Tradition SEF, Inc.

RULEBOOK

April 16, 20182, 2019

Version: 20.420.5
CHAPTER 1 DEFINITIONS 5

RULE 101 Definitions

5

RULE 102 Rules of Construction

11

CHAPTER 2 SEF OWNERSHIP AND GOVERNANCE 12

RULE 201 Board

12

RULE 202 Officers

13

RULE 203 Qualifications of Directors, Disciplinary Panel Members, Appeal Panel

Members, Committee Members and Officers

13

RULE 204 Standing Committees

14

RULE 205 Nominating Committee

14

RULE 206 Participant Committee

15

RULE 207 Regulatory Oversight Committee

15

RULE 208 Emergency Rules

16

RULE 209 Conflicts of Interest

17

RULE 210 Restrictions on Use of Material Non-Public Information

18

RULE 211 Maintenance of Books and Records by Tradition SEF

19

RULE 212 Recording of Communications

19

 1
RULE 213 Information-Sharing Agreements

19

RULE 214 Services Agreement with a Regulatory Services Provider

20

CHAPTER 3 TRADING PRIVILEGES AND PARTICIPANTS 21

RULE 301 Scope

21

RULE 302 Participant Criteria

21

RULE 303 Participant Application Process

21

RULE 304 Additional Criteria for Participants

22

RULE 305 Trading Privileges

24

RULE 306 Limitations on Access to a Platform

24

RULE 307 Dues and Fees

24

RULE 308 Authorized Traders, Authorized Brokers and Authorized Agents

25

RULE 309 Authorized Representatives

26

RULE 310 Participant Notices

27

RULE 311 Communications between Tradition SEF and Participants

27

RULE 312 Application of Rules and Jurisdiction

27

 2
RULE 313 Description of Status

28

RULE 314 Withdrawal of Participant

28

RULE 315 Independent Software Vendors

28

CHAPTER 4 OBLIGATIONS OF PARTICIPANTS AND CUSTOMERS 29

RULE 401 Scope

29

RULE 402 Duties and Responsibilities of Participants, including Clearing Firms and

FCMs

29

RULE 403 Duties and Responsibilities of Participants that Provide Customers with

Access to a Platform

30

RULE 404 Required Disclosures to Tradition SEF

31

RULE 405 Inspections by Tradition SEF

31

RULE 406 Minimum Financial and Related Reporting Requirements

32

RULE 407 Confidentiality of Financial and Other Information

32

RULE 408 Authority to Impose Restrictions

32

RULE 409 CFTC Registration

32

RULE 410 WITHDRAWN

32

RULE 411 Information Regarding Orders

32

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RULE 412 Confirmations

33

CHAPTER 5 TRADING PRACTICES AND BUSINESS CONDUCT 34

RULE 501 Scope

34

RULE 502 Procedures

34

RULE 503 Business Days and Trading Hours

34

RULE 504 Execution Methods

35

RULE 505 Platform Order Books

35

RULE 506 Order Types; Submission and Procedures

36

RULE 507 Request for Quote and Request for Continuous Stream

37

RULE 508 Work Up Process

3738

RULE 509 Block Trades

38

RULE 510 Recordkeeping Requirements for Entering Orders into the Platform

3940

RULE 511 Trade Cancellations and Price Adjustments by Tradition SEF

4142

RULE 512 Swap Data Reporting

42

RULE 513 Correction or Cancellation of Swap Data

43

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RULE 514 Adherence to Rules and Applicable Law

4344

RULE 515 Supervision

44

RULE 516 Fraudulent Acts Prohibited

44

RULE 517 Fictitious, Wash, Accommodation or Non-Competitive Transactions

Prohibited

44

RULE 518 Market Disruption Prohibited

4445

RULE 519 Market Manipulation Prohibited

4445

RULE 520 Disruptive Trading Practices Prohibited

45

RULE 521 Prohibition of Misstatements

45

RULE 522 Acts Detrimental to the Reputation of Tradition SEF Prohibited

45

RULE 523 Misuse of the Platform

45

RULE 524 Responsibility for Customer Orders

45

RULE 525 Withholding Customer Orders Prohibited

4546

RULE 526 Trading Ahead of Customer Orders Prohibited

4546

RULE 527 Trading Against Customer Order Prohibited

46

 5
RULE 528 Disclosing Customer Orders Prohibited

46

RULE 529 Prearranged, Pre-Negotiated and Noncompetitive Transactions

Prohibited

46

RULE 530 Discretionary Orders

4647

RULE 531 Priority of Execution

47

RULE 532 Position Limits and Exemptions

47

RULE 533 Position Accountability

48

RULE 534 Responsibility of Swap Dealers and Major Swap Participants for

Compliance with Trading Requirement

48

RULE 535 Market Operations Department

48

RULE 536 Liquidity Provider Programs

4849

RULE 537 Limitation of Liability

49

RULE 538 Error Trade Policy

51

RULE 539 Error Trade Policy for Tradition SEF Errors

51

RULE 540 Transaction Enforceability

52

RULE 541 Counterparty Anonymity

52

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RULE 542 Risk controls for trading

5253

RULE 543 Publication of market data on swaps and options thereon: trading volume

and prices, and submission of transaction data to the CFTC

53

RULE 544 Affirmations of Cleared Swaps

53

CHAPTER 6 DISCIPLINARY RULES 53

RULE 601 General

53

RULE 602 Inquiries and Investigation

5455

RULE 603 Reports of Investigations

55

RULE 604 Opportunity to Respond

56

RULE 605 Review of Investigative Reports

56

RULE 606 Notice of Charges

5657

RULE 607 Answer to Notice of Charges

57

RULE 608 Service of Notice of Charges

5758

RULE 609 Settlements

58

RULE 610 Disciplinary Panel

5859

RULE 611 Convening Hearings of Disciplinary Proceedings

59

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RULE 612 Respondent Review of Evidence

60

RULE 613 Conducting Hearings of Disciplinary Proceedings

60

RULE 614 Decision of Hearing Panel

6162

RULE 615 Sanctions

62

RULE 616 Appeal from Hearing Panel Decision, Summary Impositions of Fines and

Other Summary Actions

63

RULE 617 Summary Imposition of Fines

64

RULE 618 Summary Suspensions and Other Summary Actions

65

RULE 619 Rights and Responsibilities after Suspension or Termination

66

RULE 620 Notice to the Respondent, the Regulatory Services Provider and the

Public

6667

CHAPTER 7 CLEARED SWAPS, UNCLEARED SWAPS AND PACKAGE

TRANSACTIONS 69

RULE 701 Cleared Swaps

69

RULE 702 Clearing Services

69

RULE 703 Cleared Swaps, Rejections and Errors

69

RULE 704 Credit Checks - Pre-Execution Credit Check

71

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RULE 705 Cleared Swap Margin Requirements

72

RULE 706 Uncleared Swaps

72

RULE 707 Package Transactions

72

RULE 708 Exceptions and Exemptions to Clearing Requirement

73

CHAPTER 8 MISCELLANEOUS 74

RULE 801 Gifts and Gratuities

74

RULE 802 Market Data

74

RULE 803 Extension or Waiver of Rules

75

RULE 804 Effect of Amendment, Repeal or New Rule

75

RULE 805 Signatures

75

RULE 806 Governing Law

75

RULE 807 Dispute Resolution

75

RULE 808 Disputes with Tradition SEF

75

CHAPTER 9 PRODUCT SPECIFICATIONS AND LISTINGS 76

RULE 901 Product Specifications

76

RULE 902 Swaps Not Readily Susceptible to Manipulation

76

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Appendix A U.S. Dollar Interest Rate Swap Product Listing 77

Appendix B Credit Product Listing 78

Appendix C Foreign Currency Product Listing 79

Appendix D Equities Product Listing 80

Appendix E Commodities Product Listing 81

CHAPTER 1

DEFINITIONS

RULE 101 Definitions

When used in this Rulebook the following terms shall have the respective meanings as follows:

“Act” or “CEA” means the Commodity Exchange Act.

“Affiliate” means, with respect to any Person, any Person who, directly or indirectly, Controls, is

Controlled by, or is under common Control with, such other Person.

“Appeal Panel” means a panel comprised of a chair and two individuals selected from the

Disciplinary Panel by the Chief Compliance Officer to consider appeals of decisions of a Hearing

Panel in accordance with Chapter 6.

“Applicable Law” means, with respect to any Person, any statute, law, regulation, rule or

ordinance of any governmental or self-regulatory authority applicable to such Person, including

the Act and CFTC Regulations.

“Authorized Agent” means a Person acting on behalf of a Broker Firm Participant. An

Authorized Agent is not a Broker Firm Participant and shall not have direct access to a Platform to

enter Orders or execute Swaps.

“Authorized Representative” means an individual who is employed and authorized by a

Participant to represent the Participant in SEF matters pursuant to Rule 309.

“Authorized Broker” means a Person who is employed by or is an Authorized Agent of a Broker

Firm Participant and who has been authorized by such Broker Firm Participant to access one or

more Platforms pursuant to Rule 308 and to enter Orders or execute Swaps on a Platform on

behalf of the Customers of the Broker Firm Participant

“Authorized Trader” means an individual who is employed by or is an agent of a Participant or a

Customer and who has been authorized to access one or more Platforms pursuant to Rule 308

and to enter Orders or execute Swaps on behalf of such Participant or Customer, as applicable.

“Authorized Jurisdiction” means such jurisdictions as may be acceptable to Tradition SEF and

are published on the Tradition SEF website and in a Participant Notice from time to time.

“Block Trade” means a privately negotiated transaction in a Swap that meets the requirements

of Rule 509.

“Board” means the Board of Tradition SEF.

“Breakage Agreement” means an agreement or any other arrangement between the parties that

provides for the assessment of liability or payment of damages between the parties to a Cleared

Swap in the event that the Cleared Swap is rejected from clearing.

“Broker Firm Participant” means a Person that (i) is a Participant (but not a General

Participant), (ii) is registered as a Futures Commission Merchant or Introducing Broker or in

another appropriate capacity, or is exempt from such registration, and (iii) enters Orders or

executes Swaps on a Platform or subject to the Rules on an agency basis on behalf of

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Customers, or other Participants or their Customers, but may not engage in SEF Activity for the

Broker Firm Participant’s Proprietary Account.

“Business Day” means a day on which Tradition SEF is open for trading.

“Chief Executive Officer” means the individual appointed by the Board as Tradition SEF’s chief

executive officer.

“CFTC” or “Commission” means the U.S. Commodity Futures Trading Commission or any

successor regulatory body.

“CFTC Regulations” means the rules and regulations promulgated by the CFTC.

“Chief Compliance Officer” means the individual appointed by the Board in accordance with the

Act, CFTC Regulations 37.1500 and 37.1501 and Tradition SEF Bylaws as Tradition SEF’s chief

compliance officer.

“Cleared Swap” means a Swap that is to be submitted for clearing to a Clearing House, either

on a mandatory or voluntary basis.

“Clearing Firm” means an entity meeting the requirements of, and approved for, Clearing

Membership at the Clearing House that is authorized pursuant to the rules of such Clearing House

to clear any or all of the Swaps. For the avoidance of doubt, a Clearing Firm also may register

with Tradition SEF as a Participant.

“Clearing House” means any DCO with which Tradition SEF has entered into a clearing access

agreement that provides clearing and settlement services in relation to Swaps.

“Confirmation” means the consummation (electronic or otherwise) of legally binding

documentation (electronic or otherwise) that memorializes the agreement of the parties to all

terms of a Swap, which shall be in writing (electronic or otherwise) and shall legally supersede any

previous agreement (electronic or otherwise) relating to the Swap.

“Control” means the possession, direct or indirect, of the power to direct or cause the direction of

the management and policies of a Person, whether through the ownership of securities, by

contract, or otherwise. The terms “controlling” or “controlled” shall have meanings correlative to

the foregoing.

“Customer” means a Person that is (i) an Eligible Contract Participant, and (ii) is a customer, as

defined in CFTC Regulation 1.3(k), of a Participant that is authorized by the customer to transmit

Orders on its behalf or is authorized by a Participant to directly transmit Orders to Tradition SEF

through the Participant’s Trading Privileges.

“Derivatives Clearing Organization” or “DCO” means a “derivatives clearing organization”

registered with the CFTC pursuant to Section 5b of the Act or a Clearing House operating

pursuant to a CFTC no-action letter or exemption from registration with the CFTC.

“Designated Contract Market” or “DCM” means a “designated contract market” as set forth

under Section 5 of the Act.

“Direct Customer Access” means, with respect to a Customer, direct connectivity to a Tradition

SEF Platform through: (i) an ISV or the Customer’s proprietary application program interface; (ii) a

Tradition SEF graphical user interface (i.e., GUI) directly to Tradition SEF’s Order Book; or (iii)

voice access to an Order Book or RFQ System through a SEF Execution Specialist; in each case,

as authorized by a Participant through the Participant’s Trading Privileges.

“Director” means any member of the Board.

“Disciplinary Panel” means the panel appointed by the Board at the recommendation of the

Chief Compliance Officer to act in an adjudicative role and fulfil various adjudicative

responsibilities and duties described in Chapter 6.

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“Eligible Contract Participant” means an eligible contract participant as defined in Section

1a(18) of the Act and CFTC Regulation 1.3(m).

“Emergency” means the occurrences or circumstances which, in the opinion of the Board, or a

person or persons duly authorized to issue such an opinion on behalf of the Board of Tradition

SEF under circumstances and pursuant to procedures set forth in the Rules, requires immediate

action and threatens or may threaten such things as the fair and orderly trading in, or the

liquidation of or delivery pursuant to, any agreements, contracts, Swaps or transactions or the

timely collection and payment of funds in connection with clearing and settlement by a DCO,

including, without limitation, the following:

(a) any circumstance which may materially affect the performance of agreements,

contracts, Swaps or transactions, including failure of the payment system or the

bankruptcy or insolvency of any Participant or Customer;

(b) any action taken by any governmental body or any other registered entity, board of

trade, market or facility which may have a direct impact on trading or clearing and

settlement;

(c) any manipulative or attempted manipulative activity or any actual, attempted, or

threatened corner, squeeze, congestion, or undue concentration of positions; or

(d) any other circumstance which may have a severe, adverse effect upon the functioning

of Tradition SEF or any other registered entity with the CFTC. “Emergency Rules” has

the meaning set forth in Rule 208(a).

“Execution Agreement” means the documentation between Swaps market participants

substantially in the form of an ISDA Master Agreement or similar agreement between

counterparties that governs the terms of Uncleared Swaps.

“Fixed Income Clearing Corporation” or “FICC” means the subsidiary of The Depository Trust

& Clearing Corporation (“DTCC”) that provides real-time trade matching, clearing, risk

management and netting for trades in US Government debt issues, including repurchase

agreements or repos.

“Futures Commission Merchant” or “FCM” has the meaning set forth in Section 1a(28) of the

Act and in CFTC Regulation 1.3(p).

“General Participant” means a Person that is a Participant (but not a Broker Firm Participant): (i)

that engages in SEF Activity for its Proprietary Account and/or; (ii) that enters Orders or executes

Swaps on a Platform or subject to the Rules on an agency basis on behalf of its Customers, or

other Participants or their Customers, provided such Person is registered as (A) an FCM or

Introducing Broker, or (B) a Commodity Pool Operator (”CPO”) or Commodity Trading Advisor

(“CTA”) and in such CPO or CTA capacity submits Orders on behalf of pools it operates or

Customer accounts for which it has discretionary authority, respectively, or is exempt from such

registration; and /or (iii) acts as a principal counterparty to a Customer with respect to a Swap.

“Government Agency” means any governmental entity (including the United States, a State, or a

foreign government).

“Hearing Panel” means a panel comprised of a chair and two individuals selected from the

Disciplinary Panel by the Chief Compliance Officer to act in an adjudicative role and fulfil various

adjudicative responsibilities and duties described in Chapter 6.

“Independent Software Vendor” or “ISV” means a Person that makes available to Participants

(and/or its Customers where such Customers have been authorized to do so by the Participants)

a system or platform offering smart order routing, front-end trading applications, aggregation, or a

combination of the foregoing, but that does not provide Participants or Customers the ability to

effect Swaps on such systems or platforms.

“Interested Person” has the meaning attributed to such term in Rule 209(a).

12
“Intermediated Access” means, with respect to a Customer, indirect connectivity to a Tradition

SEF Platform or RFQ System though a Participant’s: (i) technology platform; or (ii) order

placement infrastructure.

“Introducing Broker” has the meaning set forth in Section 1a(31) of the Act and in CFTC

Regulation 1.3(mm).

“Insolvency Event” means, in relation to any Participant: (a) that an order is made by a court of

competent jurisdiction, or a resolution is passed, for the liquidation, bankruptcy or administration

of such Participant or a notice of appointment of a bankruptcy trustee or administrator of such

Participant is filed with a court of competent jurisdiction; (b) the appointment of a manager,

receiver, administrative receiver, administrator, trustee or other similar officer of such Participant

or in respect of any part or any of its assets; (c) such Participant convenes a meeting of its

creditors generally or makes or proposes any arrangement or composition with, or any

assignment for the benefit of, its creditors generally (otherwise than in the course of a

reorganization or restructuring previously approved in writing by Tradition SEF); (d) such

Participant is unable to pay its debts as they become due or admits in writing its inability to pay its

debts as they are due or is insolvent; (e) any action occurs in respect of any Participant in any

jurisdiction which is analogous to any of those set out in sub-paragraphs (a), (b), (c), or (d)

immediately above.

“ISDA” means the International Swaps and Derivatives Association, Inc.

“Major Swap Participant” means a “major swap participant” as defined in Section 1a(33) of the

Act and Commission Regulation 1.3(hhh).

“Market Operations Department” or “MOD” means the Tradition SEF Market Operations

Department, which provides technical support and control over the operations of the Platform.

“Market Regulation Department” means all SEF Officials and/or agents of Tradition SEF

(including the Regulatory Services Provider) that assist Tradition SEF in the surveillance of trading

on the Platform and enforcement of the Rules and other Obligations.

“NFA” means the National Futures Association.

“Nominating Committee” means the committee of the Board constituted in accordance with

Rule 206.

“Non-Clearing Firm” means a Participant who is not a Clearing Firm but has a guaranteed

clearing arrangement in place with a Clearing Firm.

“Obligation” means each Rule of Tradition SEF, order or procedure issued by Tradition SEF,

including Participant Notices and applicable Platform Supplements, and other requirement

implemented by Tradition SEF under the Rules, including each term of a Swap, as well as any

contractual obligations between a Clearing Firm, Participant, Customer, and Tradition SEF,

including the Participant Documentation.

“Officer” means any officer of Tradition SEF.

“Order” means either a firm bid or a firm offer for a Swap pursuant to these Rules, and includes

any modification to, or cancellation of such a bid or offer.

“Order Book” means, in accordance with CFTC Regulation 37.3(a)(3), the portion of Tradition

SEF’s trading system environment in which multiple market participants have the ability to enter

multiple Orders, observe and receive Orders entered by other market participants, and transact

on such Orders.

“Order Types” means the Order types made available by Tradition SEF for execution on a

Platform.

“Package” means a transaction involving two or more instruments: (1) that is executed between

two or more counterparties; (2) that is priced or quoted as one economic transaction with

13
simultaneous or near simultaneous execution of all components; (3) that has at least one

component that is a Swap that is made available to trade; and (4) where the execution of each

component is contingent upon the execution of all other components.

“Participant” means an Eligible Contract Participant (other than an ISV) that satisfies the

Participant criteria described in Rule 302 and has entered into and has in effect the applicable

Participant Documentation, and that has been granted Trading Privileges by Tradition SEF, and

includes General Participants and Broker Firm Participants unless the context requires otherwise.

“Participant Committee” means the committee of the Board constituted in accordance with Rule

206.

“Participant Documentation” means the agreements for General Participants and Broker Firm

Participants, as applicable, (together with any applicable schedules, exhibits or appendices

thereto required by Tradition SEF) in form and substance acceptable to Tradition SEF, that are

required to be executed and delivered to Tradition SEF before a Person may access the Platform.

“Participant Notice” means a communication sent by or on behalf of Tradition SEF to all

Participants as described in Rule 310.

“Permitted Transaction” means Swaps that are not Required Transactions.

“Person” means a natural person or an entity.

“Platform” means any Tradition SEF trading platform that is used for trading Swaps, including

any licensed software that is a part thereof from time to time, and any successor electronic trading

system thereto.

“Platform Supplement” means the documentation published by Tradition SEF from time to time

that sets forth the specific Rules and trading protocols for trading on a specific Platform. The

Rules and trading protocols of such Platform Supplements are herein incorporated by reference

by into this Rulebook. For the avoidance of doubt, any Rule contained in a Platform Supplement,

to the extent that there is any conflict with the Tradition SEF Rulebook, shall take precedence over

inconsistent provisions in the Rulebook.

“Proprietary Account” has the meaning ascribed to it by CFTC Regulation 1.3(y).

“Public Director” means a Director with the qualifications set forth in Rule 201(e).

“Public Individual” means an individual that is determined by the Board or Chief Compliance

Officer, as applicable, to have no “material relationship” with Tradition SEF, as such term is used

in Rule 201(e).

“Regulatory Data” means proprietary data or personal information that a Participant provides to

Tradition SEF for the purpose of fulfilling its regulatory obligations.

“Regulatory Oversight Committee” means the committee of the Board constituted in

accordance with Rule 207.

“Regulatory Services Agreement” means the agreement(s) between Tradition SEF and the

Regulatory Services Provider whereby market surveillance and trade practice surveillance

functions are delegated to the Regulatory Services Provider.

“Regulatory Services Provider” means the NFA or other such organization, if any, which

provides regulatory services to Tradition SEF pursuant to a Regulatory Services Agreement.

“Reporting Counterparty” means the Participant that is required to report Swap data as

designated pursuant to Rule 512 and, for the avoidance of doubt, shall have the obligations of

the “reporting party” set forth in Part 43 of CFTC Regulations.

“Request For Quote” or “RFQ” means the transmission of an interest to trade by a Participant

which must be directed to a minimum number of responding Participants as defined by the CFTC

from time to time.

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“Required Swap Creation Data” means all primary economic terms data for a Swap in the swap

asset class in question as specified in Appendix 1 to Part 45, and all confirmation data for the

Swap.

“Required Transaction” means all Swaps that the CFTC has identified as required to be traded

on a SEF or DCM in accordance with Section 2(h)(8) of the Act.

“RFQ System” means a trading system or platform operated by Tradition SEF in which a market

participant transmits a Request for Quote.

“Rule” or “Rules” means the Participant Documentation, Rulebook, the Appendices hereto,

Platform Supplements, Tradition SEF Bylaws, and the published interpretations, orders,

resolutions, advisories, notices, statements of policy, decisions, manuals, and directives of

Tradition SEF.

“SDR” means a swap data repository, registered with the CFTC in accordance with Section 21 of

the Act and Part 49 of CFTC Regulations.

“SEF” means “swap execution facility” as defined in Section 1a(50) of the Act.

“SEF Activity” means business for which a Participant, Customer, or Clearing Firm is subject to

the Rules, which is purportedly conducted subject to the Rules, or which should have been

conducted subject to the Rules.

“SEF Execution Specialist” means a Tradition SEF employee responsible for assisting

Participants and Customers to transmit Orders or Request For Quotes to a Platform and to RFQ

Recipients.

“SEF Official” means any Director or Officer of, or individual employed directly by, Tradition SEF,

the Regulatory Services Provider or any individual rendering similar services to Tradition SEF

under an administrative or similar agreement.

“SEF Proceeding” and “SEF Proceedings” have the meanings attributed to such terms in Rule

209(a).

“Self-Regulatory Organization” shall, unless otherwise provided, have the meaning attributed to

such term in CFTC Regulation 1.3(ee) and, in addition, shall include a SEF, Derivatives Clearing

Organization, and registered futures association.

“Supervised Persons” means, with respect to a Participant, any directors, officers, employees or

agents of such Participant.

“Swap” means any instrument that is a swap as defined in Section 1a(47) of the Act and CFTC

Regulation 1.3(xxx), and as used in these Rules, refers solely to transactions in Swaps (including

Orders) that are made on or to be made on Tradition SEF or pursuant to these Rules.

“Swap Dealer” means a “swap dealer” as defined in Section 1a(49) of the Act and CFTC

Regulation 1.3(qqqq).

“Swap Transaction and Pricing Data” means all data required to be reported pursuant to Part

43 of the Commission’s regulations and Appendix A to Part 43, including the actual notional or

principal amount of a Swap and an actual description of the underlying asset(s).

“Trading Day” means a day on which the Platform is open for business as set forth in Tradition

SEF Rule 503.

“Trading Hours” means, for any Trading Day, the hours as set forth in Tradition SEF Rule 503.

“Trading Privileges” means the right granted by Tradition SEF to: (i) a General Participant to

directly transmit Orders for certain or all Swaps through the Platform for each of its Proprietary

Accounts, and (ii) any Participant if registered or exempt in any applicable capacity and

authorized to act on behalf of Customers in accordance with Applicable Law, for the accounts of

such Customers.

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“Tradition SEF” means Tradition SEF Inc., a Delaware corporation.

“Tradition SEF Bylaws” means the Bylaws of Tradition SEF, Inc., as the same may be amended

from time to time.

“Trad-X Platform” means the Trad-X market operated by Tradition SEF.

“Tradition Holdings” means Tradition Service Holding S.A., or any successor thereto.

“Uncleared Swap” means any Swap other than a Cleared Swap.

“User Agreement” means any user agreement that must be entered into by any user of the

Platform.

