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NEX SEF Limited

Governance Policy

NEX SEF Limited

Governance Policy
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Governance Policy

The policies set out below will apply to NEX SEF Limited (the “Company”). The Governance Policy

is not intended to supersede or interpret any Applicable Law. It does not purport to be a 

comprehensive governance framework for the Company and should be read in conjunction with the 

Company’s Articles of Association, Company's Facility Rulebook (the “Facility Rulebook”) and

the Board of Directors Terms of Reference.

Glossary

Defined terms unless otherwise defined in this Governance Policy have the meaning given to them

in the Facility Rulebook.

Applicable Law means, with respect to any person, any statute,law, regulation,

rule or ordinance of any Governmental Authority applicable to

such person (as defined in the Facility Rulebook),including but

not limited to the FCA's rules, the Act and Commission

Regulations

Articles of Association means the Company's Articles of Association

The Board means the Company's board of directors

Chief Compliance Officer means the Company's Chief Compliance Officer

Commission or CFTC means the US Commodity Futures Trading Commission

Commission Regulations means any rule, regulation, order, directive and any interpretation

thereof promulgated by the Commission, as amended

Emergency has the meaning set out in the Facility Rulebook at clause 104

Facility means the venue provided by the Company for the execution

of Contracts, as set out in the Facility Rulebook

FCA means the UK Financial Conduct Authority

Hearing Panel means the disciplinary panel described in Section 6 of this

Governance Policy

Public Directors means any person who qualifies as a “public director” within the 

meaning set forth in the Commission Regulations.

Public Panelist has the meaning set out in Section 6 of this Governance Policy

Respondent means any person who is charged with a Rule violation, set out

in the Facility Rulebook

Regulatory Oversight

Committee

means the committee of the Board described in Section 6 of this

Governance Policy

Review Panel means the disciplinary panel described in Section 6 of this

Governance Policy

Trading Privilege Holders means an individual or entity with Trading Privileges on the

Facility granted pursuant to Rule 201 of the Facility Rulebook

(including an Intermediary), but does not include an Authorised 

Trader
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1. OVERVIEW

1.1 The Board has the power by itself or through agents, and is authorized and empowered on behalf 

and in the name of the Company, to perform all acts and enter into other undertakings that it may in 

its discretion deem necessary or advisable in order to promote the sound and efficient operation of 

the Facility (except such as otherwise required by Applicable Law) and as set forth in its Terms of 

Reference.

1.2 The Board, (or committee thereof or other delegated body) acting in accordance with the Articles of 

Association and its Terms of Reference, may from time to time cause the Company to enter into such

agreements with domestic or foreign self-regulatory associations, other associations, boards of trade

and their respective regulators providing for the exchange of information and other forms of mutual

assistance for financial surveillance, routine audits, market surveillance, investigative, enforcement 

and otherregulatory purposes as the Board may consider necessary or appropriate or as Applicable

Law may require.

2. CONFLICTS OF INTEREST

2.1 Each director is required to act in the best interests of the Company and to refrain from any conduct 

that would be, or gives the appearance of being, a conflict of interest.

PERSONAL CONFLICTS OF INTEREST

2.2 No director, member of any committee or oversight panel, or officer or other person authorized to 

exercise authority on behalf of the Company, including the Compliance Function, will knowingly 

participate in such body’s deliberations or voting, including in any inquiry, investigation or any 

disciplinary proceeding, suspension, Emergency or other executive action (each, an “Executive 

Proceeding”) if such person has a conflict of interest between such person's position acting on 

behalf of the Company and such person's personal interests (each, an “Interested Person”), unless 

deliberations are permitted by section 2.6. Material conflicts of interest include, but are not limited to,

instances where an Interested Person (a) is a named party in interest in an Executive Proceeding, 

(b) is an employer, employee or fellow employee of a named party in interest or potential named 

party in interest in an Executive Proceeding, (c) has any other significant, ongoing business 

relationship with a named party in interest or potential named party in interest in an Executive 

Proceeding, excluding relationships limited to executing transactions opposite each other or to

clearing transactions through the same clearing members, (d) has a family relationship with a named 

party in interest or potential named party in interest in an Executive Proceeding (each of (a) through

(d) being a “Relationship Conflict of Interest”) or (e) has a direct and substantial financial interest 

in the result of the deliberations or vote of any Executive Proceeding based upon either Facility or 

non-Facility positions (a “Financial Conflict of Interest”). For purposes of this subparagraph, a 

"family relationship" exists between a named party in interest or potential named party in interest in

an Executive Proceeding and a potential Interested Person if one person is the other's spouse

(including a domestic partner or partner in a civil union), co-habitator, former spouse, parent, 

stepparent, child or other legal dependent, sibling, stepbrother, stepsister, grandparent, grandchild,

uncle, aunt, nephew, niece or in-law.

2.3 Prior to the consideration of any matter or significant action that will be considered by the Board or a 

committee of the Board in an Executive Proceeding, each potential Interested Person must disclose
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the existence of any potential conflict of interest, including any potential Relationship Conflict of 

Interest and/or Financial Conflict of Interest, to the any member of the Board or the individual acting 

as chairman of the relevant committee andmay choose to abstain and recuse himself or herself from 

the deliberations and voting. The potential Interested Person is encouraged to consult with the

Company’s Secretary and any necessary internal or external advisors in advance of the topic being 

discussed or voted upon. If a potential Interested Person fails to disclose the existence of any 

potential conflict of interest that he or she knows of, or reasonably should know of, such potential 

Interested Person will be deemed an Interested Person prohibited from participation in an Executive 

Proceeding by the Board or committee ofthe Board, as applicable. If the Board or committee of the 

Board, as applicable, discovers that such a potential Interested Person participated in an Executive

Proceeding without having made the disclosure of a potential conflict of interest, the determination 

of such Executive Proceeding shall be null and void, unless, in the case of an Emergency action, the

potential Interested Person makes the disclosures required pursuant to section 2.4 and the Board or 

committee thereof determines that such potential Interested Person would have been permitted to 

participate in the Executive Proceeding pursuant to section 2.5 or 2.6.

