Compliance Officer.

2.2.2 Any Officer may also be a director, officer, partner or employee of AEGIS‐SEF or of any of its

Affiliates.

2.2.3 The Officers shall have such powers and duties in the management of AEGIS‐SEF as the

Board may prescribe from time to time, subject to any limitation set forth in the Operating

Agreement.

2.3 Eligibility/Fitness.

2.3.1 An individual may not serve as a Chief Compliance Officer, if the individual would be

disqualified from registration pursuant to CEA Sections 8a(2) or 8a(3).

2.3.2 The Chief Compliance Officer shall immediately notify the President of AEGIS‐SEF if such

individual meets one or more of the criteria in Rule 2.3.1. The CCO shall provide to AEGIS‐

SEF, where applicable, changes in registration information within 30 days and certification
AEGIS SEF, LLC

12

of compliance accordingly. AEGIS‐SEF shall verify information supporting compliance with

eligibility criteria.

2.3.3 To serve as a member of the Board, an individual must possess the ability to contribute to

the effective oversight and management of AEGIS‐SEF, taking into account the needs of

AEGIS‐SEF and such factors as the individual’s experience, perspective, skills and knowledge

of the industry in which AEGIS‐SEF operates. This shall include sufficient expertise, where

applicable, in financial services, risk management, and execution services.

2.3.4 A Director or Officer must meet any qualifications set forth from time to time in the

Operating Agreement.

2.4 Standing Committees.

2.4.1 The Board shall initially have the following three standing committees: the Nominating

Committee, the SEF Participant Committee, and the Regulatory Oversight 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.

Each member ofsuch standing committees must be a Director, one of whom the Board shall

designate as the chairperson of each standing committee. Each standing committee shall

assist in the supervision, management and control of the affairs of AEGIS‐SEF within its

particular area of responsibility, subject to the authority of the Board. 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.

2.4.2 Nominating Committee.  The Nominating Committee of the Board reports to the Board and

shall consist of at least two Directors appointed from time to time by the Board. The

Nominating Committee shall have the authority to (i) 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 (ii) administer a process for the

nomination of individuals to the Board.

2.4.3 SEF Participant Committee.    The SEF Participant Committee of the Board reports to the

Board and shall consist of at least two Directors appointed from time to time by the Board.

The SEF Participant Committee shall (i) determine the standards and requirements for initial

and continuing Participant eligibility, (ii) review appeals of staff denials of Participant

applications, and (iii) approve Rules that would result in different categories or classes of

Participants receiving disparate access to the AEGIS‐SEF Platform. The SEF Participant

Committee shall not, and shall not permit AEGIS‐SEF to, restrict access or impose burdens

on access to the AEGIS‐SEF Platform in a discriminatory manner, within each category or

class of Participants or between similarly‐situated categories or classes of Participants.

2.4.4 Regulatory Oversight Committee.  The Regulatory Oversight Committee of the Board shall

report to the Board and consist of at least two Directors.
AEGIS SEF, LLC

13

Each member of the Regulatory Oversight Committee shall serve for a term of one calendar

year from the date of their appointment or for the remainder of their term as a 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 Director. A member of the Regulatory Oversight Committee may serve for multiple

terms.

The Regulatory Oversight committee shall meet with the Chief Compliance Officer at least

quarterly. The Board shall dedicate sufficient resources to allow sufficient time for the

Regulatory Oversight Committee to fulfill its mandate. The Regulatory Oversight committee

shall make such recommendations to the Board that will, in its judgment, best promote the

interests of AEGIS‐SEF. 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.

2.4.5 Special Committees.  In addition to the standing committees, the Board shall have the power

and authority to create and terminate, in accordance with the Operating Agreement,special

committees of the Board and designate their composition, responsibilities and powers.

2.5 Confidentiality.

2.5.1 No member of the Board or any committee established by the Board or by or pursuant

to the Rules will use or disclose any material non‐public information obtained in connection

with such member’s participation in the Board or such committee for any purpose other

than the performance of his or her official duties as a member of the Board or such

committee.

2.5.2 No Officer, employee or agent of AEGIS‐SEF will (i) trade in any commodity interest if such

Officer, employee or agent obtained material non‐public information concerning such

financial instrument in connection with such employee’s, Officer’s or agent’s employment

or (ii) disclose to any other Person material non‐public information obtained in connection

with such employee’s, Officer’s or agent’s employment, if such employee, Officer or agent

could reasonably expect that such information might assist another Person in trading any

commodity interest.

2.6 Conflicts of Interest.

2.6.1 Named Party In Interest Conflict

(a) No member of the Board, any Disciplinary Panel or any Appeal Panel will knowingly

participate in such body’s deliberations or voting in any matter involving a named

party in interest where such member (i) isthe named party in interest in the matter,

(ii) is an employer, employee or fellow employee of a named party in interest, (iii)

has any other significant, ongoing business relationship with a named party in

interest, excluding relationships limited to SEF Contracts, or (iv) has a family

relationship with a named party in interest.

(b) Prior to consideration of any matter involving a named party in interest, each

member of the deliberating body who does not choose to abstain from
AEGIS SEF, LLC

14

deliberations and voting will disclose to the Chief Compliance Officer whether such

member has one of the relationships listed in clause (a) above with a named party

in interest.

(c) The Chief Compliance Officer will determine whether any member of the relevant

deliberating body who does not choose to abstain from deliberations and voting is

subject to a conflicts restriction under this paragraph (c). Such determination will be

based upon a review of the following information: (i) information provided by such

member pursuant to clause (b) above; and (ii) any other source of information that

is held by and reasonably available to AEGIS‐SEF.

2.6.2 Financial Interest In A Significant Action Conflict

(a) No member of the Board, any Disciplinary Panel or any Appeal Panel will participate

in such body’s deliberations and voting on any significant action if such member has

a direct and substantial financial interest in the result of the vote, as determined

pursuant to clause (c) below.

(b) Prior to consideration of any significant action, each member of the deliberating

body, who does not choose to abstain from deliberations and voting, will disclose

to the Chief Compliance Officer any information that may be relevant to a

determination of whether such member has a direct and substantial financial

interest in the result of the vote.

(c) The Chief Compliance Officer will determine whether any member   of the relevant

deliberating body, who does not choose to abstain from deliberations and voting, is

subject to a conflicts restriction under this paragraph (c). Such determination will be

based upon a review of the following information: (i) information provided by such

member pursuant to clause (b) above; and (ii) any other information reasonably

available to AEGIS‐SEF, taking into consideration the exigency of the significant

action being contemplated.

(d) Any member of the Board, any Disciplinary Panel or any Appeal Panel, who would

otherwise be required to abstain from deliberations and voting pursuant to clause

(a) above, may participate in deliberations, but not voting, 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

information specified in clause (c) above which is the basis for such member’s

substantial financial interest in the significant action that is being contemplated. In

making its determination, the deliberating body will consider: (i) whether such

member’s participation in the deliberations is necessary to achieve a quorum; and

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

in the matter being considered.

2.6.3 The minutes of any meeting to which the conflicts determination procedures set forth in

this Rule apply will reflect the following information:
AEGIS SEF, LLC

15

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

meeting in person or who otherwise participated in such meeting;

(b) 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;

(c) the information that was reviewed for each member of the relevant deliberating

body; and

(d) any determination made in accordance with clause (d) of Rule 2.6.2 above.

2.7 Maintenance of Books and Records by AEGIS‐SEF.

2.7.1 AEGIS‐SEF shall keep, or cause to be kept, complete and accurate books and records of

accounts of AEGIS‐SEF, including all books and records required to be maintained pursuant

to the CEA, and the CFTC Regulations.

2.7.2 AEGIS‐SEF 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 U.S.

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

2.8 Information‐Sharing Arrangements.

2.8.1 AEGIS‐SEF may enter into information‐sharing agreements or other arrangements or

procedures to coordinate surveillance with other markets on which financial instruments

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

arrangements or procedures adopted pursuant to this Rule, AEGIS‐SEF may:

(a) provide market surveillance reports to other markets;

(b) share information and documents concerning current and former Participants,

Authorized Users, or Broker Firms with other markets;

(c) share information and documents concerning ongoing and completed

investigations with other markets; or

(d) require its current or former Participants, Authorized Users, or Broker Firms to

provide information and documents to AEGIS‐SEF at the request of other markets

with which AEGIS‐SEF has an information‐  sharing agreement or other

arrangements or procedures.

2.8.2 AEGIS‐SEF may enter into any arrangement with any Person or body (including the CFTC, the

NFA, any Self‐Regulatory Organization, any exchange, market, clearing organization or

foreign regulatory authority) if AEGIS‐SEF considers such arrangement to be in furtherance

of AEGIS‐SEF’s purpose or duties under the Rules or any law or regulation.
AEGIS SEF, LLC

16

2.8.3 AEGIS‐SEF may provide information to a duly authorized foreign Governmental Authority,

as directed by the CFTC, in accordance with an information‐sharing agreement executed

with the CFTC.

2.9 Regulatory Services Providers and Technology Services Providers.

2.9.1 AEGIS‐SEF may contract with a Regulatory Services Provider to provide certain regulatory

services to AEGIS‐SEF pursuant to a Regulatory Services Agreement. In accordance with any

such relevant Regulatory Services Agreement, a Regulatory Services Provider may perform

certain surveillance, investigative, or regulatory functions under the Rules and AEGIS‐SEF

may provide information to such Regulatory Services Provider in connection with the

performance by such Regulatory Services Provider of those functions.  AEGIS‐SEF will at all

times remain responsible for the performance of any Regulatory Services Provider.

2.9.2 Any of the powers or functions of AEGIS‐SEF under the Rules may be delegated to a

Regulatory Services Provider pursuant to the relevant Regulatory Services Agreement in

such manner and on such terms as AEGIS‐SEF and such Regulatory Services Provider may

mutually agree; provided, however, that AEGIS‐SEF shall retain ultimate decision‐making

authority with respect to any powers or functions that are delegated to such Regulatory

Services Provider.

2.9.3 AEGIS‐SEF may contract with a technology services provider to provide certain technology

services to AEGIS‐SEF pursuant to a technology services agreement. In accordance with a

technology services agreement, a technology services provider may perform certain

functions under the Rules and AEGIS‐SEF may provide information to the technology

services provider in connection with the performance by the technology services provider

of those functions.

2.9.4 AEGIS‐SEF shall retain ultimate decision‐making authority with respect to any functions that

are contracted to a technology services provider.

2.10 Use of Proprietary Data and Personal Information.

2.10.1 With respect to any proprietary data or personal information collected or received from, or

on behalf of, any Person for the purpose of fulfilling AEGIS‐SEF’s regulatory obligations,

neither AEGIS‐SEF nor any affiliate of AEGIS‐SEF, such as AEGIS Hedging Solutions, LLC

(“AEGIS‐HS”), may use such proprietary data or personal information for business or

marketing purposes without first obtaining the prior written consent of the Person from

whom such data or information is collected or received by AEGIS‐SEF; provided, however,

that AEGIS‐SEF, and AEGIS‐HS as the managing member of AEGIS‐SEF, may use such data or

information for the provision by AEGIS‐HS of its CTA services provided, that any such data is

anonymized and aggregated with similar data of other persons so that such data or

information cannot be attributed to the Person from whom such data or information is

collected or received by AEGIS‐SEF.

2.10.2 Notwithstanding the provisions of Rule 2.10.1, AEGIS‐SEF may share such proprietary data

or personal information with one or more registered entities (as such term is defined in

CFTC Regulations).
AEGIS SEF, LLC

17

2.10.3 Access to the AEGIS‐SEF Platform may not be conditioned upon the use of proprietary data

or personal information for business or marketing purposes.

2.11 Chief Compliance Officer.

2.11.1 The Chief Compliance Officer (“CCO”) shall be appointed by the President of AEGIS‐SEF.

AEGIS‐SEF will notify the Commission within two business days of appointing any new CCO,

whether interim or permanent. The CCO is responsible for monitoring the design,

implementation and effectiveness of AEGIS‐SEF’s programs to promote and enforce

compliance with applicable law and regulations and SEF Rules. Further, the CCO has the

authority to monitor the sufficiency, effectiveness and independence of AEGIS‐SEF’s

regulatory program and to oversee all facets of AEGIS‐SEF’s regulatory program, including:

(a) trade practice and market surveillance, audits, examinations and other regulatory

responsibilities with respect to Participants (including ensuring compliance with, if

applicable, financial integrity, financial reporting, sales practice, recordkeeping and

other requirements), and the conduct of investigations;

(b) reviewing the size and allocation of the regulatory budget and resources and the

number, hiring, termination and compensation of regulatory personnel;

(c) reviewing the performance of the compliance staff;

(d) recommending changes that would ensure fair, vigorous and effective regulation;

(e) reviewing all regulatory proposals prior to implementation and advising the Board

as to whether and how such changes may impact regulation; and

(f) preparing an annual report assessing, for the Board and the CFTC, the regulatory

program of AEGIS‐SEF. Such annual compliance report shall be prepared and signed

by the CCO in the form and manner prescribed by CFTC Regulation 37.1500(d).

2.11.2 Any individual nominated to serve as CCO that has been disqualified from registration

pursuant to CEA Sections 8a(2) or 8a(3) may not hold the position

2.11.3 Removal of the CCO shall require the approval of a majority of AEGIS‐SEF’s Board.

SECTION III. ACCESS BY PARTICIPANTS, AUTHORIZED USERS AND BROKER FIRMS

3.1 Jurisdiction.

3.1.1 By accessing, or entering any Order into, the AEGIS‐SEF Platform, orsubmitting any Contract

into the AEGIS‐SEF Platform, and without any need for any further action, undertaking or

agreement, a Participant, Authorized User, or Broker Firm agrees (i) to be bound by, and

comply with, the Rules and obligations and Applicable Law, in each case to the extent

applicable to it, him or her, (ii) to become subject to the jurisdiction of AEGIS‐SEF with

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

actions or omissions of such Participant, Authorized User, or Broker Firm and (iii) to assist
AEGIS SEF, LLC

18

AEGIS‐SEF in complying with its legal and regulatory obligations, cooperate with AEGIS‐SEF

and the CFTC in any inquiry, investigation, audit, examination or proceeding, and authorizes

AEGIS‐SEF to provide information regarding it to the Regulatory Services Provider, the CFTC

or any Self‐Regulatory Organization.

3.1.2 Any Participant, Authorized User, or Broker Firm whose right to access the AEGIS‐SEF

Platform isrevoked,suspended, or terminated shall remain bound by the Rules, and, in each

case to the extent applicable, and subject to the jurisdiction of AEGIS‐SEF with respect to

any and all matters arising from, related to, or in connection with, the status, actions or

omissions of such Participant, Authorized User, or Broker Firm prior to such revocation or

termination.

3.1.3 An Authorized User who issuspended for any period remainssubject to the Rules and AEGIS‐

SEF's jurisdiction throughout the period of suspension. After revocation or termination of

the designation of an Authorized User, the Authorized User remainssubject to the Rules and

the jurisdiction of AEGIS‐SEF for acts done and omissions made while registered as an

Authorized User. Any Disciplinary Proceeding relating to an Authorized User shall occur as if

the Authorized User were still registered as such.

3.2 Participants.

3.2.1 Each Participant will have the right to access the AEGIS‐SEF Platform, including the right to

place Orders for each of its accounts. The access rights of a Participant hereunder may not

be transferred, assigned, sold or leased to any third person, except pursuant to a merger or

acquisition of all or substantially all the ownership interests in such Participant with or into

such third person.

3.2.2 While a Participant will have the right to access the AEGIS‐SEF Platform, a Participant will

not become a limited liability company member of AEGIS‐SEF and will not obtain any equity

or other interest in AEGIS‐SEF, including voting rights or rights to receive any dividends or

other distributions, whether arising from a dissolution, merger or consolidation involving

AEGIS‐SEF or otherwise.

3.3 Requirements for Participants.

3.3.1 A Participant must be admitted to the AEGIS‐SEF Platform and deliver an executed

Participant Agreement. To be eligible for admission, the Participant must demonstrate to

AEGIS‐SEF that it:

(a) is of good reputation and business integrity, as determined by a review of the

following: (i) criminal proceedings or judgments against the Participant, especially

in cases involving fiduciary matters, (ii) orders or notices by regulatory bodies

denying or restricting trading privileges on relevant contract markets, (iii)

disciplinary or arbitration records at any exchange, association, or similar tribunal,

(iv) fines, suspensions, or expulsions from any commodity or security exchange,

clearing organization, the National Futures Association, the Financial Industry

Regulatory Authority, or any other organization deemed relevant by AEGIS‐SEF, (v)

significant financial or credit difficulties or distress, and/or (vi) any false statements

made within or in connection with the Participant’s application;
AEGIS SEF, LLC

19

(b) complies with the financial responsibility, recordkeeping and reporting

requirements set out in Rule 3.4;

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

relevant, documents of organization, to trade SEF Contracts;

(d) is not Insolvent;

(e) is not prohibited from using the services of the AEGIS‐SEF Platform for any reason

whatsoever;

(f) holds all registrations required under Applicable Law, if any, including any FCM,

Supervised Person and/or Associated Person registration, as applicable;

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

(h) satisfies any other criteria that AEGIS‐SEF may require from a Participant.

3.3.2 As part of the application process, AEGIS‐SEF may request any information and

documentation as it may reasonably require in order to determine whether AEGIS‐SEF’s

eligibility requirements have been satisfied. Any Participant organized or located outside of

the United States shall enter into a written agreement acceptable to AEGIS‐SEF, appointing

a third party as its U.S. agent for service of process for purposes of CFTC Regulation 15.05,

and shall provide AEGIS‐SEF with a copy of the agreement.

3.3.3 AEGIS‐SEF may deny, condition, suspend, or terminate Participant status of any entity that:

(a) is unable to satisfactorily demonstrate its ability to satisfy the eligibility criteria to

become or remain compliant with such criteria;

(b) is unable to satisfactorily demonstrate its capacity to adhere to all applicable Rules;

(c) fails to meet such other generally applicable qualifications as the SEF Participant

Committee may from time to time determine;

(d) would bring the AEGIS‐SEF Platform into disrepute as determined by AEGIS‐SEF in

its sole discretion; or

(e) shows such other cause as AEGIS‐SEF may reasonably determine.

3.3.4 If AEGIS‐SEF decides to deny or condition a Person’s application, AEGIS‐SEF shall promptly

notify the applicant in writing to the address provided by the applicant on AEGIS‐SEF

application form.

3.3.5 A person approved as a Participant shall be subject to all of the Rules.

3.3.6 Each applicant and each Participant agrees (i) promptly to provide, or procure the provision

of, such information and documents as AEGIS‐SEF may reasonably request, including but

not limited to full information on the Participant’s activities for contracts on another SEF,

Contract Market or foreign board of trade if the Participant has activity in SEF Contracts
AEGIS SEF, LLC

20

settled by reference to prices on such other SEF, Contract Market or foreign board of trade,

and (ii) that AEGIS‐SEF, without being prevented by any duty of confidentiality by any holder

of information, may obtain such information  and documents from any SDR.

3.3.7 AEGIS‐SEF shall grant access to independent software vendors that meet the requirements

for Participants set out in this Rule 3.3.

3.3.8 Each Person that applies to become a Participant must submit an application to AEGIS‐SEF

in a form and manner prescribed by AEGIS‐SEF. Each applicant must promptly update any

application materials previously provided to AEGIS‐SEF if any of the information provided

therein becomes inaccurate or incomplete after the date of submission and prior to any

approval of the application. AEGIS‐SEF shall act upon, and approve or disapprove, any such

application without unreasonabledelay.