“User ID” means the unique identification number assigned by Tradition SEF to an Authorized

Trader or Authorized Broker.

“Write,” “Written” or “Writing” means printing, lithography, photography, and other modes of

representing or reproducing words or data in a visible form, including electronic transmissions.

RULE 102 Rules of Construction

The following rules of construction shall apply to the Rules:

(a) The headings are for convenience only and do not affect the construction of the Rules.

(b) All references to time are to local time in New York, NY, USA except where expressly

provided otherwise.

(c) Unless the context otherwise requires, words denoting the singular shall include the

plural and vice versa.

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

masculine, feminine and neuter forms.

(e) References to statutes, statutory instruments, rules of a regulatory authority or

provisions thereof shall be construed as references to any of the foregoing as they

may be amended, extended varied or replaced from time to time.

(f) Appendices to these Rules form part of, and are subject to, these Rules.

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CHAPTER 2

SEF OWNERSHIP AND GOVERNANCE

RULE 201 Board

(a) Responsibility. The Board shall have the responsibilities set forth in the Tradition SEF

Bylaws, these Rules, the Act and CFTC Regulations. The Board has the power and

authority to call for review, and to affirm, modify, suspend or overrule, any and all

decisions and actions of standing committees or special committees of the Board or

any panel of the Officers related to the day to day business operations of Tradition

SEF. The Board shall, subject to applicable provisions in the Tradition SEF Bylaws,

make and amend the Rules. The Board has also delegated such authority to make

and amend the Rules to the Chief Executive Officer.

(b) Composition. At all times, at least 35% of the Directors, and no fewer than two, shall

be Public Directors. Each Director (including Public Directors) shall be appointed in

accordance with the Tradition SEF Bylaws, and shall serve until his or her successor is

duly appointed, or until his or her earlier resignation or removal, with or without cause.

The Board shall be nominated by the Nominating Committee and appointed by the

shareholder(s) of Tradition SEF in accordance with the Tradition SEF Bylaws.

Tradition SEF shall submit to the Commission within thirty (30) days after each Board

election a list of its Board members, the membership interests they represent and how

the composition of the Board otherwise meets the requirements of CFTC Regulation

1.64(b) with Tradition SEF's implementing standards and procedures.

(c) The Board may act only by the decision of an absolute majority in number of the

Directors by vote at a meeting, by unanimous written consent without a meeting, or as

otherwise set forth in the Tradition SEF Bylaws.

(d) Each Director is entitled to indemnification pursuant to the Tradition SEF Certificate of

Incorporation with respect to matters relating to Tradition SEF or otherwise relating to

Tradition Holdings.

(e) To qualify as a Public Director, an individual must be found, by action of the Board, to

have no material relationship with Tradition SEF. The Board must make such finding

upon the nomination or appointment of the Director and as often as necessary in light

of all circumstances relevant to such Director, but in no case less frequently than

annually. A “material relationship” is one that could reasonably be expected to affect

the independent judgment or decision-making of the Director. In making the finding

specified in this Rule, the Board need not consider previous service as a Director of

Tradition SEF to constitute a “material relationship.” A Director shall be considered to

have a “material relationship” with Tradition SEF if any of the following circumstances

exist or have existed within the past year.

(1) Such Director is an Officer or an employee of Tradition SEF, or an officer or an

employee of an Affiliate of Tradition SEF;

(2) Such Director is a Participant or Owner of Tradition SEF;

(3) Such Director is a director, officer, or employee of a Participant or Owner of

Tradition SEF;

(4) Such Director is an officer of another entity, which entity has a compensation

committee (or similar body) on which any Officer of Tradition SEF serves;

(5) Such Director, or an entity with which the Director is a partner, an officer, an

employee, or a director, receives more than $100,000 in combined annual

payments for legal, accounting, or consulting services from Tradition SEF or its

Affiliate, any member of Tradition SEF, or any Affiliate of such member.

Compensation for services as a Director of Tradition SEF or as a director of an

17
Affiliate thereof does not count toward the $100,000 payment limit, nor does

deferred compensation for services rendered prior to becoming a Director, so

long as such compensation is in no way contingent, conditioned, or revocable;

or,

(6) Notwithstanding Rule 201(e)(5), in the case of a Public Director that is a

member of the Regulatory Oversight Committee or Participant Committee, such

Public Director accepts, directly or indirectly, any consulting, advisory, or other

compensatory fee from Tradition SEF or its Affiliate or any member of Tradition

SEF or the member’s Affiliate, other than deferred compensation for service

rendered prior to becoming a member of the Regulatory Oversight Committee

or Participant Committee, provided that such compensation is in no way

contingent, conditioned, or revocable. This Rule 201(e)(6) does not apply to

compensation received in the Public Director’s capacity as a member of the

Regulatory Oversight Committee or Participant Committee.

Any of the relationships set forth in Rule 201(e)(1) through Rule 201(e)(6) apply to the

“immediate family” of such Director, i.e., spouse, parents, children, and siblings, in

each case, whether by blood, marriage, or adoption, or any person residing in the

home of the director or that of his or her “immediate family.”

(f) A Public Director of Tradition SEF may also serve as a Public Director of an Affiliate of

Tradition SEF if he or she otherwise meets the requirements set forth in Rule 201(e)(1)

through Rule 201(e)(6).

RULE 202 Officers

(a) The Board shall appoint such Officers as it may deem necessary or appropriate from

time to time, in accordance with the Tradition SEF Bylaws.

(b) Any Officer may also be a director, officer, partner or employee of Tradition SEF or any

of its Affiliates.

(c) The Officers shall have such powers and duties in the management of Tradition SEF

as the Board may prescribe from time to time.

(d) Each Officer is entitled to indemnification pursuant to the Tradition SEF Bylaws with

respect to matters relating to Tradition SEF or otherwise relating to Tradition Holdings.

RULE 203 Qualifications of Directors, Disciplinary Panel Members, Appeal Panel

Members, Committee Members and Officers

(a) A Director or Officer must meet the qualifications set forth from time to time in the

Tradition SEF Bylaws.

(b) An individual may not serve as a Director or an Officer, or serve on a committee

established by the Board, a Disciplinary Panel or an Appeal Panel, or hold a 10% or

more ownership interest in Tradition SEF, if the individual:

(1) within the prior five (5) years has been found, by a final decision in any action or

proceeding brought in a court of competent jurisdiction, the CFTC, or any

Self-Regulatory Organization, to have committed a disciplinary offense;

(2) within the prior five (5) years has entered into a settlement agreement in which

any of the findings or, in the absence of such findings, any of the acts charged,

included a disciplinary offense;

(3) is currently suspended from trading on a SEF or Designated Contract Market, is

suspended or expelled from membership in a Self-Regulatory Organization, is

serving any sentence or probation, or owes any portion of a fine or penalty

related to either:

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(i) a finding of a disciplinary offense by a final decision in any action or

proceeding brought in a court of competent jurisdiction, the CFTC, or any

Self-Regulatory Organization; or

(ii) a settlement agreement in which any of the findings or, in the absence of

such findings, any of the acts charged included a disciplinary offense;

(4) is currently subject to an agreement with the CFTC or Self-Regulatory

Organization not to apply for registration with the CFTC or for membership in

the Self-Regulatory Organization;

(5) is currently, or within the past three (3) years has been, subject to a revocation

or suspension of registration by the CFTC;

(6) has been convicted of a felony listed in section 8a(2)(D)(ii) through (iv) of the

Act; or

(7) is currently subject to a denial, suspension or disqualification from serving on a

disciplinary committee, arbitration panel or governing board of any

self-regulatory organization as that term is defined in section 3(a)(26) of the

Securities Exchange Act of 1934.

(c) Any Director, Officer, member of a committee established by the Board, any member

of a Disciplinary Panel, or Appeal Panel, any individual nominated to serve in any such

role, or any individual authorized by the Market Regulation Department to take

summary action shall immediately notify the Chief Executive Officer if such individual

meets one or more of the criteria in Rule 203(b).

(d) For purposes of Rule 203(b), the terms “disciplinary offense,” “final decision,” and

“settlement agreement” have the meanings set forth in CFTC Regulation 1.63(a).

RULE 204 Standing Committees

(a) The Board shall initially have three standing committees: the Nominating Committee,

the Participant Committee, and the Regulatory Oversight Committee. The Board may

from time to time constitute and appoint in accordance with the Tradition SEF Bylaws,

such additional standing committees of the Board as it may from time to time deem

necessary or advisable.

(b) Each member of such standing committees must be a Director, one of whom the

Board shall designate as the chairperson of each standing committee.

(c) Each standing committee shall assist in the supervision, management and control of

the affairs of Tradition SEF within its particular area of responsibility, subject to the

authority of the Board.

(d) Subject to the authority of the Board, each standing committee shall determine the

manner and form in which its proceedings shall be conducted. Each standing

committee may act only by the decision of an absolute majority in number of the

members of such committee, by vote at a meeting or by unanimous written consent

without a meeting. The Board has the authority to overrule the decisions of a standing

committee.

RULE 205 Nominating Committee

(a) The Nominating Committee of the Board shall consist of three Directors appointed

from time to time by the Board, two of which shall be Public Directors. At least 51% of

the members of the Nominating Committee shall be Public Directors. The Nominating

Committee shall be chaired by a Public Director.

(b) The Nominating Committee shall have the authority to:

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(1) Identify individuals qualified to serve on the Board, consistent with the criteria

that the Board requires and any composition requirement that the Commission

promulgates; and

(2) Administer a process for the nomination of individuals to the Board.

(c) The Nominating Committee reports to the Board.

RULE 206 Participant Committee

(a) The Participant Committee shall consist of three Directors appointed from time to time

by the Board, two of which shall be Public Directors. At least 35% of the members of

the Participant Committee shall be Public Directors.

(b) The Participant Committee shall:

(1) Determine the standards and requirements for initial and continuing Participant

eligibility;

(2) Review appeals of staff denials of Participant applications; and

(3) Approve rules that would result in different categories or classes of Participants

receiving different levels of access to Tradition SEF.

(c) In reviewing appeals of staff denials of Participant applications, the Participant

Committee shall not uphold any staff denial if the relevant application meets the

standards and requirements set forth by the Participant Committee.

(d) The Participant Committee shall not, and shall not permit Tradition SEF to, restrict

access or impose burdens on access in a discriminatory manner, within each category

or class of Participants or between similarly-situated categories or classes of

Participants.

(e) The Participant Committee reports to the Board.

(f) The Participant Committee’s functions may be delegated to another committee that

meets the 35% Public Director composition requirement.

RULE 207 Regulatory Oversight Committee

(a) The Regulatory Oversight Committee shall be composed entirely of Public Directors.

The Regulatory Oversight Committee shall consist of two Public Directors appointed

from time to time by the Board.

(b) Each member of the Regulatory Oversight Committee shall serve for a term of two

calendar years from the date of their appointment or for the remainder of their term as

a Public Director, and until the due appointment of his or her successor, or until his or

her earlier resignation or removal, with or without cause, as a member of the

Regulatory Oversight Committee or as a Public Director. A member of the Regulatory

Oversight Committee may serve for multiple terms.

(c) The Regulatory Oversight Committee shall oversee Tradition SEF’s regulatory

program on behalf of the Board. It shall make such recommendations to the Board as

will, in its judgment; best promote the interests of Tradition SEF. The Regulatory

Oversight Committee shall also have such other powers and perform such other duties

as set forth in the Rules and as the Board may delegate to it from time to time.

(d) The Board shall delegate sufficient authority, dedicate sufficient resources, and allow

sufficient time for the Regulatory Oversight Committee to fulfill its mandate.

(e) The Regulatory Oversight Committee shall prepare an annual report describing the

self-regulatory program, expenses, staffing, investigations and disciplinary actions and

performance of the disciplinary committees, panels and the Chief Compliance Officer.

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(f) Without limiting the generality of the foregoing, the Regulatory Oversight Committee

shall have authority to:

(1) Monitor the regulatory program of Tradition SEF for sufficiency, effectiveness,

and independence;

(2) Oversee all facets of the regulatory program, including:

(i) Trade practice and market surveillance; audits, examinations, and other

regulatory responsibilities with respect to Participants (including

compliance with, if applicable, financial integrity, financial reporting, sales

practice, recordkeeping, and other requirements); and the conduct of

investigations;

(ii) Reviewing the size and allocation of the regulatory budget and resources,

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

personnel;

(iii) Overseeing the Chief Compliance Officer of Tradition SEF, who will

report directly to the Board, including continually monitoring for potential

conflicts of interest;

(iv) Recommending changes that would ensure fair, vigorous, and effective

regulation; and

(v) Reviewing all regulatory proposals prior to implementation and advising

the Board as to whether and how such changes may impact regulation.

(g) The Regulatory Oversight Committee reports to the Board.

RULE 208 Emergency Rules

(a) During an Emergency, the Board acting in its reasonable discretion may implement

temporary emergency procedures and rules (“Emergency Rules”), subject to the

applicable provisions of the Act and CFTC Regulations 37.800, 37.801, 40.1 and 40.6.

Emergency Rules may require or authorize Tradition SEF, the Board, any committee of

the Board, the Chief Executive Officer, or any other Officer to take actions necessary

or appropriate to respond to the Emergency, including, but not limited to, the following

actions:

(1) suspending or curtailing trading or limiting trading to liquidation (in whole or in

part) on Tradition SEF in co-ordination with the relevant DCO, if necessary;

(2) extending, limiting or changing the Trading Hours;

(3) temporarily modifying or suspending any provision of the Rules or Obligations;

(4) imposing or modifying price limits;

(5) imposing or modifying position limits; in accordance with the position limits

described in Rule 532; and/or

(6) taking such other actions as may be required or directed by the CFTC,

including:

(i) imposing or modifying intraday market restrictions;

(ii) ordering the liquidation or transfer of open positions in any contract;

(iii) ordering the fixing of a settlement price;

(iv) transferring customer contracts and the margin;

(v) altering any contract’s settlement terms or conditions; and

(vi) extending or shortening expiration dates.

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(b) Before any Emergency Rule may be enforced, a required vote of the Board must

approve the adoption of such Emergency Rule at a duly convened meeting. Directors

may attend such a meeting by teleconference. If the Chief Executive Officer

determines that Emergency Rules must be implemented with respect to an Emergency

before a meeting of the Board can reasonably be convened, then the Chief Executive

Officer shall have the authority, without Board action, to implement any Emergency

Rules with respect to such Emergency that he or she deems necessary or appropriate

to respond to such Emergency. Should the Chief Executive Officer be unavailable, the

Board Chairman, Chief Administrative Officer or Chief Compliance Officer may

implement any Emergency Rules with respect to such Emergency that he or she

deems necessary or appropriate to respond to such Emergency. In such

circumstances, the Board Chairman or Chief Executive Officer shall convene a

meeting, including by teleconference, of the Board as soon as practicable, but in any

event no later than two (2) business days (as such term is defined in CFTC Regulation

40.1(a)) following the declaration of the Emergency to ratify, amend or repeal any such

Emergency Rule.

(c) Whenever Tradition SEF, the Board, any committee of the Board, or the Chief

Executive Officer takes actions necessary or appropriate to respond to an Emergency

a duly authorized representative of Tradition SEF, where possible, will send an

announcement in a Participant Notice. When the Board, any committee of the Board or

the Chief Executive Officer determines that the Emergency has been reduced

sufficiently to allow Tradition SEF to resume normal functioning, any such actions

responding to an Emergency will be terminated.

(d) Tradition SEF will use reasonable efforts to notify the CFTC prior to implementing,

modifying or terminating an Emergency Rule. If such prior notification is not possible or

practicable, Tradition SEF will notify the CFTC as soon as possible or reasonably

practicable after implementing, modifying or terminating an Emergency Rule.

(e) Upon taking any action in response to an Emergency, Tradition SEF will document the

decision-making process related to such action. Such documentation will be kept for at

least five years following the date on which the Emergency ceases to exist or to affect

Tradition SEF, and all such documentation will be provided to the CFTC upon request.

RULE 209 Conflicts of Interest

(a) A Director, Officer, Disciplinary Panel member or other Person authorized to exercise

Tradition SEF’s authority concerning any inquiry, investigation, disciplinary proceeding

or any appeal from a disciplinary proceeding, summary suspension, or other summary

actions (any such action, a “SEF Proceeding” and, collectively, “SEF Proceedings”), or

Emergency actions taken pursuant to Rule 208 (each such SEF Proceeding or

Emergency action, a “Self-Regulatory Action”) who knowingly has a “material conflict

of interest” between his or her position as a Director, Officer, panel member or

exercise of authority concerning a Self-Regulatory Action and his or her personal

interests (each, an “Interested Person”) may not participate in any deliberations or vote

of the Board, any committee established by the Board, a Disciplinary Panel or an

Appeal Panel or exercise any authority with respect to such Self-Regulatory Action

involving his or her personal interest, except as described in Rule 209(d).

(b) For purposes of Rule 209(a), a “material conflict of interest” means a Director, Officer,

Disciplinary Panel Member or other person:

(1) being named as a respondent or potential respondent in the Self-Regulatory

Action;

(2) being an employer, employee, fellow employee or an Affiliate of a respondent

or potential respondent in the Self-Regulatory Action;

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(3) having any significant, ongoing business relationship with a respondent or

potential respondent in the Self-Regulatory Action;

(4) having a family relationship with a respondent or potential respondent in a

Self-Regulatory Action (including the individual’s spouse, co-habitator, former

spouse, parent, step-parent, child, step-child, sibling, step-brother, step-sister,

grandparent, grandchild, uncle, aunt, nephew, niece, father-in-law,

mother-in-law, brother-in-law or sister-in-law);

(5) having a direct and substantial financial interest in the result of the deliberations

or vote based upon either SEF or non-SEF positions (as referenced in CFTC

Regulation 1.69), other than a direct or indirect equity or other interest in

Tradition Holdings, that could reasonably be expected to be affected by the

action. A direct and substantial financial interest includes positions in Swaps in

accounts of, controlled by, or affiliated with the Interested Person or in any

other types of direct and substantial financial positions of the Interested Person

that are reasonably expected to be affected by the deliberations or vote; and/or

(6) any other circumstance that gives rise to a conflict between the Director’s,

Officer’s, Disciplinary Panel Member’s or other person’s exercise of authority

concerning any Self-Regulatory Action and his or her personal interests.

(c) Before considering any Self-Regulatory Action, an Interested Person must disclose in

writing to the Board the material facts concerning his or her relationship or interest in

the matter.

(d) Any Interested Person who would be required otherwise to abstain from deliberations

and voting pursuant to Rule 209(a) as a result of having a direct and substantial

financial interest in the result of the deliberations and vote may participate in

deliberations, prior to a vote on the matter, if:

(1) the material facts about the Interested Person’s financial interest in the matter

are disclosed or known to the Board, any committee established by the Board,

Disciplinary Panel or an Appeal Panel;

(2) the Board, any committee established by the Board, Disciplinary Panel or an

Appeal Panel determines that the participation by the Interested Person would

be consistent with the public interest; and

(3) a majority of the Directors (excluding any Interested Persons) vote to allow the

Interested Person to participate in deliberations on the matter.

(e) If a determination is made pursuant to Rule 209(d) that an Interested Person may

participate in deliberations prior to a vote, then the minutes of the meeting of the Board

any committee established by the Board, a Disciplinary Panel or an Appeal Panel

thereof will reflect the determination and the reasons for the determination.

(f) If a determination is made that all Directors are Interested Persons with respect to a

matter subject to a vote by the Board, the Chief Executive Officer will appoint a panel

of individuals who are not Interested Persons with respect to such matter, which will

have the same authority and powers over such matter that the Board would have if the

Directors were not Interested Persons with respect to such matter.

RULE 210 Restrictions on Use of Material Non-Public Information

No Director, member of any committee or panel established by the Board, Officer of Tradition

SEF, Employee of Tradition SEF or consultant to Tradition SEF shall:

(a) trade for such person’s own account, or for or on behalf of any other account, in any

commodity interest traded on any DCM or SEF or cleared by any Clearing House if

such person has access to material non-public information obtained through the

23
performance of such person’s official duties concerning such Swap or commodity

interest;

(b) use or disclose for any purpose other than the performance of his or her official duties

any material, non-public information obtained as a result of such person’s official

duties, provided, however, that such person may disclose confidential information if

required by law or a court order to be revealed to the United States Department of

Justice or the CFTC; or

(c) trade, directly or indirectly, in any Swap traded on Tradition SEF or in any related

commodity interest.

For the purposes of this Rule 210, the terms “material information” and “non-public information”

shall each have the meaning set forth in CFTC Regulation 1.59(a).

RULE 211 Maintenance of Books and Records by Tradition SEF

(a) Tradition SEF shall keep, or cause to be kept, complete and accurate books and

records of all activities relating to the business of Tradition SEF, including, without

limitation, all books and records required to be maintained pursuant to the Act and

CFTC Regulations, including, but not limited to, CFTC Regulations 37.205, 37.1000,

37.1001, 43.3(h), 45.2, 45.5, 45.6(f), and in accordance with CFTC Regulations 1.31,

43.3(h), 45.2, 45.5 and 45.6(f). Tradition SEF shall include the unique swap identifier

for a Swap in all records and Swap data reported to a SDR with respect to the Swap

throughout the life of the Swap and for five (5) years thereafter in accordance with

CFTC Regulation 45.5(e). Tradition SEF shall keep, or cause to be kept, such records

in electronic form, or keep, or cause to be kept, in paper form, if originally created and

exclusively maintained in paper form, so long as they are retrievable, and information

in them is reportable, as required by CFTC Regulation 45.2.

(b) Tradition SEF shall retain all such books and records for at least five (5) years, and

with respect to records required to be retained pursuant to CFTC Regulations 45.2 and

45.5, Tradition SEF shall (i) retain all such records for the life of the Swap and for a

period of five years following the final termination of the Swap; and (ii) make such

records open to inspection upon request by any representative of the CFTC, the

United States Department of Justice, or the United States Securities and Exchange

Commission, or by any representative of a prudential regulator as authorized by the

CFTC.

(c) Tradition SEF shall: (i) establish and enforce rules that allow it to obtain any necessary

information to perform any of the functions described in Section 5(h) of the Act; (ii)

provide such information to the Commission upon request; and (iii) have the capacity

to carry out such international information-sharing agreements as the Commission

may require, from time-to-time.

RULE 212 Recording of Communications

Tradition SEF or the Regulatory Services Provider may record conversations and retain copies of

electronic communications between SEF Officials, on one hand, and any Person accessing any

Platform, including without limitation, Participants, Customers, Authorized Traders, Authorized

Brokers, Authorized Agents, Clearing Firms and their respective employees and agents, on the

other hand. Any such recordings may be retained by Tradition SEF or the Regulatory Services

Provider in such manner and for such periods of time as required by law or regulation. Tradition

SEF or Regulatory Services Provider will retain such recording in compliance with CFTC

Regulation 1.31.

RULE 213 Information-Sharing Agreements

(a) As required by CFTC Regulation 37.504, Tradition SEF may enter into

information-sharing agreements or other arrangements or procedures to coordinate

surveillance with other markets on which instruments related to the Swaps trade. As

24
part of any information-sharing agreements or other arrangements or procedures

adopted pursuant to this Rule, Tradition SEF may:

(1) provide market surveillance reports to other markets;

(2) share information and documents concerning current and former Participants

with other markets;

(3) share information and documents concerning ongoing and completed

investigations with other markets; and/or

(4) require its current or former Participants to provide information and documents

to Tradition SEF at the request of other markets with which Tradition SEF has

an information-sharing agreement or other arrangements or procedures.

(b) Tradition SEF may enter into any arrangement with any Person or body (including,

without limitation, the CFTC, the NFA, any Self-Regulatory Organization, any SEF,

market, or clearing organization, or foreign regulatory authority) if Tradition SEF

considers such arrangement to be required under the Rules or CFTC Regulation

37.504.

(c) Tradition SEF may disclose to any Person or entity information concerning or

associated with a Participant or other Person that Tradition SEF believes is necessary

and appropriate in exercising a legal or regulatory function, whether or not a formal

arrangement governing the disclosure exists or a request for information was made.

RULE 214 Services Agreement with a Regulatory Services Provider

(a) Tradition SEF may contract with a Regulatory Services Provider to provide certain

regulatory services to Tradition SEF pursuant to a Services Agreement. In accordance

with a Services Agreement, the Regulatory Services Provider may perform certain

surveillance, investigative, and regulatory functions under the Rules and Tradition SEF

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

performance by the Regulatory Services Provider of those functions.

(b) Tradition SEF shall retain exclusive decision-making authority with respect to any

functions that are contracted to a Regulatory Services Provider. Tradition SEF shall

document any instances where its actions differ from those recommended by its

Regulatory Service Provider, including the reasons for the course of action

recommended by the Regulatory Service Provider and the reasons why Tradition SEF

chose a different course of action.

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CHAPTER 3

TRADING PRIVILEGES AND PARTICIPANTS

RULE 301 Scope

This Chapter 3 applies to all Participants and Customers trading on a Platform. Additional

Participant and Customer requirements specific to a particular Platform may be set forth in the

applicable Platform Supplement for such Platform.