2.4 If disclosure of a potential conflict of interest is required pursuant to section 2.3, a potential Interested 

Person must disclose all information required under Applicable Law in relation to any conflict of

interest, including:

(a) In the case of any potential Relationship Conflict of Interest, such disclosure must 

include the specific type of Relationship Conflict of Interest based on the categories

(a) through (d) in section 2.2; and/or

(b) In the case of any potential Financial Conflict of Interest, such disclosure must

include the financial interest and related position information (including information

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

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

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

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

expects could be affected by the significant action, including but not limited to:

(i) gross positions held in such person’s personal accounts or “controlled

accounts,” as defined in Commission Regulation § 1.3(j);

(ii) gross positions held in proprietary accounts, as defined in Commission

Regulation § 1.17(b)(3), at such person’s affiliated firm;

(iii) gross positions held in accounts in which such person is a principal, as

defined in Commission Regulation § 3.1(a);

(iv) net positions held in Customer accounts, as defined in Commission

Regulation § 1.17(b)(2), at such person’s affiliated firm; and

(v) any other types of positions, held in such person’s personal accounts or the 

proprietary accounts of such person’s affiliated firm, that the Company reasonably

expects could be affected by the significant action.

(c) Notwithstanding subsection (b), in the case of a potential Financial Conflict of
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Interest, no such disclosure is required by a potential Interested Person if such

person chooses to abstain from deliberations and voting on the relevant Executive

Proceeding.

2.5 If a potential Interested Person who discloses a potential material conflict of interest does not choose 

to abstain and recuse himself or herself from deliberations and voting in any Executive Proceeding, 

the directors, or committee or oversight panel, as applicable, will determine whether such person

is an Interested Person prohibited from participation in the Executive Proceeding. Such 

determination will be made by a majority vote made in accordance with the procedures in the Articles 

of Association governing decision-making by directors and will be based upon a review of:

(a) the information provided by such potential Interested Person pursuant tosection 2.4;

(b) any other source of information that is held by or reasonably available to the

Company;

(c) in the case of a Financial Conflict of Interest, the most recent large trader reports and 

clearing records available to the Company; and

(d) any Applicable Law.

2.6 With respect to Financial Conflicts of Interest only, and save for where Applicable Law prohibits it,

any person determined to be an Interested Person who would otherwisebe required to abstain from 

deliberations and voting pursuant to this section, may participate in deliberations, but not in voting, if 

the Board, or committee or oversight panel, as applicable, determines by a majority vote (excluding 

all relevant Interested Persons) made in accordance with the procedures in the Articles of

Associationgoverning decision-making by directors that such participation would be consistent with

the public interest after considering the following factors:

(a) whether such Interested Person's participation in the deliberations is necessary to 

achieve a quorum;

(b) whether the Interested Person has unique or special expertise, knowledge or

experience in the matter being considered; and

(c) the position information which is the basis for the Interested Person’s Financial

Conflict of Interest.

PUBLIC DIRECTOR CLASSIFICATION

2.7 Any Public Director will be prohibited from having a “material relationship”, as defined from time to 

time in the Commission Regulations (a “Material Relationship”) with the Company which 

reasonably could affect the independent judgment or decision-making of such director. Material

Relationships are currently defined to include the following:

(a) the director, or an immediate family member of the director, may not be an officer or 

employee of the Company or its affiliate;

(b) the director, or an immediate family member of the director, may not be a Member 
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(as defined in Section 1a(34) of the Commodity Exchange Act (“CEA”) and any

regulation promulgated thereunder) of the Company, or a director, officer or

employee of a Company Member;

(c) the director, or an immediate family member of the director, may not be an officer of 

another entity, which entity has a compensation committee (or similarbody) on which

any officer of the Company serves; and

(d) the director, or an immediate family member of the director, or an entity with which 

the director or such immediate family member is a partner, an officer, an employee 

or a director, may not receive more than $100,000 in combined annual payments for

legal, accounting, or consulting services from the Company, any affiliate thereof, 

any Member of the Company or any affiliate of such Member.

2.8 Notwithstanding the foregoing, (a) compensation for services as a director of the Company or as a

director of an affiliate of the Company shall not count toward the $100,000 threshold specified in 

clause (d) of the definition of Material Relationship, nor shall compensation for services rendered by 

such individual prior to becoming a director of the Company, so long as such compensation is or was

in no way contingent, conditioned or revocable; and (b) a Public Director may also serve as a director 

of an affiliate of the Company if he or she otherwise meets the requirements set forth in clauses (a)

through (d) of the definition of Material Relationship.

2.9 Each of the preceding disqualifying circumstances is subject to a one-year look back. Public Directors 

will have an affirmative duty to investigate from time to time, and promptly disclose, the existence 

and nature of any such Material Relationships to the Board. The Board must make such findings of 

any material relationship upon the nomination or appointment of the proposed Public Director and as 

often as necessary in light of all circumstances relevant to such director, but in no case less than

annually.

COMMERCIAL CONFLICT OF INTEREST

2.10 2.10 The Board has governance and oversight responsibility for the Company’s compliance 

with applicable regulations, including meeting its obligations as a self-regulatory organization. In 

connection therewith, the Board recognizes it must balance the advancement of the Company’s 

commercial interests with the fulfillment of its self-regulatory responsibilities. In considering matters 

brought before the Board that have the potential to impact the Company’s ability to fulfill its selfregulatory obligations, the Board must consider the alignment to its established risk appetite ---

Regulatory. 

(a)

3. COMPENSATION

3.1 Compensation awarded to any Public Director and other nonexecutive directors shall not be linked 

to the Company’s business performance.

4. CERTIFICATION AND COMPLIANCE

4.1 Each prospective director and director shall, before taking office, acknowledge his or her receipt and
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understanding of this Governance Policy, as well as upon any publication of a revised Governance 

Policy or amendment thereto. In addition, (a) upon request from the Company, the director shall

certify that the qualification information he/she provided to the Company before being elected as a 

director has not changed materially, and (b) from time to time the director shall provide an updated

statement of qualification information that reflects any material changes.