3.3.9 Each Person approved as a Participant in accordance with Rule 3.3.8 above shall agree in

writing to abide by the Rules and consent to the jurisdiction of AEGIS‐SEF.

3.3.10 Upon satisfaction of the requirements and proceduresset forth in Rules 3.3.8 and Rule 3.3.9,

AEGIS‐SEF will grant a Person’s application to become a Participant. If the application

process is not completed within six months of submission of an application and payment of

any applicable fee, the application will be deemed to be withdrawn.

3.4 Minimum Financial Requirements.

3.4.1 A Participant must qualify as an Eligible Contract Participant at all times and must promptly

notify AEGIS‐SEF if it fails to qualify as an Eligible Contract Participant.

3.4.2 A Participant or Broker Firm that is registered with the CFTC as an FCM must remain in

compliance with the minimum financial and related reporting requirements of CFTC

Regulations. Specifically, all Participants or Broker Firms registered with the CFTC as FCMs

or IBs must maintain capital in accordance with CFTC Regulation 1.17. A copy of any notice

or written report that a Participant or Broker Firm is required to file with the CFTC pursuant

to CFTC Regulations 1.10, 1.12 and/or 1.17 must also be filed with AEGIS‐SEF within the time

periods prescribed for such filing or delivery in CFTC Regulations 1.10, 1.12 and/or 1.17. A

Participant or Broker Firm that violates CFTC Regulations 1.10, 1.12 or 1.17 will be deemed

to have violated this Rule 3.4.2.

3.4.3 A Participant that is not registered with the CFTC must, upon request by AEGIS‐SEF, submit

to AEGIS‐SEF or the Regulatory Service Provider, if any, annual audited financial statements

certified by a certified independent public accountant (or by a Person having similar

qualifications if the Participant’s books of account are kept outside the United States) within

ninety calendar days of the Participant’s fiscal year‐end. If audited financial statements are

not available, the Participant must submit unaudited financial statements or the most

recent tax return to AEGIS‐SEF.

3.5 Duties and Responsibilities of Participants.

3.5.1 Each Participant shall, and shall cause its Authorized Users to:
AEGIS SEF, LLC

21

(a) access the AEGIS‐SEF Platform in a responsible manner and not for any improper

purpose;

(b) access the AEGIS‐SEF Platform only to conduct business that is subject to the Rules

and the SEF Requirements and in a manner consistent with the Rules and the SEF

Requirements;

(c) comply with the Rules and the SEF Requirements and act in a manner consistent

with the Rules and the SEF Requirements;

(d) observe high standards of integrity, market conduct, commercial honor, fair dealing,

and just and equitable principles of trade while conducting or seeking to conduct

any business connected with or concerning the AEGIS‐SEF Platform;

(e) not knowingly mislead or conceal any material fact or matter in any dealings or

filings with AEGIS‐SEF or in connection with a Disciplinary Proceedings;

(f) cooperate promptly and fully with AEGIS‐SEF in any investigation, inquiry, audit,

examination or proceeding regarding compliance with the Rules or any Disciplinary

Proceedings or arbitration;

(g) comply with any order issued by AEGIS‐SEF; keep all User IDs, account numbers and

passwords related to the AEGIS‐SEF Platform confidential; and

(h) keep, or cause to be kept, complete and accurate books and records, including,

without limitation, all books and records required to be maintained pursuant to the

Applicable Law, for at leastfive (5) years, and make such books and records available

for inspection by a representative of AEGIS‐SEF, the CFTC or the U.S. Department of

Justice.

3.5.2 In addition to the requirements of Rule 3.5.1, each Participant shall employ practices to

monitor and enforce compliance with its internal risk limits and shall be responsible for all

Orders and Transactions effected by or for the account of such Participant, its Authorized

Users or by any Person using its or their User IDs.

3.6 Authorized Users.

3.6.1 Each Participant and Broker Firm must designate at least one of its employees as an

Authorized User.

3.6.2 By agreeing to become an Authorized User, an individual agrees to be bound by the duties

and responsibilities of an Authorized User set out in Rule 3.7 and to be subject to, and

comply with, the Rules.

3.6.3 To designate an Authorized User, a Participant must follow the procedures established by

AEGIS‐SEF. AEGIS‐SEF may establish criteria that individuals must fulfill to become an

Authorized User. Without limiting the generality of the foregoing, each Participant will

ensure on an ongoing basis that (i) none of its Authorized Users are subject to a

disqualification pursuant to any Applicable Law (unless an appropriate exemption has been
AEGIS SEF, LLC

22

obtained with respect thereto) and (ii) each of its Authorized Users is technically proficient

and conducts their business in a fair and equitable manner.

3.6.4 AEGIS‐SEF will promptly notify a Participant in writing of the approval of designated

Authorized User(s) or if AEGIS‐SEF declines to approve the nomination of an Authorized

User.

3.6.5 AEGIS‐SEF will maintain a list of all designated Authorized Users for each Participant.

3.6.6 AEGIS‐SEF may, in its sole discretion, revoke or suspend the designation of an individual as

an Authorized User and shall promptly notify the Participant of such action.

3.6.7 To request the termination of the designation of an individual as an Authorized User, the

Participant must follow the procedures established by AEGIS‐SEF. AEGIS‐SEF may, in its

sole discretion, refuse to accept a request to terminate the registration of an Authorized

User or may postpone the effective date of the termination of registration if AEGIS‐SEF

considers it necessary for the protection of the Participant or in AEGIS‐SEF’s best interest.

Based on the information provided to, and other information gathered by, AEGIS‐SEF

regarding the request to terminate the registration of an Authorized User, AEGIS‐SEF will

determine whether to:

(a) accept the request to terminate such registration;

(b) postpone the effective date of termination of the registration; and/or

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

the registration.

3.7 Duties and Responsibilities of Authorized Users.

3.7.1 By agreeing to act as an Authorized User, such Person agrees to be bound by the duties and

responsibilities of an Authorized User and to be subject to, and comply with, the Rules.

3.7.2 An Authorized User must:

(a) ensure that activity conducted under the User IDs assigned to it complies with

Applicable Law and the Rules;

(b) have the authority, at AEGIS‐SEF’s request, to adjust or withdraw any Order

submitted under such User IDs;

(c) have and maintain all necessary regulatory approvals and/or licenses to operate as

an Authorized User;

(d) cooperate promptly and fully with AEGIS‐SEF in any investigation, inquiry, audit,

examination or proceeding regarding compliance with the Rules or any Disciplinary

Proceedings or arbitration proceeding;

(e) comply with any order issued by AEGIS‐SEF; and
AEGIS SEF, LLC

23

(f) agree to such other terms and conditions as may be established by AEGIS‐SEF from

time to time.

3.8 Broker Firms Accessing the AEGIS‐SEF Platform.

A Broker Firm may trade an account on behalf of a Participant under separate agreement between

that Broker Firm and the Participant.

3.9 Required Notices.

3.9.1 Each Participant shall immediately notify AEGIS‐SEF upon becoming aware of any of the

following events:

(a) any material changes to the information provided to AEGIS‐SEF by the Participant;

(b) any damage to, or failure or material inadequacy of, the systems, facilities or

equipment of the Participant used to effect Transactions on the AEGIS‐SEF Platform;

(c) any refusal of admission to, or withdrawal by the Participant of any application for

membership in, any Self‐Regulatory Organization;

(d) any denial or withdrawal of an application for registration or license by or from any

governmental agency, and any revocation, suspension or conditioning of a

registration or license granted by any Governmental Authority;

(e) the commencement of any judicial or administrative proceeding against the

Participant by a Governmental Authority 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 Authority;

(f) the indictment or conviction of, or any confession of guilt or plea of guilty or nolo

contendere by, the Participant or any of its officers for any felony or misdemeanor

involving, arising from, or related to, the purchase or sale of any commodity,

security, futures contract, option or other financial instrument, or involving or

arising from fraud or moral turpitude; and

(g) the Insolvency of the Participant or any of its Affiliates.

3.9.2 Each Participant shall notify AEGIS‐SEF at least ten business days prior to any merger,

acquisition, consolidation, combination, sale or other material change of ownership.

3.9.3 Nothing in this Rule 3.9 is intended to substitute for or limit any other reporting obligations

that a Participant may have to AEGIS‐SEF or any regulatory agency or Self‐Regulatory

Organization.

3.10 Account Administrators.

3.10.1 Each Participant shall appoint at least one Account Administrator who shall be responsible

for monitoring the Participant’s participation on the AEGIS‐SEF Platform, the compliance of
AEGIS SEF, LLC

24

the Participant with the Rules and communication with AEGIS‐SEF. The Account

Administrator(s) may access the AEGIS‐SEF Platform for risk management, audit and other

back‐office purposes as specified by AEGIS‐SEF from time to time.

3.10.2 Account Administrators shall not have Trading Privileges on the AEGIS‐SEF Platform.

3.10.3 A Participantshall promptly notify AEGIS‐SEF of a change in the identity of any of its Account

Administrators.

3.11 Access Requirements and Terms.

3.11.1 Participant accounts will be issued User IDs and passwordsforsecure access. The Participant

is responsible for the security of these items, and any misuse is the responsibility of the

Participant.

3.11.2 User IDs and passwords are for the Participant’s use only and shall not be shared with other

parties.

3.11.3 A Participant must notify AEGIS‐SEF immediately upon any suspicion of theft of a password,

or any unauthorized access.

3.12 Dues and Fees.

3.12.1 SEF dues and fees are posted at AEGIS‐SEF website and updated from time to time.

3.13 Inspections by AEGIS‐SEF.

3.13.1 If instructed to do so by the CFTC, based on evidence of a trading anomaly involving a

Participant or Broker Firm, or in coordination with another Participant’s or Broker Firm’s

regulatory compliance committee, AEGIS‐SEF and the Regulatory Services Provider, if any,

shall have the right, in connection with determining whether the Rules are being, will be, or

have been violated by the Participant or Broker Firm, to:

(a) inspect systems, equipment and software operated by the Participant or Broker

Firm in connection with business that is subject to the AEGIS‐SEF Rules, wherever

located;

(b) access the systems, equipment, software, and the premises on which the systems,

equipment, and software are located, and access any data stored in any of the

systems or equipment that is related to Bids, Offers, Transactions, RFQs, or

responses to an RFQ effected using the AEGIS‐SEF Platform, during the regular

business hours of such Participant or Broker Firm; and/or

(c) copy and/or reproduce any data to which AEGIS‐SEF has access under this rule that

is related to Bids, Offers, Transactions, RFQs, or responses to an RFQ effected using

the AEGIS‐SEF Platform.

3.13.2 Each Participant or Broker Firm shall provide the Regulatory Services Provider, if any, with

the same access as it would be required to provide to AEGIS‐SEF.
AEGIS SEF, LLC

25

3.13.3 AEGIS‐SEF may require a Participant or Broker Firm to furnish such information concerning

their business that is subject to the Rules of AEGIS‐SEF as AEGIS‐SEF deems reasonably

necessary to enable AEGIS‐SEF to perform its obligations under Applicable Law, including

information relating to (i) Transactions executed on the AEGIS‐SEF Platform and in related

derivatives markets, including in the products underlying those Transactions, and (ii)

information requested by a government agency relating to AEGIS‐SEF’s business and/or

AEGIS‐SEF’s compliance with Applicable Law that AEGIS‐SEF believes is maintained by, or

otherwise in the possession of, a Participant or Broker Firm.

3.14 Liquidity Provider Program.

In its discretion, AEGIS‐SEF may offer a liquidity provider program that provides incentives to

Participants that meet trading volume or liquidity thresholds established by AEGIS‐SEF. The liquidity

provider program may offer reduced fees, amongst other incentives, for qualified liquidity providers

as determined by AEGIS‐SEF in its sole discretion.

3.15 Broker Firms.

3.15.1 Participants may enter Orders and effect Transactions through a Broker Firm acting on their

behalf.

3.15.2 A Broker Firm:

(a) must enter into the applicable Broker Firm Agreement with AEGIS‐SEF and agree to

be subject to and to comply with the Rules;

(b) must agree to enter Orders and effect Transactions on behalf of a Participant only

in accordance with these Rules and procedures established by AEGIS‐SEF;

(c) must have and maintain all necessary regulatory approvals and/or licenses to enter

Orders and effect Transactions on behalf of Participants to the AEGIS‐SEF Platform;

(d) must maintain adequate financial resources in accordance with Rule 3.4; and

(e) must agree to such other terms and conditions as may be established by AEGIS‐SEF

from time to time.

3.15.3 The Broker Firm shall be responsible to AEGIS‐SEF for any failure by such Broker Firm (or its

employees or agents) to comply with the Rules.

3.15.4 AEGIS‐SEF will maintain a list of all designated Broker Firms for each Participant. AEGIS‐SEF

may, in its sole discretion, revoke or suspend the designation of an individual as a Broker

Firm and shall promptly notify the appropriate Participants of such action.

SECTION IV. TRADING OPERATIONS

4.1 Trading Hours and Operation.

4.1.1 Trading Hours
AEGIS SEF, LLC

26

The AEGIS‐SEF Platform will be open for trading on all business days during the market hours

specified in the trading calendar, which is available at AEGIS‐SEF’s website. During non‐

trading hours, AEGIS‐SEF systems will allow users to submit, modify and cancel orders as

defined in this Section IV.  

4.1.2 Procedures

With respect to trading on or through the AEGIS‐SEF Platform, AEGIS‐SEF may adopt,

without limitation, procedures relating to Transactions in SEF Contracts and trading on the

AEGIS‐SEF Platform, including procedures to:

(a) disseminate the prices of bids and offers and the prices of trades executed in SEF

Contracts;

(b) record and account for SEF Contracts;

(c) perform market surveillance and regulation on matters affecting SEF Contracts;

(d) establish limits on the number and/or size of Orders that may be submitted to the

AEGIS‐SEF Platform;

(e) establish limits on the number of SEF Contracts that may be traded on the AEGIS‐

SEF Platform or pursuant to the Rules;

(f) establish a limit on the maximum daily price fluctuations for any SEF Contracts and

provide for any related restriction or suspension of trading in such SEF Contracts;

and

(g) require a suspended or expelled Participant, or a Participant with restricted trading

rights, to cancel or liquidate one or more positions for such Participant’s account in

order to reduce or eliminate such Participant’s open positions, with such Participant

to be liable for any costs associated with such cancellation or liquidation.

4.1.3 Trading Suspension and Emergencies

AEGIS‐SEF reserves the right to adjust Trading Hours and suspend market activities

(including cancelling or suspending Orders) for all or a subset of OTOB SEF Contracts in the

case of extenuating market circumstances which include, but are not limited to, any

occurrence or circumstance that AEGIS‐SEF determines requires immediate action to

preserve the fair and orderly trading in, or the liquidation of or delivery pursuant to, any

OTOB SEF Contracts.

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 AEGIS‐SEF, the Board, any

committee of the Board, the President or, in his or her absence, any other Officer to take

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

the following actions:
AEGIS SEF, LLC

27

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

in part);

(b) extending or shortening the Last Trading Day for OTOB SEF Contracts;

(c) providing alternative settlement mechanisms;

(d) ordering the liquidation or transfer of Transactions, the fixing of a Settlement Price,

or the reduction of positions;

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

(f) temporarily modifying or suspending any provision of the Rules;

(g) imposing or modifying trading limits, price limits and/or position limits; and/or

(h) any other action as directed by the CFTC.

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 President, or another

authorized 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

President or such 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 President or such

Officer must convene a meeting as soon as practicable. Emergency actions taken pursuant

to this Rule 4.1.3 are subject to the conflict of interest provisions set forth in Rule 2.6.

Whenever AEGIS‐SEF, the Board, any committee of the Board, the President or other

authorized Officer takes actions necessary or appropriate to respond to an Emergency, a

duly authorized representative of AEGIS‐SEF, where possible, will post an announcement in

a notice to Participants. When the Board, any committee of the Board, the President or

other authorized Officer determines that the Emergency has been reduced sufficiently to

allow the AEGIS‐SEF Platform to resume normal functioning, any such actions responding to

an Emergency will be terminated.

AEGIS‐SEF 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,

AEGIS‐SEF will notify the CFTC as soon as possible or reasonably practicable.

Upon taking any action in response to an Emergency, AEGIS‐SEF will document the decision‐

making process related to such action. Such documentation will be kept for at least five

years following the date on which the Emergency ceases to exist or to affect AEGIS‐SEF, and

all such documentation will be provided to the CFTC upon request.

4.2 Contract Specifications.

The terms and conditions of each OTOB SEF Contract are set forth in the Contract Specifications as

shown in Section X of this Rulebook. Otherwise, the Contract Specifications applicable to each OTOB
AEGIS SEF, LLC

28

SEF Contract will be made available on AEGIS‐SEF’s website and are subject to revision or

amendment from time to time by AEGIS‐SEF.

4.3 Use of User IDs.

4.3.1 Each Participant and Broker Firm and each of their Authorized Users must have a unique,

AEGIS‐SEF‐assigned, registered User ID.

4.3.2 Each Order entered must contain an AEGIS‐SEF‐assigned User ID that identifies the

Authorized User that entered the Order.

4.3.3 No Person may use a User ID to place any Order except as permitted by the Rules, nor may

any Person knowingly permit or assist the unauthorized use of a User ID. Each Participant,

Broker Firm and Authorized User shall ensure that no User ID is used by any Person not

authorized by these Rules. Each Participant and Broker Firm must have in place policies and

procedures to ensure the proper use and protection of User IDs.

4.3.4 Each Participant and Broker Firm shall ensure the accuracy of the registration information

of its Authorized Users at all times.

4.3.5 Each Participant and Broker Firm shall be solely responsible for controlling and monitoring

the use of all User IDs issued to it and to its Authorized Users of the AEGIS‐SEF Platform.

4.3.6 Each Participant and Broker Firm shall notify AEGIS‐SEF promptly upon becoming aware of:

(a) any unauthorized disclosure or use of any User ID assigned to it or any of its

Authorized Users and of any other reason for deactivating a User ID; and  

(b) any unauthorized access to the AEGIS‐SEF Platform by any Authorized User or by

any Person using a User ID assigned to such Participant, Broker Firm or Authorized

User.

4.3.7 Any algorithm or other trading system, if any, that automates the generation and routing of

Orders to the AEGIS‐SEF Platform must have a unique, AEGIS‐SEF‐assigned, registered User

ID.

4.3.8 Each Participant and Broker Firm and each of their Authorized Users shall be bound by any

actions taken through the use of a User ID assigned to such Participant, Broker Firm or

Authorized User (other than any such actionsresulting from the fault or negligence of AEGIS‐

SEF), including the submission of Orders and/or execution of Transactions, whether or not

such actions were taken or authorized by such Participant, Broker Firm or Authorized User,

as the case may be.

4.4 Trading Procedures.

The following is a summary of the execution methods and credit and risk limit functionality available

on the AEGIS‐SEF Platform.    It is not intended to provide a comprehensive description of the

operation of the AEGIS‐SEF Platform or the execution methods and/or credit and risk functionality

available thereon. Additional information with respect to the operation of the AEGIS‐SEF Platform,

the execution methods and credit and risk functionality is provided in the applicable users guide and
AEGIS SEF, LLC

29

other specific information that AEGIS‐SEF may make available, from time to time, to Participants,

Authorized Users, and Broker Firms.  For each Permitted Transaction that is executed on or pursuant

to the rules of the AEGIS‐SEF Platform using either the Order Book under Rule 4.7 or the RFQ

Function under Rule 4.8, a Permitted Transaction will be deemed executed on the AEGIS‐SEF

Platform upon AEGIS‐SEF providing a record of the terms of an executed Transaction to each

counterparty as provided in Rule 4.10 below.  

