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DCM Exhibit L-1 

Core Principle Compliance Chart 

17 CFR Part 38 

1. Subpart B – Designation as Contract Market – §38.100 

Core Principle #1 Compliance

See the Rules of the Exchange (DCM Exhibit M-1), also 

referred to herein as the “Rulebook” or “Exchange Rules” or 

“Rules of the Exchange”, Compliance Manual (DCM Exhibit 

O-1), and other Exhibits submitted with the Exchange’s 

application to be a Designated Contract Market. 
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2. Subpart C – Compliance With Rules – §38.150 

Core Principle #2 Compliance

See the Exchange Rules, Compliance Manual (DCM Exhibit O1), and other Exhibits submitted with the Exchange’s 

application as a Designated Contract Market. Specifically, see 

the sections of the Rules addressing the following issues: 

 Access requirements - Rule 4(c) 

 Abusive trade practices - Chapter 7 of the Rulebook 

 Terms and conditions of the contracts will be as 

 certified to the Commission. 

The capacity of the Exchange to detect and investigate 

violations will be augmented by its engagement of Eventus. 

3. Subpart D – Contracts Not Readily Subject to Manipulation – §38.200 

Core Principle #3 Compliance

The Exchange will submit contracts for self-certification under 

Commission Regulation §40.2 with a narrative that addresses 

the likelihood of manipulation and the reasons the Exchange 

believes the contract is not readily susceptible to manipulation. 

Similarly, any contract for which the Exchange seeks 

Commission approval under §40.3 will also include a narrative 

that addresses the likelihood of manipulation and the reasons 

the Exchange believes the contract is not readily susceptible to 

manipulation. 

In presenting its analysis, the Exchange will rely on the 

Guidance in Appendix C in meeting this Core Principle for new 

product listings. 
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4. Subpart E – Prevention of Market Disruption – §38.250 

Core Principle #4 Compliance

The Exchange will implement procedures and practices to 

monitor trading to prevent manipulation, price distortion, and 

disruptions of the delivery or cash-settlement process. The 

Exchange has developed an internal real time monitoring 

system and will use the Validus system for T+1 surveillance. 

The Exchange has tools to intervene in trading on a real time 

basis if necessary and has a compliance program to address 

violations of market rules. 

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

surveillance of trading. The control desk will be staffed at all 

times that the Exchange is open for trading. See the 

Compliance Manual at DCM Exhibit O-1, Section XIII: Real 

Time Market Monitoring, for information on the control desk 

functions. 

Additionally, the Exchange’s Compliance Manual addresses 

the specific points raised by this Core Principle directly. 

5. Subpart F – Position Limitations or Accountability – §38.300 

Core Principle #5 Compliance

The Exchange will include Position Accountability thresholds 

with each contract filed under §40.2 or §40.3. These will be 

included in the terms and conditions of each contract. 

For any contract that is subject to a position limitation 

established by the Commission, pursuant to section 4a(a), the 

Exchange shall set a Position Limit at a level not higher than 

the position limitation established by the Commission. 

The Exchange staff will monitor compliance with the position 

limits and reportable position thresholds.
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6. Subpart G – Emergency Authority – §38.350 

Core Principle #6 Compliance

Procedures and guidelines for the exercise of emergency 

authority are defined by the Exchange Rules, including 

Definition xxiii: Emergency, and under the provisions of 

Exchange Rule 3(k). Among other things, the Rules require the 

Exchange to notify the Commission of any emergency action 

taken, or proposed to be taken, and to document its decisionmaking process and reasons for using its emergency action 

authority. 

7. Subpart H – Availability of General Information – §38.400 

Core Principle #7 Compliance

Exchange Rule 4(h) requires that all Rules of the Exchange, 

including all amendments thereto and notices and policies 

thereunder, as well as the specifications for all Contracts from 

time to time traded on the Exchange, be publicly available on 

the Exchange’s website. The web page address is subject to 

change, but the Exchange has procured 

www.aristotleexchange.com as its likely URL. 

8. Subpart I – Daily Publication of Trading Information – §38.450 

Core Principle #8 Compliance

Exchange Rule 4(h) requires that the Exchange shall make 

public daily information on settlement prices, volume, open 

interest, and opening and closing ranges for actively traded 

contracts. This information will be published to the Exchange 

website, the address of which is subject to change but is likely 

to be www.aristotleexchange.com. 

The Exchange will publish additional reports from time to time 

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

Rules. 
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9. Subpart J – Execution of Transactions – §38.500 

Core Principle #9 Compliance

The Exchange Rulebook establishes trading rules to ensure fair 

and equitable trading. 

All Participants and their Authorized Traders (each as defined 

in the Rules of the Exchange) will have equal access to the 

Exchange’s trading platform, including information regarding 

prices, bids, and offers. Orders will be executed impartially in 

accordance with the principles set forth in Chapter 5 of the 

Rules of the Exchange. 

Rule 5(c)(iii)(1) provides that all pre-negotiated transactions 

that are not expressly permitted are prohibited. 

Chapter 5 of the Rules of the Exchange also contains other 

rules to prevent trading-related abuses, such as wash trading, 

accommodation trades, and trading ahead. 

The Exchange will maintain systems including Validus and 

surveillance procedures to detect abuses such as wash trading, 

accommodation trades, trading ahead, and other types of 

market manipulation or fraud. 

As provided by Rule 5(c)(iii)(3) and (4), the Exchange will 

permit certain off-exchange trades as specifically outlined in 

Chapter 5 of the Rules of the Exchange. 