4.2 Directors are required to report suspected violations of the Governance Policy or of any Applicable 

Law, rule or regulation by any director to the Board, the Regulatory Oversight Committee or the Chief 

Compliance Officer (who will subsequently relay any such suspected violations to the Board or the 

Regulatory Oversight Committee, unlesssuch reported violation is proven incorrect after a prompt 

initial review of its merits). The Board or the Regulatory Oversight Committee, as applicable, shall 

determine whether to conduct an investigation and what appropriate action should be taken.

Directors may consult with the Company’s General Counsel if there is any doubt as to whether a 

particular transaction or course of conduct complies with or is subject to the Governance Policy.

5. PUBLIC DIRECTOR FINDINGS

5.1 The Board shall make Public Director findings (including but not limited to determinations as to

such Public Directors' Material Relationships) as often as necessary in light of all circumstances 

relevant to each Public Director, but in no case less than annually.

6. COMMITTEES

Regulatory Oversight Committee

6.1 The Regulatory Oversight Committee shall be a Standing Committee of directors.

6.2 The Regulatory Oversight Committee shall be composed of those directors designated by the Board

from time to time.

6.3 The Regulatory Oversight Committee members and Regulatory Oversight Committee Chairman shall 

be appointed by the Board. Each appointee will serve until the due appointment of his or her 

successor or his or her resignation or removal as a member of the Regulatory Oversight Committee, 

with or without cause, by a majority vote of the Board. A member of the Regulatory Oversight 

Committee may serve for multiple terms.

6.4 The Regulatory Oversight Committee shall meet at least four times each year and at such other

times as it deems necessary to fulfil its responsibilities. The Committeemay meet in joint session 

with any other committee of the Board from time to time todiscuss areas of common interest and 

significant matters.

6.5 The Regulatory Oversight Committee shall report regularly to the Board with respect to its activities 

and make recommendations to the Board it may deem necessary or advisable for the orderly conduct 

of its business. Minutes of its meetings shall be maintained on behalf of the Regulatory Oversight 

Committee and approved by the Regulatory Oversight Committee.

6.6 Unless the Board provides otherwise the Regulatory Oversight Committee can make, alter or repeal 

rules for the conduct of its business. In the absence of such rules, each meeting of the Regulatory 
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Oversight Committee shall be called, notice of each such meeting be given or waived and the 

business of the Regulatory Oversight Committee conducted or its action taken as nearly as may be

in the same manner as is provided in the Articles of Association with respect to the meetings or for 

conduct ofbusiness or the taking of actions by the Board.

6.7 The Regulatory Oversight Committee shall:

(a) monitor the Facility's self-regulatory program for sufficiency, effectiveness, and

independence;

(b) oversee all facets of the Facility's self-regulatory program, including tradepractice,

market surveillance, audits, examinations and other regulatory responsibilities with

respect to Participants, and the conduct of investigations;

(c) review the size and allocation of the Facility's regulatory budget and resources; and

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

(d) review the performance of the Compliance Function, and make recommendations

with respect to such performance to the directors;

(e) review all regulatory proposals prior to implementation and advise the directors as to

whether and how such changes may impact regulation;

(f) regularly monitor for conflicts of interest in accordance with Section 2 of this

Governance Policy;

(g) recommend changes to the Facility's self-regulatory program that would ensure fair,

vigorous, and effective regulation;

(h) prepare an annual report to the directors and the Commission assessing the selfregulatory program of the Facility and including a description of the program, the

expenses of the program, the staffing and structure of the program, a catalogue of 

investigations and disciplinary actions taken during the year, and a review of the 

performance of the Review Panel, Hearing Panel, and Chief Compliance Officer; 

(i) review and address any conflicts of interest matters brought to its attention by the 

senior management, the Chief Compliance Officer or the Head of Compliance

Oversight (SMF16), including the following potential conflicts of interest:

a. any matter regarding the ability of the Chief Compliance Officer or the 

Head of Compliance Oversight (SMF16) to satisfy his or her obligations to 

the business they serve or such individual otherwise has a conflict of 

interest with the Company’s interests, including when such individual may 

also owe an obligation to a Trading Privilege Holder; 

b. any matter where the interests of the Company may be in conflict with the 

interests of another business within the CME Group organization; and

c. any proposed commercial initiative that is not aligned with the Company’s 

established risk appetite --- Regulatory; and

(j) perform such other duties as the directors may delegate to it from time to time.In 

addition, the Regulatory Oversight Committee may impose controls on the Facility to 

reduce the potential risk of market disruption, including but not limited to market 

restrictions that pause or halt trading in specified market conditions.
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6.8 To the extent, there is a tie vote of the members of the Regulatory Oversight Committee, the matter 

being considered shall be escalated to the CME Group Inc. Market Regulation Oversight 

Committee. The decision of the CME Group Inc. Market Regulation Oversight Committee shall be 

final. 

Disciplinary Panels

6.9 At such time as determined in the discretion of the Board (or at such other time as may otherwise be 

required by Applicable Law), the Board shall appoint a Review Panel, which shall consist of no less 

than five (5) panelists. In the discretion of the Board or if required by Applicable Law, the Review 

Panel shall also include at least oneperson who would not be disqualified from serving as a Public 

Director under the Commission Regulations (the “Public Panelist”). Such Public Panelist shall 

serve as thechair of the Review Panel; provided, that to the extent that the Review Panel is not then 

required to include a Public Panelist, then the chair of the Review Panel shall be appointed by the

Board. No Participant shall be permitted to participate in deliberations or voting on any matter in

which the Participant has a financial interest. The Review Panel shall have the power to direct that

an investigation of any suspected Violation be conducted. In any case where the Review Panel 

concludes, by majority vote, that a Violation may have occurred, the relevant Participant shall be

advised of that fact and the matter shall be referred to the Hearing Panel, pursuant to the procedures

detailed in Chapter Five of the Company's Facility Rulebook.