4.5 Required Transactions.

AEGIS‐SEF does not currently offer any SEF Contracts that are Required Transactions and, therefore,

AEGIS‐SEF does not currently offer any execution function for Required Transactions.

4.6 Permitted Transactions

4.6.1 All Participants may enter Bids/Offers (i.e., an Order) directly into the AEGIS‐SEF Platform’s

Order Book under Rule 4.7 for each offered OTOB SEF Contract, but only for Permitted

Transactions that are also Hedging Contracts.  All Orders submitted to the Order Book are

anonymous; provided, however, that for Permitted Transactions, the identity of each

Counterparty is disclosed to the other Counterparty in the Trade Communication at the time

of delivery of such Trade Communication as provided in Rule 4.10.

4.6.2 Any Participant that is a CEU, or an Eligible Affiliate of a CEU, may transmit an RFQ to one or

more Financial Counterparties using the AEGIS‐SEF Platform’s RFQ Function under Rule 4.8,

seeking indicative Bids to purchase or Offers to sell an OTOB SEF Contract or a Bespoke SEF

Contract, provided that any such OTOB SEF Contract or Bespoke SEF Contract must be a

Permitted Transaction and a Hedging Contract.  The RFQ Function is a fully‐disclosed trading

system.

4.6.3 Any swap entered into using the AEGIS‐SEF Platform’s Order Book under Rule 4.7, or the

AEGIS‐SEF Platform’s RFQ Function under Rule 4.8, may only include SEF Contracts, that are

both Permitted Transactions and Hedging Contracts, in which all Counterparties to each

such SEF Contract are Participants and at least one Counterparty to each such SEF Contract

must be a Participant that is also: (i) a Commercial End‐User that is eligible for and has

elected the End‐User Exception with respect to such SEF Contract, (ii) an Eligible Affiliate of

a CEU that is eligible for and has elected the Hedging‐Affiliate Exception with respect to such

SEF Contract, or (iii) a Financial Counterparty that is a Pass‐Through Swap Counterparty with

respect to such SEF Contract that is also a Pass‐Through Swap Offset.

4.6.4 Note too that any SEF Contract, that is a Permitted Transaction and a Hedging Contract, and

is entered into between a Financial Counterparty that is a SD, as one Counterparty, and

either (i) a CEU that is eligible for and elects the End‐User Exception to clearing, or (ii) an

Eligible Affiliate of a CEU that is eligible for and elects the Hedging‐Affiliate Exception to

clearing, as the other Counterparty, will be exempt from the CFTC’s regulatory margin

requirements under CFTC Regulation Section 23.150 and therefore exempt from any

requirement to post initial margin or variation margin as regulatory margin.

4.7 Execution Methods for Permitted Transactions: Order Book
AEGIS SEF, LLC

30

The Order Book function provides an execution method that is only available for OTOB SEF

Contracts.  AEGIS‐SEF will maintain an Order Book for each OTOB SEF Contract that is offered for

trading by AEGIS‐SEF to Participants using the AEGIS‐SEF Platform.  Posting Participants may submit

Bids/Offers (each an Order) for an OTOB SEF Contract directly into the AEGIS‐SEF Platform’s Order

Book for that OTOB SEF Contract, provided each such Order may only involve an OTOB SEF Contract

that is both a Permitted Transaction and a Hedging Contract that complies with the requirements of

Rule 4.6.3.

4.7.1 AEGIS‐SEF Platform’s Order Book functionality provides a trading platform in which all

Participants using the AEGIS‐SEF Platform have the ability to enter multiple Bids to purchase

and Offers to sell (each an Order), observe or receive Bids and Offers entered by other

Participants, and transact on such Bids and Offers (as required by CFTC Regulation Section

37.3(a)(3)(iii)).  All Bids and Offers entered on the Order Book shall be Orders (i.e., firm Bids

or Offers and not indications of interest or indicative quotes), and all Orders shall be

displayed on the Order Book on an anonymous basis.

4.7.2 When a Posting Participant enters a Bid or Offer (i.e., an Order) on the Order Book, other

Participants are notified thatsuch Bid or Offer has been placed by the Bid or Offer appearing

on the Order Book on the AEGIS‐SEF Platform.

4.7.3 AEGIS‐SEF has no matching engine.  If a Participant elects to transact by accepting a Bid or

Offer (i.e., an Order)submitted by a Posting Participant on the AEGIS‐SEF’s Order Book,such

Participant may fill that Order by submitting its acceptance on the AEGIS‐SEF’s Order Book.  

If there are multiple acceptances for any Bid or Offer, the earliest to arrive on the Order

Book will be the Bid or Offer that fills the Order resting on the Order Book (i.e. the Order to

which the original Posting Participant’s Order will be matched).

4.7.4 Each Posting Participant, or a Broker Firm acting on behalf of such Posting Participant, shall

enter Orders into the Order Book on the AEGIS‐SEF Platform, and AEGIS‐SEF shall maintain

an electronic record of those entries. Each Participant shall be responsible for any and all

Orders entered using User IDs assigned by AEGIS‐SEF to the Participant, its Authorized Users

or Broker Firm.

4.7.5 Orders submitted by a Posting Participant can only be accepted (i.e., filled) with Bids or

Offers posted by other Participants with whom such Posting Participant has an agreement

governing the execution and settlement of swaps; provided, further, that if the Posting

Participant has designated credit and/or risk limits applicable to such Order pursuant to Rule

4.9.1, then only other Participants also having credit available with such Posting Participant,

as indicated by such Posting Participant, may accept (i.e., fill) such Posting Participant’s

Orders. When a Participant has logged into the AEGIS‐SEF Platform and observes the Orders

submitted and resting on the AEGIS‐SEF Platform’s Order Book, while each such Order is

displayed on an anonymous basis, if the Posting Participant that submitted each such Order

has (i) an agreement governing the execution and settlement of swaps with the observing

Participant and (ii) satisfies any applicable minimum credit requirement as indicated by the

Posting Participant pursuant to Rule 4.9.1, then the observing Participant will see a green

light displayed next to such Order, and, if not, then a red light will be displayed next to such

Order.
AEGIS SEF, LLC

31

4.7.6 All Orders submitted to the AEGIS‐SEF Platform’s Order Book must contain the following

information: (i) the relevant OTOB SEF Contract code; (ii) whether such Order is a bid to buy

or an offer to sell; (iii) the Order type (as shown below), (iv) price; (v) quantity; (vi) account

designation (the number to an account); (vii) the User ID of the Person entering the Order;

(viii) CTI code; (ix) any credit and/or risk limit applicable to such Order, (x) whether the

Posting Participant submitting such Order satisfies, or any Participant filling (i.e., accepting)

such Order must satisfy, the requirement of Rule 4.6.3 that at least one Counterparty to

such OTOB SEF Contract shall be: (A) a Commercial End‐User that is eligible for and has

elected the End‐User Exception with respect to such OTOB SEF Contract, (B) an Eligible

Affiliate of a CEU that is eligible for and has elected the Hedging‐Affiliate Exception with

respect to such OTOB SEF Contract, or (C) a Financial Counterparty that is a Pass‐Through

Swap Counterparty with respect to such OTOB SEF Contract that is also a Pass‐Through Swap

Offset, provided, further, that any such Pass‐Through Swap Offset must also be a Permitted

Transaction, and (xi) such additional information as may be prescribed from time to time by

AEGIS‐SEF.

4.7.7 All Orders submitted to the Order Book are anonymous and are posted anonymously.  For

Permitted Transactions executed using the Order Book, the identity of each Counterparty

will be disclosed to the other Counterparty in the Trade Communication delivered by AEGIS‐

SEF to the two Counterparties in accordance with Rule 4.10.

4.7.8 Order Types.  At the discretion of AEGIS‐SEF, the following types of Orders, as well as any

other types that may be approved from time to time, may be entered into the Order Book

on the AEGIS‐SEF Platform with respect to any OTOB SEF Contract that is both a Permitted

Transaction and a Hedging Contract:

(a) Market Order. A simple Order to buy an OTOB SEF Contract immediately executed

at the lowest price currently available on the AEGIS‐SEF Platform or to sell an OTOB

SEF Contract immediately executed at the highest price currently available on the

AEGIS‐SEF Platform.

(b) Limit Order. A simple Order executed when a specific price is met.

(c) All‐or‐None Order. A Limit Order where only the entire submitted size is available

for execution.

(d) Stop Order. A Market Order whose activation is dependent upon a specific price

being reached or surpassed (e.g., a Stop Order to buy becomes a Market Order in

the system when a trade is executed at or below the stop price, while a Stop Order

to sell becomes a Market Order in the system when a trade is executed at or above

the stop price).

(e) Stop Limit Order. A Stop Order that activates a Limit Order when the stop price is

reached or surpassed.

4.7.9 Allocation of Bunched Orders

(a) Orders eligible for post‐execution allocation must be allocated by an eligible account

manager in accordance with CFTC Regulation Section 1.35(b)(5).
AEGIS SEF, LLC

32

(b) Allocations must be made as soon as practicable after the entire transaction is

executed, but in any event account managers must provide allocation information

no later than a time sufficiently before the end of the day the order is executed to

ensure that records identify the ultimate customer for each trade.

(c) Allocations must be fair and equitable. No account or group of accounts may receive

consistently favorable or unfavorable treatment.

(d) The allocation methodology must be sufficiently objective and specific to permit

independent verification of the fairness of the allocations using that methodology

by appropriate regulatory and self‐regulatory authorities and by outside auditors.

(e) Eligible account managers shall keep and must make available upon request of any

representative of AEGIS‐SEF, the CFTC, the United States Department of Justice, or

other appropriate regulatory agency, the information specified in CFTC Regulation

Section 1.35(b)(5)(iii).

4.8 Execution Methods for Permitted Transactions: RFQ Function

The RFQ Function provides an execution method that is available for either Bespoke SEF Contracts

or OTOB SEF Contracts.  For Permitted Transactions, in addition to the Order Book execution method

described above in Rule 4.7, AEGIS‐SEF will also provide a request for quote (“Request for Quote

Function” or “RFQ Function”) execution method as described below in this Rule 4.8.  In addition,

the AEGIS‐SEF Platform may, from time to time, provide various other execution methods for

Permitted Transactions as notified by AEGIS‐SEF to Participants, Authorized Users and Broker Firms.

4.8.1 For Bespoke SEF Contracts and OTOB SEF Contracts, that are both Permitted Transactions

and Hedging Contracts, the RFQ Function available on the AEGIS‐SEF Platform allows a

Requesting Participant to transmit an RFQ seeking indicative quotes from one or more

Designated Participants for a bid to purchase or an offer to sell such Bespoke SEF Contract

or OTOB SEF Contract; provided, however, that the Requesting Participant is: (i) a

Commercial End‐User thatis eligible for and has elected the End‐User Exception with respect

to such SEF Contract, (ii) an Eligible Affiliate of a CEU that is eligible for and has elected the

Hedging Affiliate Exception with respect to such SEF Contract, or (iii) a Financial

Counterparty that is a Pass‐Through Swap Counterparty seeking such SEF Contract as a Pass‐

Through Swap Offset; provided, further, that only such Designated Participants will be

allowed to submit an indicative bid or offer or a firm Order in response to such RFQ; and

provided,still further, that the Requesting Participantshall be informed by AEGIS‐SEF of any

relevant Order resting at that time in the Order Book on the AEGIS‐SEF Platform that may

be responsive to such RFQ.  The RFQ Function is a fully disclosed trading system.

4.8.2 An RFQ may be sent by a Requesting Participant to one or more Designated Participants

provided that the Requesting Participant has an agreement with each such Designated

Participant governing the execution and settlement of swaps.

4.8.3 Using the RFQ Function, a Requesting Participant may initiate the negotiating process for a

Bespoke SEF Contract or an OTOB SEF Contract, that is both a Permitted Transaction and a

Hedging Contract, by submitting an RFQ that will be transmitted by the RFQ Function to one

or more Designated Participants selected by the Requesting Participant.    Such RFQ shall
AEGIS SEF, LLC

33

specify: the identification of the Requesting Participant; whether the RFQ is for a bid, offer,

or another form of response; and the quantity requested.

4.8.4 In response to any such RFQ, any Designated Participant receiving such RFQ may reply with

a responsive quote, which shall be an indicative response in that it is a solicitation of an offer

to negotiate.

4.8.5 If a responsive quote is acceptable to the Requesting Participant, the Requesting Participant

can accept the quote, which will cause a request to deal to be sent to the Designated

Participant that sent such responsive quote (“Responding Participant”).  If the Responding

Participant accepts such request, a legally enforceable transaction shall have occurred and

the process of the RFQ Function shall conclude.  If the Responding Participant rejects the

Requesting Participant’s request, then the process of the RFQ Function shall conclude and

no swap transaction shall have occurred.

4.8.6 If none of the initial responsive quotes from the Responding Participants are acceptable to

the Requesting Participant, then the Responding Participants may continue to send

responses until the Requesting Participant accepts one of such responses or the Requesting

Participant elects to terminate the process of the RFQ Function without having entered into

the requested Bespoke SEF Contract or OTOB SEF Contract, that is both a Permitted

Transaction and a Hedging Contract.

4.9 Credit and Risk Limits.  

4.9.1 Initially, the AEGIS‐SEF Platform will not provide Posting Participants the ability to require

minimum credit support when posting Bids/Offers on the Order Book on the AEGIS‐SEF

Platform; provided, however, that on and after the second anniversary of the effective date

of the AEGIS‐SEF Rulebook, when and if requested by one or more Financial Counterparties,

or when initiated by AEGIS‐SEF of its own volition, AEGIS‐SEF may add such ability to its

Order Book.  At such time, the AEGIS‐SEF Platform will then permit Participants, Authorized

Users and Broker Firms to input and establish credit and/or risk limits on the AEGIS‐SEF

Platform.  At such time, AEGIS‐SEF may also require Participants, Authorized Users and/or

Broker Firms to input and establish credit and/or risk limits on the AEGIS‐SEF Platform.

4.9.2 AEGIS‐SEF shall make public daily information on Settlement Prices, volume, open interest,

and opening and closing ranges for OTOB SEF Contracts that are actively traded, if any, on

the AEGIS‐SEF Platform’s Order Book. Trading information will be published on the AEGIS‐

SEF website at the end of the day.  

4.9.3 A Person establishing credit and/or risk limits on the AEGIS‐SEF Platform pursuant to Rule

4.9.1 shall be solely responsible for evaluating the creditworthiness of each Person for

whom it establishes such limit and for determining whether such Person is in compliance

with any such limits with respect to its activity on the AEGIS‐SEF Platform. AEGIS‐SEF shall

not have any responsibility for compliance with credit limits by a Participant, Authorized

User, or Broker Firm, notwithstanding that such credit limits may have been input into the

AEGIS‐SEF Platform, or for monitoring, maintaining or enforcing any such credit limits.

4.10 Confirmation of Transactions.
AEGIS SEF, LLC

34

4.10.1 For each Permitted Transaction that is executed on or pursuant to the rules of the AEGIS‐

SEF Platform using either the Order Book or the RFQ Function, AEGIS‐SEF will provide each

Counterparty to such Transaction a written record of all of the terms of that Transaction (a

“Trade Communication”) which shall legally supersede any previous agreement and serve

as a confirmation of the executed Transaction. This confirmation by AEGIS‐SEF of all terms

of the Transaction shall take place at the same time as execution.

4.10.2 With respect to each Transaction in a SEF Contract that is not cleared by a DCO, a Trade

Communication shall, for purposes of CFTC Regulation 37.6(b), consist of the Trade

Communication and, in accordance with and to the extent permitted by CFTC No‐Action

Letter 15‐25 (expiring March 31, 2016) and for so long as the applicable relief provided

therein is effective, the Terms Incorporated by Reference. In the event of any conflict

between (i) the Trade Communication and (ii) the Terms Incorporated by Reference, the

Trade Communication shall prevail to the extent of any inconsistency. “Trade

Communication” meansthe written communication containing the economic termsspecific

to a transaction provided by AEGIS‐SEF to the Participant(s) and/or Authorized User(s) who

executed such transaction on the AEGIS‐SEF Platform. “Terms Incorporated by Reference”

means the documents and agreements between the counterparties to the Transaction

(including, without limitation, ISDA master agreements (including the ISDA Schedules, ISDA

Credit Support Annexes, ISDA Protocols, and any other ISDA Annexesthereto), other master

agreements, terms supplements, master confirmation agreements, master netting

agreements, and incorporated industry definitions) governing such Transaction existing at

the time of execution of the Transaction.  The Participant(s) and/or Authorized User(s) must,

as applicable, maintain copies of all Terms Incorporated by Reference and, for purposes of

compliance with these Rules and CFTC Regulations shall provide AEGIS‐SEF with copies of

such Terms Incorporated by Reference, including all credit support terms agreed between

them, promptly upon request by AEGIS‐SEF.   As stated in the preamble to the SEF Core

Principles Final Rule: “counterparties choosing to execute a transaction not submitted for

clearing on or pursuant to the rules of a SEF must have all terms, including possible long‐

term credit support arrangements, agreed to no later than execution, such that the SEF can

provide a written confirmation inclusive of those terms at the time of execution and report

complete, non‐duplicative, and non‐contradictory data to an SDR as soon as technologically

practicable after execution.” (Emphasis added.) See 78 Fed. Reg. 33,476 at 33,491 (June 4,

2013).  

4.10.3 Delivery of a Trade Communication by AEGIS‐SEF to the Participants that are the

counterparties to any Transaction will not preempt or prevent one counterparty to such

Transaction delivering a Confirmation with respect to such Transaction to the other

Participant that is a counterparty to such Transaction in accordance with the ISDA master

agreement, or other master agreement, in effect between such counterparties.

4.11 Block Trades.

4.11.1 If AEGIS‐SEF were to decide to offer Required Transactions, AEGIS‐SEF shall then designate

the OTOB SEF Contracts in which Block Trades are permitted and determine the minimum

block size for such transactions. Appendix A to these Rules (“Minimum Block Sizes for the

OTOB SEF Contracts”) will then be revised to set forth a listing of minimum block sizes for

OTOB SEF Contracts.
AEGIS SEF, LLC

35

4.11.2 The following rules shall govern Block Trades for Required Transactions:

(a) A Block Trade must be for a quantity that is at or in excess of the applicable

minimum threshold. Orders may not be aggregated in order to achieve the

minimum transaction size unless expressly permitted under Applicable Law.

(b) Each Participant entering into a Block Trade must be an Eligible Contract Participant.

(c) A Broker Firm may submit a Block Trade to the AEGIS‐SEF Platform on behalf of

Participants that have consented to or provided instructions to execute Block

Trades.

(d) The price at which a Block Trade is executed must be fair and reasonable in light of

(i) the size of the Block Trade, (ii) the prices and sizes of other transactions in the

same OTOB SEF Contract at the relevant time, (iii) the prices and sizes of

transactions in other relevant markets at the relevant time, and (iv) the

circumstances of the markets or the Participants to the Block Trade.

(e) Block Trades shall not set off conditional orders (e.g., Stop Orders) or otherwise

affect orders submitted by Participants directly to the Order Book.

