NEX SEF LIMITED

Facility Rulebook

Version 1.9

MayJune 2018

© Copyright 2018 NEX SEF Limited

All Rights Reserved.
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created, and the Order or Pre-Arranged Cross must be entered into a Trading Platform or submitted to the 

Facility, as applicable, as soon as practicable.

(b) Priority of execution. Non-discretionary executable Customer Orders received by a 

Participant who is an Intermediary shall be entered into Facility in the sequence received. Non-discretionary 

Orders that cannot be immediately entered must be entered when the Orders become executable, in the 

sequence in which the Orders were received. 

(c) NEX SEF shall provide all Confirmations of Intermediated Transactions to the Intermediary 

upon execution of the transaction. Except to the extent that NEX SEF sends Confirmations of Contracts 

directly to the relevant Customer, any Participant that transacts as an Intermediary for any Customer shall 

be responsible for ensuring that such Customers receive all Confirmations of Contracts entered into on 

behalf of such Customers as soon as technologically practicable after receipt of the Confirmation from NEX 

SEF.

Rule 314 Bunched Orders

Bunched Orders must be allocated and recorded in accordance with Commission Regulation 1.35(b)(5) 

and the NFA's Interpretive Notice related to Compliance Rule 2-10. Bunched Orders may be entered using 

a designation for a group of accounts or suspense account number; provided, however that:

(1) the Bid/Offer or Pre-Arranged Cross is being placed by a Participant who is, or is 

acting on behalf of, an account manager for multiple accounts eligible for post execution allocation; 

or

(2) a written, pre-determined allocation scheme that defines the group of accounts has 

been provided to the Clearing Firm accepting or clearing the Bid/Offer prior to the time that such 

Bid/Offer is entered.

Rule 315 NEX SEF Authority over Transactions

(a) NEX SEF Authority Regarding Cancellations, Price Adjustments and Errors

NEX SEF has authority to cancel any transaction, to adjust the price of any transaction executed on the 

Facility, or to execute or require the execution of a new or offsetting transaction: (i) when NEX SEF 

determines in its sole discretion such action is necessary to mitigate system defects or market disrupting 

events, Disorderly Trading Conditions and breaches of capacity limits caused by the improper or erroneous 

use of a Trading Platform; (ii) at any time NEX SEF determines, in its sole discretion, that allowing a 

transaction to stand as executed may have a material adverse effect on the integrity of the market; or (iii) in 

accordance with Rule 315(c), (d), (h) or (i). All decisions of NEX SEF regarding NEX SEF's cancellation of 

transactions or the adjustment of transaction prices and the execution of new or offsetting transactions shall 

be final, subject to 315(d).

(b) Determination to Review a Transaction's Price

(1) NEX SEF may determine to review a transaction's price based on its independent 

analysis of market activity or upon a Participant's request. A Participant's request for review must 

be made (i) for an uncleared Pre-Arranged Cross, within one Business Day of the execution of such 

transaction, and (ii) for any other transaction executed on the Facility within 15 minutes of the 

execution of such transaction. In the absence of a timely request for review, NEX SEF may 

determine whether or not a transaction will be subject to review in its sole discretion. 

Notwithstanding the foregoing, subject to Applicable Law, NEX SEF shall amend the terms of, or 

cancel, any transaction that the parties, together with the DCO, as applicable, mutually agree to 

amend or cancel, in the event that such amendment or cancellation is not submitted to NEX SEF 

within the applicable review period specified above.
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(2) If NEX SEF determines to review a transaction's price, it will promptly issue an 

alert to all Participants via a Trading Platform or electronic mail indicating that the transaction is 

under review.

(c) Review of a Transaction's Price

(1) In reviewing a transaction's price, NEX SEF shall determine the fair value price for 

the Swap at the time the transaction under review occurred. NEX SEF may consider any relevant 

information, including, but not limited to, the last transaction price of the Swap or a better Bid/Offer, 

a more recent price for a different maturity date, the price of the same or related Swap established 

in another venue or another market, the market conditions at the time of the transaction.

(2) If NEX SEF determines that the price of a transaction is a fair value price, NEX 

SEF will issue an alert indicating that the transaction shall stand as executed.

(3) If NEX SEF determines that the price of a transaction is not a fair value price, NEX 

SEF shall have the right, in its sole discretion, to cancel or adjust the price of such transaction. 