Hearing Panel

6.9 At such time as determined in the discretion of the Board (or at such other time as may otherwise be 

required by Applicable Law), tThe Board shall appoint a Hearing Panel to conduct a formal 

disciplinary hearing. The Hearing Panel, shall consist of five (5) Panelists. One Panelist shall serve 

as the chair of the Hearing Panel ("Hearing Panel Chairman) which shall consist of no less than 

five (5) panelists. In the discretion of the Board or if required by Applicable Law, the Hearing Panel 

shall include at least one person who is a Public Panelist. Such Public Panelist shall serve as the 

chair of the Hearing Panel; provided, that to the extent that the Hearing Panel is not then requiredto 

include a Public Panelist, then the chair of the Hearing Panel shall be appointed by the Board.

6.10 A quorum of the Hearing Panel shall consist of a majority of the Hearing Panel and must include at 

least the Hearing Panel Chair, one Panelist who is a Facility Subject Person, and one Panelist who 

is not a Facility Subject Person. The Hearing Panel may not include any members of the Market 

Regulation Staff, any person involved in adjudicating any other stage of the same Proceeding, or any 

person with a history of disciplinary offenses that would be disqualifying under CFTC Regulation 

§ 1.63(c). The Hearing Panel shall include sufficient different membership interests so as to ensure 

fairness and to prevent special treatment or preference for any person.

6.11 No Participant Panelist shall be permitted to participate in deliberations or voting on any matter in 

which the Participant has a financial interestconsistent with Conflicts of Interest outlined in Section 2 

above. Within ten (10) days of being notified of the appointment of a Hearing Panel, aA Respondent 

(as defined in Chapter Five of the Company's Facility Rulebook) may seek to disqualify any individual 

named to the Hearing Panel on account of a conflict of interest or other reasonable grounds, by

serving written notice to the appropriate staff of the Company and providing acopy thereof to the 

chair of the Hearing Panel. By not filing a timely request for disqualification, the Respondent will be 
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deemed to have waived any objection to the composition of the Hearing Panel. The appropriate

staff of the Company will decide the merits of any request for disqualification within his or her sole 

discretion and such decision will not be subject to appeal. 

6.12 The Hearing Panel shall conduct the formal hearings on Violations referred to it by the Review 

PanelCompliance Function, pursuant to the procedures detailed in Chapter Five of the Company's

Facility Rulebook.

6.116.13 The Hearing Panel shall have: 1) jurisdiction over any party subject to the jurisdiction of the 

Facility, including any Participant, with respect to matters relating to business conduct, trading 

practices, sales practices, trading ethics and market manipulations or other actions that threaten the 

integrity of the market; 2) the authority, pursuant to Rule 104, to take emergency actions; 3) the 

authority to conduct hearings, proceedings and appeals on all matters over which it has jurisdiction, 

including hearings appealing summary actions; 4) the authority to make findings on Violations against 

any Facility Subject Person subject to the jurisdiction of the Facility; and 5) the authority to levy 

sanctions.

6.12 In designating the members of a Review Panel or Hearing Panel, the directors shall endeavour to 

appoint a panel that is not dominated or subject to disproportionate influence by any group or class 

of Participants. The Board shall consider the objection of any Participant who believes this objective 

is not satisfied, and the Board shall determine whether a change is necessary or advisable to meet

this objective.

7. COMPLIANCE FUNCTION.

7.1 The directors shall appoint and approve the Chief Compliance Officer of the Company, who shall be 

the Chief Compliance Officer of the Company. The Chief Compliance Officer shall not serve as 

general counsel of the Company, or as a member of the Company's legal department, and may not

be disqualified from registration pursuant to sections 8a(2) or 8a(3) of the CEA. In addition, the 

Board will register with the FCA a Head of Compliance Oversight (SMF16 – Senior Management 

Function 16). Compliance with SEF Core Principles will be overseen by the Chief Compliance Officer 

appointed by the Board, Compliance with FCA Part IV obligations will be overseen by Head of 

Compliance Oversight. References in this document and any other related document to the 

Compliance Function is intended to mean, for Commission related considerations, the Chief 

Compliance Officer and, for FCA Part IV related considerations, the Head of Compliance Oversight 

(SMF16). To the extent any of the activities concern both the Commission and FCA, the Chief 

Compliance Officer and the Head of Compliance Oversight (SMF16) will co-operate to ensure 

compliance with the respective regulations.

7.2 The Compliance Function shall have the following duties, which list shall not bedeemed exhaustive:

(a) oversee and review the Facility's compliance with section 5h of the CEA and any

related rules adopted by the Commission;

(b) oversee and review compliance with the FCA Handbook and all requirements of a 

Part IV authorized firm;

(c) oversee and review compliance with the rules and regulations of any other regulatory
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body to which the Facility and/or the Company is subject;

(d) in consultation with the Regulatory Oversight Committee, resolve any conflicts of

interest that may arise;

(e) establish and administer written policies and procedures reasonably designed to

prevent violation of Applicable Law;

(f) establish procedures for the remediation of noncompliance issues identified by the 

Compliance Function through a compliance office review, look-back, internal or

external audit finding, self-reported error, or validated complaint;

(g) establish and follow appropriate procedures for handling, management response, 

remediation, retesting, and closing of noncompliance issues;

(h) establish a compliance manual designed to promote compliance with Applicable Law

and administer a written code of ethics designed to prevent ethical violations and to

promote honesty and ethical conduct;

(i) supervise the Company's self-regulatory program with respect to trade practice

surveillance, market surveillance, real-time market monitoring, compliance withaudit

trail requirements, enforcement and disciplinary proceedings, 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);

(i)(j) refer Rule violations to the Hearing Panel for formal disciplinary hearings and issue 

summary findings and fines, as described in Chapter 5 of the Facility Rulebook

(j)(k) supervise the effectiveness and sufficiency of any regulatory services provided to 

the Company by Chicago Mercantile Exchange Inc. or any other registered futures 

association or other registered entity; and

(k)(l) prepare and file any the annual compliance reports required by Commission

Regulation 37.1500(d) as well as any other compliance reports that are required by 

Applicable Law. The Chief Compliance Officer shall also prepare and file any reports 

required by Section 6 after the appointment of a new Director.

7.3 Notwithstanding section 7.2, if the Compliance Function is determined to be an Interested Person 

pursuant to section 2 of this Governance Policy, the Board shall not consult with the Compliance 

Function on the relevant matter. In such an event, the Board shall consult with outside counsel or 

other third-party compliance consultant onthe matter.