(f) Parties to a Block Trade must ensure that each Block Trade is submitted without

delay upon execution of the trade, in no event later than fifteen (15) minutes after

execution through an approved submission method. The submission must include

the OTOB SEF Contract(s), contract month(s), price, quantity of the Transaction,

time of execution, as well as any other information that AEGIS‐SEF may require.

AEGIS‐SEF shall promptly publish price and volume information.

(g) Broker Firms and Participants involved in the execution of Block Trades must

maintain written or electronic records of all such Block Trades, including an

electronic timestamp reflecting the date and time each such Order was received as

well as an electronic timestamp reflecting the date and time such Order was

executed or cancelled.

4.11.3 Trade Entry

If any Required Transactions are offered by AEGIS‐SEF, then Block Trades may be submitted

to the AEGIS‐SEF Platform by Participants or Broker Firms.

For Block Trades that are submitted directly by Participants, both Participants must confirm

the Block Trades to each other, specifying the identical Expiry(s) to be traded, the volume

and price, the buyer and seller, and which Participant will report the Block Trade to the

AEGIS‐SEF Platform.

A Broker Firm must specify the Expiry(s) to be traded, the volume and price, and the buyer

and seller. Both buyer and seller must be Participants.

4.11.4 Modification and Cancellation
AEGIS SEF, LLC

36

Block Trades submitted during the AEGIS‐SEF Platform’s Trading Hours are subject to

immediate confirmation by AEGIS‐SEF and may not be modified or cancelled by either

Broker Firms or Participants. If erroneous information has been submitted as part of a Block

Trade, AEGIS‐SEF should be notified as soon as the error is detected. If appropriate, AEGIS‐

SEF will facilitate the modification of the trade on a discretionary basis; any trade

modification AEGIS‐SEF agrees to submit to the SDR will be done during normal Trading

Hours.

Block Trades submitted during non‐trading hours will be queued and executed in the order

of submission when the market is next opened. Block Trades submitted outside of Trading

Hours and queued for reporting to the SDR above may be cancelled directly on the AEGIS‐

SEF Platform as long as the cancellation occurs before the AEGIS‐SEF Platform reopens for

regular Trading Hours.

4.11.5 Risk Limit Validation

All Block Trades submitted by either a Broker Firm or Participant will be subject to Trade

Risk Limit verification. Upon verification that the Block Trade will not cause any party to the

Block Trade to exceed its Trade Risk Limit, the Block Trade will be submitted to the SDR.

A Participant that has exceeded its Trade Risk Limit (because of changes in the risk profile of

such Participant’s existing positions or otherwise) may be party to a Block Trade only if such

Block Trade will reduce the Trade Risk Limit violation.

4.12 Position Transfers.

AEGIS‐SEF may permit transfer trades to move positions between Customer Accounts for

administrative purposes (“Position Transfers”) where no change in beneficial ownership is involved.

Participants must obtain approval from AEGIS‐SEF for a Position Transfer; such approval shall be

granted at the sole discretion of AEGIS‐SEF. Position Transfers will not contribute to any reported

volume, price, or trading range.

4.13 Trade Cancellations; Trade Reviews.

4.13.1 Trade Cancellation Authority

AEGIS‐SEF may 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 AEGIS‐

SEF Platform or by system defects or malfunctions. Notwithstanding any other provision of

this Rule 4.13.1, AEGIS‐SEF may adjust trade prices or cancel any trade if AEGIS‐SEF

determinesthat allowing the trade to stand as executed may have a material, adverse effect

on the integrity of the market. Any decision of AEGIS‐SEF with respect to an adjustment or

cancellation subject to this Rule 4.13.1 shall be final.

4.13.2 Review of Trades

AEGIS‐SEF may review a trade based on its analysis of market conditions or a request for

review by a user of the AEGIS‐SEF Platform. A request for review must be made within five

minutes of the execution of the trade. AEGIS‐SEF shall promptly determine whether the
AEGIS SEF, LLC

37

trade will be subject to review, and upon deciding to review a trade, AEGIS‐SEF will promptly

issue an alert to all Participants indicating that the trade is under review.  In the case of

OTOB SEF Contracts determined by AEGIS‐SEF to be illiquid, AEGIS‐SEF may initiate a review

up to one hour after the execution of the trade, and hasthe authority, but not the obligation,

to review trades reported more than one hour following execution if it determines that the

trade price was significantly out of line with fair value. In the course of its review of any

trade, AEGIS‐SEF may, but is not obligated to, inform any of the parties to the trade of the

identity and contact information of any other party to the trade.

4.14 Settlement; Clearing.

AEGIS‐SEF will provide links to relevant Settlement Prices from reference sources for OTOB

SEF Contracts on the AEGIS‐SEF Website. AEGIS‐SEF currently only offers Permitted

Transactions, without clearing. This section is reserved should Required Transactions, with

clearing, be added to the AEGIS‐SEF Platform in the future.

4.15 Recordkeeping; Audit Trail.

4.15.1 Participants that access the AEGIS‐SEF Platform electronically are responsible for

maintaining or causing to be maintained an audit trail for all electronic Orders, which shall

include Order entry, modification, and cancellation (the “Audit Trail”). Such Audit Trailshall

include Orders submitted and the times of Order entry and of any Order modification or

cancellation. Times that are so captured must not be capable of being modified by the

Person entering the Order and must reflect all necessary data fields specified by the AEGIS‐

SEF Platform from time to time. For executed Orders, the Audit Trail must record the

execution time of the trade along with all execution information.

4.15.2 Participants shall maintain Audit Trail information for a minimum of five (5) years and must

have the ability to produce Audit Trail data in a standard format upon request of AEGIS‐SEF.

4.15.3 CTI Codes. Each Participant or Broker Firm must identify each Transaction executed on the

AEGIS‐SEF Platform on the record of Transactions submitted to AEGIS‐SEF with the correct

CTI code. The CTI codes are as follows:

CTI 1: Transactions initiated and executed by an individual Participant for his own account,

for an account he controls or for an account in which he has ownership or financial interest;

CTI 2: Transactions executed for the proprietary account of a Participant firm;

CTI 3: Transactions where an individual Participant or Authorized User executes for the

personal account of another individual Participant, for an account the other individual

Participant controls or for an account in which the other individual Participant has

ownership or financial interest;

CTI 4: Any transaction not meeting the definition of CTI 1, 2 or 3. (These should be non‐

Participant customer transactions).

4.16 Information Regarding Orders.
AEGIS SEF, LLC

38

4.16.1 AEGIS‐SEF 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 AEGIS‐SEF, financial information

services or otherwise) as it may consider necessary or advisable from time to time.

4.16.2 Each Participant or other Person receiving any such information referred to in Rule 4.16.1

above shall not redistribute such information other than to the extent and in the manner as

may be expressly permitted by AEGIS‐SEF in writing from time to time.

4.17 Disaster Recovery; Business Continuity.

4.17.1 Each Participant shall have written disaster recovery and business continuity policies and

procedures in place to ensure it is able to perform certain basic operational functions in the

event of a significant internal or external interruption to its operations. At a minimum, the

following areas must be addressed in the Participant’s policies and procedures:

(a) the Participant must have procedures in place to allow it to continue to operate

during periods of stress or to transfer accounts to another fully operational

Participant with minimal disruption to the AEGIS‐SEF Platform;

(b) the Participant must perform periodic testing of disaster recovery and business

continuity plans, duplication of critical systems at back up sites and periodic back‐

up of critical information and provide AEGIS‐SEF with information regarding the

foregoing upon request; and

(c) the Participant must maintain and, at the request of AEGIS‐SEF, provide accurate

and complete information for its key personnel. A Participant must inform AEGIS‐

SEF in a timely manner whenever a change to its key personnel is made.

4.17.2 AEGIS‐SEF may prescribe additional and/or alternative requirements for a Participant’s

compliance with this rule.

4.18 Part 45 Reporting.

4.18.1 Reporting Swap Creation Data.

(a) (I) Part 45 of the CFTC’s Regulations sets forth the rules regarding regulatory

reporting.    For any swap executed on or pursuant to the rules of the AEGIS‐SEF

Platform, Sections 45.3(a) and 45.10(a) of the CFTC’s Regulations require AEGIS‐SEF

to report required swap creation data, as described in Appendix 1 to Part 45

(“Creation Data”), to a single Swap Data Repository (“SDR”) in the manner provided

in Section 45.13(a) of the CFTC’s Regulations not later than the end of the next

business day following the execution date of such swap.  

(II) Alternative Approach to Reporting. If the CFTC in approving AEGIS‐SEF’s SEF

Application, or in interpretive guidance applicable to SEFs only trading SEF Contracts

that are both Permitted Transactions and Hedging Contracts, if the CFTC allows the

following alternative approach to reporting, then for each such SEF Contract (i) that

is both a Permitted Transaction and a Hedging Contract, (ii) in which at least one
AEGIS SEF, LLC

39

party to such SEF Contract is a registered Swap Dealer, and (iii) such Swap Dealer is

the reporting party or the reporting counterparty under CFTC Regulation Section

45.8 with respect to such SEF Contract and any swap underlying such SEF Contract,

then such Swap Dealer shall report both Creation Data and Continuation Data with

respect to the swap underlying such SEF Contract and AEGIS‐SEF shall have no

reporting obligations under CFTC Regulation Parts 43 or 45 with respect to such SEF

Contract and the swap underlying such SEF Contract.  Similarly, AEGIS‐SEF shall have

no other obligations with respect to such SEF Contract or the swap underlying such

SEF Contract under any provision of Rule 4.18.1 or Rule 4.18.2.

(b) For any swap executed on or pursuant to the rules of the AEGIS‐SEF Platform,

Section 45.5(a) of the CFTC’s Regulations requires AEGIS‐SEF to generate and assign

a Unique Transaction Identifier (“UTI”) at or as soon as technologically practicable

following the execution of such swap, and prior to the reporting of required swap

creation data, which UTI shall consist of a single data field that contains two

components: (i) the legal entity identifier (“LEI”) of AEGIS‐SEF, and (ii) an

alphanumeric code generated and assigned by such SEF, which shall be unique with

respect to all such codes generated and assigned by AEGIS‐SEF.   AEGIS‐SEF shall

transmit the UTI electronically to (A) the SDR to which AEGIS‐SEF reports required

swap Creation Data for the swap as a part of that report, (B) to each counterparty

to the swap, as soon as technologically practicable after execution of the swap; and

(C) to the DCO, if any, to which the swap is submitted for clearing, as part of the

required swap Creation Data transmitted to the DCO for clearing purposes.

(c) A Participant or the Participant’s counterparty must transmit all data required to be

reported under CFTC Regulation Part 45 for any Block Trades to AEGIS‐SEF as soon

as technologically practicable after execution.

(d) AEGIS‐SEF may enter into contractual relationships with third party service

providers to transmit the required swap Creation Data to such SDR.

(e) Participant must provide AEGIS‐SEF with sufficient information to enable AEGIS‐SEF

to report all Creation Data, including without limitation:

(i) The Legal Entity Identifier of the Participant;

(ii) A yes/no indication of whether Participant is a Swap Dealer with respect to

the product with respect to which the Order is placed;

(iii) A yes/no indication of whether Participant is a Major Swap Participant with

respect to the product with respect to which the Order is placed.

(iv) A yes/no indication of whether Participant is a financial entity as defined in

CEA Section (2)(h)(7)(C);

(v) A yes/no indication of whether Participant is a U.S. Person;
AEGIS SEF, LLC

40

(vi) For each SEF Contract that is a Hedging Contract, an indication which

Participant(s) will elect the End‐User Exception or the Hedging Affiliate

Exception, if applicable, for any swap resulting from the Order; and

(vii) Any other information reasonably requested by AEGIS‐SEF for such

reporting.

(f) To the extent required, AEGIS‐SEF shall also perform any reporting required under

Part 43, Real‐Time Reporting, of the CFTC’s Regulations. AEGIS‐SEF shall have the

authority to charge fees for any services provided pursuant to this Rule 4.18.1;

provided, however, that such fees shall be equitable and non‐discriminatory.

4.18.2 Reporting Continuation Data.

(a) Part 45 of the CFTC’s Regulations requires Continuation Data to be reported to the

same Swap Data Repository referenced in Rule 4.18.1 during the life of any

Transaction. Continuation Data includes life‐cycle event data, as defined in Section

45.1 of the CFTC Regulations, or any successor regulation thereto, and Valuation

Data.

(b) Pursuant to Section 45.4(d) of the CFTC Regulations, Continuation Data for any

uncleared Transaction, whether or not the Transaction is executed on a Swap

Execution Facility, will be reported to the relevant Swap Data Repository by the

Reporting Counterparty.

(c) AEGIS‐SEF will have no obligation to fulfill any requirements to report Continuation

Data for any Participant, including Valuation Data.

(d) If AEGIS‐SEF fulfills any requirementsto report Continuation Data for any Participant

that is a Reporting Counterparty, such Participant will at all times remain

responsible for the performance of any and all regulatory reporting requirements

imposed on such Participant under Part 45 of the CFTC Regulations.

4.19 Publication of Trading Information.

AEGIS‐SEF will publish trading information as required by CEA Section 5h(f)(9) and CFTC Regulations

Parts 16 and 37.    If and to the extent required thereby, AEGIS‐SEF shall make public: (i) daily

information on Settlement Prices, volume, open interest, and opening and closing ranges for any

actively traded OTOB SEF Contracts on the AEGIS‐SEF Platform, and (ii) daily information on prices,

volume, and other relevant terms for each Bespoke SEF Contract executed that day using the RFQ

Function on the AEGIS‐SEF Platform.  Such trading information will be published, in an anonymized

form, on the AEGIS‐SEF website at the end of the day.

4.20 Trade Practice Surveillance, Market Monitoring and Financial Surveillance; Information Security;

Business Continuity‐Disaster Recovery Planning and Resources; and Anti‐Money Laundering and

Anti‐Terrorism (KYC).

As more fully described in Exhibit O, Documentation of Trade Practice, Market and Financial

Surveillance Protocols, to its SEF Application, AEGIS‐SEF will perform trade practice surveillance,
AEGIS SEF, LLC

41

market monitoring, and financial surveillance, through its CCO and other AEGIS‐SEF personnel as

required by Core Principle 4, Monitoring of Trading and Trade Processing, Core Principle 5, Ability to

Obtain Information, Core Principle 6, Position Limits or Accountability, and Core Principle 7, Financial

Integrity of Transactions, of Section 5h of the CEA, and Subparts C through H of Part 37 of the CFTC

Regulations.   

AEGIS‐SEF will maintain information security, and business continuity‐disaster recovery planning

and resources, in accordance with Core Principle 14, System Safeguards, of Section 5h of the CEA,

and Subpart O – System Safeguards of Part 37 of the CFTC Regulations (17 C.F.R. Sections 37.1400

and 37.1401).

AEGIS‐SEF will perform periodic (at least annually) testing of its surveillance systems, data privacy

methods, and disaster recovery plan and will provide updates and improvements thereto from time

to time based on the performance of such testing.

Anti‐Money Laundering and Anti‐Terrorism. Although AEGIS‐SEF is not a party to any OTOB SEF

Contract or any Bespoke SEF Contract, it is, nevertheless, AEGIS‐SEF’s policy (a) not to engage in or

knowingly assist any money laundering or other illicit business; and (b) not to engage in or knowingly

assist, or be a conduit for, terrorist financing.

Accordingly, prior to execution of each OTOB SEF Contract or Bespoke SEF Contract proposed to be

executed using the AEGIS‐SEF Platform, the Participants that are, or will be, counterparties under

each such SEF Contract will be required to provide to AEGIS‐SEF sufficient information relating to

each Participant’s counterparty, and Broker Firms will be required to provide to AEGIS‐SEF sufficient

information relating to any Broker Firm’s Trading Customer’s counterparty, for AEGIS‐SEF to confirm

that “know your customer” inquiries have been made and AEGIS‐SEF may elect to conduct restricted

list searches, including searches against the Specially Designated Nationals and Blocked Persons list

maintained by the Office of Foreign Assets Control of the U.S. Department of the Treasury, with

respect to each such counterparty.

SECTION V. CONTRACTS TO BE TRADED

5.1 Listing Procedures for Participants Seeking to List a New OTOB SEF Contract.

Pursuant to CFTC Regulations Section 37.4, AEGIS‐SEF, acting on its own volition without any request

from a Participant, may propose the listing of a swap as an OTOB SEF Contract on the AEGIS‐SEF

Platform,subject to complying with Rule 5.2 of the AEGIS‐SEF Rulebook and to objectively justifiable

commercial criteria.  0Any Participant may propose to AEGIS‐SEF the listing of a swap as an OTOB

SEF Contract on the AEGIS‐SEF Platform by submitting a listing application to AEGIS‐SEF. The

President of AEGIS‐SEF, whether acting on its own volition or in response to a request from a

Participant, shall have authority, subject to complying with Rule 5.2 and to objectively justifiable

commercial criteria, to submit a proposed OTOB SEF Contract to the CFTC, either with a request for

prior approval pursuant to CFTC Regulations Section 40.3, or with a self‐certification pursuant to

CFTC Regulations Section 40.2.

5.2 Swaps Not Readily Susceptible to Manipulation.

Before the President of AEGIS‐SEF submits a swap to the CFTC for prior approval or with a self‐

certification as an OTOB SEF Contract, the Chief Compliance Officer of AEGIS shall determine that
AEGIS SEF, LLC

42

such swap is not readily susceptible to manipulation, and shall submit to the CFTC the information

required by Appendix C to Part 38 of the CFTC’s Regulations to show that such swap complies with

the CFTC’s Core Principle 3 for SEFs, namely that:  

(a) For cash‐settled swaps, documentation demonstrating that the Settlement Price index is a

reliable indicator of market values and conditions, is highly regarded by industry/market

agents, and is publicly available on a timely basis;

(b) Where an independent, private‐sector third party calculates the referenced price index,

verification that the third party utilizes business practices that minimize the opportunity or

incentive to manipulate the cash Settlement Prices included in the index;

(c) Any other available information demonstrating that the referenced price index calculation

procedures safeguard against potential attempts to artificially influence the price, and a

description of how the calculation procedures eliminate or reduce the impact of potentially

unrepresentative data;

(d) Appropriate speculative limits, if necessary, to prevent manipulation; and

(e) Procedures for intraday market restrictions that pause or halt trading in the event of

extraordinary price moves that may result in distorted prices.  

SECTION VI. CODE OF CONDUCT

Preamble

This code of conduct defines and reaffirms the values, principles and internal controls that

Participants, Authorized Users, and Broker Firms as applicable, must follow in conducting their

business activities on the AEGIS‐SEF Platform. This code of conduct is intended to complement the

internal principles and practices of Participants, Authorized Users, and Broker Firms and to guide

market participants as they submit bids and offers, execute Transactions, and use other services on

the AEGIS‐SEF Platform. Compliance with this code helps ensure that activity on the AEGIS‐SEF

Platform is conducted with integrity. Violations of this code of conduct may result in penalties

including, but not limited to, temporary or permanent loss of access to the AEGIS‐SEF Platform.