RULE 302 Participant Criteria

(a) To be eligible for admission as a Participant, an applicant must demonstrate to the

satisfaction of Tradition SEF that it:

(1) is an Eligible Contract Participant;

(2) meets the criteria for a Participant set forth in the Rulebook and Platform

Supplement for the specific Platforms it seeks to access;

(3) is of good reputation and business integrity;

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

if relevant, documents of organization, to trade Swaps;

(5) is not subject to an Insolvency Event;

(6) is not prohibited from using the services of Tradition SEF for any reason

whatsoever;

(7) has and maintains all necessary regulatory approvals and/or licenses to

operate as a Participant in relation to Swap Activity under Applicable Law and

not be subject to any trading ban, prohibition or suspension issued by the CFTC

or the NFA, or statutory disqualification under Section 8a(2) of the Act;

(8) It is not subject to any economic or trade sanctions programs administered by

the Office of Foreign Assets Control of the U.S. Department of the Treasury

(“OFAC”) or other relevant U.S. or non-U.S. authority, and is not listed on

OFAC’s List of Specially Designated Nationals and Blocked Persons.

(9) satisfies any other criteria that Tradition SEF may require from a Participant

from time to time;

(10) has successfully completed the Participant application process to the

satisfaction of Tradition SEF.

(b) Once admitted, the Participant shall continue to comply with all applicable eligibility

criteria in Rule 302(a).

(c) If a General Participant enters into Cleared Swaps for its Proprietary Account, it must:

(i) be a Clearing Firm eligible to clear such Cleared Swaps; or (ii) have a clearing

arrangement with a Clearing Firm eligible to clear such Cleared Swaps; and (iii) with

respect to Package transactions where one or more components of the Package are

not Swaps have such additional arrangement as may be specified in the applicable

Platform Supplement.

RULE 303 Participant Application Process

(a) Any Person who desires to become a Participant shall:

(1) enter into the Participant Documentation;

(2) enter into a User Agreement for specific Platforms it seeks to access;

26
(3) agree to abide by the Rules, including any Platform Supplement for a Platform

to which the Participant has access, and Applicable Law and to consent to the

jurisdiction of Tradition SEF;

(4) provide such information and documentation as may be reasonably requested

by Tradition SEF, and follow the procedures established by Tradition SEF for

admission; and

(5) if organized or located outside of the United States, enter into a written

agreement acceptable to Tradition SEF appointing a third party as its U.S.

agent for service of process.

(b) In considering an application from a potential Participant, Tradition SEF may require

additional information from the applicant, or conduct an investigation to verify

information submitted by the applicant, or both.

(c) If Tradition SEF admits an applicant as a Participant, it shall promptly notify the

applicant and state in such notice the date on which the applicant shall become a

Participant.

(d) Tradition SEF may deny, condition or terminate Participant status of any Person:

(1) if such Person is unable to satisfactorily demonstrate its ability to satisfy the

eligibility criteria to become or remain a Participant;

(2) if such Person is unable to satisfactorily demonstrate its capacity to adhere to

all applicable Rules; or,

(3) for such other cause as Tradition SEF may reasonably determine.

(e) If Tradition SEF decides to decline or condition an application for admission as a

Participant, or terminate a Person’s status as a Participant, Tradition SEF shall

promptly notify such Person (the “Affected Person”) thereof in a writing sent to the

address provided by the applicant in the Tradition SEF application form or maintained

in Tradition SEF registry of Participants. Such Affected Person may, within twenty (20)

Trading Days, request in writing that Participant Committee reconsider the

determination.

(f) Within twenty-eight (28) calendar days of receiving the request for reconsideration, the

Participant Committee shall either confirm, reverse or modify the denial, conditioning

or termination of the Affected Person as a Participant, and shall promptly notify the

Affected Person accordingly in writing. The Participant Committee may, within its

discretion, schedule a hearing (in-person or by teleconference); request additional

information from the Affected Person; or, establish any other process that it believes is

necessary and appropriate to consider the request for reconsideration.

(g) The Participant Committee’s decision is the final action of Tradition SEF and is not

subject to appeal within Tradition SEF.

(h) A Participant may not transfer or assign its status as a Participant without the prior

written consent of Tradition SEF (not to be unreasonably withheld or delayed), and any

purported transfer or assignment without Tradition SEF’s prior consent is not binding

on Tradition SEF.

(i) All rights and privileges of a Participant terminate upon, and all obligations of a

Participant shall survive, dissolution of the Participant.

RULE 304 Additional Criteria for Participants

(a) Each Participant that will enter into Swaps for or on behalf of Customers, or otherwise

permit Customers to access the Platform, must satisfy the following criteria, in addition

to those set forth in Rule 302.

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(1) The Participant must, if acting in an agency capacity on behalf of a Customer,

be registered with the CFTC as (A) an FCM or Introducing Broker, or (B) a

Commodity Pool Operator or Commodity Trading Advisor and in such CPO or

CTA capacity submits Orders on behalf of pools it operates or Customer

accounts for which it has discretionary authority, respectively, or be exempt

from such registration.

(2) The Participant must obtain representations and/or ensure that each of its

Customers is an Eligible Contract Participant at all relevant times.

(3) It must obtain representations and/or ensure that each Customer that enters

into Cleared Swaps, (i) is a Clearing Firm eligible to clear such Cleared Swaps;

or (ii) has a guaranteed clearing arrangement with a Clearing Firm eligible to

clear such Cleared Swaps; and (iii) with respect to Package transactions where

one or more of the components of the Package are not Swaps have such

additional arrangement as may be specified in the applicable Platform

Supplement.

(4) It must obtain representations and/or ensure that the Customer has and

maintains all necessary regulatory approvals and/or licenses to access a

Platform and enter into Swaps under Applicable Law and is not subject to any

trading ban, prohibition or suspension issued by the CFTC or the NFA, or

statutory disqualification under Section 8a(2) of the Act.

(5) If it is subject to the U.S. Bank Secrecy Act, the USA PATRIOT Act and the

regulations thereunder, or similar legislation in any jurisdiction, it has

implemented a written anti-money laundering program that has been approved

in writing by its senior management and is reasonably designed to promote and

monitor its compliance with the applicable requirements of such laws.

(6) It will screen Customers for compliance with economic or trade sanctions

programs administered by OFAC or other relevant U.S. or non-U.S. authority,

including screening Customer names against OFAC’s List of Specially

Designated Nationals and Blocked Persons.

(7) It must identify all of its Customers to Tradition SEF in the manner, at the times

and in such detail as is specified by Tradition SEF.

(8) It must obtain representations and/or ensure that each Customer is trading on

Tradition SEF or subject to the Rules only for its own account (or the account of

a Person managed by the Customer).

(9) If its Customer is a “special entity” as defined in the Act or is otherwise subject

to law or regulation affecting the Customer’s ability to enter into Swaps or the

liabilities or responsibilities of other Persons with respect thereto, the

Participant must ensure that the Customer’s use of Tradition SEF in

accordance with the Rules is in compliance with such law or regulation and any

related requirements of its constituent or other documents. Upon request by

Tradition SEF, such Customer must provide a representation regarding its

compliance with such law or regulation.

(10) It must obtain appropriate representations and/or ensure that each Customer is

organized and located in an Authorized Jurisdiction if it permits the Customer to

have direct access to Tradition SEF through the Trading Privileges of the

Participant.

(11) It satisfies such other criteria as Tradition SEF may specify from time to time,

subject to Rule 302 and Applicable Law.

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(b) If a Participant enters into or facilitates a Swap that is subject to the mandatory

clearing requirement of Section 2(h) of the Act, the Participant shall be responsible for

compliance with the mandatory trading requirement under Section 2(h)(8) of the Act.

RULE 305 Trading Privileges

(a) A Participant will have Trading Privileges on each Platform for which it has been

approved as a Participant by Tradition SEF.

(b) The Trading Privileges of a Participant may not be transferred, assigned, sold or

leased, but a Participant may permit its Customers to have direct access to Tradition

SEF through the Participant’s Trading Privileges, subject to Rule 304 and 306.

(c) Admission as a Participant only entitles the Participant to the Trading Privileges and

does not confer any right of ownership in, or right to attend or vote at meetings of,

Tradition SEF, or right to share in the profits, of Tradition SEF.

RULE 306 Limitations on Access to a Platform

(a) Tradition SEF may at any time revoke, suspend, limit, condition, restrict or qualify a

Participant’s Trading Privileges or a Customer’s ability to access a Platform through

the Trading Privileges of a Participant,

(1) if such Participant or Customer has failed to:

(i) comply with the Rules or Applicable Law;

(ii) demonstrate to the satisfaction of Tradition SEF its ability or willingness

to comply with the Rules or Applicable Law; or

(iii) remain in compliance with any of the criteria set forth in Rule 302(a) and

Rule 304, as applicable; or

(2) for any such other circumstances as Tradition SEF may reasonably determine

to be necessary or appropriate.

(b) Notwithstanding the foregoing, Tradition SEF will establish and impartially enforce

rules governing any decision to revoke, suspend, limit, condition, restrict, qualify or

permanently bar a Participant or Customer’s access to any or all SEF Platforms,

including when such decisions are made as a result of a disciplinary action taken by

Tradition SEF or during an Emergency.

(c) A Clearing Firm may at any time revoke the authorization of any Non-Clearing Firm

guaranteed by it with or without prior notice to such Non-Clearing Firm. For purposes

of the relationship between the relevant Clearing Firm and Tradition SEF, and the

obligations of such Clearing Firm to Tradition SEF, any such revocation shall become

effective upon the receipt by Tradition SEF of written notice thereof from the Clearing

Firm. Upon such receipt, the Trading Privileges of the Non-Clearing Firm subject

thereto shall be automatically terminated, and such Non-Clearing Firm must obtain a

guarantee from another Clearing Firm if it does not already have one before its Trading

Privileges will be reinstated.

RULE 307 Dues and Fees

(a) Tradition SEF shall set the amounts and times of payment for any dues or fees

(including Platform fees, brokerage and/or any transaction surcharges) to be paid by

Participants. Tradition SEF shall from time to time send a Participant Notice setting

forth the amounts and times of payment for any dues or fees. Each Participant shall

pay such dues and fees when due. If a Participant fails to pay when due any such

dues or fees levied on such Participant, and such payment obligation remains

unsatisfied for thirty days after receipt of the invoice, Tradition SEF may suspend,

revoke, limit, condition, restrict or qualify the Participant’s Trading Privileges as it

deems necessary or appropriate.

29
(b) Tradition SEF shall set the amounts and times of payment for any connection, access,

usage or maintenance fees to be paid by ISVs. Tradition SEF shall from time to time

notify ISVs the amounts and times of payment for any fees. Each ISV shall pay such

fees when due. If an ISV fails to pay when due any such fees levied on such ISV, and

such payment obligation remains unsatisfied for thirty days after receipt of the invoice,

Tradition SEF may suspend, revoke, limit, condition, restrict or qualify the ISV’s access

as it deems necessary or appropriate.

RULE 308 Authorized Traders, Authorized Brokers and Authorized Agents

(a) Unless otherwise specified in a Platform User Agreement, each General Participant

shall designate one or more Authorized Traders for itself and one or more Authorized

Traders for each of its Customers that are granted direct access to a SEF Platform or

System. Each Broker Firm Participant shall designate one or more Authorized Brokers

or Authorized Agents to act on behalf of its Customers. Such designated Authorized

Traders, Authorized Brokers or Authorized Agents will be the sole Persons authorized

to enter into Swaps on behalf of the Participant or such Customer with respect to SEF

Activity. Authorized Agents may only place orders indirectly via their sponsoring

Participant’s infrastructure with respect to SEF Activity. Authorized Agents may not

place orders directly onto Tradition SEF.

(b) An Authorized Trader, Authorized Broker and an Authorized Agent must, and a

Participant must ensure that each Authorized Trader, Authorized Broker and

Authorized Agent designated by it, at all times:

(1) agree to abide by the Rules and Applicable Law and consent to the jurisdiction

of Tradition SEF;

(2) effect transactions pursuant to the Rules solely from within the United States or,

except as may be expressly permitted by Tradition SEF in writing from time to

time, a jurisdiction in which Tradition SEF is permitted by Applicable Law to

offer trading on Tradition SEF;

(3) ensure that the activity conducted under its User ID complies with the Rules;

(4) have the authority, at Tradition SEF’s direction, to adjust or withdraw any Order

submitted under its User IDs;

(5) have and maintain all necessary regulatory approvals and/or licenses to

operate as an Authorized Trader, Authorized Broker or Authorized Agent under

Applicable Law and not be subject to any trading ban, prohibition or suspension

issued by the CFTC or the NFA, or statutory disqualification under Section

8a(2) of the Act;

(6) cooperate promptly and fully with Tradition SEF in any investigation, inquiry,

audit, examination or proceeding regarding compliance with the Rules or any

Tradition SEF disciplinary or arbitration proceeding which relates to SEF

Activity; and

(7) agree to such other terms and conditions as may be established by Tradition

SEF from time to time.

(c) To designate an Authorized Trader, Authorized Broker or Authorized Agent, a General

Participant or Broker Firm Participant, as applicable, must follow the procedures

established by Tradition SEF. Tradition SEF will promptly notify a General Participant

or Broker Firm Participant in writing of the approval of Authorized Traders, Authorized

Brokers or Authorized Agent, or if Tradition SEF declines to approve the nomination of

an Authorized Trader, Authorized Broker or Authorized Agent. Tradition SEF will

maintain a list of all designated Authorized Traders for each Customer of a General

Participant or Broker Firm Participant that has been granted direct access to a SEF

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Platform or System and a list of all designated Authorized Brokers or Authorized

Agents for each Broker Firm Participant.

(d) Each Authorized Trader and Authorized Broker must use a unique User ID to access

the Platform. In no event may an individual enter an Order or permit the entry of an

Order by an individual using a User ID other than the individual’s own unique User ID.

(e) Tradition SEF may, acting in its reasonable discretion, terminate or suspend the

designation of an individual as Authorized Trader, Authorized Broker or Authorized

Agent and shall promptly notify the Participant or Broker Firm Participant, as

applicable, of such action.

(f) To request the termination of the designation of an individual as an Authorized Trader,

Authorized Broker or Authorized Agent, the General Participant or Broker Firm

Participant, as applicable, must notify Tradition SEF. Tradition SEF, in its sole

discretion, may postpone the effective date of the termination of registration if Tradition

SEF considers it necessary for the protection of the Participant, a Customer,

Authorized Broker or Authorized Agent, or if Tradition SEF considers it in Tradition

SEF’s best interest. Based on the information provided to, and other information

gathered by, Tradition SEF regarding the request to terminate the registration of an

Authorized Trader, or Authorized Broker or the designation of an Authorized Agent

Tradition SEF will determine whether to terminate the registration of an Authorized

Trader, Authorized Broker or the designation of an Authorized Agent.

(1) Postpone the termination of the designation, and/or

(2) Impose any terms or conditions before or after the effective date of termination

of the designation.

(g) Notwithstanding the foregoing, however, upon such General Participant’s or Broker

Firm Participant’s request of termination of registration, Tradition SEF shall

immediately suspend access to Tradition SEF by the relevant Authorized Trader,

Authorized Broker or Authorized Agent, and the Participant will have no liability for any

Orders entered into by, or purported to be entered into by, or other act or omission of

(or purported to be of), the Authorized Trader, Authorized Broker or Authorized Agent

in respect of whom such notification has been made, where such Orders are entered

into or such acts or omissions occur after the date and time of such notification, of

termination or registering to Tradition SEF and the Participant shall not be required to

complete, or novate to any Clearing House, such Order(s).

(h) Upon the termination or suspension of an Authorized Trader, Authorized Broker or

Authorized Agent, the Participant, or Broker Firm Participant, as applicable, shall take

immediate measures appropriate to ensure that such Authorized Trader, Authorized

Broker or Authorized Agent shall not have access to any Platform or utilize its User ID,

as applicable, after the effective date of any such revocation or suspension.

(i) Where applicable, Tradition SEF will disable the User ID assigned to a Participant,

Authorized Trader, Authorized Broker or Customer of a Participant immediately upon

the termination or suspension of access rights.

RULE 309 Authorized Representatives

(a) Each Participant shall designate one or more Authorized Representatives who will

represent the Participant before Tradition SEF and its committees and receive notices

on behalf of the Participant.

(b) The Authorized Representative shall be empowered by the Participant, to act on its

behalf and Tradition SEF shall be entitled to rely on the actions of the Authorized

Representative as binding on the Participant, its Customers and their respective

Authorized Traders, and its Broker Firm Participants and Authorized Brokers.

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(c) Each Participant must ensure that Tradition SEF has, at all times, current contact and

other requested information for each of its Authorized Representatives so that

Tradition SEF is able to immediately contact the Authorized Representatives.

RULE 310 Participant Notices

Tradition SEF shall publish a notice with respect to each addition to, modification of, or

clarification of, the Rules or of any action to implement any Rules on Tradition SEF’s website and

via an electronic mail distribution to each Authorized Representative, in a form and manner that is

reasonably designed to enable each Participant to become aware of and familiar with, and to

implement any necessary preparatory measures to be taken by it with respect to, such addition or

modification, prior to the effective date thereof (each a “Participant Notice”).

RULE 311 Communications between Tradition SEF and Participants

(a) Each Participant must provide Tradition SEF with its current electronic mail address

and telephone number and the electronic mail address and telephone number of any

of their respective Authorized Representatives, and immediately (and in any event

within 24 hours) update this information whenever it changes.

(b) All communications between Tradition SEF and a Participant or its Authorized

Representative will be transmitted by electronic mail.

(c) Each Participant will be responsible for promptly reviewing and, if necessary,

responding to all electronic communications from Tradition SEF to the Participant or its

Authorized Representatives.

RULE 312 Application of Rules and Jurisdiction

(a) By becoming a Participant, Customer, Authorized Trader, Authorized Broker,

Authorized Agent, or by directly or indirectly accessing a Platform, or initiating,

executing or authorizing the execution of any Order or RFQ on or subject to the Rules

of Tradition SEF, or by acting as a Clearing Firm with respect to transactions executed

on or subject to the Rules of Tradition SEF, a Person agrees, relating to SEF Activity:

(1) to be bound by, and comply with, the Rules and Applicable Law, in each case to

the extent applicable to it,

(2) to the extent any provision in the Rules is inconsistent with a provision of any

User Agreement, the provision of the Rules shall govern with respect to any

Swap,

(3) to become subject to the jurisdiction of Tradition SEF with respect to any and all

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

omissions of such Person, and

(4) to assist Tradition SEF in complying with its legal and regulatory obligations,

cooperate with Tradition SEF and the CFTC in any inquiry, investigation, audit,

examination or proceeding, and authorize Tradition SEF to provide information

regarding it to the Regulatory Services Provider, the CFTC or any

Self-Regulatory Organization.

(b) Any Participant whose Trading Privileges, and any Customer, Authorized Trader,

Authorized Broker or Authorized Agent whose ability to access the Platform, are

suspended, revoked or terminated shall remain bound by the Rules and Applicable

Law, in each case to the extent applicable to it, and subject to the jurisdiction of

Tradition SEF and the Clearing House with respect to any and all matters arising from,

related to, or in connection with, the status, actions or omissions of such Participant,

Customer, Authorized Trader, Authorized Broker or Authorized Agent prior to such

suspension, revocation or termination.

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RULE 313 Description of Status

A Participant shall ensure that the form, content and context of any description of the Participant’s

status on Tradition SEF to Customers is not inconsistent with, and does not misrepresent, the

Participant’s capacity on Tradition SEF under the Rules or the Participant’s registration, if any,

under the Act, or under any other Applicable Law.

RULE 314 Withdrawal of Participant

(a) To withdraw from Tradition SEF, an Authorized Representative of the withdrawing

Participant must electronically notify the Chief Compliance Officer of the Participant’s

intention to withdraw.

(b) Upon receipt by Tradition SEF of such Participant’s notification of withdrawal as a

Participant, Tradition SEF shall immediately suspend all rights and privileges of the

Participant (including, without limitation, the Trading Privileges and ability to access the

Platform) and the Participant will have no liability for any Orders entered into by, or

purported to be entered into by, or other act or omission of (or purported to be of), the

Participant or any Customer in respect of whom such notification has been made,

where such Orders are entered into or such acts or omissions occur after the date and

time of receipt of such notification of withdrawal and the Participant shall not be

required to complete, or novate to any Clearing House, such Order(s).

(c) Upon receipt by Tradition SEF of notification of the withdrawal of a Participant, all

rights and privileges of such Participant terminate (including, without limitation, the

Trading Privileges and ability to access the Platform). The withdrawal of a Participant

shall not affect the rights of Tradition SEF under the Rules or relieve the former

Participant of its Obligations under the Rules, to perform all contracts involving any

Swaps entered into by such, or to pay any SEF fees, costs, or charges incurred, before

the withdrawal. Notwithstanding the withdrawal of a Participant, the withdrawn

Participant remains subject to the Rules, the Obligations and the jurisdiction of

Tradition SEF for acts done and omissions made while a Participant, and must

cooperate in any SEF Proceeding under Chapter 6 and other proceedings under

Chapter 8 as if the withdrawn Participant were still a Participant.

RULE 315 Independent Software Vendors

A person seeking to act as an Independent Software Vendor with respect to any Platform must

satisfy Tradition SEF’s technological integrity requirements, complete the necessary ISV access

documentation, agree to abide by the Rules and Applicable Law, consent to the jurisdiction of

Tradition SEF, and not adversely affect Tradition SEF’s ability to comply with Applicable Law.

Access to Tradition SEF and a Platform by an ISV shall be pursuant to criteria that is impartial,

transparent and applied in a fair and non-discriminatory manner. Persons seeking access to

Tradition SEF or a Platform through an ISV must themselves be a Participant or Customer

authorized by a Participant to have such access.

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CHAPTER 4

OBLIGATIONS OF PARTICIPANTS AND CUSTOMERS

RULE 401 Scope

This Chapter 4 applies to all Participants and Customers trading on a Platform. Additional

Participant and Customer requirements specific to a particular Platform may be set forth in the

applicable Platform Supplement for such Platform.

RULE 402 Duties and Responsibilities of Participants, including Clearing Firms and

FCMs

(a) In connection with its SEF Activity each Participant shall, and, to the extent applicable,

shall cause its employees, Authorized Traders, Authorized Brokers or Authorized

Agents to:

(1) use each Platform only to conduct SEF Activity;

(2) conduct all SEF Activity in a manner consistent with the Rules and Obligations;

(3) comply with all Rules and Obligations and act in a manner consistent with each

Rule of Tradition SEF and Obligation;

(4) comply with all NFA Rules, if and to the extent applicable to it, and act in a

manner consistent with the NFA Rules, if and to the extent applicable;

(5) not knowingly mislead or conceal any material fact or matter in any dealings or

filings with Tradition SEF or in response to any disciplinary or arbitration

proceeding;

(6) cooperate promptly and fully with Tradition SEF in any investigation, inquiry,

audit, examination or proceeding regarding compliance with the Rules or any

disciplinary or arbitration proceeding;

(7) keep any User IDs, account numbers and passwords related to the Platform

confidential;

(8) at all times have adequate systems and controls intended to minimize the risk

of error in relation to offers or bids submitted to the Platform and to ensure that

its conduct on the Platform complies with these Rules;

(9) subject to any applicable error trade policy, be fully liable for: all trading losses,

all Orders, all transactions in Swaps effected by Participant or its employees

who are Authorized Traders or Authorized Brokers or designated Authorized

Agents, all transactions effected on Tradition SEF and for any use of the

Platform made by Participant or its employees who are Authorized Traders or

Authorized Brokers or any designated Authorized Agents, and all trades even if

the Orders received via the Platform: (1) were entered as a result of a failure in

the security controls and/or credit controls, other than due to the gross

negligence of Tradition SEF, or (2) were entered by an unknown or

unauthorized user;

(10) employ practices to monitor and enforce compliance with risk limits;

(11) be responsible for promptly informing Tradition SEF of any material changes to

the information provided to Tradition SEF by the Participant pursuant to Rule

302; and,

(12) keep, or cause to be kept, complete and accurate books and records, including,

without limitation, all books and records required to be maintained pursuant to

the Act, CFTC Regulations, including, but not limited to, CFTC Regulations

1.31, 1.35, 18.05, 43.3(h), and 45.2, or the Rules and make such books and

records available for inspection by a representative of Tradition SEF, the CFTC

34
or the United States Department of Justice. Such retention period shall be five

(5) years for books and records, or such longer period mandated by CFTC

Regulations, except that the retention period for voice communications shall be

one (1) year.

RULE 403 Duties and Responsibilities of Participants that Provide Customers with

Access to a Platform

(a) A Participant may provide Customers with Intermediated Access (including through an

Authorized Agent) or Direct Customer Access connectivity to a Tradition SEF Platform

subject to the following:

(1) All Swaps effected through Intermediated Access or Direct Customer Access

connectivity to a Tradition SEF Platform, including Intermediated Access or

Direct Customer Access connectivity of non-Clearing Firm Participants or

non-Participant Customers, must be guaranteed by a Clearing Firm that

assumes financial responsibility for all Swaps effected through such connection

to a Tradition SEF Platform.

(2) With respect to a Swap given up to another Clearing Firm, such guarantee of

financial responsibility is effective only until such time that the other Clearing

Firm accepts the Swap and assumes financial responsibility for such Swap.

(3) Participant shall assist Tradition SEF in any investigation into potential

violations of the Rules or the Act which occur through or with respect to an

Intermediated Access or Direct Customer Access connection provided by the

Participant to any non-Participant Customer. Such assistance must be timely

and may include, but not be limited to, requiring any non-Participant Customer

to produce documents, to answer questions from Tradition SEF, and/or to

appear before Tradition SEF in connection with an investigation.

(4) Participant shall facilitate the suspension or termination of a Customer's

Intermediated Access or Direct Customer Access provided by Participant if

Tradition SEF determines that the actions of the Customer threaten the integrity

or liquidity of any contract or violate any Tradition SEF Rule or the Act, or if the

Customer fails to cooperate in an investigation.