7.4 The Compliance Function shall have supervisory authority over all staff acting in furtherance of the 

Compliance Function’s obligations as determined by the relevant regulatory regime.

7.5 Removal of the Chief Compliance Officer shall require the approval of a majority of the directors. The 

directors shall immediately appoint an interim Chief Compliance Officer and shall appoint a

permanent Chief Compliance Officer as soon as reasonably practicable thereafter. Where 
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necessary, the Company shall make all notifications required under Applicable Law in relation to any 

such appointment and termination, including that the Company shall notify the Commission within

(2) business days of the departure of the Chief Compliance Officer and explain the reasons for the

departure and (b) the appointing of any new interim or permanent Chief Compliance Officer.

7.6 The Company shall notify the FCA immediately following the removal of the SMF16. The Board shall

immediately appoint an interim SMF16.

8. FINANCIAL RESOURCES

8.1 The Company must maintain adequate financial operational, and managerial resources to discharge

each responsibility of the Company. The Company shall maintain financial resources as required by 

Applicable Law, including Commission Regulations 37.1300-1307.

Last revised and approved by the Board of Directors of NEX SEF Limited: XXXJune 21, 2021
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NEX SEF Limited

Governance Policy

NEX SEF Limited

Governance Policy
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Governance Policy

The policies set out below will apply to NEX SEF Limited (the “Company”). The Governance Policy

is not intended to supersede or interpret any Applicable Law. It does not purport to be a 

comprehensive governance framework for the Company and should be read in conjunction with the 

Company’s Articles of Association, Company's Facility Rulebook (the “Facility Rulebook”) and

the Board of Directors Terms of Reference.

Glossary

Defined terms unless otherwise defined in this Governance Policy have the meaning given to them

in the Facility Rulebook.

Applicable Law means, with respect to any person, any statute,law, regulation,

rule or ordinance of any Governmental Authority applicable to

such person (as defined in the Facility Rulebook),including but

not limited to the FCA's rules, the Act and Commission

Regulations

Articles of Association means the Company's Articles of Association

The Board means the Company's board of directors

Chief Compliance Officer means the Company's Chief Compliance Officer

Commission or CFTC means the US Commodity Futures Trading Commission

Commission Regulations means any rule, regulation, order, directive and any interpretation

thereof promulgated by the Commission, as amended

Emergency has the meaning set out in the Facility Rulebook at clause 104

Facility means the venue provided by the Company for the execution

of Contracts, as set out in the Facility Rulebook

FCA means the UK Financial Conduct Authority

Hearing Panel means the disciplinary panel described in Section 6 of this

Governance Policy

Public Directors means any person who qualifies as a “public director” within the 

meaning set forth in the Commission Regulations.

Public Panelist has the meaning set out in Section 6 of this Governance Policy

Respondent means any person who is charged with a Rule violation, set out

in the Facility Rulebook

Regulatory Oversight

Committee

means the committee of the Board described in Section 6 of this

Governance Policy

Trading Privilege Holders means an individual or entity with Trading Privileges on the

Facility granted pursuant to Rule 201 of the Facility Rulebook

(including an Intermediary), but does not include an Authorised 

Trader
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1. OVERVIEW

1.1 The Board has the power by itself or through agents, and is authorized and empowered on behalf 

and in the name of the Company, to perform all acts and enter into other undertakings that it may in 

its discretion deem necessary or advisable in order to promote the sound and efficient operation of 

the Facility (except such as otherwise required by Applicable Law) and as set forth in its Terms of 

Reference.

1.2 The Board, (or committee thereof or other delegated body) acting in accordance with the Articles of 

Association and its Terms of Reference, may from time to time cause the Company to enter into such

agreements with domestic or foreign self-regulatory associations, other associations, boards of trade

and their respective regulators providing for the exchange of information and other forms of mutual

assistance for financial surveillance, routine audits, market surveillance, investigative, enforcement 

and otherregulatory purposes as the Board may consider necessary or appropriate or as Applicable

Law may require.

2. CONFLICTS OF INTEREST

2.1 Each director is required to act in the best interests of the Company and to refrain from any conduct 

that would be, or gives the appearance of being, a conflict of interest.

PERSONAL CONFLICTS OF INTEREST

2.2 No director, member of any committee or oversight panel, or officer or other person authorized to 

exercise authority on behalf of the Company, including the Compliance Function, will knowingly 

participate in such body’s deliberations or voting, including in any inquiry, investigation or any 

disciplinary proceeding, suspension, Emergency or other executive action (each, an “Executive 

Proceeding”) if such person has a conflict of interest between such person's position acting on 

behalf of the Company and such person's personal interests (each, an “Interested Person”), unless 

deliberations are permitted by section 2.6. Material conflicts of interest include, but are not limited to,

instances where an Interested Person (a) is a named party in interest in an Executive Proceeding, 

(b) is an employer, employee or fellow employee of a named party in interest or potential named 

party in interest in an Executive Proceeding, (c) has any other significant, ongoing business 

relationship with a named party in interest or potential named party in interest in an Executive 

Proceeding, excluding relationships limited to executing transactions opposite each other or to

clearing transactions through the same clearing members, (d) has a family relationship with a named 

party in interest or potential named party in interest in an Executive Proceeding (each of (a) through

(d) being a “Relationship Conflict of Interest”) or (e) has a direct and substantial financial interest 

in the result of the deliberations or vote of any Executive Proceeding based upon either Facility or 

non-Facility positions (a “Financial Conflict of Interest”). For purposes of this subparagraph, a 

"family relationship" exists between a named party in interest or potential named party in interest in

an Executive Proceeding and a potential Interested Person if one person is the other's spouse

(including a domestic partner or partner in a civil union), co-habitator, former spouse, parent, 

stepparent, child or other legal dependent, sibling, stepbrother, stepsister, grandparent, grandchild,

uncle, aunt, nephew, niece or in-law.