6.1 Ethical Standards.

Conducting trading activities in an honorable and principled manner consistent with this code is the

essence of ethical conduct with respect to the AEGIS‐SEF Platform. Participants, Authorized Users,

and Broker Firmsshall act in accordance with these standards of ethics with regard to its SEF activity:

6.1.1 Regulatory Compliance. No Participant, Authorized User, or Broker Firm shall engage in

conduct that is a violation of the CEA or CFTC Regulations, or the Rules of the and will

conduct its businessin accordance with all applicable laws, regulations, tariffs and rules, and

in good faith, with a commitment to honest dealing.
AEGIS SEF, LLC

43

6.1.2 Fraud. No Participant, Authorized User, or Broker Firm shall engage in any fraudulent act or

engage in any scheme to defraud, deceive, trick or mislead in connection with or related to

any SEF activity.

6.1.3 Good Faith. No Participant, Authorized User, or Broker Firm shall knowingly enter, or cause

to be entered, bids or offers into the system other than in good faith for the purpose of

executing bona fide transactions.

6.1.4 Transaction Integrity. Participants, Authorized Users, and Broker Firms shall honor the

terms and conditions of the Rules and SEF Requirements and will transact in SEF Contracts

only for legitimate business purposes.

6.1.5 Antitrust. No Participant, Authorized User, or Broker Firm shall collude with other Persons

to affect the price or supply of any commodity, allocate territories, customers or SEF

Contracts, or otherwise unlawfully restrain competition.

6.1.6 Risk Management. Participants and Broker Firms shall adopt, adhere to and enforce risk

management and other policies and structures that are designed to ensure that trading

activities are conducted in accordance with this Code.

6.2 Sound Trading Practices.

Commodity markets reflect the constantly changing dynamics of supply and demand.    Efficient

business operations in such an environment demand practices that can manage risk and discover

market prices. Such practices must be consistent with the guiding ethical standards of this code of

conduct. Participants, Authorized Users, and Broker Firms will each act in accordance with these

standards of sound trading practices with regard to its SEF activity:

6.2.1 Skills. Each Participant, Authorized User, and Broker Firm is responsible for understanding

all factors that influence commodity markets, in order to maintain a high level of

competence in its trading. All Participants, Authorized Users, and Broker Firms must actively

and continually work to upgrade their skills, knowledge, and expertise in order to maintain

a high standard of professional knowledge.

6.2.2 Rules.  AEGIS‐SEF will provide updates to these Rules and memos regarding the application

and interpretation of these Rules. It is the obligation of each Participant, Authorized User,

and Broker Firm to ensure these documents are read and understood. It shall be prohibited

for a Participant, Authorized User, or Broker Firm to violate any Rule or any agreement made

with AEGIS‐SEF, or to engage in fraud, dishonorable or dishonest conduct, or conduct which

is inconsistent with just and equitable principles of trade.

6.2.3 Price Manipulation, Fictitious, Non‐Competitive or Artificial Transactions. No Person shall

effect or induce the purchase or sale of any SEF Contract for the purpose of creating or

inducing a false, misleading, or artificial appearance of activity in such SEF Contract, or for

the purpose of unduly or improperly influencing the market price of such SEF Contract or

for the purpose of making a price which does not reflect the true state of the market in such

SEF Contract. No Person shall arrange and execute simultaneous offsetting buy and sell

Orders in a SEF Contract with intent to artificially affect reported revenues, trading volumes

or prices.
AEGIS SEF, LLC

44

6.2.4 Market Manipulation. No Person shall attempt to manipulate, or manipulate the market, in

any SEF Contract. No Person shall directly or indirectly participate in or have any interest in

the profit of a manipulative operation or knowingly manage or finance a manipulative

operation. This includes any pool, syndicate, or joint account, whether in corporate form or

otherwise, organized or used intentionally for the purposes of unfairly influencing the

market price of any SEF Contract.

6.2.5 Market Disruption. Orders entered on the AEGIS‐SEF Platform for the purpose of upsetting

the equilibrium of the market in any SEF Contract or creating a condition in which prices do

not or will not reflect fair market values are prohibited, and any Person 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 AEGIS‐SEF Platform.

6.2.6 Gratuities. Except with the prior written approval of the Chief Compliance Officer, no Person

shall, directly or indirectly, give or permit to be given anything of value, including gifts and

gratuities, to a SEF Official in an amount that exceeds the maximum value permitted by

AEGIS‐SEF’s gifts and entertainment policy.

6.2.7 Disruptive Trading Practices. No Person shall engage in any trading, practice, or conduct

that constitutes a disruptive trading practice, as defined in CEA Section 4c(a)(5) (7 U.S.C.

6c(a)(5)), or in any interpretive guidance issued by the CFTC, such as 78 Fed. Reg. 31890.

6.2.8 Rumors. No Person shall knowingly circulate, in any manner, rumors that might affect

market conditions in any SEF Contract; provided, however, that this shall not prohibit

discussion of unsubstantiated information, so long as its source and unverified nature are

disclosed.

6.2.9 False Reports. No Person shall make any knowing misstatement of a material fact to AEGIS‐

SEF, any SEF Official, or any Board committee or Disciplinary or Appeals Panel. No Person

shall knowingly disseminate false or misleading reports regarding Transactions, AEGIS‐SEF

or one or more commodity markets.

6.2.10 Wash Sales. No Person shall place or accept buy and sell Orders in the same product and

expiration month, when they know 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 that are entered with

the intent to negate market risk or price competition shall be deemed to violate the

prohibition on wash sales. Additionally, no Participant shall knowingly execute or

accommodate the execution of such Orders by direct or indirect means.

6.2.11 Financial Condition. No trading will be conducted for the purpose of misrepresenting the

financial condition of the Participant, Authorized User, or Broker Firm.

6.2.12 Acts Detrimental to the AEGIS‐SEF Platform. No Person shall engage in any act that is

detrimental to the AEGIS‐SEF Platform. Misuse of the AEGIS‐SEF Platform is strictly

prohibited. It shall be deemed an act detrimental to the AEGIS‐SEF Platform to permit

unauthorized use of the AEGIS‐SEF Platform, to assist any Person in obtaining unauthorized

accessto the AEGIS‐SEF Platform, to trade on the AEGIS‐SEF Platform without an agreement
AEGIS SEF, LLC

45

and an established account, to alter the equipment associated with the AEGIS‐SEF Platform

(except with AEGIS‐SEF’s consent), to interfere with the operation of the AEGIS‐SEF

Platform, to intercept or interfere with information provided thereby, or in any way to use

the AEGIS‐SEF Platform in a manner contrary to the Rules.

6.2.13 Supervision. Participants and Broker Firms shall establish, maintain and administer

reasonable supervisory procedures to monitor the compliance of Authorized Users and

Supervised Persons with the Rules and any applicable provisions of the CEA or CFTC

Regulations and such Participant or Broker Firm may be held accountable for the actions of

such Authorized Users or Supervised Persons.

6.2.14 Disclosing Order Information. No Person shall disclose an Order to buy or sell, except to a

designated SEF Official or the CFTC or as necessary to efficiently execute the Order nor shall

any Person solicit or induce another Person to disclose Order information. No Person shall

take action or direct anotherto take action based on non‐public Orderinformation, 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.

6.3 Priority of Customer Orders.

6.3.1 No Person shall knowingly enter an Order into the AEGIS‐SEF Platform 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, including, without limitation, an Order allowing

discretion as to time and price, when such Person is in possession of a Customer Order that

can be but has not been submitted to the AEGIS‐SEF Platform.

6.3.2 For purposes of this Rule 6.3, a Person will not be deemed to knowingly buy or sell a SEF

Contract or execute a discretionary Order if (i) such Person is a corporate or other legal

entity consisting of more than one individual trader; (ii)such Person hasin place appropriate

“firewall” or separation of function procedures; and (iii) the Person or Authorized User

buying or selling the SEF Contract or executing the discretionary Order in question has no

direct knowledge of the Order to buy or sell the same SEF Contract for any other Person at

the same price or at the market price or of the Customer Order for the same SEF Contract,

as the case may be.

6.4 Trading Against Customer Orders.

6.4.1 General Prohibition. No Person 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.

6.4.2 Exceptions. The foregoing restriction does not prohibit permissible pre‐execution

discussions conducted in accordance with Rule 6.9.4 and shall not apply to the following:

(a) Block Trades affected pursuant to Rule 4.11;

(b) A trade knowingly made by a Person on the AEGIS‐SEF Platform against a Customer

Order for its own account, an account in which it has a direct or indirect financial
AEGIS SEF, LLC

46

interest, or an account over which it has discretionary trading authority if the

Customer Order has been entered immediately upon receipt and has first been

exposed on the AEGIS‐SEF Platform for a minimum of five (5) seconds; or

(c) Transactionsin which the Customer has consented in writing priorto the transaction

to waive the application of this Rule 6.4 as long as: (1) the Participant or Broker Firm

has clearly notified the Customer that the Participant or Broker Firm may take,

directly or indirectly, the opposite side of such Customer’s 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; (2) the Participant or

Broker Firm has waited for a minimum of five (5) seconds after first entering the

Order received from the Customer into the AEGIS‐SEF Platform before taking the

opposite side of the transaction; and (3) the Participant or Broker Firm maintains a

record that clearly identifies, by appropriate descriptive words, all such

transactions, including the time of execution, Commodity, date, price, quantity and

delivery month and provides a copy of such record to AEGIS‐SEF.

6.5 Crossing Orders.

6.5.1 Opposite Orders for different beneficial owners that are placed by a Person with discretion

(including time and price discretion) over both accounts may be entered into the Order Book

on the AEGIS‐SEF Platform, aslong as one Order is exposed for a minimum of five (5)seconds

before the other Order is entered into the Order Book and offset against the first Order.

6.5.2 Independently initiated Orders on opposite sides of the market for different beneficial

account ownersthat are immediately executable against each other may be entered without

delay provided that the Orders did not involve pre‐ execution communications.

6.6 Withholding of Customer Orders Prohibited.

No Broker Firm shall withhold or withdraw from the market any Customer Order, or any part of an

Order, for the benefit of any Person other than the Customer.

6.7 Priority of Execution.

6.7.1 Customer Orders must be entered into the AEGIS‐SEF Platform as soon as practicable. A

Broker Firm that receives a Customer Order that is not immediately entered into the AEGIS‐

SEF Platform must create a non‐erasable record of the Order, including the Order

instructions, account designation, date, time of receipt and any other information that may

be required by AEGIS‐SEF.

6.7.2 Customer Orders received by a Broker Firm shall be entered into the AEGIS‐SEF Platform in

the sequence received. Customer Orders that cannot be immediately entered into the

AEGIS‐SEF Platform must be entered when the Orders become executable in the sequence

in which the Orders were received.

6.7.3 Nondiscretionary Customer Orders received by a Broker Firm shall be entered into the

AEGIS‐SEF Platform in the sequence in which they were received. Nondiscretionary

Customer Orders that cannot be immediately entered into the AEGIS‐SEF Platform must be
AEGIS SEF, LLC

47

entered when the Orders become executable in the sequence in which the Orders were

received.

6.8 Responsibility for Customer Orders.

6.8.1 A Broker Firm must exercise due care in the handling and execution of Customer Orders. In

the case of a dispute as to whether a Broker Firm has exercised due care, AEGIS‐SEF is

authorized to determine whether the Broker Firm was negligent and, if applicable, whether

an adjustment is owed to the Customer.

6.8.2 A Broker Firm may not directly or indirectly guarantee the execution of an Order or any of

its terms such as the quantity or price and may only report an execution that has been

effected on the AEGIS‐SEF Platform or pursuant to the Rules. This Rule 6.8 shall not be

construed to prevent a Broker Firm from assuming or sharing in the losses resulting from an

error or the mishandling of an Order.

6.8.3 A Broker Firm 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 Broker Firm was

negligent or is settling a bona fide dispute regarding negligence. Broker Firms shall

document all adjustments. Broker Firms shall make and retain a record that contains the

date the adjustment was made, the name of the Broker Firm 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 AEGIS‐SEF

upon request.

6.9 Money Passing, Pre‐Arranged, Pre‐Negotiated and Noncompetitive Trades Prohibited.

6.9.1 No Person may enter Orders the purpose of which is to enter into Contracts without a net

change in either party’s open positions but a resulting profit to one party and a loss to the

other party, commonly known as a “money pass.”

6.9.2 No Person shall prearrange or pre‐negotiate any purchase or sale or noncompetitively

execute any Transaction, except as provided in Rule 6.9.3 or Rule 6.9.4.

6.9.3 The foregoing restriction shall not apply to Block Trades affected pursuant to Rule 4.11.

6.9.4 Participants and Authorized Users may engage in pre‐execution communications with

regard to transactions executed or to be executed on the AEGIS‐SEF Platform if one party

(the first party) wishes to be assured that a contra party (the second party) will take the

opposite side of the first party’s Order, subject to the following restrictions:

(a) 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.

(b) Parties to pre‐execution communications shall not disclose to a non‐party the

details of such communications or enter an Order to take advantage of information

conveyed during such communications except in accordance with this rule.
AEGIS SEF, LLC

48

(c) The first party’s Order must be entered into the AEGIS‐SEF Platform first, and the

second party’s Order may not be entered into the AEGIS‐SEF Platform until a period

of five (5) seconds has elapsed from the time entry of the first Order.

6.10 Disciplinary Procedures; Termination of Connection.

6.10.1 All access denials, suspensions, expulsions and other restrictions imposed upon a

Participant, Authorized User, or Broker Firm by AEGIS‐SEF pursuant to Disciplinary

Proceedings shall restrict with equal force and effect, access to, and use of, the AEGIS‐SEF

Platform.

6.10.2 AEGIS‐SEF, at its sole discretion, shall have the right to summarily terminate the connection

of any Participant, Authorized User, or Broker Firm or the access of any User ID to the AEGIS‐

SEF Platform. Additionally, AEGIS‐SEF, at its sole discretion, shall have the right to direct a

Participant to immediately terminate access to the AEGIS‐SEF Platform for any of such

Participant’s Authorized Users.

6.11 Position Limits and Accountability.

6.11.1 AEGIS‐SEF does not have any SEF Contracts subject to position limits at this time.  So long

as AEGIS‐SEF only allows trading of Permitted Transactions that satisfy the requirements of

Rule 4.6.3, all of the SEF Contracts traded on AEGIS‐SEF Platform will be Permitted

Transactionsthat are bona fide hedging transactions, which are notsubject to position limits

for speculative transactions.

6.11.2 The CFTC may also from time to time establish position limits for SEF Contracts traded

pursuant to these Rules. For any future SEF Contract subject to a position limit set by the

CFTC, AEGIS‐SEF shall not set its position limit at a level higher than the CFTC’s limit.

6.11.3 AEGIS‐SEF will demonstrate compliance with Commission Regulation 37.600 for Permitted

Transactions by sending the Commission a list of Permitted Transactions traded on the

AEGIS‐SEF Platform.

6.11.4 This Rule shall not limit the jurisdiction of AEGIS‐SEF to take action that it determines

necessary or appropriate in respect of any positions on the AEGIS‐SEF Platform.

6.12 Aggregation of Positions.

For purposes of Rule 6.11, positions in SEF Contracts shall be aggregated as required under CFTC

Regulations.

6.13 Information Disclosure and Documentation.

6.13.1 Participants, Authorized Users, and Broker Firms shall provide information relating to SEF

Contracts to regulators in compliance with all applicable rules and requirements and

continue to cooperate with regulators as reasonably necessary to assist in their

understanding of the markets.

6.13.2 Participants, Authorized Users, and Broker Firmsshall ensure that any information disclosed

to AEGIS‐SEF is accurate and consistent. No existing or prospective Participant, Authorized
AEGIS SEF, LLC

49

User, and Broker Firm shall make any false statements or misrepresentations in any

application, report or other communication to AEGIS‐SEF.

6.14 Compliance, Trade Practices Monitoring and Surveillance, and Markets Monitoring.

6.14.1 Each Participant and Broker Firm will have a compliance program commensurate with the

size and scope of its trading activities on the AEGIS‐SEF Platform and designed to ensure

appropriate, timely and ongoing review of trading practices and compliance with the Rules.

Each Participant and Broker Firm will act in accordance with these practices for compliance

and monitoring with regard to its AEGIS‐SEF Platform activity:

(a) Provide for proper training of personnel on the provisions of the Rules.

(b) Maintain internal policies and procedures to promote compliance with the Rules.

(c) Promptly disclose to AEGIS‐SEF the details of any violations of the Rules involving

Participant’s or Broker Firm’s activities on the AEGIS‐SEF Platform or provision of

market information to AEGIS‐SEF or any of its Affiliates.

(d) Provide an environment that encourages employees to engage in safe and

confidential discussions and to disclose to senior management any trading practices

that might violate the Rules.

(e) Require any consultant, contractor and/or subcontractor to disclose all financial

affiliations and conflict of interests. Ensure that consultants, contractors or

subcontractors do not cause any disclosure of information in violation of this code

and that confidentiality agreements are in effect where appropriate.

(f) Establish clear lines of accountability for trading practices, including provisions

relating to the responsibilities of corporate officers, with appropriate oversight by

the board of directors or other senior corporate management committee.

6.14.2 Pursuant to Exhibit O to its SEF Application, AEGIS‐SEF shall perform trade practices

monitoring and surveillance, in order to ensure that AEGIS‐SEF establishes and enforces

trading, trade processing, and participation rules that will deter abuses and give AEGIS‐SEF

the capacity to detect, investigate, and enforce those rules, including means to provide

market participants with impartial accessto the market and to capture information that may

be used in establishing whether rule violations have occurred.   

6.14.3 Pursuant to Exhibit O to its SEF Application, AEGIS‐SEF shall perform market monitoring and

surveillance in order to: (a) detect manipulation, price distortions and where possible,

disruptions of the delivery or cash‐settlement process; (b) monitor, detect and deter

potential trade practice violations or market manipulation; (c) monitor, detect and

investigate any anomalous behavior it observes in the trading or use of its SEF platform by

Participants and compare the behavior of its Participants to behavior of Affiliates of

Participants observed either on its SEF platform or through its monitoring of market data

and newsservicesto monitor, detect and deter potential trade practice violations or market

manipulation; (d) review busted trades and any trades negotiated using the Order Book

Function or the RFQ Function that are subsequently reversed or cancelled to determine
AEGIS SEF, LLC

50

whether they were executed pursuant to the CFTC Regulations and the AEGIS‐SEF Rulebook

or other applicable guidelines; and (e) use its audit trail data and other available information

to review selected trades to determine whether they were executed in conformity with

AEGIS‐SEF’s and the CFTC’s applicable regulations and guidelines.

SECTION VII. DISCIPLINE AND ENFORCEMENT

7.1 General.

(a) Participants, Authorized Users and other Persons within AEGIS‐SEF’s jurisdiction are

subject to this Section VII if they are alleged to: (i) have violated: (ii) have aided and

abetted a violation of; (iii) be violating; or (iv) be about to violate, any Rule of AEGIS‐

SEF.

(b) Except when the Board reservesresponsibility for an inquiry or investigation to itself

or delegates its responsibility to a committee of the Board, AEGIS‐SEF 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 Section VII.

(c) AEGIS‐SEF may delegate any or all of its powers or responsibilities under this Section

VII to the Market Regulation Department, which may take any actions on behalf of

AEGIS‐SEF that AEGIS‐SEF is permitted to take hereunder. In the event of any such

delegation, references to AEGIS‐SEF in this Section VII shall be construed to be

references to the Market Regulation Department. The Market Regulation

Department will maintain an enforcement staff that will effectively and promptly

prosecute violations in accordance with this Section VII. The enforcement staff may

not include persons that are associated with Participants using the AEGIS‐SEF

Platform or persons whose interests conflict with their enforcement duties. Further,

a member of the enforcement staff may not operate under the direction or control

of any Participant. Any reference to the Market Regulation Department in this

Section VII shall also be a reference to the enforcement staff.