(5) If a Participant has actual or constructive notice of a violation of Tradition SEF

Rules in connection with the use of Intermediated Access or Direct Customer

Access by a Customer for which it has provided Intermediated Access or Direct

Customer Access and the Participant fails to take appropriate action, the

Participant may be found to have committed an act detrimental to the interest or

welfare of Tradition SEF.

(6) The Customer authorized by a Participant for Direct Customer Access

connectivity to a Tradition SEF Platform must agree to be subject to Rule

402(a)(12).

(b) Participants that are FCMs or Clearing Firms shall comply with Applicable Law,

including Parts 1 and 22 of the CFTC Regulations, regarding the treatment of

Customer funds and Customer Orders.

(c) A Participant that transacts in a Block Trade on behalf of a Customer must receive

prior written instruction or consent from the Customer to do so. Such instruction or

consent may be provided in the power of attorney or similar document by which the

Customer provides the Participant with discretionary trading authority or the authority

to direct the trading in its account.

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RULE 404 Required Disclosures to Tradition SEF

(a) Each Participant, ISV or Broker Firm Participant on behalf of an Authorized Agent,

shall immediately notify the Market Regulation Department upon becoming aware of

any of the following events, as applicable:

(1) any material change to the contact information provided to Tradition SEF in

relation to SEF Activity;

(2) any damage to, or failure or inadequacy of, the systems, facilities or equipment

of the Participant or ISV to transmit or handle Orders or otherwise engage in

SEF Activity pursuant to the Rules or to timely perform the Participant’s

financial obligations under or in connection with Swaps in relation to SEF

Activity;

(3) any refusal of admission to any Self-Regulatory Organization, SEF, Designated

Contract Market or Derivatives Clearing Organization;

(4) any expulsion, suspension or material fine (whether through an adverse

determination, voluntary settlement or otherwise) imposed on the Participant by

any Self-Regulatory Organization;

(5) any denial or withdrawal of any application for any registration or license by or

from any Government Agency, and any revocation, suspension or conditioning

of any registration or license granted by any Government Agency in relation to

SEF Activity;

(6) the commencement of any judicial or administrative proceeding against the

Participant or the imposition of any fine, cease and desist order, denial of

trading privileges, censure or other sanction or remedy (whether through an

adverse determination, voluntary settlement or otherwise) imposed by any

Government Agency in relation to SEF Activity;

(7) any indictment or conviction of, or any confession of guilt or plea of guilty or

nolo contendere by, the Participant or (or, if the Participant is an entity, by any

of its principals or senior officers) for any felony or misdemeanor involving,

arising from, or related to, the purchase or sale of any commodity, futures

contract, option, swap, security, securities futures product or other financial

instrument, or involving or arising from fraud or moral turpitude; and

(8) the Participant becoming the subject of an Insolvency Event.

RULE 405 Inspections by Tradition SEF

(a) Tradition SEF (or the Regulatory Services Provider or other authorized

representatives), shall have the right, in connection with determining whether all Rules

and Obligations are being, will be, or have been complied with by the Participant or

Customer authorized by a Participant for Direct Customer Access connectivity to a

Tradition SEF Platform, to, and Tradition SEF shall perform or cause to be performed

on a periodic basis:

(1) inspect systems, equipment and software operated by the Participant or such

Customer in connection with SEF Activity, wherever located;

(2) access the systems, equipment, software, and the premises on which the

systems, equipment, and software are located, and any data stored in any of

the systems or equipment, during the regular business hours and the Trading

Hours of Tradition SEF, in relation to SEF Activity; and/or

(3) copy or reproduce any data to which Tradition SEF has access under this Rule,

provided, in each case, that Tradition SEF shall provide as much advanced

notice to the Participant as is reasonably possible, and shall endeavor to

36
conduct any such activities in a manner and at such times so as to minimize the

business impact upon the Participant.

(b) Each Participant or Customer shall provide the Regulatory Services Provider with the

same access to their books and records and offices as they are required to provide

under Applicable Law, including CFTC Regulations 1.31 and 45.2, and this Rulebook.

(c) The Market Regulation Department may require a Participant or Customer to furnish

(periodically or on a particular occasion) information concerning the Participant’s or

Customer’s SEF Activity. For a Participant or Customer, such information includes but

is not limited to, the Participant’s or Customer’s open trading positions or Swaps to

which the Participant or Customer, respectively, is a party.

RULE 406 Minimum Financial and Related Reporting Requirements

(a) Each Participant that is registered with any Government Agency, including the CFTC

and the U.S. Securities and Exchange Commission, or a Self-Regulatory Organization

shall comply with the provisions of Applicable Law, including but not limited to the rules

and regulation such Government Agency imposes on a Participant relating to minimum

financial and related reporting and recordkeeping requirements.

(b) Upon the request of Tradition SEF, a Participant shall provide a copy of any notice or

written report that a Participant is required to file with the CFTC pursuant to CFTC

Regulation 1.12.

RULE 407 Confidentiality of Financial and Other Information

All information and data obtained or received by the Market Regulation Department from

inspections of accounting and other records, quarterly balance sheets and declarations or reports

on financial condition will be treated as confidential by Tradition SEF; however, this Rule does not

supplant Rule 213 and the Rules in Chapter 6, or any other requirement of legal process or law.

RULE 408 Authority to Impose Restrictions

Whenever a Participant is subject to the early warning requirements set forth in CFTC Regulation

1.12, Tradition SEF may impose such conditions or restrictions on the business and operations of

such Participant or as Tradition SEF may deem necessary or appropriate for the protection of

Customers, other Participants, or Tradition SEF solely as such business and operations relate to

SEF Activity.

RULE 409 CFTC Registration

No Participant may (a) solicit or accept from any Person an Order for the purchase or sale of a

Swap in an agency capacity unless such Participant is registered with or exempt from registration

with the CFTC as a Futures Commission Merchant or Introducing Broker; or (b) submit an Order

on behalf of pools they operate or Customer accounts for which they have discretionary

authority, unless such Participant is registered as a Commodity Pool Operator or Commodity

Trading Advisor, respectively, or is exempt from such registration.

RULE 410 WITHDRAWN

RULE 411 Information Regarding Orders

(a) Tradition SEF will make information regarding Orders (including prices bid or offered),

trades and any other matters it may deem appropriate available to Participants,

Customers, and other Persons at such times and in such manner (whether through the

Platform, a ticker, financial information services or otherwise) as it may consider

necessary or advisable from time to time and provided that such provision of

information is permitted under Applicable Law.

(b) Each Participant, Customer, or other Person receiving any such information through

the Platform may redistribute such information only to such extent and in such manner

as may be permitted by Tradition SEF from time to time.

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RULE 412 Confirmations

(a) Cleared Swaps. For Cleared Swaps, Tradition SEF will provide counterparties to

transactions a Confirmation of all the terms of each transaction executed on the SEF

at the time of execution; provided that specific counterparty identifiers for accounts

included in bunched Orders involving Swaps need not be included in Confirmations

provided by Tradition SEF if the applicable requirements of Commission Regulation

1.35(b)(5) are met. The Confirmation provided by the SEF for Cleared Swaps will be

the final legally binding Confirmation of the terms of any transaction executed on the

SEF and will supersede any conflicting Confirmation or agreement provided to, or

between, as applicable, counterparties, regardless of when such other Confirmation is

provided.

(b) Uncleared Swaps. Tradition SEF will provide counterparties to transactions with a

Confirmation of the economic terms of each Uncleared Swap transaction executed on

the SEF at the time of execution; provided that specific counterparty identifiers for

accounts included in bunched Orders involving Swaps need not be included in SEF

Confirmations (as defined below) provided by Tradition SEF, if the applicable

requirements of Commission Regulation 1.35(b)(5) are met. The Confirmation,

together with any underlying previously-negotiated freestanding agreements between

the counterparties (the “Terms Incorporated by Reference”) shall, taken together, for

purposes of Commission Regulation 37.6(b), comprise all of the terms of such Swap

and serve as the Confirmation of such Uncleared Swap. Counterparties shall maintain

all records of such previously-negotiated freestanding agreements in accordance with

CFTC No-Action Letter 17-17, which shall expire on the effective date of any changes

in CFTC Regulations.

(1) Upon request by Tradition SEF, counterparties to a transaction shall provide

Tradition SEF with any underlying previously-negotiated freestanding

agreements between the counterparties.

(2) Upon request by the Commission to Tradition SEF, counterparties to a

transaction shall provide Tradition SEF with any underlying

previously-negotiated freestanding agreements between the counterparties and

such documents shall be furnished to the Commission as soon as they are

available.

(3) In satisfaction of the obligations imposed on Tradition SEF pursuant to CFTC

Regulation 37.6(b), counterparties to a transaction hereby agree that the

provisions of Rule 412(b)(4) shall govern any conflicting terms of any underlying

previously-negotiated freestanding agreement between the counterparties.

(4) In the event of any conflict between the terms of: (x) a Confirmation; and (y)

any underlying previously-negotiated freestanding agreement between the

counterparties to a transaction, the terms of the Confirmation shall legally

supersede any contradictory term. The Confirmation sent to the applicable

counterparties shall state the same.

(c) Tradition SEF shall transmit a Confirmation for a Swap that is executed as a block

trade in accordance with Rule 509 after such block trade is reported to Tradition SEF.

(d) Information contained on a Confirmation to a transaction shall be considered

confidential by and between the counterparties to a transaction, Tradition SEF, and

any relevant service providers to Tradition SEF, and is not for dissemination outside of

those relationships with the exception of any applicable regulatory requirements of

Tradition SEF or any other requirement of legal process or law.

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CHAPTER 5

TRADING PRACTICES AND BUSINESS CONDUCT

RULE 501 Scope

This Chapter 5 applies to all Swap transactions executed on or through a Tradition SEF Platform

pursuant to the Rules of Tradition SEF. Additional requirements, specific to transactions in certain

products, shall be set forth in the applicable Platform Supplement for each Platform.

RULE 502 Procedures

(a) With respect to trading on or though the Platform, Tradition SEF may adopt, without

limitation, procedures relating to transactions in Swaps and trading on the Platform,

including procedures to:

(1) determine the daily settlement price of a Swap;

(2) disseminate the prices of bids and offers on, and trades in, Swaps;

(3) record, and account for, Swaps and SEF Activity;

(4) perform market surveillance and regulation on matters affecting Swaps and

SEF Activity;

(5) establish limits on the number and/or size of Orders that may be submitted by a

Participant or Customer through the Platform;

(6) establish limits on the number of Swaps that may be held by a Participant or

Customer; and

(7) establish a limit on the maximum daily price fluctuations for any Swap and

provide for any related restriction or suspension of trading in the Swap.

(b) Tradition SEF may, in its discretion and at any time, amend any procedures adopted

pursuant to Rule 502(a), and will publish the amendments in a Participant Notice or in

any other manner determined appropriate by Tradition SEF.

RULE 503 Business Days and Trading Hours

The Trading Hours for each Platform shall be as set forth in the applicable Platform Supplement.

Unless specified otherwise in a Platform Supplement or as provided in Rule 212 with respect to

Emergencies, Tradition SEF, Inc. will operate Business Days as follows:

Tradition SEF will operate on days which are Business Days in Hong Kong, Singapore, Tokyo,

London and New York. For purposes of determining if a day is a New York Business Day, such

day may not be a SIFMA-recommended full day holiday.

Days are calculated by reference to Eastern Prevailing Time in the United States on any day on

which Tradition SEF is operating.

Access for Pre-arranged off-facility Permitted Transactions or Block trades: 24 hours.

Days subject to early close in any jurisdiction will constitute Business Days regardless. Days are

calculated by reference to Eastern Prevailing Time in the United States on any day on which

Tradition SEF is operating.

Tradition SEF reserves the right to close on different days or times if requested or required to do

so by the CFTC, or where there is a force majeure event, such as hurricanes, flooding, terrorist

attacks or otherwise, affecting the above-mentioned location generally, any relevant market

infrastructure (such as DCOs, payment and clearing systems or SDRs) or Tradition SEF’s'

facilities in particular.

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RULE 504 Execution Methods

(a) For Required Transactions, other than Block Trades, Tradition SEF may facilitate the

execution of Orders through its Order Book or, through RFQ, where available, as RFQ

is set forth in each applicable Platform Supplement, or via Request for Continuous 

Stream (as described in the Trad-X Platform Supplement).

Participants may enter bids/offers for Required Transactions into the Order Books: (i)

directly via a trading Platform GUI, (ii) directly via API, where available or (iii) through a

Broker Firm Participant or directly through IM, telephone or other acceptable form of

communication with a SEF Execution Specialist. Orders for Required Transactions

must contain the economic and other information pursuant to Rule 506 and Rule

510(c).

(b) For Permitted Transactions, Tradition SEF may facilitate the execution of transactions

as follows:

(1) Permitted Transactions may be privately negotiated or arranged apart from

Tradition SEF and entered into a SEF trade capture system or GUI for which an

Authorized Trader or Authorized Broker has been granted access, or presented

to Tradition SEF for execution pursuant to Rule 529 through communication

with a SEF Execution Specialist via IM, telephone or other acceptable form of

communication.

(2) Orders for non-cleared Permitted Transactions may be entered into the

Permitted Transaction Order Book through interaction with a Broker Firm

Participant that has been granted agency access to the Order Book, or directly

through IM, telephone or other acceptable form of communication with a SEF

Execution Specialist. Participants may request access rights to view and

monitor Orders in the Order Book over the internet by requesting access

through email communication at tradsefob@tradition.com.

(3) Orders for Permitted Transactions in Interest Rate Swaps and Credit Default

Swaps may be entered into the Order Books provided by the Trad-X and

StreamGlobal Platforms respectively, pursuant to the Rules in their respective

Platform Supplements.

(4) Permitted Transactions may be executed via electronic RFQ as set forth in a

Platform Supplement, if electronic submission is supported by such Platform.

(c) Orders or prearranged Permitted Transactions must contain the economic and other

information pursuant to Rule 506 and Rule 510(c).

(d) Block trades are presented to Tradition SEF for execution pursuant to Rule 529

through communication with a SEF Execution Specialist via IM, telephone or other

acceptable form of communication.

RULE 505 Platform Order Books

(a) A Participant or Customer may transmit Orders to the Platform Order Books

electronically or through a Broker Firm Participant or through a SEF Execution

Specialist.

(b) Unless otherwise stated in a Platform Supplement, the Platform Order Books use a

Price/Time priority model (also known as the First In, First Out or FIFO method).

Under the Price/Time priority model, bid (offer) Orders will be matched with the earliest

offer (bid) Order to arrive in the Platform at the best price. If there are multiple bid and

offer Orders that have the same price, the earliest to arrive in the Platform will be the

offer (bid) Order to which the bid (offer) Order is matched.

(c) All Orders submitted to a Platform Order Book will be processed in accordance with

the Order Types made available and defined by Tradition SEF from time to time.

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(d) A Platform also may facilitate the matching of Orders through a series of

auction-based Order Book functions made available on the Platforms. Operation

characteristics of the auctions may vary by Platform and will be set forth in the

applicable Platform Supplement.

RULE 506 Order Types; Submission and Procedures

Tradition SEF, in its sole discretion, may modify the Order Types available for execution, and alter

the associated procedures for such Order Types on any Platforms including but not limited to

establishing limits or minimums on the number and size of Orders or minimum quote increments.

Orders shall include the following information: the price or yield; quantity; underlying product,

instrument or index; maturity or expiration month or date of the instrument to be traded; an

account identifier; for Options, put or call (or strategy) and strike price; Order submitter’s entity

name (counterparty) and, the Order submitter’s Authorized Trader’s or Broker’ User ID. Orders

may be submitted to a Platform using such methods set forth in the applicable Platform

Supplement. Order types available on Platforms may include, but are not limited to:

(a) Contingent Order – Is an Order involving the simultaneous execution of two or more

transactions or an Order whose execution depends upon the execution and/or price of

another financial instrument.

(b) Limit Order – Is an Order to buy or sell at a price and quantity no worse than that

pre-determined by the Participant when submitting the Order. After submission, any

notional amount on a Limit Order that is not executed pursuant to the request of the

Participant or Customer shall remain as executable in the Order Book until withdrawn

by the Participant or Customer or the end of the Trading Day, whichever is sooner.

(c) Good Till Cancel (GTC) – Is an Order which will participate in all normal trading

sessions until cancelled by the Participant or Customer. The Order is cancelled at the

end of the Trading Day on which it was submitted.

(d) Market Order – Is an Order that will execute against any available Orders in the

opposite side of the Order Book, on a price-time priority, until the Order is fully

executed or all available liquidity exhausted, whichever comes first.

(e) Immediate or Cancel (IOC) – Is an Order that will either be immediately executed or

cancelled.

(f) Timed Order (GTT) – Is an Order which will participate in a normal trading session

until the time specified is reached, at which time the Order will be cancelled, even if the

current (active) trading session has not finished. The Order is cancelled at the end of

the Trading Day on which it was submitted.

(g) All or None (AON) – Is a Limit Order where only the entire submitted size is available

for execution.

(h) Iceberg – Is a Limit Order that is comprised of a visible portion, which is a

conventional Limit Order and a hidden portion, which is submitted as a follow on Limit

Order when the initial, visible portion is fully executed.

(i) One Cancels Other (OCO) – Is a Limit Order that is linked to one or more other

Orders by the Participant with the linked Order being cancelled when any other Order

in the same OCO group is fully or partially executed.

(j) Fill or Kill – Is an Order which will be executed in full immediately upon receipt, or

cancelled in full. However, full execution of the Order size may be validly achieved

through fills with more than one Participant.

(k) Trade at Settlement (TAS) – Is an Order for a fixed volume in a contract, at a price or

premium equal to the daily settlement price or index fixing price, or a specified

differential above or below the daily settlement price or index fixing price, for the

contract on a Trading Day. The actual TAS transaction price or premium is

41
determined subsequent to the transaction, based upon the daily settlement price or

index fixing price of the contract.

(l) Disregard Tape (DRT) – Absent any restrictions, a DRT (Not-Held Order) means any

Order giving a Person complete discretion over price and time in execution of an

Order, including discretion to execute all, some or none of this Order.

RULE 507 Request for Quote and Request for Continuous Stream

(a) Participants and Customers may initiate and respond to RFQs for both Required

Transactions and Permitted Transactions through communications with a SEF

Execution Specialist, or electronically if electronic submission is supported by the

relevant Platform. The RFQ should include a product and a size. RFQsRequest for 

Continuious Stream (“RFCS”) is only available where electronic streaming is supported 

by the relevant Platform. RFQs and RFCSs are processed independently from the

Order Book, except as set forth in paragraph (4) below.

(1) Participants and Customers, and Broker Firm Participants acting on behalf of a

Participant or Customer may submit RFQs or RFCSs to Tradition SEF which

will be transmitted to no fewer than the regulatory required minimum number of

market participants as set forth by the CFTC from time to time. Market

participants shall be notified of RFQs by SEF Execution Specialists, or notified

electronically, if electronic RFQ is supported by the relevant platform. Market 

participants shall be notified of RFCSs electronically through the appropriate 

Platform.

(2) Responses by market participants to an RFQ or RFCS that are made by

Affiliates of, or are controlled by, the initiator of the RFQ are deemed invalid as

a response and shall not be counted toward the regulatory required minimum

number of market participants, unless the response of the Affiliate or controlled

Person is on behalf of a Customer of such Affiliate or controlled Person.

(3) Responses to an RFQ or RFCS must be for a firm quantity and price.

Responses to RFQs shall be reflected to the RFQ requestor through

communications from a SEF Execution Specialist, or electronically if electronic

submission is supported by the relevant Platform, andResponses to RFCSs 

shall be reflected to the RFCS requestor electronically. Responses to RFQs 

and RFCSs shall only be transmitted to the initiator of the RFQ or RFCS or to

the Participant acting on behalf of the initiator of the RFQ or RFCS who will in

turn only transmit responses to the initiator of the RFQ or RFCS.

(4) Upon receipt of the first response to an RFQ, Tradition SEF will communicate

such response and any resting Order on the Order Book pertaining to the same

instrument to the initiator of the RFQ or to a Participant acting on behalf of the

initiator of the RFQ. The preceding sentence does not apply to RFCS 

responses.

(5) Upon receipt of a satisfactory number of responses and any Order Book resting

Bid or Offer the initiator of the RFQ or RFCS may choose to:

(i) Execute on any of the valid responses;

(ii) Make a counter offer to received responses but such counter offer must

be transmitted to no fewer than the regulatory required minimum number

of Participants as set out by the CFTC from time to time; or

(iii) Not transact on any of the received responses and withdraw from the

RFQ Systemor RFCS at that time.

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(6) A requestor may cancel an RFQ or RFCS at any time during the RFQ or RFCS 

process by notifying a SEF Execution Specialist or by electronic means if

electronic submission is supported by the relevant platform.

(b) A Swap in the RFQ System(or RFCS process as described in Platform Supplement 

S-1), whether a Cleared Swap or an Uncleared Swap, is deemed to be executed at the

time the initiator of the RFQ or RFCS accepts the response to the RFQ from the

responder to the RFQ or the RFCS, or the relevant response from the Order Book.

RULE 508 Work -Up Process

Upon execution of a Swap via the Order Book or RFQ, Tradition SEF may make available a work

up process. Any transactions executed in a work-up process may only be executed for the same

product at the same price and with the same terms other than size as the initial trade, for which

details were previously submitted to a SDR and made publically available prior to the work-up

process. Any resting bids or offers on the Order Book equal to or better than the initial trade price

shall be included in the work-up session. Operational characteristics of the work up process may

vary by Platform and are set forth in the applicable Platform Supplement.

RULE 509 Block Trades

Tradition SEF is relying on the relief provided in CFTC No-Action Letter 17-60 with regard

to the Rules for Block Trades that are intended to be cleared. CFTC No-Action Letter 17-60

shall expire at 11:59 pm, Eastern Time, on November 15, 2020.

(a) Tradition SEF shall designate the Swaps in which Block Trades shall be permitted.

The minimum quantity thresholds for such Swaps shall be the “appropriate minimum

block size” as established by the CFTC from time to time and in accordance with

CFTC Regulation 43.6.

(b) The following shall govern Block Trades:

(1) A Block Trade must be for a quantity that is at or in excess of the appropriate

minimum block size. Pursuant to CFTC Regulation 43.6(h)(4), when

determining whether a swap transaction denominated in a currency other than

U.S. dollars qualifies as a Block Trade, Tradition SEF shall refer to currency

exchange rates that are widely accepted by the market, and widely published

within the preceding two Business Days from the date of execution of the swap

transaction in order to determine such qualification.

(2) Spread trades may be executed as Block Trades, provided that the quantity of

each leg of the spread meets its applicable appropriate minimum block size.

(3) A Participant, Authorized Trader, Authorized Broker acting for another Person

shall not execute any Order by means of a Block Trade for such Person unless

such Person has specified that the Order be executed as a Block Trade.

(4) The price at which a Block Trade is executed must reflect (i) the size of the

Block Trade, (ii) the prices and sizes of other transactions in the same contract

at the relevant time, (iii) the prices and sizes of transactions in other relevant

markets, including without limitation the underlying cash market or related

swaps markets, at the relevant time, and (iv) the circumstances of the markets

or the Participants to the Block Trade.

(5) If a Block Trade in a product listed for trading on Tradition SEF is arranged or

executed outside of Tradition SEF, or if parties to a transaction that qualifies as

a Block Trade elect and notify Tradition SEF to have such transaction treated

as a Block Trade, one of the Persons or the Participant, Authorized Broker,

Authorized Trader acting on behalf of one of the Persons to the Block Trade

must ensure that each Block Trade is reported to Tradition SEF in such a way

that ensures that Tradition SEF is able to meet its obligation to report the Block

Trade to an SDR as soon as technologically practicable after execution and

43
within the time limit set forth below in subsection (c). The Block Trade report

must include the description of the underlying asset as required by section

43.4(d)(2), expiration date, quantity, the actual notional or principal amount of

the Block Trade, Clearing Firms, and time of execution. For unwind trades, the

Block Trade report must include the originally-issued trade identification

convention (i.e., trade ticker convention), price, effective date, expiration date,

quantity, Clearing Firms, and time of execution. Tradition SEF shall promptly

publish such information separately from the reports of transactions in the

regular market.

(6) Block Trades executed on Tradition SEF must not be facilitated through

Tradition SEF’s order book. Block Trades may be executed through the RFQ

system pursuant to CFTC No-Action Letter 17-60 and must satisfy the

conditions of No-Action Letter 17-60 and this Rule 509. Such Block Trades

shall not be subject to the minimum participant requirement set forth in CFTC

Regulation 37.9(a)(3).

(7) Trades above the appropriate minimum block size may occur on the Tradition

SEF’s Order Book; however such Trades will not receive treatment as Block

Trades and will not be afforded a reporting time delay.

(8) Block Trades must be reported to Tradition SEF in accordance with an

approved reporting method.

(9) Participants, Authorized Traders and Authorized Brokers involved in the

execution of Block Trades must maintain a record of the transaction in

accordance with Rule 402.

(c) The timing for reporting of Block Trades shall be as established in a Participant Notice

but in no event shall be more than 8 minutes after the parties have agreed to the terms

of such Block Trade.

(d) All Orders executed in accordance with Rule 509, unless otherwise exempted by Rule,

are subject to the following recordation requirements.

(1) At the time of execution, every Order received from a Participant or Customer

must be in the form of a written or electronic record and include an electronic

timestamp reflecting the date and time such Order was received and must

identify the specific account(s) for which the Order was placed.