2.3 Prior to the consideration of any matter or significant action that will be considered by the Board or a 

committee of the Board in an Executive Proceeding, each potential Interested Person must disclose
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the existence of any potential conflict of interest, including any potential Relationship Conflict of 

Interest and/or Financial Conflict of Interest, to the any member of the Board or the individual acting 

as chairman of the relevant committee andmay choose to abstain and recuse himself or herself from 

the deliberations and voting. The potential Interested Person is encouraged to consult with the

Company’s Secretary and any necessary internal or external advisors in advance of the topic being 

discussed or voted upon. If a potential Interested Person fails to disclose the existence of any 

potential conflict of interest that he or she knows of, or reasonably should know of, such potential 

Interested Person will be deemed an Interested Person prohibited from participation in an Executive 

Proceeding by the Board or committee ofthe Board, as applicable. If the Board or committee of the 

Board, as applicable, discovers that such a potential Interested Person participated in an Executive

Proceeding without having made the disclosure of a potential conflict of interest, the determination 

of such Executive Proceeding shall be null and void, unless, in the case of an Emergency action, the

potential Interested Person makes the disclosures required pursuant to section 2.4 and the Board or 

committee thereof determines that such potential Interested Person would have been permitted to 

participate in the Executive Proceeding pursuant to section 2.5 or 2.6.

2.4 If disclosure of a potential conflict of interest is required pursuant to section 2.3, a potential Interested 

Person must disclose all information required under Applicable Law in relation to any conflict of

interest, including:

(a) In the case of any potential Relationship Conflict of Interest, such disclosure must 

include the specific type of Relationship Conflict of Interest based on the categories

(a) through (d) in section 2.2; and/or

(b) In the case of any potential Financial Conflict of Interest, such disclosure must

include the financial interest and related position information (including information

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

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

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

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

expects could be affected by the significant action, including but not limited to:

(i) gross positions held in such person’s personal accounts or “controlled

accounts,” as defined in Commission Regulation § 1.3(j);

(ii) gross positions held in proprietary accounts, as defined in Commission

Regulation § 1.17(b)(3), at such person’s affiliated firm;

(iii) gross positions held in accounts in which such person is a principal, as

defined in Commission Regulation § 3.1(a);

(iv) net positions held in Customer accounts, as defined in Commission

Regulation § 1.17(b)(2), at such person’s affiliated firm; and

(v) any other types of positions, held in such person’s personal accounts or the 

proprietary accounts of such person’s affiliated firm, that the Company reasonably

expects could be affected by the significant action.

(c) Notwithstanding subsection (b), in the case of a potential Financial Conflict of
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Interest, no such disclosure is required by a potential Interested Person if such

person chooses to abstain from deliberations and voting on the relevant Executive

Proceeding.

2.5 If a potential Interested Person who discloses a potential material conflict of interest does not choose 

to abstain and recuse himself or herself from deliberations and voting in any Executive Proceeding, 

the directors, or committee or oversight panel, as applicable, will determine whether such person

is an Interested Person prohibited from participation in the Executive Proceeding. Such 

determination will be made by a majority vote made in accordance with the procedures in the Articles 

of Association governing decision-making by directors and will be based upon a review of:

(a) the information provided by such potential Interested Person pursuant tosection 2.4;

(b) any other source of information that is held by or reasonably available to the

Company;

(c) in the case of a Financial Conflict of Interest, the most recent large trader reports and 

clearing records available to the Company; and

(d) any Applicable Law.

2.6 With respect to Financial Conflicts of Interest only, and save for where Applicable Law prohibits it,

any person determined to be an Interested Person who would otherwisebe required to abstain from 

deliberations and voting pursuant to this section, may participate in deliberations, but not in voting, if 

the Board, or committee or oversight panel, as applicable, determines by a majority vote (excluding 

all relevant Interested Persons) made in accordance with the procedures in the Articles of

Associationgoverning decision-making by directors that such participation would be consistent with

the public interest after considering the following factors:

(a) whether such Interested Person's participation in the deliberations is necessary to 

achieve a quorum;

(b) whether the Interested Person has unique or special expertise, knowledge or

experience in the matter being considered; and

(c) the position information which is the basis for the Interested Person’s Financial

Conflict of Interest.

PUBLIC DIRECTOR CLASSIFICATION

2.7 Any Public Director will be prohibited from having a “material relationship”, as defined from time to 

time in the Commission Regulations (a “Material Relationship”) with the Company which 

reasonably could affect the independent judgment or decision-making of such director. Material

Relationships are currently defined to include the following:

(a) the director, or an immediate family member of the director, may not be an officer or 

employee of the Company or its affiliate;

(b) the director, or an immediate family member of the director, may not be a Member 
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(as defined in Section 1a(34) of the Commodity Exchange Act (“CEA”) and any

regulation promulgated thereunder) of the Company, or a director, officer or

employee of a Company Member;

(c) the director, or an immediate family member of the director, may not be an officer of 

another entity, which entity has a compensation committee (or similarbody) on which

any officer of the Company serves; and

(d) the director, or an immediate family member of the director, or an entity with which 

the director or such immediate family member is a partner, an officer, an employee 

or a director, may not receive more than $100,000 in combined annual payments for

legal, accounting, or consulting services from the Company, any affiliate thereof, 

any Member of the Company or any affiliate of such Member.

2.8 Notwithstanding the foregoing, (a) compensation for services as a director of the Company or as a

director of an affiliate of the Company shall not count toward the $100,000 threshold specified in 

clause (d) of the definition of Material Relationship, nor shall compensation for services rendered by 

such individual prior to becoming a director of the Company, so long as such compensation is or was

in no way contingent, conditioned or revocable; and (b) a Public Director may also serve as a director 

of an affiliate of the Company if he or she otherwise meets the requirements set forth in clauses (a)

through (d) of the definition of Material Relationship.

2.9 Each of the preceding disqualifying circumstances is subject to a one-year look back. Public Directors 

will have an affirmative duty to investigate from time to time, and promptly disclose, the existence 

and nature of any such Material Relationships to the Board. The Board must make such findings of 

any material relationship upon the nomination or appointment of the proposed Public Director and as 

often as necessary in light of all circumstances relevant to such director, but in no case less than

annually.