(d) No member of the staff of AEGIS‐SEF 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. No member of the Board 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 with respect to which the Board

member is not a member of the relevant Disciplinary Panel or Appeal Panel.

(e) Upon being served with a notice of charges, the respondent may be represented by

counsel or any other representative of its choosing, at its own expense, in all

succeeding stages of the disciplinary process pursuant to this SectionVII.

(f) Pursuant to this Section VII, AEGIS‐SEF may hold:
AEGIS SEF, LLC

51

(i) a Participant liable, and impose sanctions against such Participant, for such

Participant’s own acts and omissions that constitute a violation of

Applicable Law;

(ii) a Participant liable, and impose sanctions against such Participant, for the

acts and omissions of each Authorized User authorized by, and each other

agent or representative of, such Participant that constitute a violation of

Applicable Law as if such violation were that of theParticipant;

(iii) an Authorized User liable, and impose sanctions against him or her, forsuch

Authorized User’s own acts and omissions that constitute a violation of

Applicable Law;

(iv) an Authorized User liable, and impose sanctions against him or her, for the

acts and omissions of each agent or representative of such Authorized User

that constitute a violation of Applicable Law as if such violation were that of

the Authorized User; and

(v) The Board shall appoint individuals on Disciplinary Panels and Appeal Panels

at the recommendation of the Chief Compliance Officer to serve for a term

of one year subject to reappointment, removal or replacement by the

Board. The term of an individual selected as a member of a Disciplinary

Panel or an Appeal Panel will not expire until the relevant Disciplinary

Proceedings are complete.

7.2 Inquiries and Investigation.

(a) The Market Regulation Department will investigate any matter within AEGIS‐SEF’s

disciplinary jurisdiction that is brought to the attention of the Market Regulation

Department. An investigation must be commenced upon the receipt of a request

from the CFTC staff or upon the discovery or receipt of information by AEGIS‐SEF

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 preliminary inquiries and

investigations within its sole discretion.

(b) The Market Regulation Department has the authority to:

(i) initiate and conduct preliminary inquiries andinvestigations;

(ii) prepare investigative reports and make recommendations concerning the

initiation of Disciplinary Proceedings;

(iii) prosecute alleged violations within AEGIS‐SEF’s disciplinary jurisdiction; and

(iv) represent AEGIS‐SEF on appeal from any Disciplinary Proceeding, summary

imposition of fines, summary suspension or other summary action.

(c) Each Participant, Authorized User and other Person subject to AEGIS‐SEF’s

jurisdiction:
AEGIS SEF, LLC

52

(i) is obligated to appear and testify and respond in writing to inquiries within

the time period required by the Market Regulation Department in

connection with (A) any SEF Business or Rule of AEGIS‐SEF; (B) any

preliminary inquiry or investigation; or (C) any preparation by and

presentation during a Disciplinary Proceeding or appeal from a decision in a

Disciplinary Proceeding, summary imposition of fines, summary suspension

or othersummary action by AEGIS‐SEF;

(ii) 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

(A) any Rule of AEGIS‐SEF; (B) any inquiry or investigation; or (C) any

preparation by and presentation during a Disciplinary Proceeding or appeal

from a decision in any Disciplinary Proceeding,summary imposition of fines,

summary suspension or other summary action by AEGIS‐SEF; and

(iii) may not impede or delay any preliminary inquiry, investigation, Disciplinary

Proceeding, appeal from a Disciplinary Proceeding, summary imposition of

fines, summary suspension or other summary action.

7.3 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 an

investigation for the Chief Compliance Officer when the evidence gathered during

any inquiry or investigation forms a reasonable basis to believe that a violation

within AEGIS‐SEF’s jurisdiction has occurred or is about to occur. Any such written

investigation report will include the following information:

(i) the reason(s) for initiating the investigation;

(ii) a summary of the complaint, if any;

(iii) all relevant facts and evidence gathered;

(iv) the Market Regulation Department’s analysis and conclusions;and

(v) the recommendation of the Market Regulation Department as to whether

disciplinary action should be pursued.

(b) For each potential respondent, the Market Regulation Department will recommend

any one of the following actions:

(i) closing the investigation without further action;

(ii) resolving the investigation through an informal disposition, including the

issuance of a warning letter; or

(iii) initiating Disciplinary Proceedings.
AEGIS SEF, LLC

53

(c) If the Market Regulation Department determines that no reasonable basis exists for

finding a violation, then the written investigation report will include the following

information:

(i) the reasons for initiating the investigation;

(ii) if the investigation was initiated by a complaint from a market participant

or regulator, a summary of the complaint;

(iii) all relevant facts and evidence gathered; and

(iv) the Market Regulation Department’s analysis and conclusions.

(d) After reviewing the Market Regulation Department’s written investigation report,

the Chief Compliance Officer will either:

(i) decline to forward the investigative report to a Review Panel for further

review;

(ii) forward the investigative report to a Review Panel for further review

without a recommendation regarding the initiation of Disciplinary

Proceedings; or

(iii) forward the investigative report to a Review Panel for further review with a

recommendation to initiate DisciplinaryProceedings.

(e) Each Market Regulation Department investigation must be completed in a timely

manner. Absent mitigating factors, a timely manner is no later than twelve (12)

months after the date that an investigation is opened. Mitigating factors that may

reasonably justify an investigation taking longer than twelve (12) months to

complete include the complexity of the investigation, the number of firms or

individuals involved as potential wrongdoers, the number of potential violations to

be investigated, and the volume of documents and data to be examined and

analyzed.

(f) In addition to any of the actions permitted pursuant to this Rule 7.3, the Market

Regulation Department may issue a warning letter to the potential respondent.

Such warning letter, if issued, shall not be construed as a penalty or an indication

that a finding of a violation has been made. A copy of such warning letter that is

issued shall be included in the investigation report of such potential respondent. No

more than one warning letter for the same potential violation may be issued to the

same potential respondent during any rolling twelve (12) month period.

7.4 Review of Investigative Reports.

(a) The Review Panel shall review the written investigation reports prepared by the

Market Regulation Department to determine whether further action with respect

to the matters discussed therein isrequired.
AEGIS SEF, LLC

54

(b) The Review Panel will review each completed investigation report promptly after

receipt thereof and, within twenty (20) days of such receipt, take one of the

following actions:

(i) If the Review Panel determines that additional investigation or evidence is

needed, the Review Panel shall promptly direct the Market Regulation

Department to conduct furtherinvestigation;

(ii) If the Review Panel determines that no reasonable basis exists for finding a

violation or that prosecution is otherwise unwarranted, the Review Panel

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; or

(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.

(c) Any member of the Review Panel must promptly recuse himself or herself and notify

the Chief Compliance Officer of the recusal if such member has a relationship of a

type listed in Rule 2.6.1 with a potential respondent in an investigative report.

(d) The Review Panel shall be comprised of three members. Furthermore, no group or

class of participants may dominate or exercise disproportionate influence on a

Review Panel. In addition, the Review Panel must not include any members of the

Market Regulation Department or any person involved in adjudicating any other

stage of the same proceeding. No member of the Review Panel may participate in

deliberations or voting on any matter in which he or she has a financial, personal or

other direct interest. A Review Panel may not include any members of the Market

Regulation Department or any person involved in adjudicating any other stage of

the same proceeding. If a vacancy shall occur on a Review Panel after it has begun

its proceedings, the remaining members shall complete consideration and

disposition of the matter. Once a Review Panel has determined the matter for which

it was appointed and has notified the Chief Compliance Officer in writing of its

decision, it shall be dissolved automatically. Except as may otherwise be provided

in these rules the Board may, at any time, with or without cause, remove any

member of a Review Panel.

7.5 Notice of Charges.

(a) If the Review Panel authorizes Disciplinary Proceedings pursuant to Rule 7.4, the

Market Regulation Department will prepare, and serve in accordance with Rule 7.7,

a notice of charges.

(b) A notice of charges must:

(i) adequately state the acts, practices or conduct that the respondent is

alleged to have engaged in;
AEGIS SEF, LLC

55

(ii) state the provision(s) of Applicable Law alleged to have been violated or

about to be violated;

(iii) advise the respondent of its right to a hearing and its right to counsel;

(iv) state the period of time within which the respondent can request a hearing

on the notice of charges, which will not be less than twenty (20) days after

service of the notice of charges;

(v) 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

(vi) advise the respondent that a failure to answer or to expressly deny a charge

may be deemed to be an admission of suchcharge.

(c) Upon being served with a notice of charges, the respondent has the right to be

represented by legal counsel or any other representative of its choosing in all

succeeding stages of the Disciplinary Proceedings, other than a Director, member of

an applicable Disciplinary Panel, SEF employee or other person substantially related

to the underlying investigation.

7.6 Answer to Notice of Charges.

(a) If the respondent determines to answer a notice of charges, the respondent must

file a written answer within twenty (20) days after being served with such notice, or

within such later time period determined appropriate by the chairperson of the

Review Panel.

(b) To answer a notice of charges, the respondent must in writing:

(i) specify the allegations that the respondent denies oradmits;

(ii) specify the allegations that the respondent does not have sufficient

information to either deny or admit;

(iii) specify any specific facts that contradict the notice ofcharges;

(iv) specify any affirmative defenses to the notice of charges;and

(v) sign and serve the answer on the HearingPanel.

(c) Any failure by the respondent to timely serve a written 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 or expressly deny one or more allegations in a notice of

charges will be deemed to be an admission of that allegation or those allegations. A

general denial by the respondent, without more, will not satisfy the foregoing

requirements.
AEGIS SEF, LLC

56

(d) If a respondent admits or failsto specifically deny any of the allegationsin the notice

of charges, the Hearing Panel shall find that such violations set forth in such

allegations have been committed and shall impose a sanction for each such

violation. The Hearing Panel shall promptly notify the respondent in writing of any

sanction to be imposed pursuant to this Rule 7.6(d) and advise the respondent that

it may request a hearing on such sanction within the time period specified in the

notice. The failure to requestsuch a hearing within such time period shall be deemed

to constitute an acceptance of such sanction. Any hearing pursuant to this Rule

7.6(d) shall be concerned only with the sanction(s) imposed by the Hearing Panel

pursuant to this Rule 7.6(d).

7.7 Service of Notice of Charges.

Any notice of charges or other documents contemplated to be served pursuant to this Section VII

may be served upon the respondent either personally or by leaving  the same at his or her place of

business or by deposit with the United States post office, postage prepaid via registered or certified

mail addressed to the respondent at the address as it appears on the books and records of AEGIS‐

SEF.

7.8 Settlements.

(a) At any time after a notice of charges has been issued, the respondent may propose

in writing an offer ofsettlementto anticipated orinstituted Disciplinary Proceedings.

Any offer ofsettlement must contain proposed findings and sanctions and be signed

by the respondent or potential respondent and submitted to the Market Regulation

Department. 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 AEGIS‐SEF over it and

over the subject matter of the proceedings and consent to the entry of the findings

and sanctions imposed under such offer ofsettlement.

(b) The Review Panel or Hearing Panel, as applicable, may accept the offer of

settlement, but may not alter the terms of a settlement offer unless the respondent

or potential respondent agrees.

(c) If an offer of settlement is accepted, the Review Panel or Hearing Panel, as

applicable, must issue a written decision specifying the rule violations that the

presiding panel has reason to believe were committed, including the basis or

reasons for the presiding panel’s conclusions, and any sanction to be imposed,

which shall include full Customer restitution where Customer harm is

demonstrated. Should an offer of settlement be accepted by the Hearing Panel

without the agreement of the Market Regulation Department,such written decision

must adequately support the Hearing Panel’s acceptance of the settlement. If

applicable,such written decision must also include a statement that the respondent

has accepted the sanctions imposed without either admitting or denying the rule

violations.

(d) The respondent or potential respondent may withdraw his or her offer of

settlement at any time before final acceptance by the presidingpanel.
AEGIS SEF, LLC

57

(e) If the offer of settlement of a respondent or potential respondent is not accepted,

fails to become final or is withdrawn before final acceptance by the presiding panel,

the matter will proceed as if the offer had not been made and the offer (and all

documentsrelating to it) will not become part ofthe record. Neither the respondent,

the 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, any Disciplinary Proceedings.

(f) Any accepted settlement agreement shall include a waiver by the respondent of all

rightsto appeal or otherwise challenge or contestthe validity ofthe settlement offer.

7.9 Hearing Panel.

(a) The Board will appoint a Hearing Panel to conduct hearings in connection with any

Disciplinary Proceedings authorized by a Review Panel, to make findings and impose

sanctions pursuant to this Section VII.

(b) The Hearing Panel shall be comprised of three members. The chair of the Hearing

Panel shall be appointed by the Board. No group or class of participants may

dominate or exercise disproportionate influence on a Hearing Panel, and no

member of the Hearing Panel may participate in deliberations or voting on any

matter in which he orshe has a financial, personal or other direct interest. A Hearing

Panel may not include any members of the Market Regulation Department or any

person involved in adjudicating any otherstage of the same proceeding. If a vacancy

shall occur on a Hearing Panel after it has begun its proceedings, the remaining

members shall complete consideration and disposition of the matter. Once a

Hearing Panel has determined the matter for which it was appointed and has

notified the Chief Compliance Officer in writing of its decision, it shall be dissolved

automatically. The Board may, at any time remove any member of a Hearing Panel

for cause.

(c) Any of the functions of AEGIS‐SEF or the Hearing Panel under this Section VII may

be performed by a Regulatory Service Provider pursuant to a delegation of such

functions by AEGIS‐SEF, and references to the Review Panel, the Hearing Panel or

the Market Regulation Department, as appropriate, shall be deemed to be

references to such Regulatory Service Provider. Nevertheless, AEGIS‐SEF will retain

exclusive authority in all substantive decisions made by any Regulatory Service

Provider, including, but not limited to, denials of access to the AEGIS‐SEF Platform

for disciplinary reasons. AEGIS‐SEF will document any instances where its actions

differ from those recommended by the Regulatory Service Provider.

(d) Within ten days of being notified of the appointment of a Hearing Panel, a

respondent may seek to disqualify any individual named to the Hearing Panel for

the reasons identified in Rule 2.6.1, or for any other reasonable grounds, by serving

written notice on the General Counsel and providing a copy thereof to the Hearing

Panel. By not timely filing a request for disqualification, the respondent will be

deemed to have waived any objection to the composition of a Hearing Panel. The

General Counsel will decide the merits of any request for disqualification within his

or her sole discretion. Any such decision will be final and not subject toappeal.
AEGIS SEF, LLC

58

7.10 Convening Hearings of Disciplinary Proceedings.

(a) All Disciplinary Proceedings (except for summary impositions of fines pursuant to

Rule 7.17) will be conducted at a hearing before a Hearing Panel. A hearing will be

conducted privately and confidentially unless the Hearing Panel decides that the

hearing, or any part of it, should be held in public after giving each respondent the

opportunity to present its, his or her views on holding a public hearing.

Notwithstanding the confidentiality of hearings, a 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 Disciplinary Proceedings with respect to such

respondent. Parties to a Disciplinary Proceeding include each respondent and the

Market Regulation Department. The hearing shall be conducted before members of

the Hearing Panel.

(c) The chairman of the Hearing Panel may continue, adjourn or otherwise conduct the

hearing as he or she may deem appropriate. The chairman of the Hearing Panel will

determine all procedural and evidentiary matters, including the admissibility and

relevance of any evidence proffered. In determining procedural and evidentiary

matters, the chairman of the Hearing Panel will not be bound by any evidentiary or

procedural rules or law; nevertheless, the procedures for the hearing may not be so

informal as to deny a fair hearing. Once admitted during the hearing, the Hearing

Panel may consider, and attach the weight it believes appropriate to, evidence or

other materials. AEGIS‐SEF will provide guidance to the chairman of the Hearing

Panel on the conduct of the hearing.

(d) Except for procedural and evidentiary matters decided by the chairman of the

Hearing Panel pursuant to paragraph (c) above and Rule 7.11, unless each

respondent otherwise consents, the entire Hearing Panel must be present during

the entire hearing and any related deliberations.

7.11 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 evidence in the possession or under the control of AEGIS‐SEF

that the Market Regulation Department will use to support the allegations and

proposed sanctions in the notice of charges or which the chairman of the Hearing

Panel deems relevant to those charges. Notwithstanding the foregoing, no

respondent will have the right to review, and AEGIS‐SEF 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
AEGIS SEF, LLC

59

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:

(i) 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 sanctionsin the notices

of charges, and

(ii) 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 or

that are relevant to those charges.

(d) For purposes of this Rule 7.11, information that could adversely affect competitive

positions includes positions in SEF Contracts currently held, trading strategies

employed in establishing or liquidating positions, the identity of Customers, and the

personal finances of the Person providing theinformation.

(e) Unless indicated otherwise by the chairman of the Hearing Panel, all such requests

for access to information identified in Rule 7.11(a) must be made not less than ten

(10) days prior to the scheduled hearingdate.

7.12 Conducting Hearings of Disciplinary Proceedings.

(a) At a hearing conducted with a Hearing Panel, the Market Regulation Department

will present its case supporting the allegations and proposed sanctions in the notice

of chargesto the Hearing Panel. The respondent is entitled to appear personally and

participate in the hearing.

(b) At a hearing conducted with a Hearing Panel, the Market Regulation Department

and each respondent may:

(i) present evidence and facts deemed relevant and admissible by the chairman

of the Hearing Panel;

(ii) call and examine witnesses (including, but not limited to, employees or

agents of AEGIS‐SEF that form part of the Market Regulation Department);

and

(iii) cross‐examine witnesses called by other parties.

(c) If a respondent has failed to timely file a written answer to a notice of charges but

appears at the hearing, the respondent may not participate in the hearing (except

for a hearing pursuant to Rule 7.6(d)) 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
AEGIS SEF, LLC

60

to timelyfile an answer, the Hearing Panel will adjourn the hearing and direct the

respondent to promptly file a written answer in accordance with Rule7.6.

(d) Any person entitled, required, or called upon to attend a hearing before a Hearing

Panel pursuant to paragraph (b)(ii) 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. AEGIS‐SEF will require persons within its jurisdiction that

are called as witnesses to appear at the hearing and produce evidence, and will

make reasonable efforts to secure the presence of all other persons called as

witnesses whose testimony would be relevant.

(e) If, during any Disciplinary Proceedings, the Hearing Panel determines that a

reasonable basis existsto believe thatthe respondent violated, oris about to violate,

a Rule of AEGIS‐SEF or a provision of Applicable Law otherthan 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 7.6. 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.

(f) The Hearing Panel may summarily impose sanctions on any Participant, Authorized

User, or other Person within AEGIS‐SEF’s jurisdiction whose actions impede the

progress of a hearing.

(g) AEGIS‐SEF 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, and a copy of such recordings shall become a part

of the record of such proceedings. If the respondent requests a copy of all or

portions of the recording of a hearing, the chairman of the Hearing Panel may,

within his or her sole discretion, order the respondent to pay the costs for

transcribing the recording of the hearing.

(h) No interlocutory appeals of rulings of any Hearing Panel, or chairman of the Hearing

Panel, are permitted.