(d) Alternative Resolution by Agreement of Parties for Transactions Reviewed for Price

(1) With the approval of NEX SEF, parties to a transaction that is under review for 

price or that has had its price adjusted may instead, together with the DCO, as applicable, mutually 

agree to cancel or otherwise adjust the price of the transaction.

(2) With the approval of NEX SEF, parties to a transaction that is cancelled may 

instead, together with the DCO, as applicable, mutually agree to adjust the price of such transaction 

to a fair value price.

(3) Subject to sections (d)(i) and (d)(ii), parties to a transaction that is cancelled or that 

has had its price adjusted may mutually agree to a cash adjustment.

(4) Any cancellation or adjustment made pursuant to sections (d)(i), (d)(ii) or (d)(iii)

must be reported to the Facility by the parties within one (1) Business Day and the parties must 

maintain a record of such adjustment.

(e) Liability for Losses Resulting from Cancellations or Price Adjustments

(1) A party that through error or mistake enters a Bid/Offer or Pre-Arranged Cross that 

results in a cancellation or price adjustment shall be responsible for demonstrated claims of realised 

losses incurred by persons whose transaction prices were cancelled or adjusted; provided, 

however, that a claimant shall not be entitled to compensation for losses incurred as a result of the 

claimant's failure to take reasonable actions to mitigate the loss.

(2) A claim for a loss pursuant to this Rule 315 must be submitted to the Facility within 

one (1) Business Day of the event giving rise to the claim. NEX SEF will reject any claim that is 

not filed in a timely manner and such decision shall be final. Eligible claims shall be forwarded by 

NEX SEF to the party responsible for the Bid/Offer or Pre-Arranged Cross that resulted in a 

cancellation or a price adjustment of a transaction and the Participant through which the transaction 

was submitted to the Facility. Such party, or Participant on behalf of such party, shall, within ten 

(10) Business Days of receipt of the claim, admit or deny responsibility in whole or in part. Failure 

to respond to the claim within ten (10) Business Days shall be deemed a denial of liability.

(3) To the extent that liability is admitted, payment shall be made within ten 

(10) Business Days. Unless otherwise agreed upon in writing by the parties, failure to make the 

payment within ten (10) Business Days shall be deemed a denial of liability for the purposes of this 

Rule 315. A copy of any such written agreement must be provided to NEX SEF.
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(4) To the extent that liability is denied, the party making the claim may submit the

claim for arbitration pursuant to Rule 702. Such claims must be submitted to NEX SEF within ten 

(10) Business Days of the date the party was issued notification that liability was denied.

(f) [Reserved]

(g) Reporting and Recording of Cancellations and Price Adjustments

(1) Cancelled transactions and any prices that have been adjusted shall be cancelled 

in NEX SEF's official records. 

(2) Transactions that have had their price adjusted shall be reflected in NEX SEF's 

official records at the adjusted price.

(h) Review of Transactions for Errors

(1) If a Participant, Customer or Clearing Firm believes that any transaction in one or 

more Contracts was executed, cleared or rejected from clearing as a result of an Error, as defined 

in Rule 315(h)(3), such person may request review of the transaction.

(2) Upon receipt of a request for review of a transaction, or if NEX SEF determines on 

its own initiative to conduct such a review, NEX SEF will review its records to determine if an Error 

occurred.

(3) NEX SEF may cancel or adjust the transaction, or execute or require the execution 

of a new or offsetting Cleared Contract under the procedures of Rule 315(i), as appropriate, if the 

review described in this Rule reveals that:

(i) a Trading Platform made a material mistake or that a mistake occurred as 

a result of a malfunction in a Trading Platform or by human error; or

(ii) a Bid/Offer or Pre-Arranged Cross was incorrectly displayed and/or 

executed and/or reported; or

(iii) a Trading Platform, Participant or Customer made a clerical or operating 

error or omission that caused a transaction to be rejected from clearing 

and void ab initio; or

(iv) a Clearing Firm or DCO rejected a leg of a Package Transaction for 

clearing because of the sequencing of submission for clearing of the legs 

of the applicable Package Transaction (each of the foregoing, an "Error").

(4) If the review described in this Rule reveals that no Error occurred, NEX SEF will 

inform any person who requested the review that NEX SEF has determined that the transaction 

was properly handled, the evidence supporting that determination, and that a cancelation, 

adjustment or a new or offsetting transaction under Rule 315(i) will not be made.