(2) Such record shall also include an electronic timestamp reflecting the date and

time such Order was executed or cancelled.

(e) Except as otherwise provided in Rule 509(f) below, the aggregation of orders for

different accounts in order to satisfy the minimum Block Trade size or the cap size

requirement is prohibited.

(f) Aggregation of orders for different accounts in which the entire order may be

considered a Block Trade is permissible if done by a person who:

(1) Is a commodity trading advisor registered pursuant to section 4n of the CEA,

or exempt from registration under the CEA, or a principal thereof, who has

discretionary trading authority or direct client accounts,

(2) Is an investment advisor who has discretionary trading authority or direct client

accounts and satisfies the criteria of § 4.7(a)(2)(v) of the Commission’s

regulations, or

(3) Is a foreign person who performs a similar role or functions as the persons

described in 43.6(h)(6)(i)(A) or (B) of this section and is subject as such to

foreign regulation; and,

(4) Has more than $25,000,000 in total assets under management.

44
(g) Tradition SEF shall report Required Swap Creation Data and Swap Transaction and

Pricing Data of each Block Trade to a registered Swap Data Repository in accordance

with Rule 512.

RULE 510 Recordkeeping Requirements for Entering Orders into the Platform

(a) General Requirements.

(1) Each Authorized Trader entering Orders into the Platform shall input for each

Order:

(i) the User ID assigned him by Tradition SEF,

(ii) the price or yield, quantity, product, maturity or expiration month or date,

customer type indicator code and account number (except as provided in

Section (d)), and, for Options, put or call and strike price.

(iii) The Authorized Trader’s User ID must be present on each Order entered.

(2) With respect to Orders received by an Authorized Trader that are capable of

being immediately entered into the Platform, no record other than that set forth

above need be made. However, if an Authorized Trader receives an Order that

cannot be immediately entered into the Platform, the Authorized Trader must

prepare a written Order and include the account designation, date, an electronic

timestamp reflecting the time of receipt and other information required pursuant

to section (a) above. The Order must be entered into the Platform when it

becomes executable.

(b) Audit Trail Requirements.

Participants that directly connect to, or that provide connectivity to, any Platform are

responsible for maintaining, or causing to be maintained (including causing Customers to

whom a Participant has provided Direct Customer Access connectivity to a Tradition SEF

Platform to maintain), an Order routing/front-end audit trail (“Audit Trail”) for all electronic

Orders, including Order entry, modification, cancellation and responses to such

messages, entered into the Platform through any gateway to the Platform. The Audit Trail

must contain all Order receipt, Order entry, Order modification, and response/receipt

times to the highest level of precision achievable by the operating system, in accordance

with CFTC requirements for electronic Orders and no more than one second for

non-electronic Orders. The times captured must not be able to be modified by the Person

entering the Order. The data must also contain all Fix Tag information and fields which

should include, but is not limited to the following: A record of all fields relating to Order

entry, including transaction date, product, SEF code, expiration month, quantity, Order

Type, Order Qualifier, price, buy/sell indicator, stop/trigger price, Order number, unique

transaction number, account number, session ID, operator ID, host Order number, trader

Order number, Clearing Firm, type of action, action status code, customer type indicator,

origin, and timestamps. For executed Orders, the Audit Trail must record the execution

time of the Swap along with all fill information.

(1) Participants must maintain Audit Trail information as required by the Act, CFTC

Regulations 1.35, 23.201, 23.202 and 23.203, as applicable, and these Rules

and must have the ability to produce this data in a standard format upon

request of the Market Regulation Department.

(2) A Participant whose Customer is itself a Participant may agree with such

Customer that it is the Customer’s obligation to maintain the Audit Trail for such

Customer’s Orders. Any such agreement shall be in writing, and a copy of such

agreement shall be provided to Tradition SEF.

45
(c) In addition to the requirements set forth in paragraphs (a) and (b), each Participant,

Broker Firm Participant, Customer, Authorized Trader, Authorized Broker and

Authorized Agent that submits an Order to buy or sell a Swap shall include with each

such Order sufficient information to enable Tradition SEF to report all swap creation

data required under Part 45 of CFTC Regulations as Tradition SEF may request from

time to time, including the following information (to the extent such information is not

provided by the Platform):

(1) the legal entity identifier of the Participant or Customer placing the Order;

(2) a yes/no indication of whether the Participant or Customer is a Swap Dealer

with respect to the Swap for which the Order is placed;

(3) a yes/no indication of whether the Participant or Customer is a Major Swap

Participant with respect to the Swap for which the Order is placed;

(4) a yes/no indication of whether the Participant or Customer is a financial entity

as such term is defined in Section 2(h)(7)(C) of the Act;

(5) a yes/no indication of whether the Participant or Customer will elect the clearing

requirement exception in Section 2(h)(7) of the Act for any Swap resulting from

the Order, if applicable;

(6) a yes/no indication of whether the Participant or Customer is a U.S. person; and

(7) if the Swap will be allocated:

(i) an indication that the Swap will be allocated; and

(ii) the legal entity identifier of the agent;

(iii) an indication of whether the Swap is a post-allocation swap; and

(iv) if the Swap is a post-allocation swap, the unique swap identifier of the

original transaction between the reporting counterparty and the agent.

Post-allocation Swaps shall be respectively effected and reported in

accordance with the rules of the Clearing House and Swap Data

Repository and in accordance with Parts 43 and 45 of the CFTC

Regulations.

(d) Customer Type Indicator (CTI) Codes. Each Participant must identify each transaction

executed on the Platform on the record of transactions submitted to Tradition SEF with

the correct CTI code. The CTI codes are as follows:

(1) CTI 2- Swaps executed for the Proprietary Account of a Clearing Firm or a

Participant that is not an individual.

(2) CTI 4- Any transaction not meeting the definition of CTI 2.

(e) Each Participant, Customer or Authorized Agent must create and maintain records of

their SEF Activity, which records shall include, at a minimum, the index or instrument

used as a reference price, the underlying commodity, and related derivatives markets.

Each Participant, Customer or Authorized Agent shall make such records available,

upon request, to the SEF or, if applicable, to its regulatory service provider, and to the

Commission. In the course of a trade practice surveillance or market surveillance

investigation into any trading activity involving post-trade allocations, Tradition SEF will

ascertain whether a post-trade allocation was made, and if so, Tradition SEF will

request, obtain and review the post-trade allocation information as part of its

investigation. Tradition SEF is relying on the relief provided in CFTC No-Action Letter

17-54 with regard to certain audit trail requirements related to post-trade allocations.

CFTC No-Action Letter 17-54 expires at 11:59 pm, Eastern Time, on November 15,

2020.

46
RULE 511 Trade Cancellations and Price Adjustments by Tradition SEF

Tradition SEF may cancel any trade or adjust trade prices in accordance with the Rules (if any)

set forth in the applicable Platform Supplement for trades that are the result of unauthorized

Traders or the failure of a SEF Platform function, or when such action is necessary to mitigate

market disrupting events caused by improper conduct or erroneous trading behaviour, or if

allowing the trade to stand as executed would have a material adverse effect on the integrity of

the market. Any trade price adjustments or trade cancellations shall be transparent to the market

and subject to standards including, but not limited to: transactions entered into in the name of a

Participant or Customer without the knowledge or authority of such a Participant or Customer, or

entered into by an Authorized Trader or Authorized Broker after a notification to disable an

Authorized Trader’s or Authorized Broker’s access to the SEF Platforms has been received by

Tradition SEF in accordance with the applicable procedures set out in SEF Rules or Platform

Supplements; a trade executed as a result of an order entering a SEF Platform as a result of a

failure of an Order Input Collar, Order Size Collar, or failure of a House Limit Function or other

credit or clearing limit function; or which is executed at a price outside of the current bid and offer

for the Product; or which is manifestly erroneous.

RULE 512 Swap Data Reporting

(a) Tradition SEF will report Required Swap Creation Data pursuant to Part 45 of CFTC

Regulations and Swap Transaction and Pricing Data pursuant to Part 43 of CFTC

Regulations to an SDR for each Swap as soon as technologically practicable after

execution. Tradition SEF may disclose Swap Transaction and Pricing Data relating to

publicly reportable Swap transactions to the market participants of Tradition SEF, prior

to the public dissemination of such data by an SDR, but no earlier than the transmittal

of such data to an SDR for public dissemination. Such disclosure of Swap Transaction

and Pricing Data relating to publicly reportable Swap transactions shall be made on a

non-discriminatory basis among Tradition SEF market participants. Tradition SEF shall

provide Swap Transaction and Pricing Data to market participants in a form that does

not disclose the identities, or otherwise facilitate identification, of the parties to the

Swap. All Required Swap Creation Data and Swap Transaction and Pricing Data

reported for a Swap reported by Tradition SEF shall be reported to the same SDR. For

multi-asset Swaps, Tradition SEF shall report Required Swap Creation Data and Swap

Transaction and Pricing Data for each asset class to the same SDR that accepts

Swaps in the asset class that Tradition SEF treats as the primary asset class involved

in the Swap in accordance with CFTC Regulation 45.3(f).

(b) Tradition SEF shall report Required Swap Creation Data and Swap Transaction and

Pricing Data for interest rate, equity and foreign exchange asset classes to the DTCC

Data Repository or CME Swap Data Repository, for commodity asset class to CME

Swap Data Repository or ICE Trade Vault, and for the credit asset classes, to ICE

Trade Vault, DTCC Data Repository or CME Swap Data Repository, as requested by

Participants.

(c) The Reporting Counterparty for each Swap executed pursuant to the Rules shall be

established pursuant to CFTC Regulation 45.8, as may be amended from time to time,

and shall have the obligations of the reporting party set forth in Part 43 of CFTC

Regulations and the reporting counterparty in Part 45 of CFTC Regulations. The

Reporting Counterparty shall receive notification that it is the Reporting Counterparty

no later than the time that the counterparties receive a transaction confirmation from

Tradition SEF. If both counterparties to a Swap executed pursuant to the Rules are

equal in the hierarchy (for example, both are Swap Dealers), the Reporting

Counterparty for such Swap shall be determined in accordance with the Dodd-Frank

Act—Swap Transaction Reporting Requirements (version July 15, 2013 or such

successor version as may be adopted from time to time published by ISDA), or if an

ISDA framework exits, reporting will follow the ISDA framework. Tradition SEF shall

47
publish the ISDA Dodd-Frank Act—Swap Transaction Reporting Requirements

document on the Tradition SEF website with the Rulebook. Tradition SEF shall from

time to time designate a Swap Data Repository in respect of one or more Swaps and

shall notify Participants of such designation. With respect to each Swap Data

Repository, Tradition SEF shall use the facilities, methods, or data standards provided

or required by each such Swap Data Repository to which Tradition SEF reports the

data.

(d) Each Participant: (i) authorizes Tradition SEF to send Required Swap Creation Data

and Swap Transaction and Pricing Data on its behalf and, if applicable, on behalf of its

Customers to the relevant Swap Data Repository and agrees to take all such actions

as are deemed necessary or required by such Swap Data Repository to facilitate or

confirm such authorization; and (ii) consents to the maintenance of such Required

Swap Creation Data and Swap Transaction and Pricing Data by the relevant Swap

Data Repository.

(e) Should a registered SDR incur an operational problem and Tradition SEF receive

notice that the SDR was unable to receive and hold in queue Swap Transaction and

Pricing Data, Tradition SEF shall hold in cue and report the data to the registered SDR

upon receiving notice that the SDR has resumed normal operations.

(f) After the execution of a Swap, Tradition SEF shall (1) timestamp Swap Transaction

and Pricing Data relating to such Swap with the date and time, to the nearest second

of when Tradition SEF (a) receives data from a swap counterparty; and (b) transmits

such data to a Swap Data Repository for public dissemination; and (2) generate and

assign a unique swap identifier that contains the unique alphanumeric code assigned

to Tradition SEF by the CFTC and an alphanumeric code generated and assigned to

the Swap by Tradition SEF’s automated systems, which shall be unique with respect to

all such codes that Tradition SEF generates and assigns, at, or as soon as

technologically practicable following, the time of execution of the Swap, and prior to the

reporting of Required Swap Creation Data and Swap Transaction and Pricing Data. As

soon as technologically practicable after a Swap’s execution, Tradition SEF shall

electronically transmit the unique swap identifier and the identity of the SDR to which

Tradition SEF has reported Required Swap Creation Data and Swap Transaction and

Pricing Data to (1) each counterparty to the Swap; and (2) the Derivatives Clearing

Organization, if any, to which the Swap is submitted for clearing, as part of the

Required Swap Creation Data and Swap Transaction and Pricing Data transmitted to

the Derivatives Clearing Organization for clearing purposes.

(g) Tradition SEF shall use the internal product identifier or product description used by an

SDR to which a Swap is reported in all recordkeeping and Swap data reporting

pursuant to CFTC Regulation 45.7(c)(2).

RULE 513 Correction or Cancellation of Swap Data

Participants and Customers that become aware of an error or omission in Required Swap

Creation Data or Swap Transaction and Pricing Data for a Swap shall promptly submit corrected

data to Tradition SEF and, if the error or omission relates to a Block Trade, the counterparty to

such Block Trade.

If Tradition SEF becomes aware of an error or omission in the Swap Transaction and Pricing Data

reported with respect to such Swap, or receives notification from the Reporting Counterparty,

Tradition SEF shall submit corrected data to the same registered SDR as soon as technologically

practicable after discover of the error or omission and receipt of the corrected data. For Cleared

Swaps, if Tradition SEF becomes aware of, or receives notification from the Reporting

Counterparty about, any error or omission in the Cleared Swap’s Transaction and Pricing Data

reported with respect to such Cleared Swap, then Tradition SEF shall promptly notify the

applicable Clearing Firm and the procedures under Rule 703 may be applied under the

circumstances addressed in that Rule. No Person, including the SEF, shall submit or agree to

48
submit a cancellation or correction for the purpose of re-reporting Swap Transaction and Pricing

Data in order to gain or extend a delay in public dissemination of accurate Swap Transaction and

Pricing Data or to otherwise evade reporting requirements.

RULE 514 Adherence to Rules and Applicable Law

It shall be a violation for any Participant, Customer, Authorized Trader, Authorized Broker,

Authorized Agent, Supervised Person or Independent Software Vendor to violate any Rule,

provision of the Act, applicable CFTC Regulations or other Applicable Law or any agreement

made with Tradition SEF, or to engage in fraud, dishonourable or dishonest conduct, or in conduct

which is inconsistent with just and equitable principles of trade.

RULE 515 Supervision

(a) Each Participant shall establish, maintain and administer reasonable supervisory

procedures to monitor the compliance of its Authorized Traders, Authorized Brokers,

Authorized Agent and Supervised Persons with the Rules and any applicable

provisions of the Act or CFTC and such Participant may be held accountable for the

actions of such Authorized Traders, Authorized Brokers, Authorized Agent or

Supervised Persons.

(b) Each Customer shall establish, maintain and administer reasonable supervisory

procedures to monitor the compliance of any representatives or agents under the

control of such Customer with the Rules and any applicable provisions of the Act or

CFTC, and such Customer may be held accountable for the actions of such

representatives or agents.

RULE 516 Fraudulent Acts Prohibited

No Participant, Customer, Authorized Trader, Authorized Broker, Authorized Agent or Supervised

Person shall engage in, or attempt to engage in any fraudulent act or engage, or attempt to

engage in any manipulative device, scheme or artifice to defraud, deceive, trick or mislead in

connection with or related to any SEF Activity or other activity related to the Clearing House.

RULE 517 Fictitious, Wash, Accommodation or Non-Competitive Transactions

Prohibited

(a) No Participant, Customer, Authorized Trader, Authorized Broker, Authorized Agent or

Supervised Person shall create fictitious transactions, wash transactions,

accommodation transactions, or non-competitive transactions (except as otherwise

authorized by the Rules), or execute any such Order with knowledge of its nature as a

fictitious transaction, wash transaction, accommodation transaction or non-competitive

transaction.

(b) The following requirements shall apply to all Swap transactions, including Block

Trades, between Affiliates:

(1) The trade price must be based on a competitive market price, and each Affiliate

trade must reflect: (a) the size of the trade; (b) the prices and sizes of other

transactions in the same contract at the relevant time; (c) the prices and sizes

of transactions in other relevant markets, including without limitation the

underlying cash market or related swaps markets, at the relevant time; and (d)

the circumstances of the markets or the Participants to the trade;

(2) Each party must have a separate and independent legal bona fide business

purpose for engaging in the trade; and

(3) Each party’s decision to enter into the trade must be made by a separate and

independent decision maker.

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RULE 518 Market Disruption Prohibited

Orders entered into the Platform for the purpose of market manipulation or market disruption

associated with any Swap or creating a condition in which prices do not or will not reflect fair

market values are prohibited. If Participant or Customer, or any of their respective Authorized

Traders or Supervised Persons, or designated Authorized Agents, makes or assists in entering

any such Order with knowledge of the purpose thereof or who, with such knowledge, in any way

assists in carrying out any plan or scheme for the entering of any such Order, they will be deemed

to have engaged in an act detrimental to Tradition SEF.

RULE 519 Market Manipulation Prohibited

No Participant, Customer, Authorized Trader, Authorized Broker, Authorized Agent or Supervised

Person shall attempt to manipulate or manipulate the price of any Swap, including, without

limitation, engaging in activity in violation of CEA Sections 4c(a)(5) and 9(a)(2) and Commission

Regulations 180.1(a) and 180.2.

RULE 520 Disruptive Trading Practices Prohibited

No Participant, Customer, Authorized Trader, Authorized Broker, Authorized Agent or Supervised

Person shall engage in any trading, practice, or conduct that constitutes a “disruptive trading

practice,” as such term is defined by Section 4c(a)(5) of the Act, described in the CFTC’s

Antidisruptive Practices Authority Interpretive Guidance and Policy Statement, 78 Fed. Reg.

31890 (May 28, 2013), or otherwise prohibited under these Rules.

RULE 521 Prohibition of Misstatements

No Participant, Customer, Authorized Trader, Authorized Broker, Authorized Agent or Supervised

Person shall make any knowing misstatement of a material fact to Tradition SEF, any SEF

Official, or any Board committee or SEF panel.

RULE 522 Acts Detrimental to the Reputation of Tradition SEF Prohibited

No Participant, Customer, Authorized Trader, Authorized Broker, Authorized Agent or Supervised

Person shall engage in any SEF Activity that tends to impair the reputation, integrity or good name

of Tradition SEF.

RULE 523 Misuse of the Platform

Misuse of a Platform is strictly prohibited. It shall be deemed an act detrimental to Tradition SEF

to permit unauthorized use of any Platform, to assist any Person in obtaining unauthorized access

to any Platform, to trade on any Platform without an agreement and an established account with a

Clearing Firm (for cleared trades), to alter the equipment associated with any Platform (except

with Tradition SEF’s consent), to interfere with the operation of any Platform, to intercept or

interfere with information provided thereby, or in any way to use any Platform in a manner contrary

to the Rules.

RULE 524 Responsibility for Customer Orders

(a) A Participant who inadvertently, through error or omission, fails to execute an Order at

the time it should have been executed may, upon discovery of such error or omission,

execute such Order at the best obtainable price. Unless the Customer that has placed

the Order agrees otherwise, such Order shall be executed as promptly as practicable

and shall be reported to the Customer at the price at which actually executed. A

Participant may not adjust the price at which an Order was executed. A Participant

that agrees to compensate a Customer for such an error shall document all such

payments, including the amount of any payment and the reason therefore. Such

records must be provided to Tradition SEF upon request.

(b) A Participant may execute an Order to rectify an error as provided in paragraph (a)

without prior instructions from the Customer, but this Rule 524 shall not be construed

50
to contravene any instructions received from a Customer respecting any Order prior to

its execution.

RULE 525 Withholding Customer Orders Prohibited

No Participant shall withhold or withdraw from the market any Order, or any part of an Order, for

the benefit of any Person other than for the Customer for whom the Participant is placing the

Order.

RULE 526 Trading Ahead of Customer Orders Prohibited

No Participant shall enter an Order into any Platform for his own account, an account in which he

has a direct or indirect financial interest or an account over which he has discretionary trading

authority within the same contract, including, without limitation, an Order allowing discretion as to

time and price, when such Participant is in possession of any unsubmitted Customer Order that

such Platform is capable of accepting.

RULE 527 Trading Against Customer Order Prohibited

(a) General Prohibition. No Participant in possession of a Customer Order shall knowingly

take, directly or indirectly, the opposite side of such Order for its own account, an

account in which it has a direct or indirect financial interest, or an account over which it

has discretionary trading authority, save in the event that the an Affiliate is entering an

Order on behalf of a Customer

(b) Exceptions. The foregoing restriction shall not apply to the following:

(1) Block trades executed pursuant to Rule 509;

(2) Swaps executed pursuant to Rule 529;

(3) Swaps where the Customer has consented in writing no more than 12 months

prior to the transaction to waive the application of Rule 527 as long as the

Participant has clearly notified the Customer that the Participant will take,

directly or indirectly, the opposite side of such Order for its own account, an

account in which it has a direct or indirect financial interest, or an account over

which it has discretionary trading authority. The Participant must clearly

identify, by appropriate Order entry system indicator, all such transactions.

RULE 528 Disclosing Customer Orders Prohibited

No Participant shall disclose another Customer’s Order to buy or sell except to a designated SEF

Official or the CFTC, and no Participant shall solicit or induce another Participant to disclose

Order information. No Person shall take action or direct another to take action based on

non-public Order information, however acquired. The mere statement of opinions or indications of

the price at which a market may open or resume trading does not constitute a violation of this rule.

RULE 529 Prearranged, Pre-Negotiated and Noncompetitive Transactions Prohibited

(a) No Person shall prearrange or pre-negotiate any purchase or sale or noncompetitively

execute any Swap, except in accordance with Section (b) below. The foregoing

restriction shall not apply to Block Trades affected pursuant to Rule 509 or pursuant to

the Rules relating to Permitted Transactions.

(b) Pre-Execution Communications for Swaps Executed on a Platform. Parties may

engage in pre-execution communications with regard to transactions executed on the

Platform where one party (the first party) wishes to be assured that a contra party (the

second party) will take the opposite side of the Order subject to the following

restrictions:

(1) A party may not engage in pre-execution communications with other market

participants on behalf of another party unless the party for whose benefit the

trade is being made has previously consented to permit such communications.

51
(2) Parties to pre-execution communications shall not:

(i) disclose to a nonparty the details of such communications or

(ii) enter an Order to take advantage of information conveyed during such

communications except in accordance with this rule.

(3) For Required Transactions, the first party’s Order must be entered into the

Platform first and the second party’s Order may not be entered into the Platform

until a period of 15 seconds, or such shorter time as may be specified in a

Platform Supplement, has elapsed from the time of entry of the first Order.

RULE 530 Discretionary Orders

No Participant shall submit a Discretionary Order to the Platform for any account of another

Person without the prior specific written consent of such other Person to the exercise of such

discretion, provided, however, that the restriction set forth in this subparagraph shall not apply to a

Discretionary Order for a Proprietary Account of the Participant.

RULE 531 Priority of Execution

Non-discretionary Customer Orders received by a Participant or its Authorized Traders shall be

entered into the Platform in the sequence received. Non-discretionary Orders that cannot be

immediately entered into the Platform must be entered when the Orders become executable in

the sequence in which the Orders were received.

RULE 532 Position Limits and Exemptions

(a) Tradition SEF may establish position limits for one or more Swaps tradable on

Tradition SEF, and grant exemptions from position limits, in accordance with CFTC

Regulations. The position limit for a Swap established by Tradition SEF shall not be at

a level higher than any limit set by the CFTC for such Swap. The position limit levels

applicable to those Swaps with position limits are set forth in the Position Limit Table

set forth by Tradition SEF from time to time in a Participant Notice. To reduce the

potential threat of market manipulation or congestion, Tradition SEF shall adopt for

each of the contracts of the facility, as is necessary and appropriate, position

limitations or position accountability levels for speculators.

(b) A Person seeking an exemption from position limits, including position limits

established pursuant to a previously approved exemption, must file the required

application with the Market Regulation Department and receive approval prior to

exceeding such limits. Notwithstanding the foregoing, a Person who establishes an

exemption-eligible position in excess of position limits and files the required application

with the Market Regulation Department shall not be in violation of this Rule 532

provided the filing occurs within one (1) Business Day after assuming the position. In

the event the positions in excess of the limits are not deemed to be exemption-eligible,

the applicant and Clearing Firm will be in violation of speculative limits for the period of

time in which the excess positions remained open.

(c) In order to obtain an exemption from position limits, a Person must:

(1) Provide a description of the exemption sought, including whether the exemption

is for bona fide hedging positions as defined in CFTC Regulation 1.3(z)(1) or

any other applicable CFTC Regulation, risk management positions or

arbitrage/spread positions;

(2) Provide a complete and accurate explanation of the underlying exposure

related to the exemption request;

(3) Agree to promptly provide, upon request by the Market Regulation Department,

information or documentation regarding the Person’s financial condition;

52
(4) Agree to comply with all terms, conditions or limitations imposed by the Market

Regulation Department with respect to the exemption;

(5) Agree that the Market Regulation Department may modify or revoke the

exemption at any time;

(6) Agree to initiate and liquidate positions in an orderly manner; and,

(7) Agree to promptly submit a supplemental statement to the Market Regulation

Department whenever there is a material change to the information provided in

the most recent application.