7.13 Decision of Hearing Panel.

(a) Promptly following a hearing, the Hearing Panel will render a written 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) AEGIS‐SEF will serve a copy of the written decision on the respondent and the

Market Regulation Department. The written decision will include the following

information:

(i) the notice of charges or a summary of thecharges;
AEGIS SEF, LLC

61

(ii) the answer, if any, or a summary ofthe answer;

(iii) a summary ofthe evidence introduced at the hearing or, where appropriate,

incorporation by reference of the investigationreport;

(iv) a statement of findings and conclusions with respect to each charge, and a

complete explanation of the evidentiary and other bases for such findings

and conclusions with respect to each charge;

(v) an indication of each specific rule that the respondent was found to have

violated; and

(vi) a declaration of all sanctions imposed against the respondent, including the

basis for such sanctions and the effective date of such sanctions.

(c) Unless a timely notice of appeal is filed pursuant to Rule 7.16, the order of the

Disciplinary Proceedings will become final upon the expiration of 20 days after the

order is served on the respondent and a copy thereof is provided to the Market

Regulation Department.

7.14 Sanctions.

(a) After notice and opportunity for hearing in accordance with these rules, AEGIS‐SEF

will impose sanctions if a Participant, Authorized User, or other Person within

AEGIS‐SEF’s jurisdiction is found to have violated any Applicable Law. Disciplinary

sanctions imposed by AEGIS‐SEF shall be commensurate with the violations

committed, and shall be clearly sufficient to deter recidivism or similar violations by

other market participants. In addition, the respondent’s disciplinary history will be

taken into account in determining the appropriate sanction.

(b) AEGIS‐SEF may deny, suspend, or permanently bar a Participant’s access to the

AEGIS‐SEF Platform pursuant to disciplinary measures or emergency action upon

such Participant’s breach of any Rules outlined in this AEGIS‐SEF Rulebook; provided

that any decision to deny, suspend, or permanently bar a Participant’s access to the

AEGIS‐SEF Platform shall be impartially enforced and not be put into effect while

such Financial Counterparty is involved in any live trade on the AEGIS‐SEF Platform.

AEGIS‐SEF shall provide Participant 24 hours’ prior written notice of any decision to

suspend or permanently bar Participant from accessing the AEGIS‐SEF Platform;

provided, however, if a live trade is reasonably expected to occur within less than

24 hours of such decision, notice provided as soon as reasonably practicable prior

to such trade going live shall be deemed sufficient.  Such notice shall include an

explanation, in reasonable detail, of the reason for the suspension or permanent

bar.

(c) AEGIS‐SEF may impose one or more of the following sanctions or remedies:

(i) censure;
AEGIS SEF, LLC

62

(ii) limitation on the Participant’s right to access all or part of the AEGIS‐SEF

Platform;

(iii) suspension of the Participant’s right to access all or part of the AEGIS‐SEF

Platform for a period not to exceed twelve (12)months;

(iv) fine of up to $1,000,000 for eachviolation;

(v) restitution or disgorgement;

(vi) expulsion or termination of a Participant, Authorized User or other Person

within AEGIS‐SEF’s jurisdiction; or

(vii) any other sanction or remedy deemed to beappropriate.

(d) Each Participant will be responsible for paying any fine or other amount imposed

on, but not paid by, any Authorized User authorized by, or other agent or

representative of, such Participant.

7.15 Costs.

Regardless of the outcome of any Disciplinary Proceeding, a Hearing Panel may order a respondent

to pay some or all of the costs associated with the Disciplinary Proceedings, including costs that the

Hearing Panel believes were unnecessarily caused by the respondent. Costs may include costs

associated with the inquiry or investigation, the prosecution by the Market Regulation Department,

legal and professional assistance, the hearing, and administrative and other expenses incurred by

the Hearing Panel.

7.16 Appeal from Hearing Panel Decision.

(a) Parties to a Disciplinary Proceeding may appeal the decision of the Hearing Panel

within twenty (20) days ofreceiving the order oftheDisciplinary Proceedings by filing

a notice of appeal with the counsel designated by AEGIS‐SEF. While an appeal is

pending, the effect of the written decision issued by the Hearing Panel (including

any sanctions, remedies, or costs imposed thereby) issuspended.

(b) In a notice of appeal, the appellant must state in writing the grounds for appeal,

including the findings of fact, conclusions, or sanctions to which the appellant

objects. An appellant may appeal the written decision of a Hearing Panel on any of

the following grounds:

(i) the decision was arbitrary, capricious, an abuse of discretion, or not in

accordance with the Rules of AEGIS‐SEF;

(ii) the decision exceeded the authority or jurisdiction of the Hearing Panel or

AEGIS‐SEF;

(iii) the decision failed to observe requiredprocedures;

(iv) the decision was unsupported by the facts or evidence; or
AEGIS SEF, LLC

63

(v) the imposed sanctions, remedies, or costs were inappropriate or

unsupported by the record.

(c) The General Counsel will forward copies of any notice of appeals received by it to

all parties to the Disciplinary Proceedings in question, except the appellant. On or

before the 20th day after filing a notice of appeal, the appellant must file with the

Chief Compliance Officer and serve 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 appellantserved its brief, the appellee may

file and serve its brief in opposition.

(d) Within twenty (20) 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 Appeal Panel shall be comprised of three members. No group or class

of participants may dominate or exercise disproportionate influence on an Appeal

Panel. An individual may not serve on an Appeal Panel if the individual has a

relationship of a type described in Rule 2.6.1. The appeals proceeding shall be

conducted before all members of the Appeal Panel.

(e) Within ten (10) days of being notified of the appointment of an Appeal Panel, the

appellant may seek to disqualify any individual named to the Appeal Panel for the

reasons listed in Rule 2.6.1 or for any other reasonable grounds, by serving written

notice on the AEGIS‐SEF’s designated counsel (which may be an internal counsel or

an external counsel). By not timely filing a request for disqualification, the appellant

will be deemed to have waived any objection to the composition of the Appeal

Panel. The General Counsel will decide the merits of any such objection in his or her

sole discretion. Any such decision will be final and not subject to appeal.

(f) An Appeal Panel may hold a hearing to allow parties to present oral arguments. Any

hearing will be conducted privately and confidentially unless the chairman of the

Appeal Panel decides that the hearing, or any part of it, should be held in public

after giving each appellant the opportunity to present its, his, or her views on

holding a public hearing. Notwithstanding the confidentiality of hearings, an Appeal

Panel may appoint individuals 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 any evidentiary or procedural rules orlaw.

(g) Except for good cause, the Appeal Panel will only consider on appeal the record

before the Hearing Panel, the written exceptions filed by the parties, and the oral or

written arguments of the parties. The Appeal Panel may only consider new evidence

when it issatisfied that good cause exists asto why the evidence was notintroduced

during a prior stage of the Disciplinary Proceeding. In connection with any appeal,

the Market Regulation Department will furnish to the Appeal Panel a transcript of

the hearing, any exhibits introduced at the hearing, the notice of appeal, and briefs

filed to supportand oppose the appeal.

(h) After completing its review, the Appeal Panel may affirm, modify, or reverse any

order of Disciplinary Proceedings under appeal in whole or in part, including
AEGIS SEF, LLC

64

increasing, decreasing, or eliminating any sanction or remedy imposed; imposing

any other sanction or remedy authorized by the Rules of AEGIS‐SEF; or remanding

the matter to the same or a different Hearing Panel for further Disciplinary

Proceedings. The Appeal Panel may order a new hearing for good cause, or if the

Appeal Panel deems it appropriate.

(i) Promptly following the appeal proceeding, the Appeal Panel will issue a written

decision and provide a copy to the parties. The written decision issued by the Appeal

Panel must adhere to all the requirements of Rule 7.13(b), to the extent that a

different conclusion is reached from that issued by the Hearing Panel. A decision by

a majority of the Appeal Panel will constitute the decision of the Appeal Panel.

(j) An Appeal Panel’s written decision on appeal (including findings of fact and

conclusions and the imposition of sanctions, remedies, and costs, and the effective

date of any sanction, remedy, or cost) will be the final action of AEGIS‐SEF, and will

not be subject to appeal within AEGIS‐SEF. Disciplinary sanctions imposed by AEGIS‐

SEF shall be commensurate with the violations committed, and shall be clearly

sufficient to deter recidivism or similar violations by other market participants. In

addition, the respondent’s disciplinary history will be taken into account in

determining the appropriate sanction.

7.17 Summary Imposition of Fines Relating to Submission ofRecords.

(a) AEGIS‐SEF may fine a Participant, Authorized User or other Person subject to the

jurisdiction of AEGIS‐SEF forfailure:

(i) to make timely payments of initial or variation margin, Options premiums,

fees, cost, charges or fines to AEGIS‐SEF;

(ii) to make timely and accurate submissions to AEGIS‐SEF of notices, reports

or other information required by AEGIS‐SEF Rules; and/or

(iii) to keep any books and records required by AEGIS‐SEF Rules.

(b) AEGIS‐SEF will set the amount of any fines imposed pursuant to Rule 7.17, with the

maximum fine for each violation not to exceed $5,000. A warning letter may be

issued for first‐time violations or violators, provided that no more than one warning

letter may be issued per any rolling twelve (12) month period for the same violation.

7.18 Emergency Disciplinary Proceedings.

(a) Notwithstanding anything in the Rules of AEGIS‐SEF to the contrary, AEGIS‐SEF may

impose a sanction, including suspension of the Participant’s right to access the

AEGIS‐SEF Platform or the association of an Authorized User with a Participant, or

take othersummary action against any Participant, Authorized User, or other Person

subject to AEGIS‐SEF’sjurisdiction, if AEGIS‐SEF reasonably believessuch immediate

action is necessary to protect the best interest of themarketplace.
AEGIS SEF, LLC

65

(b) Whenever summary action pursuant to paragraph (a) above is proposed, AEGIS‐SEF

will, if practicable, serve the party against whom the action is contemplated with

written notice. If prior notice is not practicable, AEGIS‐SEF will give notice at the

earliest possible opportunity to the respondent against whom the action is brought.

The notice will be prepared by the Market Regulation Department, and such notice

will state the action, briefly state the reasons for the action, and state the effective

time, date, and duration of the action.

(c) The respondent shall be given the opportunity for a hearing as soon as reasonably

practicable, and the hearing must be conducted before a Hearing Panel pursuant to

Rules 7.9‐7.13. The respondent shall have the right to be represented by legal

counsel, or any other representative of its choosing and at its own expense, in all

proceedings subsequent to the emergency action taken.

(d) Promptly after the hearing concerning a summary action orsuspension, the Hearing

Panel will render a written decision based on the weight of the evidence contained

in the record of the proceeding. The decision of a majority of the Hearing Panel will

be the decision of the Hearing Panel. AEGIS‐SEF will serve copies of the written

decision of the Hearing Panel on the respondent and the Market Regulation

Department. The written decision will include the following information:

(i) a description of, andreasons for, the summary action taken;

(ii) a summary of the evidence produced at thehearing;

(iii) a statement of findings of fact andconclusions;

(iv) a determination that the summary action should be affirmed, modified, or

reversed; and

(v) a declaration of any action to be taken pursuant to the determination, and

the effective date and duration ofsuch action.

(e) Any decision of a Hearing Panel pursuant to this Rule 7.18 will be the final action of

AEGIS‐SEF, and notsubject to appeal within AEGIS‐SEF upon serving the respondent

with a copy of the decision.

(f) At the request of AEGIS‐SEF, a respondent, against whom a summary action is

brought pursuant to this Rule 7.18, must provide access to and/or copies of books

and records over which the respondent has access or control, and must furnish

information to, or appear or testify before, AEGIS‐SEF in connection with the

enforcement of any Rule of AEGIS‐SEF.

7.19 Rights and Responsibilities after Suspension or Termination.

(a) When the right of a Participant, Authorized User or other Person to access the

AEGIS‐SEF Platform is suspended for a period of twelve (12) months or less, none of

its rights will apply during the period of the suspension, except for the right of such

Participant, Authorized User or other Person to assert claims against others as
AEGIS SEF, LLC

66

provided in the Rules of AEGIS‐SEF. Any such suspension will not relieve the

Participant, Authorized User, or other Person of its obligations under the Rules of

AEGIS‐SEF to perform any transactions entered intobefore the suspension, or for

any SEF fees, costs, or charges incurred during the suspension. AEGIS‐SEF may

discipline a suspended Participant, Authorized User, or other Person under this

Section VII for any violation of Applicable Law committed by the Participant,

Authorized User or other Person before, during, or after the suspension.

(b) When the right of a Participant, Authorized User or other Person to access the

AEGIS‐SEF Platform is terminated, all of its rights will terminate, except for the right

of the Participant, Authorized User, or other Person in question to assert claims

against others, as provided in the Rules of AEGIS‐SEF. A terminated Participant,

Authorized User, or other Person may only seek to reinstate its right to access the

AEGIS‐SEF Platform by filing an application in accordance with Rule 3.3. AEGIS‐SEF

will not consider the application of a terminated Participant, Authorized User, or

other Person if such Participant, Authorized User, or other Person has failed to

appear at Disciplinary Proceedings without good cause, or hasimpeded the progress

of Disciplinary Proceedings.

(c) A suspended or terminated Participant, Authorized User or other Person remains

subject to the Rules of AEGIS‐SEF and the jurisdiction of AEGIS‐SEF for acts and

omissions prior to the suspension or termination, and must cooperate in any

inquiry, investigation, Disciplinary Proceeding, appeal of Disciplinary Proceedings,

summary suspension, or other summary action as if the suspended or terminated

Participant, Authorized User or other Person still had the right to access the AEGIS‐

SEF Platform.

7.20 Notice to the Respondent, the CFTC, and thePublic.

AEGIS‐SEF will provide written notice of Disciplinary Proceedings to the parties and the CFTC

consistent with CFTC Regulations. Whenever AEGIS‐SEF suspends, expels, fines, or otherwise

disciplines, or denies any Person access, to the AEGIS‐SEF Platform, AEGIS‐SEF will make the public

disclosures required by CFTC Regulations.

SECTION VIII. ARBITRATION

8.1 In General.

Participants, Authorized Users, and Broker Firms shall arbitrate all disputes, controversies or claims

between or among themselves that relate to or arise out of any Contract or otherwise arise out of

one or more transactions made or to be made on the AEGIS‐SEF Platform or subject to the Rules of

AEGIS‐SEF and that are based upon facts and circumstancesthat occurred at a time when the parties

were Participants, Authorized Users, and Broker Firms .

8.2 Participant, Authorized User, or Broker Firm Initiating an Arbitration Claim.
AEGIS SEF, LLC

67

A Participant, Authorized User, or Broker Firm may initiate an arbitration claim by submitting any

required documents and fees to the chosen Arbitrator. A Participant, Authorized User, or Broker

Firm that initiates such an arbitration claim shall submit notice thereof to AEGIS‐SEF.

8.3 Penalties.

8.3.1 Any failure on the part of a Participant, Authorized User, or Broker Firm to arbitrate a dispute

subject to this Section VIII, or the commencement by any such person of a suit in any court

prior to arbitrating a case that is required to be arbitrated pursuant to this Section VIII,

violates the Rules and shall subject such Person to Disciplinary Proceedings pursuant to

Section VII. Participant, Authorized User, or Broker Firm

8.3.2 The Chief Compliance Officer may summarily suspend, pursuant to Rule 8.3.1, a Participant,

Authorized User, or Broker Firm that fails to timely satisfy an arbitration award rendered in

any arbitration pursuant to this Section VIII.

SECTION IX. MISCELLANEOUS

9.1 Trading by SEF Officials Prohibited; Misuse of Material, Non‐Public Information.

9.1.1 Terms used in this Rule 9.1 and not otherwise defined in the Rules shall have the meanings

set forth in CFTC Regulations 1.3 and 1.59. As used in this Rule 9.1, the term “SEF Official”

does not include any member of the Board, a committee established by the Board, a Hearing

Panel or Appeal Panel if such Person is not also an Officer or employee of AEGIS‐SEF.

9.1.2 No SEF Official may trade, directly or indirectly, (i) any SEF Contract traded on or subject to

the Rules or (ii) any related financial instrument.

9.1.3 The Chief Compliance Officer (or, in the case of the Chief Compliance Officer, the Board)

may grant exemptions from the provisions of Rule 9.1.1 to SEF Officials on a case‐by‐case

basis under circumstances that are not contrary to the purposes of this Rule and CFTC

Regulation 1.59. Such circumstances may include, but are not necessarily limited to:

(a) participation in pooled investment vehicles where such SEF Official has no direct or

indirect control over Transactions effected by or for the account of the pool;

(b) service by such SEF Official as an executor or administrator of an estate;

(c) service by such SEF Official in any other fiduciary capacity, such as an officer of a

charitable organization, in which such SEF Official receives no pecuniary benefit

from the trading of SEF Contracts or other financial instruments;

(d) trading in SEF Contracts or financial instruments executed on or subject to the rules

of a swap execution facility, a designated contract market or a national securities

exchange under circumstances in which such SEF Official’s access to material non‐

public information in respect of such financial instruments is sufficiently minimal or

attenuated so as to be insignificant; and

(e) such other circumstances as the Chief Compliance Officer (or, in the case of the

Chief Compliance Officer, the Board) may determine.
AEGIS SEF, LLC

68

9.1.4 For the avoidance of doubt, participation by a SEF Official in a retirement plan sponsored by

AEGIS‐SEF shall not be deemed to constitute trading directly or indirectly in a SEF Contract

or related financial instrument, notwithstanding such plan’s trading of SEF Contracts or

related financial instruments.

9.1.5 Any SEF Official that has received an exemption under Rule 9.1.3(b) must:

(a) furnish to AEGIS‐SEF (or, in the case of the Chief Compliance Officer, to the Board)

account statements and other documents relevant to the trading activities that are

so exempted; and

(b) inform the Chief Compliance Officer (or, in the case of the Chief Compliance Officer,

the Board) within one business day of any material change of information that may

affect such SEF Official’s qualification for such exemption.

9.1.6 Insider Trading.  Pursuant to Section 13(e) of the CEA (7 U.S.C. 13c(e)), with respect to any

material non‐public information obtained as a result of their employment, agency

relationship or engagement with AEGIS‐SEF where the SEF Official, agent or independent

contractor expected or should have reasonably expected that the non‐public information

disclosed may assist a Person in trading any SEF Contract, any SEF Contract traded on

another designated contract market or other market, or any related underlying commodity

or security (“Material Non‐Public Information”), SEF Officials, agents and independent

contractors of AEGIS‐SEF are prohibited from (a) trading for such person’s own account, or

for or on behalf of any other account, on the basis of such Material Non‐Public Information,

or (b) disclosing such Material Non‐Public Information to others for any purpose

inconsistent with the performance of such person's official duties as a SEF Official, agent or

independent contractor of AEGIS‐SEF.