(5) NEX SEF will document in writing all requests for review of transactions received 

by NEX SEF, or any review on its own initiative, the time and manner in which NEX SEF reviewed 

its electronic audit trail in response to the request or review on its own initiative, the outcome of that 

review, and the action or actions taken by NEX SEF in response to that review.

(6) If a transaction is reviewable for price under Rule 315(b), the procedures of this 

Rule 315(h) shall not apply. 
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(i) Procedures for Correcting Errors

(1) The procedures of this Rule 315(i) are in accordance with NAL 17-27, expiring on 

the effective date of revised Commission regulations governing swaps with clerical and operational 

errors executed on a swap execution facility, and are limited to:

(i) A Cleared Contract that was rejected for clearing and void ab initio

because of a clerical or operational error or omission by NEX SEF, a 

Participant or a Customer (each, a "Rejected Transaction"),

(ii) A leg of a Package Transaction that was rejected for clearing because of 

the sequencing of submission for clearing of the legs of the applicable 

Package Transaction and only for such rejected leg (each, a "Rejected 

Leg"), and

(iii) A Cleared Contract that is carried on a DCO's books as a result of a clerical 

or operational error or omission by NEX SEF, a Participant or a Customer 

that was not identified until after the Cleared Contract had been cleared 

(each, an "Erroneously Cleared Transaction"),

in each case where the Facility has affirmatively determined that the transaction or a term 

thereof resulted from an Error.

(2) For Rejected Transactions and Rejected Legs, if a Participant, Customer or 

Clearing Firm believes that a transaction qualifies as a Rejected Transaction or a Rejected Leg, 

such Participant, Customer or Clearing Firm shall request review of the transaction pursuant to 

Rule 315(h).

(i) Upon completion of the review of the transaction pursuant to Rule 315(h), 

if NEX SEF determines that an Error resulted in a Rejected Transaction or 

a Rejected Leg and:

A. If NEX SEF is able to determine how to correct the Error, NEX 

SEF shall execute a new Cleared Contract with the same terms 

as the Rejected Transaction or Rejected Leg, other than the Error, 

without obtaining consent of the Participant that submitted the 

Rejected Transaction or Rejected Leg or the Customer on whose 

behalf such transaction was submitted. The new Cleared 

Contract must be submitted by a NEX SEF customer service 

representative as a Pre-Arranged Cross, and such Pre-Arranged 

Cross shall be subject to pre-execution credit check and risk 

screening pursuant to Rule 204(b).

B. If NEX SEF is unable to determine how to correct the Error, NEX 

SEF shall consult with the Clearing Firms for the Rejected 

Transaction or Rejected Leg and the Participants and Customers 

involved in such transaction, as necessary, and the Clearing Firms 

for such transactions may, with the consent of each respective 

Customer or Participant, agree to a new Cleared Contract with the 

same terms as the Erroneously Cleared Contract, other than the 

Error. Such Customer or Participant consent may not be obtained 

in advance, and must be sought and obtained by each Clearing 

Firm on a case-by-case basis, after the Cleared Contract has 

been rejected. If there is such agreement and consent, the new 

Cleared Contract must be submitted by the Participant specified 

in Rule 304(b) as a Pre-Arranged Cross pursuant to the procedure 

in Rule 304(b), and such Pre-Arranged Cross shall be subject to 
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pre-execution credit check and risk screening pursuant to 

Rule 204(b).

(ii) Upon execution of such Pre-Arranged Cross by NEX SEF to replace a 

Rejected Transaction or Rejected Leg, NEX SEF shall submit the 

transaction to the DCO for clearing as quickly as technologically 

practicable, but in any case no later than 60 minutes from the issuance of 

the notice of rejection by the DCO to the Clearing Firms.

(iii) If the new Cleared Contract resulting from such Pre-Arranged Cross is 

rejected from clearing, it is void ab initio and no additional new Cleared 

Contract will be permitted to be submitted under the procedure in this 

Rule 315(i)(2).

(iv) NEX SEF shall report Swap transaction data to the relevant SDR pursuant 

to Rule 309(f) for a new Cleared Contract that clears with the same terms 

as the Rejected Transaction or Rejected Leg, as applicable, other than the 

Error, including: a Part 43 cancellation for the original transaction, a 

Part 45 termination indicating the original transaction is void ab initio, and 

swap transaction data pursuant to Parts 43 and 45 for the new Cleared 

Contract. Such data shall reference the original cancelled trade, indicate 

that it has been reported pursuant to the procedures described in this Rule 

315(i)(2) and link the original cancelled trade to the new trade for reporting 

to the relevant SDR under Part 43 and Part 45 of the Commission 

Regulations.