(d) Nothing in this Rule 532 shall in any way limit:

(1) the authority of Tradition SEF to take emergency action; or

(2) the authority of the Market Regulation Department to review at any time the

positions owned or controlled by any Person and to direct that such position be

reduced to the position limit provided for in the Position Limit, Position

Accountability and Reportable Level Table.

(e) A Person who exceeds a position limit as a result of maintaining positions in Swaps at

more than one Clearing Firm shall be deemed to have waived confidentiality regarding

its positions and the identity of the Clearing Firms at which those positions are

maintained.

(f) For the purpose of determining compliance with the position limits established by

Tradition SEF pursuant to this Rule 532, positions in Swaps shall be aggregated in

accordance with CFTC Regulation 150.4.

RULE 533 Position Accountability

(a) Tradition SEF shall establish position accountability levels for Required Transactions

available to trade on Tradition SEF unless Tradition SEF has previously established

position limits pursuant to Rule 532. A Participant who holds or controls, or a

Participant or Clearing Firm that carries for another Person, aggregate positions in

excess of those specified in the Position Accountability Table set forth by Tradition

SEF from time to time in a Participant Notice, shall:

(1) Provide, in a timely manner upon request by the Market Regulation

Department, information regarding the nature of the position, trading strategy,

and hedging information to the extent that such activity took place on Tradition

SEF, if applicable.

(2) Be deemed to have consented, when so ordered by Tradition SEF, not to

further increase the positions which exceed the levels specified in the Position

Accountability column in the Position Limit, Position Accountability and

Reportable Level Table.

(3) Initiate and/or liquidate such positions in an orderly manner, in co-ordination

with the relevant DCO.

(b) For the purpose of determining compliance with the position accountability levels

established by Tradition SEF pursuant to this Rule 533, positions in Swaps shall be

aggregated in accordance with CFTC Regulation 150.4.

RULE 534 Responsibility of Swap Dealers and Major Swap Participants for

Compliance with Trading Requirement

WITHDRAWN

53
RULE 535 Market Operations Department

(a) Support. The Market Operations Department provides Platform support and problem

management only to Participants, Authorized Traders and Authorized Brokers. The

Market Operations Department provides customer support via a specified telephone

number and during specified hours, however, Market Operations Department may not

always be available to provide customer support. Persons other than Participants,

Authorized Traders and Authorized Brokers must contact their applicable Participant to

make support requests.

(b) Market Operations Department Communications. Tradition SEF shall not be liable for

any loss resulting from any inability to communicate with the Market Operations

Department. The liability of Tradition SEF for the negligent acts of Market Operations

Department staff shall be subject to the limitations and conditions set forth in the

limitation of liability rule applicable to each Platform.

RULE 536 Liquidity Provider Programs

Tradition SEF may from time to time establish one or more programs that provide Participants or

Customers with incentives for providing meeting trading volume or liquidity thresholds as may be

established by Tradition SEF. All Participants and Customers are eligible to become liquidity

providers, provided the Participant or Customer can meet the liquidity provider obligations

established by Tradition SEF as set forth in a Participant Notice.

RULE 537 Limitation of Liability

(a) EXCEPT AS PROVIDED BELOW OR AS OTHERWISE SET FORTH IN A USER

AGREEMENT, AND EXCEPT IN INSTANCES IN WHICH THE DISCLAIMING PARTY

HAS BEEN FINALLY ADJUDICATED BY A COURT OF COMPETENT

JURISDICTION TO HAVE ENGAGED IN FRAUD OR WILLFUL MISCONDUCT, IN

WHICH CASE THE DISCLAIMING PARTY FOUND TO HAVE ENGAGED IN SUCH

CONDUCT CANNOT AVAIL ITSELF OF THE PROTECTIONS IN THIS RULE 537,

NEITHER TRADITION SEF, NOR ANY AFFILIATE OF TRADITION SEF, ANY SEF

OFFICIAL, THE REGULATORY SERVICES PROVIDER, AND ANY OF THEIR

RESPECTIVE MANAGERS, DIRECTORS, OFFICERS, EMPLOYEES , AGENTS,

CONSULTANTS, OR SERVICE PROVIDERS (THE “DISCLAIMING PARTY” OR

“DISCLAIMING PARTIES”) SHALL BE LIABLE TO ANY PERSON FOR ANY LOSSES

ARISING FROM:

(1) ANY FAILURE, MALFUNCTION, FAULT IN DELIVERY, DELAY, OMISSION,

SUSPENSION, INACCURACY, INTERRUPTION, TERMINATION, OR ANY

OTHER EVENT, IN CONNECTION WITH THE FURNISHING,

PERFORMANCE, OPERATION, MAINTENANCE, USE OF OR INABILITY TO

USE ALL OR ANY PART OF ANY PLATFORM AND SERVICES OF

TRADITION SEF, OR SERVICES, EQUIPMENT OR FACILITIES USED TO

SUPPORT SUCH PLATFORM AND SERVICES, INCLUDING WITHOUT

LIMITATION ELECTRONIC ORDER ENTRY AND DELIVERY, TRADING

THROUGH ANY MEANS, ELECTRONIC COMMUNICATION OF MARKET

DATA OR INFORMATION, WORKSTATIONS, PRICE REPORTING

SYSTEMS AND ANY AND ALL TERMINALS, COMMUNICATIONS

NETWORKS, CENTRAL COMPUTERS, SOFTWARE, HARDWARE, AND

FIRMWARE RELATING THERETO; OR

(2) ANY FAILURE OR MALFUNCTION, FAULT IN DELIVERY, DELAY,

OMISSION, SUSPENSION, INACCURACY, INTERRUPTION OR

TERMINATION, OR ANY OTHER EVENT, OF ANY PLATFORM OR SERVICE

OF TRADITION SEF, OR SERVICES, EQUIPMENT OR FACILITIES USED

TO SUPPORT SUCH PLATFORM OR SERVICES, CAUSED BY ANY THIRD

54
PARTIES INCLUDING, BUT NOT LIMITED TO, INDEPENDENT SOFTWARE

VENDORS AND NETWORK PROVIDERS; OR

(3) ANY ERRORS OR INACCURACIES IN INFORMATION PROVIDED BY

TRADITION SEF OR ANY OF TRADITION SEF’S PLATFORMS, SERVICES

OR FACILITIES; OR

(4) ANY UNAUTHORIZED ACCESS TO OR UNAUTHORIZED USE OF ANY OF

TRADITION SEF’S SYSTEMS, SERVICES, EQUIPMENT OR FACILITIES BY

ANY PERSON.

THE FOREGOING LIMITATION OF LIABILITY SHALL APPLY WHETHER A CLAIM

ARISES IN CONTRACT, TORT, NEGLIGENCE, STRICT LIABILITY, NEGLIGENT

MISREPRESENTATION, RESTITUTION, BREACH OF STATUTORY DUTY,

BREACH OF WARRANTY OR OTHERWISE AND WHETHER THE CLAIM IS

BROUGHT DIRECTLY OR AS A THIRD PARTY CLAIM. THE FOREGOING

LIMITATION OF LIABILITY SHALL BE SUBJECT TO THE ACT AND THE CFTC

REGULATIONS.

(b) EXCEPT AS OTHERWISE SET FORTH IN A USER AGREEMENT, THERE ARE NO

EXPRESS OR IMPLIED WARRANTIES OR REPRESENTATIONS PROVIDED BY

TRADITION SEF OR ANY OTHER DISCLAIMING PARTY RELATING TO ANY

PLATFORM OR SERVICES OF TRADITION SEF, OR SERVICES, EQUIPMENT OR

FACILITIES USED TO SUPPORT SUCH PLATFORMS SYSTEMS OR SERVICES.

TRADITION SEF HEREBY SPECIFICALLY DISCLAIMS, OVERRIDES AND

EXCLUDES, TO THE FULLEST EXTENT PERMITTED BY LAW, ALL IMPLIED

WARRANTIES OF MERCHANTABILITY, SATISFACTORY QUALITY, FITNESS FOR

A PARTICULAR PURPOSE AND ALL OTHER WARRANTIES, CONDITIONS,

OTHER CONTRACTUAL TERMS, REPRESENTATIONS, INDEMNITIES AND

GUARANTEES WITH RESPECT TO THE PLATFORMS AND TRADITION SEF

SERVICES, WHETHER EXPRESS, IMPLIED OR STATUTORY, ARISING BY LAW,

CUSTOM, PRIOR ORAL OR WRITTEN STATEMENTS BY TRADITION SEF OR ANY

OTHER DISCLAIMING PARTY OR OTHERWISE (INCLUDING BUT NOT LIMITED

TO, AS TO TITLE, SATISFACTORY QUALITY, ACCURACY, COMPLETENESS,

UNINTERRUPTED USE, NON-INFRINGEMENT, TIMELINESS, TRUTHFULNESS,

SEQUENCE AND ANY IMPLIED WARRANTIES, CONDITIONS AND OTHER

CONTRACTUAL TERMS ARISING FROM TRANSACTION USAGE, COURSE OF

DEALING OR COURSE OF PERFORMANCE) RELATING TO ANY PLATFORM OR

SERVICES OF TRADITION SEF, OR SERVICES, EQUIPMENT OR FACILITIES

USED TO SUPPORT PLATFORMS OR SERVICES.

(c) EXCEPT AS OTHERWISE SET FORTH IN A USER AGREEMENT, ANY DISPUTE

ARISING OUT OF THE USE OF ANY PLATFORM OR SERVICE OF TRADITION

SEF, OR SERVICES, EQUIPMENT, OR FACILITIES USED TO SUPPORT SUCH

PLATFORM OR SERVICES IN WHICH THE DISCLAIMING PARTY OR

DISCLAIMING PARTIES IS A PARTY SHALL BE ADJUDICATED IN ACCORDANCE

WITH RULE 808. ANY OTHER ACTIONS, SUITS OR PROCEEDINGS AGAINST

THE DISCLAIMING PARTY OR DISCLAIMING PARTIES MUST BE BROUGHT

WITHIN TWO YEARS FROM THE TIME THAT A CAUSE OF ACTION HAS

ACCRUED.

(d) NOTWITHSTANDING THE FOREGOING, TRADITION SEF MAY ASSUME

RESPONSIBILITY FOR DIRECT, OUT-OF-POCKET LOSSES DIRECTLY CAUSED

BY THE GROSS NEGLIGENCE OF A DISCLAIMING PARTY. EXCEPT AS

OTHERWISE SET FORTH IN A USER AGREEMENT, TRADITION SEF’S TOTAL

COMBINED AGGREGATE LIABILITIES SHALL NOT IN ALL CIRCUMSTANCES

EXCEED $100,000 FOR ALL LOSSES SUFFERED FROM ALL CAUSES ON A

SINGLE CALENDAR DAY; $200,000 FOR ALL LOSSES SUFFERED FROM ALL

CAUSES IN A SINGLE CALENDAR MONTH; AND $2,000,000 FOR ALL LOSSES

55
SUFFERED FROM ALL CAUSES IN A SINGLE CALENDAR YEAR. IF THE NUMBER

OF ALLOWED CLAIMS ARISING OUT OF ANY FAILURES OR MALFUNCTIONS ON

A SINGLE DAY OR SINGLE MONTH CANNOT BE FULLY SATISFIED BECAUSE OF

THE ABOVE DOLLAR LIMITATIONS, ALL SUCH CLAIMS SHALL BE LIMITED TO A

PRO RATA SHARE OF THE MAXIMUM AMOUNT FOR THE RESPECTIVE PERIOD.

(e) EXCEPT AS OTHERWISE SET FORTH IN A USER AGREEMENT, UNDER NO

CIRCUMSTANCES SHALL TRADITION SEF BE LIABLE TO A PARTICIPANT OR

ANY OTHER PERSON FOR ANY INDIRECT, SPECIAL, INCIDENTAL,

CONSEQUENTIAL, EXEMPLARY LOSS OR PUNITIVE DAMAGES OF ANY KIND,

REGARDLESS OF WHETHER SUCH LIABILITY IS BASED ON BREACH OF

CONTRACT, TORT, STRICT LIABILITY, BREACH OF WARRANTIES OR

OTHERWISE, INCLUDING, WITHOUT LIMITATION, ANY LOSS OF REVENUE,

LOSS OF ACTUAL OR ANTICIPATED PROFITS, LOSS OF CONTRACTS, LOSS OF

THE USE OF MONEY, LOSS OF ANTICIPATED SAVINGS, LOSS OF BUSINESS,

LOSS OF OPPORTUNITY, LOSS OF MARKET SHARE, LOSS OF GOODWILL,

LOSS OF REPUTATION OR LOSS OF, DAMAGE TO OR CORRUPTION OF DATA,

HOWEVER SUFFERED OR INCURRED, REGARDLESS OF WHETHER TRADITION

SEF HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES OR

WHETHER SUCH DAMAGES OTHERWISE COULD HAVE BEEN FORESEEN OR

PREVENTED.

RULE 538 Error Trade Policy

(a) Subject to the terms of any error trade policies set forth in any applicable Platform

Supplement, and subject to the requirements of Rule 703(b), if applicable, any

Participant or Customer that is authorized by a Participant for Direct Customer Access

to a Platform, including Broker Firm Participants acting on behalf of Customers

(including other Participants) who mishandle any Order or RFQ or who execute an

Order or RFQ in error are responsible for all remedial actions and all subsequent

losses incurred with respect to such Order or RFQ, and Tradition SEF shall have no

liability.

(b) Any error caused as a result of actions or communications directly between

Customers, Participants and Broker Firm Participants shall be resolved between such

entities, and Tradition SEF shall have no liability.

RULE 539 Error Trade Policy for Tradition SEF Errors

(a) If a Participant, Broker Firm Participant or Customer that is authorized by a Participant

for Direct Customer Access to a Platform (each a “Party”) believes that an error

occurred with respect to the handling or execution of an Order or RFQ arising out of

the negligence, failure, malfunction, delay, omission, or inaccuracy of a Tradition SEF

Execution Specialist or any Platform, service, equipment or facility of Tradition SEF,

then the Party must notify Tradition SEF on recordable, auditable media at the time

such alleged error is discovered. Such notification shall be given to the Party’s SEF

Execution Specialist or SEF Trading Operations for the Platform on which the alleged

error occurred.

(b) If Tradition SEF believes that an error with respect to the handling or execution of an

Order or RFQ arising out of the negligence, failure, malfunction, delay, omission, or

inaccuracy of a Tradition SEF Execution Specialist or any Platform, service, equipment

or facility of Tradition SEF has occurred, Tradition SEF will notify the affected Parties

on recordable, auditable media at the time such alleged error is discovered. Such

notification shall be given to the Party’s Authorized Trader(s) of the Platform on which

the alleged error occurred.

(c) Upon notification of an alleged error from a Party pursuant to Rule 539 (1), or upon

Tradition SEF’s discovery of an alleged error pursuant to Rule 539 (2):

56
(1) Tradition SEF will review its records (including but not limited to, instant

message communications and other forms of messaging, voice

communications and Order transmission to Tradition SEF) to determine if the

alleged error occurred and is the fault of Tradition SEF. If the alleged error is

determined not to be the fault of Tradition SEF, then Tradition SEF shall have

no liability to the Party for the alleged error and the alleged error shall be

resolved pursuant to Rule 538.

(2) If Tradition SEF finds that it is responsible for causing the alleged error, the

transaction may be canceled or adjusted, as determined by Tradition SEF, in its

sole discretion. If Tradition SEF takes any action pursuant to this Rule 539, it

will give prompt notice and in any event will use good faith, commercially

reasonable efforts to provide the affected Parties with reasonable prior notice

and to obtain such Parties’ consent to such adjustment. Tradition SEF’s

determination of fault shall be final and non-appealable. Any liability on the part

of Tradition SEF is subject to the limitations of liability set forth in Rule 537.

(3) A Party claiming that an alleged error has occurred or a Party that has been

notified by Tradition SEF that an alleged error has occurred is responsible for

mitigating any potential damage by taking commercially reasonable market

action as may be necessary upon discovery or being notified of such alleged

error to mitigate potential damage. If a Party fails to mitigate such damage

upon discovery or being notified of the alleged error, any additional and/or

future losses and expenses incurred from the time of discovery or being notified

of the alleged error related to the alleged error shall be for the account and risk

of such Party.

RULE 540 Transaction Enforceability

(a) A transaction entered into on or pursuant to the Rules of Tradition SEF shall not

be void, voidable, subject to rescission, otherwise invalidated, or rendered

unenforceable as a result of a violation by Tradition SEF of the provisions of

Section 5h of the Act or Part 37 of CFTC Regulations.

(b) A Swap shall not be void or voidable due to any Commission proceeding to alter

or supplement a rule, term, or condition under Section 8a(7) of the Act or to

declare an emergency under Section 8a(9) of the Act.

(c) A Swap shall not be void or voidable due to any proceeding the effect of which is

to: (i) alter or supplement a specific term or condition or trading rule or procedure;

or (ii) require Tradition SEF to adopt a specific term or condition, trading rule or

procedure, or to take or refrain from taking a specific action.

RULE 541 Counterparty Anonymity

(a) Pre-trade anonymity: All trades executed directly on Tradition SEF via a Tradition

SEF Platform or via SEF Execution Specialists authorized to manage Orders on

behalf of Participants or Customers shall be pre-trade anonymous.

(b) Post-Trade name give-up:

(1) Directly executed MAT Transactions:

Exchange of Counterparty information shall take place immediately upon

execution, subject to the Rules set forth in any applicable Platform

Supplement.

(2) Directly executed Cleared / non-MAT Transactions:

Exchange of Counterparty information shall take place immediately upon

execution, and only to the extent that counterparty information is required

to perform a transaction affirmation process.

(3) Directly executed non-MAT Transactions:

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Exchange of Counterparty information shall take place immediately upon

the matching of counterparty orders for the purposes of the “name” or

“credit” check to ensure execution certainty prior to the execution of a

Transaction.

(4) Pre-Arranged Transactions; Pre-Arranged Block Transactions:

Exchange of Counterparty identity may take place at the time of the

consummation of the economic terms of the pre-arranged Transaction.

This exchange of counterparty identity may occur within a Broker Firm

Participant, or between two or more consenting counterparties prior to

introduction of the Transaction to the SEF for execution.

RULE 542 Risk controls for trading

Tradition SEF shall establish and maintain risk control mechanisms pursuant to CFTC Regulation

37.405 to prevent and reduce the potential risk of market disruptions, including, but not limited to,

market restrictions that pause or halt trading under market conditions prescribed by the swap

execution facility. Risk controls specific to each Platform will be described in the respective

Platform Supplement.

RULE 543 Publication of market data on swaps and options thereon: trading volume

and prices, and submission of transaction data to the CFTC

Tradition SEF shall publish on its website, www.traditionsef.com, pursuant to CFTC Regulation

16.01(e) no later than the Business Day following the day to which the information pertains, and

submit to the CFTC pursuant to CFTC Regulation 16.01(d), daily market data for Swaps and

options thereon. Such data shall be included for each product traded on Tradition SEF each day.

The information published on the SEF website and submitted to the CFTC shall be the data points

prescribed in CFTC Regulation 16.01(a)(2)(i) through (vi), as applicable to Swaps.

RULE 544 Affirmations of Cleared Swaps

(a) The parties to a Cleared Swap transaction shall affirm and release such transactions

in the relevant SEF or third-party affirmation platform as soon as technologically

practicable, but in no event later than ten (10) minutes after the execution of such

Cleared Swap.

(b) Broker Firm Participants that enter Orders, or provide Direct Customer Access, or

execute Cleared Swap transactions on Tradition SEF on behalf of Customers, or other

Participants or their Customers shall ensure that the counterparties to such Cleared

Swap transactions affirm and release such transactions in the relevant SEF or

third-party affirmation platform as soon as technologically practicable, but in no event

later than ten (10) minutes after the execution of such Cleared Swaps.

(c) Failure by a party or Broker Firm Participant to comply with (a) or (b) above, as

applicable, shall be a violation of Rule 544; provided that:

(1) in the case of non-Broker Firm Participants, such failure shall be a violation only

by the party that fails to affirm the Cleared Swap in accordance with Section (a)

of this Rule; and

(2) no such failure shall be a violation where the failure was substantially the result

of, as determined in the SEF’s sole discretion, any errors or delays caused by

the SEF or any third-party market infrastructure provider.

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CHAPTER 6 DISCIPLINARY RULES

RULE 601 General

(a) All Participants, Customers, Authorized Traders, Authorized Brokers, Authorized

Agents, Supervised Persons and other Persons, including, but not limited to Clearing

Firms and FCMs, within Tradition SEF’s jurisdiction are subject to this Chapter 6 if they

are alleged to have violated, to have aided and abetted a violation, to be violating, or to

be about to violate, any Rule of Tradition SEF or any provision of Applicable Law for

which Tradition SEF possesses disciplinary jurisdiction.

(b) Tradition SEF, through the Market Regulation Department and the Disciplinary Panel,

will conduct inquiries, investigations, disciplinary proceedings and appeals from

disciplinary proceedings, summary impositions of fines, summary suspensions or other

summary actions in accordance with this Chapter 6.

(c) No SEF Official, Director, or Officer will interfere with or attempt to influence the

process or resolution of any inquiry, investigation, disciplinary proceeding, appeal from

a disciplinary proceeding, summary imposition of fines, summary suspension or other

summary action (collectively “Disciplinary Action”), except to the extent provided under

the Rules with respect to a proceeding in which the Director is a member of the

relevant Appeal Panel.

(d) Any respondent may be represented by counsel during any Disciplinary Action

pursuant to this Chapter 6.

(e) Participant Liability – Individual and Joint Liability/Controlling Person Liability.

(1) Tradition SEF may hold a Participant liable for, and impose sanctions against

such Participant, for such Participant’s own acts and omissions that constitute a

violation as well as for the acts and omissions of each (A) Authorized Trader or

Supervised Person of such Participant, (B) Customer of such Participant, and

such Customer’s Authorized Traders, (C) other Person using a User ID of such

Participant, (D) in the case of a Participant that is a Broker Firm Participant, the

Authorized Brokers of such Broker Firm Participant and its Customers and

their Authorized Traders or Authorized Agents, or (E) other agent or

representative of such Participant, in each case, that constitute a violation as if

such violation were that of the Participant.

(2) Tradition SEF may hold a Customer liable for, and impose sanctions against

such Customer, for such Customer’s own acts and omissions that constitute a

violation as well as for the acts and omissions of each (A) Authorized Trader of

such Customer, (B) other Person using a User ID of such Customer, or (C)

other agent or representative of such Customer that is controlled by such

Customer, in each case, that constitute a violation as if such violation were that

of the Customer.

(f) Ex Parte Communications.

(1) A Person subject to a disciplinary proceeding or an appeal from a disciplinary

proceeding (and any counsel or representative of such Person) and the Market

Regulation Department (and any counsel or representative of the Market

Regulation Department) shall not knowingly make or cause to be made an ex

parte communication relevant to the merits of a disciplinary proceeding or an

appeal from a disciplinary proceeding to any member of the Disciplinary Panel

or the Appeal Panel hearing such proceeding.

(2) Members of a Disciplinary Panel or Appeal Panel shall not knowingly make or

cause to be made an ex parte communication relevant to the merits of a

disciplinary proceeding or an appeal from a disciplinary proceeding to any

Person subject to such proceeding (and any counsel or representative of such

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Person) and the Market Regulation Department (and any counsel or

representative of the Market Regulation Department).

(3) Any Person who receives, makes or learns of any communication that is

prohibited by this rule shall promptly give notice of such communication and

any response thereto to the Market Regulation Department and all parties to

the proceeding to which the communication relates.

(4) A Person shall not be deemed to have violated this rule if the Person refuses

an attempted communication concerning the merits of a proceeding as soon as

it becomes apparent the communication concerns the merits.

RULE 602 Inquiries and Investigation

(a) The Market Regulation Department may investigate any matter within Tradition SEF’s

jurisdiction. The Market Regulation Department will commence an investigation upon

the receipt of a request from Commission staff or upon the discovery or receipt of

information by Tradition SEF that, in the judgment of the Market Regulation

Department indicates a possible basis for finding that a violation has occurred or will

occur. The Market Regulation Department will determine the nature and scope of its

inquiries and investigations in its sole discretion and will function independently of any

commercial interests of Tradition SEF. If a Market Regulation Department

investigation indicates a reasonable basis for violation of a SEF Rule beyond the

scope of summary action, the Market Regulation Department will make a

recommendation to the Chief Compliance Officer that such matter be referred to a

Hearing Panel.

(b) The Market Regulation Department has the authority to:

(1) initiate and conduct inquiries and investigations;

(2) prepare investigative reports and make recommendations concerning initiating

disciplinary proceedings;

(3) prosecute alleged violations within Tradition SEF’s disciplinary jurisdiction; and,

(4) represent Tradition SEF on appeal from any disciplinary proceeding, summary

imposition of fines, summary suspension or other summary action.

(c) Each Person subject to the jurisdiction of Tradition SEF:

(1) is obligated to appear and testify and respond in writing to interrogatories within

the time period required by the Market Regulation Department in connection

with:

(i) any Tradition SEF Rule;

(ii) any inquiry or investigation; or

(iii) any preparation by and presentation during a Disciplinary Action;

(2) is obligated to produce books, records, papers, documents or other tangible

evidence in its, his or her possession, custody or control within the time period

required by the Market Regulation Department in connection with:

(i) any Tradition SEF Rule;

(ii) any inquiry or investigation; or

(iii) any preparation by and presentation during a Disciplinary Action; and

(3) may not impede or delay any Disciplinary Action.