COMMERCIAL CONFLICT OF INTEREST

2.10 The Board has governance and oversight responsibility for the Company’s compliance with 

applicable regulations, including meeting its obligations as a self-regulatory organization. In 

connection therewith, the Board recognizes it must balance the advancement of the Company’s 

commercial interests with the fulfillment of its self-regulatory responsibilities. In considering matters 

brought before the Board that have the potential to impact the Company’s ability to fulfill its selfregulatory obligations, the Board must consider the alignment to its established risk appetite ---

Regulatory. 

3. COMPENSATION

3.1 Compensation awarded to any Public Director and other nonexecutive directors shall not be linked 

to the Company’s business performance.

4. CERTIFICATION AND COMPLIANCE

4.1 Each prospective director and director shall, before taking office, acknowledge his or her receipt and

understanding of this Governance Policy, as well as upon any publication of a revised Governance 
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Policy or amendment thereto. In addition, (a) upon request from the Company, the director shall

certify that the qualification information he/she provided to the Company before being elected as a 

director has not changed materially, and (b) from time to time the director shall provide an updated

statement of qualification information that reflects any material changes.

4.2 Directors are required to report suspected violations of the Governance Policy or of any Applicable 

Law, rule or regulation by any director to the Board, the Regulatory Oversight Committee or the Chief 

Compliance Officer (who will subsequently relay any such suspected violations to the Board or the 

Regulatory Oversight Committee, unlesssuch reported violation is proven incorrect after a prompt 

initial review of its merits). The Board or the Regulatory Oversight Committee, as applicable, shall 

determine whether to conduct an investigation and what appropriate action should be taken.

Directors may consult with the Company’s General Counsel if there is any doubt as to whether a 

particular transaction or course of conduct complies with or is subject to the Governance Policy.

5. PUBLIC DIRECTOR FINDINGS

5.1 The Board shall make Public Director findings (including but not limited to determinations as to

such Public Directors' Material Relationships) as often as necessary in light of all circumstances 

relevant to each Public Director, but in no case less than annually.

6. COMMITTEES

Regulatory Oversight Committee

6.1 The Regulatory Oversight Committee shall be a Standing Committee of directors.

6.2 The Regulatory Oversight Committee shall be composed of those directors designated by the Board

from time to time.

6.3 The Regulatory Oversight Committee members and Regulatory Oversight Committee Chairman shall 

be appointed by the Board. Each appointee will serve until the due appointment of his or her 

successor or his or her resignation or removal as a member of the Regulatory Oversight Committee, 

with or without cause, by a majority vote of the Board. A member of the Regulatory Oversight 

Committee may serve for multiple terms.

6.4 The Regulatory Oversight Committee shall meet at least four times each year and at such other

times as it deems necessary to fulfil its responsibilities. The Committeemay meet in joint session 

with any other committee of the Board from time to time todiscuss areas of common interest and 

significant matters.

6.5 The Regulatory Oversight Committee shall report regularly to the Board with respect to its activities 

and make recommendations to the Board it may deem necessary or advisable for the orderly conduct 

of its business. Minutes of its meetings shall be maintained on behalf of the Regulatory Oversight 

Committee and approved by the Regulatory Oversight Committee.

6.6 Unless the Board provides otherwise the Regulatory Oversight Committee can make, alter or repeal 

rules for the conduct of its business. In the absence of such rules, each meeting of the Regulatory 

Oversight Committee shall be called, notice of each such meeting be given or waived and the 
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business of the Regulatory Oversight Committee conducted or its action taken as nearly as may be

in the same manner as is provided in the Articles of Association with respect to the meetings or for 

conduct ofbusiness or the taking of actions by the Board.

6.7 The Regulatory Oversight Committee shall:

(a) monitor the Facility's self-regulatory program for sufficiency, effectiveness, and

independence;

(b) oversee all facets of the Facility's self-regulatory program, including tradepractice,

market surveillance, audits, examinations and other regulatory responsibilities with

respect to Participants, and the conduct of investigations;

(c) review the size and allocation of the Facility's regulatory budget and resources; and

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

(d) review the performance of the Compliance Function, and make recommendations

with respect to such performance to the directors;

(e) review all regulatory proposals prior to implementation and advise the directors as to

whether and how such changes may impact regulation;

(f) regularly monitor for conflicts of interest in accordance with Section 2 of this

Governance Policy;

(g) recommend changes to the Facility's self-regulatory program that would ensure fair,

vigorous, and effective regulation;

(h) prepare an annual report to the directors and the Commission assessing the selfregulatory program of the Facility and including a description of the program, the

expenses of the program, the staffing and structure of the program, a catalogue of 

investigations and disciplinary actions taken during the year, and a review of the 

performance of the Hearing Panel, and Chief Compliance Officer; 

(i) review and address any conflicts of interest matters brought to its attention by the 

senior management, the Chief Compliance Officer or the Head of Compliance

Oversight (SMF16), including the following potential conflicts of interest:

a. any matter regarding the ability of the Chief Compliance Officer or the 

Head of Compliance Oversight (SMF16) to satisfy his or her obligations to 

the business they serve or such individual otherwise has a conflict of 

interest with the Company’s interests, including when such individual may 

also owe an obligation to a Trading Privilege Holder; 

b. any matter where the interests of the Company may be in conflict with the 

interests of another business within the CME Group organization; and

c. any proposed commercial initiative that is not aligned with the Company’s 

established risk appetite --- Regulatory; and

(j) perform such other duties as the directors may delegate to it from time to time.In 

addition, the Regulatory Oversight Committee may impose controls on the Facility to 

reduce the potential risk of market disruption, including but not limited to market 

restrictions that pause or halt trading in specified market conditions.
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6.8 To the extent, there is a tie vote of the members of the Regulatory Oversight Committee, the matter 

being considered shall be escalated to the CME Group Inc. Market Regulation Oversight 

Committee. The decision of the CME Group Inc. Market Regulation Oversight Committee shall be 

final. 

Hearing Panel

6.9 The Board shall appoint a Hearing Panel to conduct a formal disciplinary hearing. The Hearing Panel

shall consist of five (5) Panelists. One Panelist shall serve as the chair of the Hearing Panel ("Hearing 

Panel Chairman).