9.2 Market Data.

9.2.1 Each Participant, and Broker on behalf of itself and each of its Affiliates, Authorized Users

and other Persons affiliated with any of the foregoing, hereby acknowledges and agreesthat

AEGIS‐SEF owns and shall retain all right, title and interest in and to the AEGIS‐SEF Platform,

all components thereof, including without limitation all related applications, all application

programming interfaces, user interface designs, software and source code and any and all

intellectual property rights therein, including, without limitation    all registered or

unregistered, as applicable (a) copyright, (b) trade mark, (c) service mark, (d) trade secret,

(e) trade name, (f) data or database rights, (g) design rights, (h) moral rights, (i) inventions,

whether or not capable or protection by patent or registration, (j) rights in commercial

information or technical information, including know‐how, research and development data

and manufacturing methods, (k) patent, and (l) other intellectual property and ownership

rights, including applicationsforthe grant of any of the same, in or to the AEGIS‐SEF Platform

and all other related proprietary rights of AEGIS‐SEF and/or any of its Affiliates (together,

with any and all enhancements, corrections, bug fixes, updates and other modifications to

any of the foregoing and any and all data or information of any kind transmitted by means

of any of the foregoing, including, without limitation,  the  market data, the “Proprietary

Information”). Each Participant and Broker on behalf of itself and each of its Affiliates,

Authorized Users and other Persons affiliated with any of the foregoing, further

acknowledges and agrees that the Proprietary Information is the exclusive, valuable and
AEGIS SEF, LLC

69

confidential property of AEGIS‐SEF. Each Participant and Broker Firm acknowledges and

agreesthat itshall not and shall not permit its Affiliates, Authorized Users and other Persons

affiliated with any of the foregoing to, reverse engineer, copy, bug fix, correct, update,

transfer, reproduce, republish, broadcast, create derivative works based on or otherwise

modify, in any manner, all or any part of AEGIS‐SEF or the Proprietary Information. Each

Participant and Broker Firm further agrees to and to cause each of its Affiliates, Authorized

Users and other Persons affiliated with any of the foregoing to, keep the Proprietary

Information confidential and not to transfer, rent, lease, loan, sell or distribute, directly or

indirectly, all or any portion of the AEGIS‐SEF Platform or any Proprietary Information.

9.2.2 Notwithstanding any other provision of this Rule 9.2, each Participant, Authorized User, or

Broker Firm retains such rights as it may enjoy under applicable law with respect to market

data solely in the form such market data was submitted to AEGIS‐SEF by such Participant,

Authorized User, or  Broker Firm.

9.2.3 Subject to the provisions of paragraph (a), all Participants, Authorized Users, Broker Firms,

and other Persons affiliated with any of the foregoing hereby acknowledge and agree that

AEGIS‐SEF is the owner of all rights, title and interest in and to all intellectual property and

other proprietary rights (including all copyright, patent, trademark or trade secret rights) in

market data, and all derivative works based thereon, and further agree not to distribute,

create derivative works based on, or otherwise use or commercially exploit market data and

any such derivative works, provided that Participants, Authorized Users, Broker Firms, and

such other Persons may use market data for their own internal business purposes. Without

limiting the generality of the foregoing, Participants, Authorized Users, Broker Firms, and

other Persons affiliated with any of the foregoing may not distribute, sell or retransmit

market data exchange to any third party.

9.2.4 Each Participant, Authorized User, and Broker Firm hereby grants AEGIS‐SEF a non‐exclusive,

perpetual, freely transferable, world‐wide and royalty‐free license to use, distribute, sub‐

license, disclose and sell market data, in any manner, media and jurisdiction, for the benefit

of AEGIS‐SEF and/or its  Affiliates; provided that, except as may otherwise be required by

law or permitted by Rule 2.8 or in any written agreement between AEGIS‐SEF and such

Participant, AEGIS‐SEF shall not disclose market data other than on an aggregated basis that

does not directly or indirectly identify individual Participants.

9.3 Recording of Communications.

AEGIS‐SEF or the Regulatory Services Provider, if any, may record conversations and retain copies of

electronic communications between SEF Officials and Participants, Authorized Users, and Broker

Firms and their agents. Any such recordings may be retained by AEGIS‐SEF or the Regulatory Services

Provider in such manner and for such periods of time as AEGIS‐SEF may deem necessary or

appropriate, including as may be required by Applicable Law.

9.4 Confidentiality.

Except as provided in Rule 9.2, all information provided by a Participant, Authorized User, or Broker

Firm to AEGIS‐SEF shall be held in confidence and shall not be made known to any other Person

except as follows:
AEGIS SEF, LLC

70

(a) with the consent of the Participant providing such information;

(b) to a Governmental Authority, if AEGIS‐SEF is requested or legally required to do so

by such Governmental Authority;

(c) pursuant to legal process;

(d) Participant, Authorized User, or Broker Firm subject to appropriate confidentiality

requirements, to any Person providing services to AEGIS‐SEF, including but not

limited to the Regulatory Services Provider, if any;

(e) to the Board, any committee, SEF Officials, attorneys and auditors, and to agents

and independent contractors that have been engaged by AEGIS‐SEF who require

such information in connection with the discharge of their duties to AEGIS‐SEF; and

(f) as otherwise permitted under the Rules.

9.5 Force Majeure.

Notwithstanding any other provision of the rules, AEGIS‐SEF shall not be obligated to perform its

obligations under the rules or any agreement with any Person, or to compensate any Person for

losses occasioned by any delay or failure of performance, to the extent a delay or failure of

performance is the result of circumstances that AEGIS‐SEF determines, in its sole discretion, may

have an adverse effect upon the functions and facilities of the AEGIS‐SEF Platform, including, but

not limited to, acts of God, fire or other natural disasters, bomb threats, acts of terrorism or war or

severely inclement weather.

9.6 Extension or Waiver of Rules.

AEGIS‐SEF may, in its sole discretion, waive, or extend the time period for performing, any act or

acts designated by the rules, but only to the extentsuch waiver or extension is not inconsistent with

Applicable Law.

9.7 Effect of Amendment, Repeal or New Rule.

AEGIS‐SEF may, in compliance with the CEA and CFTC Regulations, amend or repeal any Rule and/or

adopt new Rules. Any such amendment or repeal of a Rule or adoption of a new Rule, shall, upon

the effective date of such amendment, repeal or adoption, as applicable, be binding on all Persons

subject to the jurisdiction of AEGIS‐SEF (regardless of when any such Person became subject to

AEGIS‐SEF’s jurisdiction) and all SEF Contracts (regardless of whether any such SEF Contract was

entered into before, on or after such effective date).

9.8 Signatures.

Rather than rely on an original signature, AEGIS‐SEF may elect to rely on a signature that is

transmitted, recorded orstored by any electronic, optical, orsimilar means(including but not limited

to telecopy, imaging, photocopying, electronic mail, electronic data interchange, telegram, or telex)

as if it were (and the signature shall be considered and have the same effect as) a valid and binding

original.
AEGIS SEF, LLC

71

9.9 Governing Law; Legal Proceedings.

9.9.1 The Rules, and the rights and obligations of AEGIS‐SEF and Participants under the Rules,shall

be governed by, and construed in accordance with, the laws of the State of Texas applicable

to contracts executed and performed wholly within the State of Texas without regard to any

provisions of Texas law that would apply the substantive law of a different jurisdiction.

9.9.2 Any action, suit or proceeding against AEGIS‐SEF, its Officers, directors, limited liability

company members, employees, agents, or any member of any committee must be brought

within one (1) year from the time that a cause of action has accrued. Any such action, suit

or proceeding shall be brought in the State or Federal courts located within the City of

Houston, Texas. Each Participant, Authorized User, or Broker Firm expressly consents to the

jurisdiction of any such court, waives any objection to venue therein, and waives any right

it may have to a trial by jury.

9.9.3 In the event that a Participant, Authorized User, or Broker Firm or an Affiliate of such Person

who fails to prevail in a lawsuit or other legal proceeding instituted by such Participant or

such Affiliate against (i) AEGIS‐SEF, (ii) the AEGIS‐SEF Platform, or (iii) any Affiliate of AEGIS‐

SEF or any of their respective officers, directors, equity holders, employees, agents, or any

member of any committee, and related to the business of AEGIS‐SEF, such Participant,

Authorized User, or Broker Firm shall pay to AEGIS‐SEF all reasonable expenses, including

attorneys’ fees, incurred by AEGIS‐SEF in the defense of such proceeding. This Rule 9.9.3

shall not apply to SEF disciplinary actions, appealsthereof, or an instance in which the Board

has granted a waiver of the provisions hereof.

9.10 LIMITATION OF LIABILITY; NO WARRANTIES.

A PERSON’S USE OF THE SERVICES, THE AEGIS‐SEF PLATFORM, SEF PROPERTY AND ANY OTHER

INFORMATION AND MATERIALS PROVIDED BY AEGIS‐SEF, IS AT THE PERSON’S OWN RISK, AND THE

SERVICES, AEGIS‐SEF PROPERTY AND ANY OTHER INFORMATION AND MATERIALS PROVIDED BY

AEGIS‐SEF HEREUNDER ARE PROVIDED ON AN “AS IS” AND “AS AVAILABLE” BASIS, WITHOUT

WARRANTIES OR REPRESENTATIONS OF ANY KIND, EXPRESS OR IMPLIED, BY STATUTE, COMMON

LAW OR OTHERWISE INCLUDING ALL IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A

PARTICULAR PURPOSE AND NON‐INFRINGEMENT AND ANY WARRANTIES ARISING FROM A COURSE

OF DEALING, USAGE OR TRADE PRACTICE. AEGIS‐SEF DOES NOT GUARANTEE THAT (i) AEGIS‐SEF

PROPERTY OR THE SERVICES WILL OPERATE IN AN ERROR FREE, SECURE OR UNINTERRUPTED

MANNER, (ii) ANY INFORMATION OR MATERIALS PROVIDED BY AEGIS‐SEF OR ACCESSIBLE THROUGH

AEGIS‐SEF PROPERTY WILL BE ACCURATE, COMPLETE, RELIABLE, OR TIMELY, OR (iii) THE SEF

PROPERTY OR ANY ASPECTS OF THE SERVICES WILL BE FREE FROM VIRUSES OR OTHER HARMFUL

COMPONENTS. AEGIS‐SEF SHALL HAVE NO LIABILITY FOR THE CREDITWORTHINESS OF ANY PERSON

OR FOR THE ACTS OR OMISSIONS OF ANY PERSON UTILIZING THE SERVICES OR ANY ASPECT OF THE

SERVICES OR SYSTEM. A PERSON ACCESSING AEGIS‐SEF IS SOLELY RESPONSIBLE FOR THE SECURITY

AND INTEGRITY OF ITS TECHNOLOGY. A PERSON’S ACCESS TO THE SYSTEM AND THE SERVICES MAY

BE INTERNET‐BASED AND THAT AEGIS‐SEF HAS NO CONTROL OVER THE INTERNET OR A PERSON’S

CONNECTIONS THERETO. ANY PERSON ACCESSING THE AEGIS‐SEF PLATFORM ACKNOWLEDGES

THAT THE INTERNET, COMPUTER NETWORKS, AND COMMUNICATIONS LINKS AND DEVICES

NECESSARY TO ENABLE A PERSON TO ACCESS AND USE THE SYSTEM AND THE SERVICES ARE

INHERENTLY INSECURE AND VULNERABLE TO ATTEMPTS AT UNAUTHORIZED ENTRY AND THAT NO

FORM OF PROTECTION CAN ENSURE PARTICIPANT’S DATA, HARDWARE, OR SOFTWARE OR THE
AEGIS SEF, LLC

72

SYSTEM OR OTHER SEF PROPERTY WILL BE FULLY SECURE. FURTHERMORE, AEGIS‐SEF SHALL HAVE

NO OBLIGATION TO MONITOR OR VERIFY ANY INFORMATION DISPLAYED THROUGH THE SYSTEM.

EXCLUDING ANY LIABILITY FOR SUCH PARTY’S WILLFUL MISCONDUCT OR GROSS NEGLIGENCE, AND

EXCLUDING, IN THE CASE OF PARTICIPANT, PARTICIPANT’S INDEMNIFICATION OBLIGATIONS

PURSUANT TO THE INDEMNIFICATION PROVISIONS OF THE PARTICIPANT AGREEMENT, EACH PARTY

AGREES THAT IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR ANY INDIRECT, SPECIAL, PUNITIVE,

EXEMPLARY OR CONSEQUENTIAL DAMAGES, INCLUDING DAMAGES FOR LOSS OF PROFITS, LOSS OF

REVENUE, LOSS OR CORRUPTION OF DATA, TRADING LOSSES OR BUSINESS INTERRUPTION AND THE

LIKE, ARISING IN ANY MANNER WHATSOEVER OUT OF OR IN CONNECTION WITH THIS AGREEMENT

OR ANY USE (WHETHER OR NOT AUTHORIZED) OR INABILITY TO USE AEGIS‐SEF PROPERTY OR ANY

OTHER INFORMATION OR MATERIALS PROVIDED TO PARTICIPANT BY AEGIS‐SEF OR ACCESSIBLE

THROUGH THE SERVICES, INCLUDING THE ACCURACY, COMPLETENESS, RELIABILITY, TIMELINESS,

QUALITY, SECURITY, PERFORMANCE, OR PRICING OF THE SERVICES OR ANY FAILURES,

DEGRADATIONS OR DELAYS ASSOCIATED THEREWITH, REGARDLESS OF WHETHER SUCH DAMAGES

ARISE IN TORT, CONTRACT, OR OTHERWISE, AND EVEN IF IT HAS BEEN ADVISED OF THE POSSIBILITY

OF SUCH DAMAGES. NOTWITHSTANDING THE FOREGOING,  IF  A COURT OR OTHER TRIBUNAL OF

COMPETENT JURISDICTION SHOULD FIND AEGIS‐SEF LIABLE FOR ANY LOSS, DAMAGE OR EXPENSES

UNDER THIS    AGREEMENT, THE AGGREGATE LIABILITY OF AEGIS‐SEF UNDER THE AGREEMENT,

REGARDLESS OF THE FORM OF ACTION, SHALL IN NO EVENT EXCEED THE GREATER OF (i) $10,000

AND (ii) THE TOTAL COMMISSIONS, FEES, OR OTHER AMOUNTS (EXCLUDING ANY APPLICABLE

TAXES AND DUTIES) PAID TO AEGIS‐SEF BY PARTICIPANT DURING THE SIX MONTHS PRECEDING THE

DATE ON WHICH THE EVENTS GIVING RISE TO SUCH LIABILITY AROSE.

ANY CLAIM FOR REDRESS OR DAMAGES HEREUNDER SHALL BE FILED IN A COURT OF COMPETENT

JURISDICTION WITHIN TWO (2) YEARS OF THE DATE ON WHICH SUCH CLAIM ALLEGEDLY AROSE.

FAILURE TO INSTITUTE LITIGATION WITHIN SUCH TIME PERIOD SHALL BE DEEMED TO BE A WAIVER

OF SUCH CLAIM AND THE CLAIM SHALL BE OF NO FURTHER FORCE OR EFFECT. THE ALLOCATIONS

OF LIABILITY IN THIS RULE 9.10 REPRESENT THE AGREED AND BARGAINED FOR UNDERSTANDING OF

THE PARTIES, AND EACH PARTY ACKNOWLEDGES THAT THE OTHER PARTY’S RIGHTS AND

OBLIGATIONS HEREUNDER REFLECT SUCH ALLOCATIONS. THE PARTIES AGREE THAT THEY WILL NOT

ALLEGE THAT THIS REMEDY FAILS ITS ESSENTIAL PURPOSE.

   
AEGIS SEF, LLC

73

SECTION X. CONTRACT SPECIFICATIONS FOR OTOB SEF CONTRACTS

10.1 Natural Gas Swaps – Contract Specifications.

Trading Hours. Unless otherwise indicated in the applicable swap specifications, the trading hours

for all swaps governed by this Rule 10.1 are as follows:

o Order Book: Available for Permitted Transactions that are Hedging Contracts and which comply

with Rule 4.6.3 on a 24 Hours per day basis, beginning at 6:00 a.m. New York Time on Monday and

ending at 5:00 p.m. New York Time on Friday.  

o RFQ Function: Only Available for Permitted Transactions that are Hedging Contracts and which

comply with Rule 4.6.3.  

o Other Execution Methods: __________________________.  

Products — Rule 10.1:

Fixed for Floating NG. A Fixed for Floating NG is a Natural Gas Swap for which settlement is in the

form of periodic fixed price payments and a stream of periodic floating price payments based on the

NATURAL GAS‐NYMEX price over a term to maturity. The natural gas payments are exchanged for a

specified period based on a notional amount.  

Specifications

Trading Conventions  

Fixed Price Payer: Buyer (Payer) pays fixed natural gas price and receives floating natural gas

price.  

Floating Price Payer:    Seller (Receiver) receives fixed natural gas price and pays floating

natural gas price.  

Transaction: Fixed‐for‐Floating Commodity Swap

Commodity: Natural Gas

Notional Quantity: ______ (See Table __)

Fixed Price: ______________ (See Table __)

Expiring Month:________________

Remaining Month:   _________________

Floating Price: ________________
AEGIS SEF, LLC

74

Expiring Month Floating Price: ______________

Remaining Month Floating Price: ______________

Pricing Date: ________________

Settlement Amount: Settlement Amount = [Fixed Amount – Floating Amount]

Fixed Amount: Fixed Amount = (Fixed Price * Notional Quantity) – Third Party Costs

Third Party Costs: __________

Floating Amount: Floating Amount = Floating Price * Notional Quantity

Monthly Forward

Payment Amount: MFPA = [(Floating Price – Fixed Price) * Notional Quantity]

Aggregate Forward

Payment Amount: ______________

Settlement: _________

Payment Date: ________

Independent Amount:   ________

10.2 WTI Crude Swaps – Contract Specifications.

Trading Hours. Unless otherwise indicated in the applicable swap specifications, the trading hours

for all swaps governed by this Rule 10.2 are as follows:

o Order Book: Available for Permitted Transactions that are Hedging Contracts and which comply

with Rule 4.6.3 on a 24 Hours per day basis, beginning at 6:00 a.m. New York Time on Monday and

ending at 5:00 p.m. New York Time on Friday.  

o RFQ Function: Only Available for Permitted Transactions that are Hedging Contracts and which

comply with Rule 4.6.3.  

o Other Execution Methods: __________________________.  

Products — Rule 10.2:

Fixed for Floating NYMEX WTI. A Fixed for Floating NYMEX WTI is a Crude Oil Swap for which

settlement is in the form of periodic fixed price payments and a stream of periodic floating price

payments based on the WTI NYMEX Oil Futures price over a term to maturity. The oil futures

payments are exchanged for a specified period based on a notional amount.  

Specifications
AEGIS SEF, LLC

75

Trading Conventions  

Fixed Price Payer: Buyer (Payer) pays fixed crude oil price and receives floating crude oil price.  

Floating Price Payer:    Seller (Receiver) receives fixed crude oil price and pays floating

crude oil price.  

Transaction: Fixed‐for‐Floating Commodity Swap

Commodity: WTI Crude Oil (Cushing)

Notional Quantity: ______ (See Table __)

Fixed Price: ______________ (See Table __)

Expiring Month:________________

Remaining Month:   _________________

Floating Price: ________________

Expiring Month Floating Price: ______________

Remaining Month Floating Price: ______________

Pricing Date: ________________

Settlement Amount: Settlement Amount = [Fixed Amount – Floating Amount]

Fixed Amount: Fixed Amount = (Fixed Price * Notional Quantity) – Third Party Costs

Third Party Costs: __________

Floating Amount: Floating Amount = Floating Price * Notional Quantity

Monthly Forward

Payment Amount: MFPA = [(Floating Price – Fixed Price) * Notional Quantity]

Aggregate Forward

Payment Amount: ______________

Settlement: _________
AEGIS SEF, LLC

76

Payment Date: ________

Independent Amount:   ________

10.3 Other OTOB SEF Contracts – Contract Specifications.

From time to time, AEGIS‐SEF will offer additional OTOB SEF Contracts on the AEGIS‐SEF Platform, which will

be listed, together with the applicable Contract Specifications, on AEGIS‐SEF’s webpage.