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RULE 603 Reports of Investigations

(a) The Market Regulation Department will maintain a log of all investigations and their

disposition. The Market Regulation Department will prepare a written report of each

investigation, regardless of whether the evidence gathered during any inquiry or

investigation forms a reasonable basis to believe that a violation within Tradition SEF’s

jurisdiction has occurred or is about to occur or whether the evidence gathered results

in closing the matter without further action or through summary action.

(b) Any written report of investigation (“Investigative Report”) will include the reasons for

initiating the investigation (including a summary of the complaint, if any), all relevant

facts and evidence gathered, Market Regulation Department staff’s analysis and

conclusions, the Person’s disciplinary history at Tradition SEF, and the

recommendation of the Market Regulation Department. For each potential respondent,

the Market Regulation Department will recommend either:

(1) closing the investigation without further action;

(2) settlement;

(3) summary action;

(4) the preparation and service of a notice of charges for instituting a disciplinary

proceeding; or,

(5) resolving the investigation through an informal disposition, including the

issuance of a warning letter. An informal disposition (including the issuance of a

warning letter) will not constitute a finding of a violation or a sanction, however,

the investigative report must include a copy of any warning letter and no more

than one warning letter for the same potential violation may be issued to the

same Person during a rolling 12-month period.

(c) The Investigative Report will be provided to the Chief Compliance Officer for a

determination as to whether the Investigative Report is complete.

RULE 604 Opportunity to Respond

(a) After completing its investigation report, the Market Regulation Department may, upon

approval of the Chief Compliance Officer, notify each potential respondent that the

Market Regulation Department has recommended formal disciplinary charges against

the potential respondent.

(b) The Market Regulation Department may allow a potential respondent to propose a

settlement of the matter or to submit a written statement explaining why a disciplinary

proceeding should not be instituted or one or more of the potential charges should not

be brought. The potential respondent shall submit such written statement within the

time limit established by the Market Regulation Department.

RULE 605 Review of Investigative Reports

(a) Review of Investigative Reports by the Chief Compliance Officer.

(1) Within 30 days of the receipt of a completed Investigative Report, the Chief

Compliance Officer will review the completed Investigation Report to determine

whether a reasonable basis exists to believe that a violation within Tradition

SEF’s jurisdiction has occurred or is about to occur.

(2) If the Chief Compliance Officer determines that additional investigation or

evidence is needed to decide whether a reasonable basis exists to believe that

a violation within Tradition SEF’s jurisdiction has occurred or is about to occur,

the Chief Compliance Officer will direct the Market Regulation Department to

conduct further investigation.

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(3) Upon receiving the completed Investigative Report or after receiving additional

information upon the completion of an investigation, the Chief Compliance

Officer will determine for each potential respondent whether to authorize:

(i) the informal disposition of the investigation (by issuing a warning letter or

otherwise) because disciplinary proceedings are unwarranted in which

case the Chief Compliance Officer shall provide a written explanation to

the Regulatory Services Provider; or

(ii) the closing of the investigation without any action because no reasonable

basis exists to believe that a violation within Tradition SEF’s jurisdiction

has occurred or is about to occur in which case the Chief Compliance

Officer shall provide a written explanation to the Regulatory Services

Provider; or,

(iii) the commencement of disciplinary proceedings because a reasonable

basis exists to believe that a violation within Tradition SEF’s jurisdiction

has occurred or is about to occur and direct that the person or entity

alleged to have committed the violation be served with a notice of

charges and proceed in accordance with the rules of Chapter 6.

RULE 606 Notice of Charges

(a) If the Chief Compliance Officer authorizes disciplinary proceedings pursuant to Rule

605(a)(3)(iii), the Market Regulation Department will prepare, and serve in accordance

with Rule 608, a notice of charges.

(b) A notice of charges will:

(1) state the acts, practices or conduct that the respondent is alleged to have

engaged in;

(2) state the Rule or provision of Applicable Law alleged to have been violated or

about to be violated;

(3) state the proposed sanctions;

(4) advise the respondent of its right to a hearing;

(5) advise the respondent that he has the right to be represented by legal counsel

or any other representative of its choosing in all succeeding stages of the

disciplinary process;

(6) state the period of time within which the respondent can request a hearing on

the notice of charges, which will not be less than 30 days after service of the

notice of charges;

(7) advise the respondent that any failure to request a hearing within the period

stated, except for good cause, will be deemed to constitute a waiver of the right

to a hearing; and

(8) advise the respondent that any allegation in the notice of charges that is not

expressly denied will be deemed to be admitted.

RULE 607 Answer to Notice of Charges

(a) If the respondent determines to answer a notice of charges, the respondent must file

answers within 30 days after being served with such notice, or within such other time

period determined by the Chief Compliance Officer.

(b) To answer a notice of charges, the respondent must in writing:

(1) specify the allegations that the respondent denies or admits;

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(2) specify the allegations that the respondent does not have sufficient information

to either deny or admit;

(3) specify any specific facts that contradict the notice of charges;

(4) specify any affirmative defenses to the notice of charges; and

(5) sign and serve the answer on the Chief Compliance Officer.

(c) Any failure by the respondent to timely serve an answer to a notice of charges will be

deemed to be an admission to the allegations in such notice. Any failure by the

respondent to answer one or more allegations in a notice of charges will be deemed to

be an admission of that allegation or those allegations. Any allegation in a notice of

charges that the respondent fails to expressly deny will be deemed to be admitted. A

general denial by the respondent, without more, will not satisfy the requirements of

paragraph (b) above.

RULE 608 Service of Notice of Charges

(a) Any notice of charges or other documents to be served pursuant to this Chapter 6 may

be served upon the respondent and service shall be deemed complete either

personally or by leaving the same at his or her place of business; by deposit in the

United States mail, postage prepaid, via registered or certified mail addressed to the

respondent at the address as it appears on the books and records of Tradition SEF.

(b) Any notice of charges or other documents contemplated to be served pursuant to this

Chapter 6 may be served upon the respondent and service shall be deemed complete

via electronic mail to the electronic mail address as it appears on the books and

records of Tradition SEF.

RULE 609 Settlements

(a) A respondent or potential respondent may at any time propose in writing an offer of

settlement related to anticipated or instituted disciplinary proceedings.

(b) Any offer of settlement should contain proposed findings and sanctions and be signed

by the respondent or potential respondent and submitted to the Market Regulation

Department.

(c) A respondent or potential respondent may offer to settle disciplinary proceedings

without admitting or denying the findings contained in the order of the disciplinary

proceedings but must accept the jurisdiction of Tradition SEF over it and over the

subject matter of the proceedings and consent to the entry of the findings and

sanctions imposed.

(d) If a respondent or potential respondent submits an offer of settlement in accordance

with paragraph (a) above, the Market Regulation Department will forward the offer to

the Chief Compliance Officer with a recommendation on whether to accept or reject

the offer. Any preliminary determination by the Chief Compliance Officer to accept the

offer shall be submitted for review by the Disciplinary Panel. If the Disciplinary Panel

agrees, then the Chief Compliance Officer shall conditionally accept an offer of

settlement, and that the settlement will become final upon the expiration of 20 days

after an order of the disciplinary proceedings consistent with the terms of the offer of

settlement is served on the respondent.

(e) If an offer of settlement is accepted by the Disciplinary Panel, the panel accepting the

offer must issue a written decision specifying the rule violations it has reason to believe

were committed, including the basis or reasons for the panel’s conclusions, and any

sanction to be imposed, which must include full customer restitution where customer

harm is demonstrated. If an offer of settlement is accepted without the agreement of

the Market Regulation Department or Chief Compliance Officer, the decision must

adequately support the Hearing Panel’s acceptance of the settlement. If applicable, the

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decision must also include a statement that the respondent has accepted the

sanctions imposed without either admitting or denying the rule violations.

(f) If an offer of settlement is accepted and the related order of disciplinary proceedings

becomes final, the respondent’s submission of the offer will be deemed to constitute a

waiver of the right to notice, opportunity for a hearing and review and appeal under the

Rules.

(g) If the offer of settlement of a respondent or potential respondent is not accepted by

agreement between the Chief Compliance Officer and the Disciplinary Panel, fails to

become final or is withdrawn by the respondent or potential respondent, the matter will

proceed as if the offer had not been made and the offer and all documents relating to it

will not become part of the record. Neither a respondent or potential respondent nor

the Market Regulation Department may use an unaccepted offer of settlement as an

admission or in any other manner at a hearing of, or appeal from, disciplinary

proceedings.

RULE 610 Disciplinary Panel

(a) The Disciplinary Panel shall function as an appointed pool of individuals from which to

select Hearing Panels and Appeal Panels.

(b) The Board shall appoint individuals to the Disciplinary Panel at the recommendation of

the Chief Compliance Officer to serve for a term of one-year, subject to reappointment

by the Board, as participants on the Disciplinary Panel. In appointing individuals to the

Disciplinary Panel, the Board must preclude any group or class of participants from

dominating or exercising disproportionate influence on the Disciplinary Panel. The

term of an individual that has been selected as a member of a Disciplinary Panel will

not expire until the related proceedings are completed.

(c) The Hearing Panel shall conduct hearings in connection with any disciplinary

proceedings (except for summary impositions of fines pursuant to Rule 617), to make

findings, render decisions, and impose sanctions pursuant to this Chapter 6.

(d) The chair of any Hearing Panel shall be a Public Individual.

(e) The Chief Compliance Officer shall select a Hearing Panel prior to the commencement

of each disciplinary matter by selecting at least one Public Individual and the remaining

individuals from the Disciplinary Panel so that any group or class of industry

participants is precluded from dominating or exercising disproportionate influence on

the Hearing Panel being formed. Any such Tradition SEF panel shall include sufficient

different membership interest so as to ensure fairness and to prevent special

treatment or preference for any Person.

(f) If an individual selected is an Interested Person or if a member of the Hearing Panel

later becomes an Interested Person, a replacement for such individual shall be

selected by the Chief Compliance Officer.

(g) Within 10 days of being notified of the appointment of the Hearing Panel, a respondent

may seek to disqualify any individual named to the Hearing Panel for the reasons

identified in Rule 209 or for any other reasonable grounds, including that such

individual has a financial interest in the matter, by serving written notice on the Chief

Compliance Officer. By not timely filing a request for disqualification, the respondent

will be deemed to have waived any objection to the composition of a Hearing Panel.

The Chief Compliance Officer of Tradition SEF will decide the merits of any request for

disqualification within his or her sole discretion. Any such decision will be final and not

subject to appeal.

(h) No person shall serve on a Hearing Panel unless that person has agreed in writing that

he or she will not publish, divulge, or make known in any manner, any facts or

information regarding the business of any person or any other information which may

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come to his attention in his official capacity as a member of the Hearing Panel, except

when reporting to the Board or to a committee concerned with such information or to

the Market Regulation Department, when requested by the CFTC or other Government

Agency or when compelled to testify in any judicial or administrative proceeding.

(i) All information, records, materials and documents provided to the Disciplinary Panel

and all deliberations, testimony, information, records, materials and documents related

thereto shall be treated as non-public and confidential and shall not be disclosed,

except as necessary to further a SEF investigation or as required by law.

RULE 611 Convening Hearings of Disciplinary Proceedings

(a) A hearing will be conducted privately and confidentially. Notwithstanding the

confidentiality of hearings, the Hearing Panel may appoint an expert to attend any

hearing and assist in deliberations if such expert agrees to be subject to an

appropriate confidentiality agreement.

(b) After reasonable notice to each respondent, the Hearing Panel will promptly convene a

hearing to conduct the disciplinary proceedings with respect to such respondent.

Parties to a disciplinary proceeding include each respondent and the Market

Regulation Department.

(c) The chair of the Hearing Panel may continue, adjourn or otherwise conduct the

hearing, as he or she may deem appropriate. The chair of the Hearing Panel will

determine all procedural and evidentiary matters, including the admissibility and

relevance of any evidence proffered. In determining procedural and evidentiary

matters, the chair of the Hearing Panel will not be bound by any evidentiary or

procedural rules or law. Once admitted during the hearing, the Hearing Panel may

consider, and attach the weight it believes appropriate to, evidence or other materials.

The general counsel of Tradition SEF, or its designee, will provide guidance to the

chair of the Hearing Panel on the conduct of the hearing.

(d) Except for procedural and evidentiary matters decided by the chair of the Hearing

Panel pursuant to paragraph (c) above and Rule 612, unless each respondent

otherwise consents, the entire Hearing Panel must be present during the entire

hearing and any related deliberations.

RULE 612 Respondent Review of Evidence

(a) Prior to the commencement of a hearing, each respondent will be given the

opportunity to review all books, records, documents, papers, transcripts of testimony

and other tangible evidence in the possession or under the control of Tradition SEF

that the Market Regulation Department will use to support the allegations and

proposed sanctions in the notice of charges or which the chair of the Hearing Panel

deems relevant to the disciplinary proceedings. Notwithstanding the foregoing, no

respondent will have the right to review, and Tradition SEF will have no obligation to

disclose, any information protected by attorney-client privilege.

(b) If any books, records, documents, papers, transcripts of testimony, or other tangible

evidence contain information that could adversely affect the competitive position of the

Person providing the information or if such information might compromise other

investigations being conducted by the Market Regulation Department, the Market

Regulation Department may redact, edit or code such information before furnishing it

to the respondent.

(c) Notwithstanding anything in paragraph (b) above to the contrary, the Market

Regulation Department:

(1) will not redact, edit or code competitive or investigative information contained in

documents in a manner that would impair the respondent’s ability to defend

against the allegations or proposed sanctions in the notices of charges, and

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(2) will provide the respondent with access to the information and portions of the

documents that the Market Regulation Department intends to rely on to support

the allegations or proposed sanctions in the notice of charges.

(d) For purposes of this Rule 612, information that could adversely affect competitive

positions include positions in Swaps currently held, trading strategies employed in

establishing or liquidating positions, the identity of any Participant or Authorized Trader

or designated Authorized Agent and the personal finances of the Person providing the

information.

RULE 613 Conducting Hearings of Disciplinary Proceedings

(a) At a hearing conducted in connection with any disciplinary proceedings, the Market

Regulation Department will present its case supporting the allegations and proposed

sanctions in the notice of charges to the Hearing Panel. If a respondent has timely filed

an answer to the notice of charges in accordance with Rule 607, the respondent is

entitled to attend and participate in the hearing.

(b) At a hearing conducted in connection with any disciplinary proceedings, the Hearing

Panel or the Market Regulation Department and each respondent may:

(1) present evidence and facts determined relevant and admissible by the chair of

the Hearing Panel;

(2) call and examine witnesses; and

(3) cross-examine witnesses called by other parties.

(c) If the respondent fails to file an answer, has filed a general denial, or if any or all of the

allegations in the notice of charges are not expressly denied in the respondent’s

answer, the chair of the Hearing Panel may limit evidence concerning any allegations

not expressly denied in determining the sanctions to impose. If a respondent fails to

file an answer but appears at the hearing, the respondent may not participate in the

hearing (by calling or cross-examining witnesses, testifying in defense, presenting

evidence concerning the notice of charges, or otherwise) unless the Hearing Panel

determines that the respondent had a compelling reason for failing to timely file an

answer. If the Hearing Panel determines that the respondent had a compelling reason

for failing to timely file an answer, the Hearing Panel will adjourn the hearing and direct

the respondent to promptly file a written answer in accordance with Rule 607.

(d) Any Person entitled, or required or called upon, to attend a hearing before a Hearing

Panel pursuant to paragraph (b)(2) above will be given reasonable notice, confirmed in

writing, specifying the date, time and place of the hearing, and the caption of the

disciplinary proceedings. All Participants (that are individuals), Authorized Traders,

other Supervised Persons, and any designated Authorized Agents that are called as

witnesses are required to appear at the hearing and, where applicable, produce

evidence. Tradition SEF will make reasonable efforts to secure the presence of all

other Persons called as witnesses whose testimony would be relevant.

(e) If during any disciplinary proceedings the Hearing Panel determines that a reasonable

basis exists to believe that the respondent violated or is about to violate a Rule of

Tradition SEF or a provision of Applicable Law other than the violations alleged in the

notice of charges, the Hearing Panel may consider those apparent violations after

providing the respondent with an opportunity to answer the additional allegations in

accordance with Rule 607. In connection with considering apparent violations pursuant

to this paragraph (e), the Hearing Panel may request that the Market Regulation

Department provide the Hearing Panel with any additional information related to the

violations at issue.

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(f) The Hearing Panel may summarily impose sanctions on any Participant, Authorized

Trader, other Supervised Person, or any designated Authorized Agent that impedes or

delays the progress of a hearing.

(g) Tradition SEF will arrange for any hearing conducted in connection with disciplinary

proceedings to be recorded verbatim, or substantially verbatim, in a manner capable of

accurate transcription. If the respondent requests a copy of all or portions of the

recording of a hearing, the chair of the Hearing Panel may within his or her sole

discretion require the respondent to pay the costs for transcribing the recording of the

hearing.

(h) No interlocutory appeals of rulings of any Hearing Panel or chair of the Hearing Panel

are permitted.

(i) If the respondent has requested a hearing, a copy of the hearing shall be made, at the

respondent’s expense, and shall become a part of the record of the proceeding. The

record shall not be required to be transcribed unless:

(1) The transcript is requested by Commission staff or the respondent;

(2) The decision is appealed pursuant to the rules of Tradition SEF; or

(3) The decision is reviewed by the Commission pursuant to Section 8c of the Act

or part 9 of the CFTC Regulations.

RULE 614 Decision of Hearing Panel

(a) As promptly as reasonable following a hearing, the Hearing Panel will issue a written

order rendering its decision based on the weight of the evidence contained in the

record of the disciplinary proceedings. A decision by a majority of the Hearing Panel

will constitute the decision of the Hearing Panel.

(b) Tradition SEF will serve a copy of the order of the disciplinary proceedings on the

respondent and the Market Regulation Department. The order will include:

(1) the notice of charges or summary of the allegations;

(2) the answer, if any, or a summary of the answer;

(3) a brief summary of the evidence introduced at the hearing or, where

appropriate, incorporation by reference of the Investigation Report;

(4) findings of fact and conclusions concerning each allegation, including a

complete explanation of the evidentiary and other basis for such findings and

conclusions with respect to each allegation;

(5) each specific Rule of Tradition SEF and provision of Applicable Law that the

respondent is found to have violated;

(6) the imposition of sanctions, if any, including the basis for such sanctions and

the effective date of each sanction; and,

(7) notice of the respondent’s right to appeal pursuant to Rule 616.

(c) Unless a timely notice of appeal is filed pursuant to Rule 616, the order of the

disciplinary proceedings will become final upon the expiration of 20 days after the

order is served on the respondent and provided to the Market Regulation Department.

RULE 615 Sanctions

(a) After notice and opportunity for hearing in accordance with the Rules, Tradition SEF

will impose sanctions if any Participant, Authorized Trader, other Supervised Person,

Authorized Agent, Customer, or other Person using any of the Participant’s User IDs is

found to have violated or to have attempted to violate a Rule of Tradition SEF or

provision of Applicable Law for which Tradition SEF possesses disciplinary jurisdiction.

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All sanctions must take into account the respondent’s disciplinary history. In the event

of demonstrated customer harm, any sanction must also include full customer

restitution. Tradition SEF may impose one or more of the following sanctions or

remedies, commensurate with the violation committed:

(1) censure;

(2) limitation on Trading Privileges, ability to otherwise access the Platform, and/or

other activities, functions or operations;

(3) suspension of Trading Privileges and/or ability to otherwise access the

Platform;

(4) fine (subject to paragraph (b) below);

(5) restitution or disgorgement;

(6) termination of Trading Privileges and/or ability to otherwise access the

Platform; or

(7) any other sanction or remedy deemed to be appropriate.

(b) Tradition SEF may impose a fine of up to $50,000 for each violation of a Rule of

Tradition SEF or a provision of Applicable Law. If a fine or other amount is not paid

within 30 days of the date that it becomes payable, then interest will accrue on the sum

from the date that it became payable at the quoted prime rate plus three percent.

Tradition SEF has sole discretion to select the bank on whose quotations to base the

prime rate. Participant will be responsible for paying any fine or other amount imposed

on, but not paid by, any of its Authorized Traders, Supervised Persons or Authorized

Agents.

RULE 616 Appeal from Hearing Panel Decision, Summary Impositions of Fines and

Other Summary Actions

(a) A respondent found by the Hearing Panel to have violated (or, in the case of a

Participant, whose Authorized Trader, Supervised Person, other Person using its User

ID, or Authorized Agent was found to have violated) a Rule of Tradition SEF or a

provision of Applicable Law or who is subject to any summary fine imposed pursuant

to Rule 617 or any summary action imposed pursuant to Rule 618 may appeal the

decision within 20 days of receiving the order of the disciplinary proceedings or the

notice of summary action, as the case may be, by filing a notice of appeal with the

Chief Compliance Officer. While an appeal is pending, the effect of the order of

disciplinary proceedings or the summary action (including any sanctions, remedies or

costs imposed thereby) shall be suspended, except as provided in Rule 601(f) with

respect to any denial or limit on Trading Privileges or ability to otherwise access the

Platform.

(b) The notice of appeal must state in writing the grounds for appeal, including the findings

of fact, conclusions or sanctions to which the respondent objects. A respondent may

appeal the order of disciplinary proceedings or any summary decision on the grounds

that:

(1) the order or decision was arbitrary, capricious, an abuse of discretion, or not in

accordance with the Rules;

(2) the order or decision exceeded the authority or jurisdiction of the Hearing

Panel, the Chief Compliance Officer or Tradition SEF;

(3) the order or decision failed to observe required procedures;

(4) the order or decision was unsupported by the facts or evidence; or

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(5) the imposed sanctions, remedies or costs are inappropriate or unsupported by

the record.

(c) The Chief Compliance Officer will forward copies of any notice of appeal received by it

to all parties to the disciplinary proceeding or summary action, as the case may be,

except the appellant. On or before the 20th day after filing a notice of appeal, the

appellant must file with the Chief Compliance Officer and serve on the Market

Regulation Department a brief supporting the notice of appeal and documents

supporting the brief. On or before the 20th day after the date on which the appellant

serves supporting brief, the appellee must file and serve its brief in opposition with the

Market Regulation Department. On or before the 10th day after the date on which the

appellee serves its brief in opposition, the appellant must file and serve a brief in reply

with the Market Regulation Department.

(d) In connection with any appeal, the Market Regulation Department will furnish to the

Chief Compliance Officer and to the respondent/appellant a transcript of the hearing,

any exhibits introduced at the hearing, the notice of appeal and briefs filed to support

and oppose the appeal.

(e) Within 30 days after the last submission filed pursuant to paragraph (c) above, the

Chief Compliance Officer will select an Appeal Panel from the Disciplinary Panel to

consider and determine the appeal. The term of an individual that has been selected

as a member of an Appeal Panel will not expire until the related proceedings are

completed.

(f) The chair of the Appeal Panel shall be a Public Individual.

(g) Within 10 days of being notified of the appointment of the Appeal Panel, an appellant

may seek to disqualify any individual named to the Appeal Panel for the reasons

identified in Rule 209 or for any other reasonable grounds, by serving written notice on

the Chief Compliance Officer. By not timely filing a request for disqualification, the

appellant will be deemed to have waived any objection to the composition of an Appeal

Panel. The Chief Compliance Officer of Tradition SEF will decide the merits of any

request for disqualification within his or her sole discretion.

(h) The Appeal Panel will hold a hearing to allow parties to present oral arguments. Any

hearing will be conducted privately and confidentially. Notwithstanding the

confidentiality of hearings, the Appeal Panel may appoint an expert to attend any

hearing and assist in the deliberations if such individuals agree to be subject to

appropriate confidentiality agreements. In determining procedural and evidentiary

matters, the Appeal Panel will not be bound by evidentiary or procedural rules or law.

(i) The Appeal Panel will only consider on appeal the record before the Hearing Panel or,

in the case of a summary action, the record considered by the Chief Compliance

Officer, the notice of appeal, the briefs filed in support and opposition of the appeal,

and any oral arguments of the parties. The Appeal Panel may only consider new

evidence when the Appeal Panel determines that good cause exists as to why the

evidence was not introduced during the disciplinary proceeding or when imposing the

summary action.

(j) After completing its review, the Appeal Panel may affirm, modify or reverse any order

of the disciplinary proceedings or summary action under appeal, in whole or in part,

including increasing, decreasing or eliminating any sanction or remedy imposed,

imposing any other sanction or remedy authorized by the Rules, remanding the matter

to the same or a different Hearing Panel for further disciplinary proceedings, or

ordering a new hearing.

(k) As promptly as reasonably possible following its review, the Appeal Panel will issue a

written decision based on the weight of the evidence before the Appeal Panel. The

decision of the Appeal Panel will include a statement of findings of fact and

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conclusions for each finding, sanction, remedy and cost reviewed on appeal, including

each specific Rule of Tradition SEF and provision of Applicable Law that the

respondent is found to have violated, if any, and the imposition of sanctions, remedies

and costs, if any, and the effective date of each sanction, remedy or cost.

(l) The Appeal Panel’s written order will be the final action of Tradition SEF and will not be

subject to appeal within Tradition SEF.

RULE 617 Summary Imposition of Fines

(a) The Chief Compliance Officer may summarily impose a fine against a Participant (on

behalf of itself or any of its Authorized Traders, other Supervised Persons, other

Persons using any of its User IDs, or Authorized Agents) or Authorized Trader for

failing:

(1) to make timely payments of fees, cost, charges or fines to Tradition SEF;

(2) to make timely and accurate submissions to Tradition SEF of notices, reports or

other information required by the Rules; and

(3) to keep any books and records required by the Rules.