10. Subpart K – Trade Information – §38.550 

Core Principle #10 Compliance

The Exchange and related systems employed by its Regulatory 

Services Provider will record full data entry and trade details 

and safely store audit trail data to assist in the prevention of 

customer and market abuses and provide evidence of any 

violations of the rules of the contract market. 

The maintenance of records, which will use WORM 

technology, will be in compliance with the standards of CFTC 

Rule 1.31. The technical aspects of the capture and storage of 

information is discussed in the DCM Form’s narrative response 

for Exhibit S. 
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11. Subpart L – Financial Integrity of Transactions – §38.600 

Core Principle #11 Compliance

All Contracts traded on the Exchange will be cleared by 

Aristotle Exchange DCO, Inc., (also referred to herein as the 

“DCO” or the “Clearinghouse”), an affiliated entity of the 

Exchange, pursuant to Chapter 6 of the Rulebook. 

Margin requirements for each Contract will be determined in 

accordance with the Rules of the DCO and the relevant 

Contract Rules. 

Original Margin shall, in all cases, be equal to or greater than 

an amount equal to the maximum loss amount a Participant 

could suffer upon liquidation or settlement of positions. 

Furthermore, all Participants are required to have the required 

funds on deposit with the Clearinghouse prior to obtaining any 

position. 

As a non-intermediated market, all Participant funds are held in 

the Member Property account of the Clearinghouse. These 

funds will be kept in an account appropriately titled as a 

member-funds account and kept separate from the proprietary 

funds of the Exchange and Clearinghouse. 

12. Subpart M – Protection of Markets and Market Participants – §38.650 

Core Principle #12 Compliance

The Rules of the Exchange contain a broad prohibition against 

fraudulent acts and market manipulation and the Exchange will 

provide surveillance practices and procedures to protect 

Participants and Authorized Traders. 

Rule 7(b) spells out the general conduct expectations for all 

Participants, including in (b)(ii) the requirement to engage in 

conduct or practices consistent with just and equitable 

principles of trade, and Rule 7(i) expressly prohibits conduct to 

the contrary. 
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13. Subpart N – Disciplinary Procedures – §38.700 

Core Principle #13 Compliance

Chapter 7 of the Rules of the Exchange implement the 

disciplinary procedures required by this Core Principle. 

These procedures mirror those required by CFTC Part 38, 

Appendix B, Acceptable Practices Core Principle 13, Rules 

38.700 through 38.712. 

14. Subpart O – Dispute Resolution – §38.750 

Core Principle #14 Compliance

Chapter 8 of the Rules of the Exchange implement the dispute 

resolution procedures required by this Core Principle. 

15. Subpart P – Governance Fitness Standards – §38.800 

Core Principle #15 Compliance

Chapter 3 of the Rules of the Exchange implement the 

governance fitness standards required by this Core Principle. 

16. Subpart Q – Conflicts of Interest – §38.850 

Core Principle #16 Compliance

Chapter 3 of the Rules of the Exchange implement the conflictof-interest standards required by this Core Principle. 
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17. Subpart R – Composition of Governing Boards of Contract Markets – §38.900 

Core Principle #17 Compliance

Chapter 3 of the Rules of the Exchange implement the conflictof-interest standards required by this Core Principle. The 

Board of Directors is composed of 5 members, two of whom 

are Public Directors. 

18. Subpart S – Recordkeeping – §38.950 

Core Principle #18 Compliance

The Exchange will maintain records of all activities related to 

its business for a period of five years and in accordance with 

Commission Regulation §1.31, and with regard to swaps, for 

the life of the swap plus five years. 

19. Subpart T – Antitrust Considerations – §38.1000 

Core Principle #19 Compliance

The Exchange believes that its Rules have been designed to 

avoid unreasonable restraints of trade or the imposition of any 

material anti-competitive burden on trading, as will the 

Contract Rules for each Contract to be certified by the 

Commission for trading on the Exchange. 

Access to the Exchange will not require the acquisition of any 

equity interest but will be available to a broad range and 

potentially unlimited number of participants, on a fair, 

equitable, and timely basis. The Exchange will operate through 

precise and predetermined electronic algorithms, without 

discrimination among different users or user groups. Trade 

information will be disseminated both to Participants and to the 

public on a continuous basis. 

Designation of Aristotle Exchange DCM will offer market 

participants an additional venue in which to trade binary 

options and other instruments on a fully-collateralized basis. 
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20. Subpart U – System Safeguards – §38.1050 

Core Principle #20 Compliance

The Exchange demonstrates its compliance with this Core 

Principle 20 through the responses already provided within 

DCM Exhibit V, including its substantial attachments. 

Specifically, the ERM section provides numerous documents 

to support compliance with section (a), including exhibits 

labeled under DCM Exhibit V’s 1.2, 1.3, 1.5, 1.6.08, and 1.7. 

Specifically, the BCM section provides numerous documents 

to support compliance with sections (b) and (c), including 

exhibits labeled under DCM Exhibit V’s 1.4.01. 

21. Subpart V – Financial Resources – §38.1100 

Core Principle #21 Compliance

The Exchange demonstrates its compliance with this Core 

Principle 21 through the responses already provided within 

DCM Exhibit I, including the attached DCM Exhibit I-1: Year 

One Operating Expenses.
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22. Subpart W – Diversity of Board of Directors – §38.1150 

Core Principle #22 Compliance

Although the board of trade is not a publicly traded company, it 

strives for inclusivity in its governing bodies. 

23. Subpart X – Securities and Exchange Commission – §38.1200 

Core Principle #23 Compliance

Not Applicable.