(v) The procedures in this Rule 315(i)(2) are not available for Rejected Legs 

of Package Transactions that are rejected for clearing by a Clearing Firm 

or DCO because the Package Transaction as a whole failed to satisfy the 

applicable Risk-Based Limits.

(3) For Erroneously Cleared Transactions, if a Participant, Customer or Clearing Firm 

believes that a Cleared Contract is carried on the books of a DCO as a result of an Error, such 

Participant, Customer or Clearing Firm may request review of the transaction pursuant to Rule 

315(h).

(i) Upon completion of the review of the transaction pursuant to Rule 315(h), 

if NEX SEF determines that an Error resulted in an Erroneously Cleared 

Transaction and:

A. If NEX SEF is able to determine how to correct the Error, NEX 

SEF shall execute a Cleared Contract that offsets the Erroneously 

Cleared Transaction carried on the books of the relevant DCO 

through the same Clearing Firms that cleared the Erroneously 

Cleared Transaction and NEX SEF shall execute a new Cleared 

Contract with the same terms as the Erroneously Cleared 

Transaction, other than the Error, in each case without obtaining 

consent of the Participant that submitted the Erroneously Cleared 

Transaction or the Customer on whose behalf such transaction 

was submitted; provided that, where an Erroneously Cleared 

Transaction did not satisfy the Risk-Based Limits of a Participant's 

Clearing Firm, NEX SEF shall obtain the consent of the relevant 

Clearing Firm prior to executing such offsetting Cleared Contract. 

The new Cleared Contract must be submitted by a NEX SEF 

customer service representative as a Pre-Arranged Cross, and 
(i) Upon completion of the review of the transaction pursuant to Rule

315(h), if NEX SEF determines that an Error resulted in an Erroneously

Cleared Transaction and:

A. If NEX SEF is able to determine how to correct the Error, NEX

SEF shall execute a Cleared Contract that offsets the

Erroneously Cleared Transaction carried on the books of the

relevant DCO through the same Clearing Firms that cleared the

Erroneously Cleared Transaction and NEX SEF shall execute a

new Cleared Contract with the same terms as the Erroneously

Cleared Transaction, other than the Error, in each case without

obtaining consent of the Participant that submitted the

Erroneously Cleared Transaction or the Customer on whose

behalf such transaction was submitted; provided that, where an

Erroneously Cleared Transaction did not satisfy the Risk-Based

Limits of a Participant's Clearing Firm, NEX SEF shall obtain the

consent of the relevant Clearing Firm prior to executing such

offsetting Cleared Contract. The new Cleared Contract must be

submitted by a NEX SEF customer service representative as a

Pre-Arranged Cross, and such Pre-Arranged Cross shall be

subject to pre-execution credit check and risk screening

pursuant to Rule 204(b).

B. If NEX SEF is unable to determine how to correct the Error, NEX

SEF shall consult with the Clearing Firms for Erroneously

Cleared Transactions and the Participants and Customers

involved in such transaction, as necessary, and the relevant

Customer or Participant may agree to execute a Cleared

Contract that offsets the Erroneously Cleared Transaction

carried on the books of the relevant DCO through the same

Clearing Firms that cleared the Erroneously Cleared Transaction

and to execute to a new Cleared Contract with the same terms

as the rejected Cleared Contract, other than the Error. The new

Cleared Contracts must be submitted by the Participant specified

in Rule 304(b) as Pre-Arranged Crosses pursuant to the

procedure in Rule 304(b), and such Pre-Arranged Crosses shall

be subject to pre-execution credit check and risk screening

pursuant to Rule 204(b).

(ii) Upon execution of such Pre-Arranged Crosses by NEX SEF to offset an

Erroneously Cleared Transaction and to enter into a new Cleared

Contract, NEX SEF shall submit the transactions to the DCO for clearing

as quickly as technologically practicable, but in any case no later than

three days after the Erroneously Cleared Transaction was executed.

(4) (j) For the avoidance of doubt, the procedures of this Rule 315(i) are not

applicable to any transaction rejected by a DCO for credit reasons.

(j) (k) Prime Broker Transactions

(1) A Prime Broker shall have the right to have the Facility cancel any Prime Broker

Transaction within 48 hours after the execution of such transaction if such transaction was

executed in excess of a Prime Broker Limit established by the Prime Broker with respect to the

Prime Broker Transaction.

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