6.10 A quorum of the Hearing Panel shall consist of a majority of the Hearing Panel and must include at 

least the Hearing Panel Chair, one Panelist who is a Facility Subject Person, and one Panelist who 

is not a Facility Subject Person. The Hearing Panel may not include any members of the Market 

Regulation Staff, any person involved in adjudicating any other stage of the same Proceeding, or any 

person with a history of disciplinary offenses that would be disqualifying under CFTC Regulation 

§ 1.63(c). The Hearing Panel shall include sufficient different membership interests so as to ensure 

fairness and to prevent special treatment or preference for any person.

6.11 No Panelist shall be permitted to participate in deliberations or voting on any matter consistent with 

Conflicts of Interest outlined in Section 2 above. A Respondent (as defined in Chapter Five of the 

Company's Facility Rulebook) may seek to disqualify any individual named to the Hearing Panel on 

account of a conflict of interest or other reasonable grounds, by serving written notice to the

appropriate staff of the Company and providing acopy thereof to the chair of the Hearing Panel. 

6.12 The Hearing Panel shall conduct the formal hearings on Violations referred to it by the Compliance 

Function, pursuant to the procedures detailed in Chapter Five of the Company's Facility Rulebook.

6.13 The Hearing Panel shall have: 1) jurisdiction over any party subject to the jurisdiction of the Facility, 

including any Participant, with respect to matters relating to business conduct, trading practices, 

sales practices, trading ethics and market manipulations or other actions that threaten the integrity 

of the market; 2) the authority, pursuant to Rule 104, to take emergency actions; 3) the authority to 

conduct hearings, proceedings and appeals on all matters over which it has jurisdiction, including 

hearings appealing summary actions; 4) the authority to make findings on Violations against any 

Facility Subject Person subject to the jurisdiction of the Facility; and 5) the authority to levy sanctions.

7. COMPLIANCE FUNCTION.

7.1 The directors shall appoint and approve the Chief Compliance Officer of the Company, who shall be 

the Chief Compliance Officer of the Company. The Chief Compliance Officer shall not serve as 

general counsel of the Company, or as a member of the Company's legal department, and may not

be disqualified from registration pursuant to sections 8a(2) or 8a(3) of the CEA. In addition, the 

Board will register with the FCA a Head of Compliance Oversight (SMF16 – Senior Management 

Function 16). Compliance with SEF Core Principles will be overseen by the Chief Compliance Officer 
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appointed by the Board, Compliance with FCA Part IV obligations will be overseen by Head of 

Compliance Oversight. References in this document and any other related document to the 

Compliance Function is intended to mean, for Commission related considerations, the Chief 

Compliance Officer and, for FCA Part IV related considerations, the Head of Compliance Oversight 

(SMF16). To the extent any of the activities concern both the Commission and FCA, the Chief 

Compliance Officer and the Head of Compliance Oversight (SMF16) will co-operate to ensure 

compliance with the respective regulations.

7.2 The Compliance Function shall have the following duties, which list shall not bedeemed exhaustive:

(a) oversee and review the Facility's compliance with section 5h of the CEA and any

related rules adopted by the Commission;

(b) oversee and review compliance with the FCA Handbook and all requirements of a 

Part IV authorized firm;

(c) oversee and review compliance with the rules and regulations of any other regulatory

body to which the Facility and/or the Company is subject;

(d) in consultation with the Regulatory Oversight Committee, resolve any conflicts of

interest that may arise;

(e) establish and administer written policies and procedures reasonably designed to

prevent violation of Applicable Law;

(f) establish procedures for the remediation of noncompliance issues identified by the 

Compliance Function through a compliance office review, look-back, internal or

external audit finding, self-reported error, or validated complaint;

(g) establish and follow appropriate procedures for handling, management response, 

remediation, retesting, and closing of noncompliance issues;

(h) establish a compliance manual designed to promote compliance with Applicable Law

and administer a written code of ethics designed to prevent ethical violations and to

promote honesty and ethical conduct;

(i) supervise the Company's self-regulatory program with respect to trade practice

surveillance, market surveillance, real-time market monitoring, compliance withaudit

trail requirements, enforcement and disciplinary proceedings, 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);

(j) refer Rule violations to the Hearing Panel for formal disciplinary hearings and issue 

summary findings and fines, as described in Chapter 5 of the Facility Rulebook

(k) supervise the effectiveness and sufficiency of any regulatory services provided to 

the Company by Chicago Mercantile Exchange Inc. or any other registered futures 

association or other registered entity; and
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(l) prepare and file any the annual compliance reports required by Commission

Regulation 37.1500(d) as well as any other compliance reports that are required by 

Applicable Law. The Chief Compliance Officer shall also prepare and file any reports 

required by Section 6 after the appointment of a new Director.

7.3 Notwithstanding section 7.2, if the Compliance Function is determined to be an Interested Person 

pursuant to section 2 of this Governance Policy, the Board shall not consult with the Compliance 

Function on the relevant matter. In such an event, the Board shall consult with outside counsel or 

other third-party compliance consultant onthe matter.

7.4 The Compliance Function shall have supervisory authority over all staff acting in furtherance of the 

Compliance Function’s obligations as determined by the relevant regulatory regime.

7.5 Removal of the Chief Compliance Officer shall require the approval of a majority of the directors. The 

directors shall immediately appoint an interim Chief Compliance Officer and shall appoint a

permanent Chief Compliance Officer as soon as reasonably practicable thereafter. Where 

necessary, the Company shall make all notifications required under Applicable Law in relation to any 

such appointment and termination, including that the Company shall notify the Commission within

(2) business days of the departure of the Chief Compliance Officer and explain the reasons for the

departure and (b) the appointing of any new interim or permanent Chief Compliance Officer.

7.6 The Company shall notify the FCA immediately following the removal of the SMF16. The Board shall

immediately appoint an interim SMF16.

8. FINANCIAL RESOURCES

8.1 The Company must maintain adequate financial operational, and managerial resources to discharge

each responsibility of the Company. The Company shall maintain financial resources as required by 

Applicable Law, including Commission Regulations 37.1300-1307.

Last revised and approved by the Board of Directors of NEX SEF Limited: February 28, 2022