(b) The Market Regulation Department, acting on behalf of the Chief Compliance Officer,

will give notice of any fine imposed pursuant to this Rule 617 to each Participant,

Authorized Trader or Authorized Agent subject thereto. The notice will specify:

(1) the violations of the Rules for which the fine is being imposed;

(2) the date of the violation for which the fine is being imposed; and,

(3) the amount of the fine.

Within 20 days of serving the notice of fine, the Participant, Authorized Trader or

Authorized Agent, as the case may be, must either pay or cause the payment of the

fine or file notice of an appeal pursuant to Rule 616. Unless timely notice of appeal is

filed pursuant to Rule 616, the fine will become final upon the expiration of 20 days

after the notice of fine is served on the Participant, Authorized Trader or Authorized

Agent, as the case may be.

(c) Tradition SEF will set the amount of any fines imposed pursuant to this Rule 617, with

the maximum fine for each violation not to exceed $5,000. Summary imposition of

fines pursuant to this Rule 617 will not preclude Tradition SEF from bringing any other

action against the Participant (or any of its Authorized Traders, other Supervised

Persons or Authorized Agent) or Authorized Trader, as the case may be.

RULE 618 Summary Suspensions and Other Summary Actions

(a) Notwithstanding anything in the Rules to the contrary, the Chief Compliance Officer

may, after consultation with the Regulatory Oversight Committee, if practicable,

summarily suspend, revoke, limit, condition, restrict or qualify a Participant’s Trading

Privileges and/or ability to otherwise access the Platform, and may take other

summary action against any Participant or any of its Authorized Traders, Supervised

Persons, or Authorized Agents in accordance with the Rules; provided, however, that

the Chief Compliance Officer must reasonably believe that the business, conduct or

activities of the Participant or any of its Authorized Traders, Supervised Persons or

Authorized Agents in question is not in the best interests of Tradition SEF or the

marketplace, including based on any of the following:

(1) statutory disqualification from registration as provided in Section 8a(2) or (3) of

the Act;

(2) nonpayment of fees, costs, charges, fines or arbitration awards; or

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(3) the reasonable belief that immediate action is necessary to protect the public or

the best interests of Tradition SEF.

(b) Whenever practicable, Tradition SEF shall provide prior written notice to the party

against whom any action in accordance with paragraph (a) shall be taken. If prior

notice is not practicable, Tradition SEF will give notice at the earliest possible

opportunity to the respondent against whom the action is brought.

(c) Unless timely notice of appeal is filed pursuant to Rule 616, the summary action will

become final upon the expiration of 20 days after the notice of action is served on the

respondent.

(d) At the request of Tradition SEF, a respondent against whom a summary action is

brought pursuant to this Rule 618 must provide books and records over which the

respondent has access or control and must furnish information to, or appear or testify

before, Tradition SEF in connection with the enforcement of any Rule of Tradition SEF.

(e) A respondent whose Trading Privileges and/or ability to otherwise access the Platform

are suspended, revoked, limited, conditioned, restricted or qualified pursuant to this

Rule 618 may apply for reinstatement by filing with the Market Regulation Department

a written request stating the applicant’s reasons for seeking reinstatement. Tradition

SEF will not consider a respondent’s request for reinstatement if the respondent (i)

owes any fines, fees, charges or costs to Tradition SEF, (ii) continues to fail to appear

at disciplinary proceedings without good cause or (iii) continues to impede the

progress of disciplinary proceedings.

(f) Within a reasonable period after the filing of a request for reinstatement, the Appeal

Panel will conduct a hearing to consider the request. At the hearing for reinstatement,

the respondent will present its, his or her case supporting the reinstatement and the

Market Regulation Department, acting on behalf of the Chief Compliance Officer may,

in its discretion, present its case opposing supporting the reinstatement and each may

present evidence and facts and call, examine and cross-examine witnesses. At the

hearing for reinstatement, Tradition SEF may require any Participant, Authorized

Trader, other Supervised Person, or Authorized Agent to appear as witnesses and

produce evidence if the Appeal Panel determines that the evidence is relevant.

(g) As promptly as reasonably possible after a reinstatement hearing, the Appeal Panel

will issue an order reinstating, denying the reinstatement, or placing conditions on the

reinstatement of the Trading Privileges and/or ability to otherwise access the Platform

of the respondent. The order will include a brief summary of the evidence introduced at

the reinstatement hearing; and, if applicable, findings of fact and conclusions not

contained in the notice of summary action issued pursuant to Rule 618(b) above. The

Appeal Panel’s order may not be appealed.

RULE 619 Rights and Responsibilities after Suspension or Termination

(a) When a Participant’s or Authorized Trader’s Trading Privileges and/or ability to

otherwise access the Platform are suspended for a period of 12 months or less, none

of its rights (including the right to hold oneself out to the public as a Participant or

Authorized Trader, enter Orders into the Platform and receive Participant rates for

fees, costs, and charges and deposit margin at Participant levels) will apply during the

period of the suspension, except for the right of the Participant or Authorized Trader in

question to assert claims against others as provided in the Rules. Any such

suspension will not affect the rights of creditors under the Rules or relieve the

Participant or Authorized Trader in question of its, his or her obligations under the

Rules to perform any Swaps entered into before the suspension, or for any SEF fees,

costs, or charges incurred during the suspension. Tradition SEF may discipline a

suspended Participant or Authorized Trader under this Chapter 6 for any violation of a

Rule of Tradition SEF or provision of Applicable Law committed by the Participant or

Authorized Trader before, during or after the suspension.

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(b) When a Participant’s or Authorized Trader’s Trading Privileges and/or ability to

otherwise access the Platform are terminated, all of its related rights will terminate,

except for the right of the Participant or Authorized Trader in question to assert claims

against others, as provided in the Rules. Any such termination will not affect the rights

of creditors under the Rules. A terminated Participant or Authorized Trader may only

seek to be reinstated by applying for Trading Privileges pursuant to Rule 302.

(c) Tradition SEF will not consider the application of a terminated Participant or Authorized

Trader if such Participant or Authorized Trader, as the case may be, continues to fail to

appear at disciplinary proceedings without good cause or continues to impede the

progress of disciplinary proceedings.

(d) A suspended or terminated Participant or Authorized Trader remains subject to the

Rules and the jurisdiction of Tradition SEF for acts and omissions prior to the

suspension of termination, and must cooperate in any inquiry, investigation,

disciplinary proceeding, appeal of disciplinary proceedings, summary suspension or

other summary action as if the suspended or terminated Participant or Authorized

Trader still had Trading Privileges or ability to otherwise access the Platform.

(e) In the event of the suspension or revocation of a Participant’s Trading Privileges

and/or ability to otherwise access the Platform, Tradition SEF shall seek to facilitate

the transfer of any Customer accounts held by such Participant to other Participants

with Trading Privileges and/or ability to otherwise access the Platform.

RULE 620 Notice to the Respondent, the Regulatory Services Provider and the Public

Tradition SEF will provide written notice of disciplinary proceedings to the parties and the

Regulatory Services Provider consistent with applicable CFTC Regulations. Whenever Tradition

SEF suspends, expels, fines or otherwise disciplines, or denies any Person access to Tradition

SEF, Tradition SEF will make the public disclosures required by CFTC Regulations.

(a) Notice of Disciplinary Action or Access Denial Action

(1) Whenever a Tradition SEF decision pursuant to which a disciplinary action or

access denial action is to be imposed has become final, Traditions SEF shall,

within thirty (30) days thereafter, provide written notice of such action to the

Person against whom the action was taken and to the Commission via NFA’s

BASIC database. Such notice shall include, but not be limited to, the following

information:

(i) The name of the Person against whom the disciplinary action or access

denial action was taken;

(ii) A statement of the reasons for the disciplinary action or access denial

action, together with a listing of any Rules which the Person who was the

subject of the disciplinary action or access denial action is charged with

having violated or which otherwise serve as the basis of Tradition SEF’s

action;

(iii) A statement of the conclusions and findings made by Tradition SEF with

regard to each Rule violation charged or, in the event of settlement, a

statement specifying those rule violations which Tradition SEF has

reason to believe were committed;

(iv) The terms of the disciplinary action or access denial action;

(v) The date on which the action was taken and the date Tradition SEF

intends to make the disciplinary or access denial action effective; and

(vi) A statement informing the party subject to the disciplinary action or

access denial action of the availability of Commission review of Tradition

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SEF’s action pursuant to section 8c of the Act and Part 9 of CFTC

Regulations.

(b) Effective Date of Disciplinary Action or Access Denial Action

(1) Any disciplinary or access denial action taken by Tradition SEF will not become

effective until at least fifteen (15) days after the written notice described in Rule

620(a) is delivered to the Person disciplined or denied access; provided,

however, that Tradition SEF may cause a disciplinary action to become

effective prior to that time in accordance with Rule 618 or if:

(i) Tradition SEF reasonably believes, and so states in its written decision,

that immediate action is necessary to protect the best interests of the

marketplace;

(ii) Tradition SEF determines, and so states in its written decision, that the

actions of a person who is within Tradition SEF's jurisdiction have

impeded the progress of a disciplinary hearing;

(iii) Tradition SEF determines that a Person has violated Tradition SEF’s

rules relating to decorum or attire, or timely submission of accurate

records required for clearing or verifying each day's transactions or other

similar activities; or

(iv) The Person against whom the action is taken has consented to the

penalty to be imposed and to the timing of its effectiveness.

(2) If Tradition SEF determines in accordance with paragraph (b)(1) of this Rule

that a disciplinary action will become effective prior to the expiration of fifteen

(15) days after written notice thereof, it shall notify the Person disciplined in

writing, either personally or other means of written telecommunication to the

Person's last known address, stating the reasons for the determination.

Tradition SEF shall also by means of written telecommunication immediately

notify the Commission (Attention: Contracts Markets Section, Division of Market

Oversight). Where notice is delivered by means of written telecommunication,

the time within which the Person so notified may file a petition for stay pursuant

to CFTC Regulation 9.24(a)(2) will be increased by one day.

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CHAPTER 7

CLEARED SWAPS, UNCLEARED SWAPS AND PACKAGE TRANSACTIONS

RULE 701 Cleared Swaps

Subject to Rule 703, a Participant or Customer shall be eligible to trade Cleared Swaps on the

SEF only if the Participant or Customer (or their respective Affiliate) is a Clearing Firm of the

appropriate Derivatives Clearing Organization where the Cleared Swap is designated for clearing

or has a clearing account with a Clearing Firm who has undertaken to provide a guarantee to the

Derivatives Clearing Organization to clear such Cleared Swap at the Derivatives Clearing

Organization, following the Clearing Firm’s acceptance of such Cleared Swap for clearing, within

the limits set by the Clearing Firm, in each case executed on a Platform or pursuant to the Rules.

A Clearing Firm may not refuse to accept a Cleared Swap for clearing that does not violate the

limits set by the Clearing Firm. Participants and Customers are prohibited from requiring a

Breakage Agreement from any other Participant or Customer as a condition of trading with that

other Participant or Customer, including with respect to Package transactions.

RULE 702 Clearing Services

(a) The clearing services provided by a Derivatives Clearing Organization with respect to

any Cleared Swap, and the rights and obligations of purchasers and sellers under

Cleared Swaps (including rights and obligations in respect of clearing and settlement,

variation payments and performance at maturity), will be governed by the rules of such

Derivatives Clearing Organization.

(b) Tradition SEF shall provide facilities to route each Cleared Swap to the Derivatives

Clearing Organization identified by the parties to such Cleared Swap, but Tradition

SEF shall be under no obligation to ensure that such Cleared Swap is accepted for

clearing.

RULE 703 Cleared Swaps, Rejections and Errors

(a) Cleared Swaps Rejected by a Derivatives Clearing Organization.

(1) If Tradition SEF receives a rejection notice from a Derivatives Clearing

Organization because a because a swap failed to clear due to a breach of a

risk-based limit set by a FCM (including the rejection of a Cleared Swap that is

a component of a Package transaction), then the Cleared Swap shall be void

ab initio and Tradition SEF shall notify the relevant Swap Data Repository that

the Cleared Swap was canceled.

(2) Additionally, and only with respect to a Cleared Swap that is a component of a

Package transaction, if such Cleared Swap is rejected by a Derivatives Clearing

Organization because of the sequencing of submissions to the Derivatives

Clearing Organization of the components of the Package, then the rejected

Cleared Swap component of the Package shall be void ab initio. In such case

a new Cleared Swap component of the Package, with terms and conditions that

match the terms of the original Cleared Swap, other than the time of execution,

may be submitted for clearing without being executed in the Order Book, by

RFQ or as a Block Trade provided:

(i) this procedure may not be used for Cleared Swaps rejected pursuant to

clause (a) above;

(ii) both Clearing Firms agree to submit the new Cleared Swap;

(iii) each Clearing Firm obtains the consent of its Customer, if any to submit

the new Cleared Swap, and such consent must be sought on a

case-by-case basis after the rejection of the original Cleared Swap;

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(iv) neither Clearing Firm may require a Customer to agree in advance to

consent to the submission of a new Cleared Swap;

(v) The new Cleared Swap must be submitted for clearing as quickly as

technologically practicable after receipt by Tradition SEF or the Clearing

Firm of a notice of rejection from clearing, but in any event, no later than

30 minutes (or 60 minutes in the case of the rejection of a Cleared Swap

that is a component of a Package and such Cleared Swap was rejected

because of the sequencing of submissions to the Derivatives Clearing

Organization) from the issuance of the notice of rejection by the

Derivatives Clearing Organization to the Clearing Firms or Tradition SEF;

(vi) Both the original Swap and the new Cleared Swap are subject to

pre-execution credit checks that comply with CFTC Regulation 1.73

and/or CFTC Regulation 23.609 and the CFTC Staff Guidance on Swaps

Straight-Through Processing issued on September 26, 2013 (the “CFTC

Staff Guidance”);

(vii) both the original swap and the new Cleared Swap are processed in

accordance with the time frames set forth in CFTC Regulations 1.74,

23.610, 39.12(b)(7) and the CFTC Staff Guidance;

(viii) Tradition SEF reports the Cleared Swap transaction data to the relevant

SDR as soon as technologically practicable after the original Cleared

Swap is rejected by the Derivatives Clearing Organization, and the

parties to the Cleared Swap provide Tradition SEF with all of the

information necessary for it to report the new Cleared Swap data and the

cancellation of the original Cleared Swap; and

(ix) If the new Swap is also rejected for clearing, it is void ab initio and the

parties may not submit another new Cleared Swap again without

executing such Cleared Swap in the Order Book, by RFQ or as a Block

Trade.

(3) For the avoidance of doubt, a Cleared Swap that is submitted for clearing and

is the subject of a rejection notice from the applicable Derivatives Clearing

Organization or Clearing Firm pursuant to this Rule will nonetheless otherwise

be within the meaning of SEF Activity for purposes of the Rules.

(4) If one or more Cleared Swap components of a Package transaction is rejected

for clearing pursuant to clauses (a) or (b) above and is void ab initio, then the

non-Swap component(s) of such Package shall also be deemed void ab initio.

(b) Errors on Trades Intended to Be Cleared or That Have Been Accepted for Clearing.

(1) In reliance upon CFTC No-Action Letter 17-27, which expires on the effective

date of revised Commission regulations that establish a permanent relief, and

in reliance upon determinations made by Tradition SEF pursuant to Tradition

SEF Error Policies set forth in Rules 538 and 539:

(i) If Tradition SEF receives a rejection notice from a Derivatives Clearing

Organization because a swap intended to be cleared failed to clear due

to an operational or clerical error or omission made by Tradition SEF, one

of the counterparties or an agent of one of the counterparties that causes

a trade to be rejected from clearing at or near the time of a transaction,

then Tradition SEF shall enter into on behalf of the counterparts, or

permit the original or intended counterparties to enter into, a new

pre-arranged transaction that corrects the errors in the original

transaction and reflects the terms to which the parties mutually assented

to without that trade having been executed pursuant to the methods set

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forth in Commission Regulations 37.9(a)(2) and 38.500 under the

following conditions:

New transactions entered into to correct errors as a result of (i) above must be

executed on Tradition SEF and submitted for clearing as quickly as

technologically practicable after receipt of notice of the rejection by the DCO to

Tradition SEF, but, in any event, no later than one hour from the issuance of the

notice.

(ii) Where a clerical or operational error or omission made by Tradition SEF,

counterparty, or an agent of the counterparty is not identified until after

the trade has been cleared, Tradition SEF shall enter into on behalf of the

counterparts, or permit the original or intended counterparties to enter

into, a new pre-arranged transaction that corrects the errors in the

original transaction and reflects the terms to which the parties mutually

assented to without that trade having been executed pursuant to the

methods set forth in Commission Regulations 37.9(a)(2) and 38.500

under the following conditions:

New transactions entered into to correct errors as a result of (ii) above, the

trade to offset the erroneous swaps carried on the DCO’s books and the new

transaction that corrects the errors in the original transaction must be executed

and submitted for clearing no later than three days after the erroneous Cleared

Swap was executed.

(3) If a new transaction that corrects the errors in an original transaction is also

rejected for clearing, the new transaction is void ab initio and the parties will not

be provided a second opportunity to submit a new trade.

(4) If Tradition SEF is able to determine how to correct an error, it may execute the

new trades without obtaining consent from the counterparties.

(5) If Tradition SEF is unable to determine how to correct an error. It may either

not fix the error, or it may seek guidance on how to address the error from the

counterparties. Any such guidance may not be implemented without consent

from both counterparties.

RULE 704 Credit Checks - Pre-Execution Credit Check

(a) Prior to entering any Order for a Cleared Swap, each Participant that is acting for its

own account shall ensure that it has sufficient credit with the Clearing Firm to which

any resulting Swap will be submitted for clearing at the relevant Derivatives Clearing

Organization. In the event that there is insufficient credit, the Participant may not enter

such Order.

(b) Prior to entering or permitting the entry of any Order for a Customer for a Cleared

Swap, each Participant shall ensure that its Customer has sufficient credit with the

Customer’s Clearing Firm to which any resulting Swap will be submitted for clearing at

the relevant Derivatives Clearing Organization. In the event that there is insufficient

credit, the Participant may not enter or permit the entry of such Order.

(c) Tradition SEF will take steps to facilitate pre-execution credit checks by Clearing Firms

and will issue notices to Clearing Firms and Participants relating thereto. Consistent

with and to the extent required by CFTC Regulations, including CFTC Regulation 1.73,

each Clearing Firm that is a Participant shall establish risk-based limits for its

proprietary account. Each Clearing Firm, whether or not a Participant, shall establish

risk-based limits for each Customer account. Except to the extent otherwise permitted

by CFTC Regulations:

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(1) such risk-based limits shall be based on position size, Order size, margin

requirements, or similar factors;

(2) a Clearing Firm shall use automated means to screen Orders that it has

authorized a Participant to execute electronically; and

(3) a Clearing Firm shall establish and maintain systems of risk controls reasonably

designed to ensure compliance with such risk-based limits for all other Orders.

RULE 705 Cleared Swap Margin Requirements

For Cleared Swaps, Participants shall comply with all margin requirements established by each

relevant Clearing House and by each relevant Clearing Firm, if applicable, as well as any margin

requirements set forth by the Commission or other Applicable Law.

RULE 706 Uncleared Swaps

A Participant or Customer may enter into an Uncleared Swap with a counterparty only if such

Participant or Customer and the counterparty have an Execution Agreement in place between

them.

RULE 707 Package Transactions

Tradition SEF is relying on the relief provided in CFTC No-Action Letter 17-55 with regard

to the Rules for Package Transactions. CFTC No-Action Letter 17-55 expires at 11:59 pm,

Eastern Time, on November 15, 2020.

(a) A Participant may execute a Swap component of a Package Transaction through any

method of execution offered by Tradition SEF as outlined in these Rules or a Platform

Supplement.

(b) Package Transactions containing at least one Cleared Swap:

(1) Spread over Treasury Package Transactions: Counterparties entering into USD

Interest Rate Swap Spread Over Trades on Tradition SEF must either be a

Netting Member or Comparison-Only Member of the Fixed Income Clearing

Corporation (“FICC”), a clearing agency registered with the Securities and

Exchange Commission, or an Executing Firm (as defined in FICC rules) and have

a relationship with a Submitting Member of FICC permitting the Treasury

component of its Spread Over Trades to be submitted to FICC for Netting or

Comparison under FICC rules.

(2) Cleared Swap versus Securities Package Transactions: Counterparties entering

into Swap versus Securities Package Trades on Tradition SEF must either be a

Member of the relevant Clearing Organization for the Securities leg of the Swap

versus Securities package transaction or have a relationship with a Clearing Firm

that has the ability to clear and settle the Securities component of its Swap versus

Securities Package Transaction with the appropriate Clearing Organization for the

Securities component of its Swap versus Securities Package Trades.

(3) Cleared Swap versus Futures Package Transactions: Counterparties entering

into Swap versus Futures Package Trades on Tradition SEF must either be a

Member of the relevant Designated Clearing Organization for the Futures

component of the Swap versus Securities Package Transaction, or have a

relationship with a Designated Clearing Firm that has the ability to clear and settle

the Futures component of its Swap versus Futures Package Transaction with the

appropriate Clearing Organization for the Futures component of its Swap versus

Futures Package Trades.

(4) Cleared Swap versus non-Cleared Swap Package Transactions: Counterparties

entering into Swap versus non-Cleared Swap Trades on Tradition SEF must have

an ISDA or other execution agreement in place with the counterparty to the

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non-cleared component of the Cleared Swap versus non-Cleared Swap Package

Transaction enabling them to bilaterally settle the non-Cleared component of

Cleared Swap versus non-Cleared Package Transaction.

(c) Non-cleared Package Transactions:

Non-Cleared Swap versus non-Cleared Swap Package Transactions: Counterparties

entering into non-Cleared Swap versus non-Cleared Swap Trades on Tradition SEF must

have an ISDA or other execution agreement in place with the counterparty to all

non-cleared components of the non-Cleared Swap versus non-Cleared Swap Package

Transaction enabling them to bilaterally settle the non-Cleared Package Transaction.

RULE 708 Exceptions and Exemptions to Clearing Requirement

(a) Tradition SEF shall report to the SDR the required counterparty election of the end-user

exception to the clearing requirement or the inter-affiliate exemption, as applicable, under

section 2(h)(7)(A) of the Act.

1. Participants and Customers shall provide Tradition SEF with the information required

for Tradition SEF to report on the Participant’s or Customer’s behalf, or cause to be

provided, to a SDR the information as set forth in CFTC Regulation 50.50(b)(1)-(3)

regarding electing the end-user exception from clearing.

2. Participants and Customers shall provide Tradition SEF with the information required

for Tradition SEF to report on the Participant’s or Customer’s behalf, or cause to be

provided, to a SDR the information as set forth in CFTC Regulation 50.52(c)(1)-(3)

regarding electing the inter-affiliate exemption.

Tradition SEF shall provide or cause to be provided to a SDR the required counterparty election of

the end-user exception or inter-affiliate exemption, as applicable, and the information as set forth

in Parts 43 and 45 of CFTC Regulations.

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CHAPTER 8

MISCELLANEOUS

RULE 801 Gifts and Gratuities

Except as permitted in writing by the Chief Compliance Officer, no Participant shall, directly or

indirectly, give or permit to be given anything of value, including gifts and gratuities, in excess of

one hundred dollars ($100) per individual per year to a SEF Official.

RULE 802 Market Data

(a) Subject to each market participant’s rights with respect to its own data, Tradition SEF

shall own all rights, title and interest, database rights and trade secret rights in and to

all trade data and related information submitted in connection with trading on the

facility and which is not collected or received for the purpose of fulfilling regulatory

obligations of Tradition SEF. Tradition SEF has the exclusive right to use, distribute,

sub-license, disclose and sell anonymized trade data and derivative works in any

manner, media and jurisdiction. Market participants shall not redistribute trade data or

derivative works based thereon unless licensed to do so by Tradition SEF. The

restriction on redistribution shall not apply to a market participant’s own data.

(b) Regulatory Data shall not be disclosed publicly other than on an aggregated or

anonymized basis, or in a manner that does not directly or indirectly identify any

market participant who has submitted such data. Regulatory Data may not be used by

Tradition SEF for business and marketing purposes, unless the market participant has

clearly consented to the use of such data in such manner. Access to Tradition SEF

shall not be conditioned upon a market participant’s consent to the use of Regulatory

Data for business or marketing purposes. Nothing in this Rule shall preclude Tradition

SEF from disclosing Regulatory Data:

(1) as required by Applicable Law or legal process;

(2) permitted by CFTC Regulations;

(3) to any committee, officer, employee or agent of Tradition SEF authorized to

receive such information within the scope of its or his/her duties;

(4) to any third-party performing a Regulatory or operational based service for

Tradition SEF, provided that such party has executed a confidentiality and

non-disclosure agreement in a form approved by Tradition SEF;

(5) to any duly authorized representative of the CFTC lawfully requesting the same;

(6) as Tradition SEF may deem necessary or appropriate in connection with any

litigation affecting it;

(7) in a manner in which a market participant consents to such disclosure;

(8) pursuant to the terms of an information-sharing agreement; or

(9) to any other Person, if, and to the extent that the Board, from time to time, may

deem appropriate.

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RULE 803 Extension or Waiver of Rules

If necessary and expedient, Tradition SEF may, in its sole discretion, waive, or extend the time

period for performing, any act or acts designated by the Rules, but only to the extent such waiver

or extension is not inconsistent with Applicable Law.

RULE 804 Effect of Amendment, Repeal or New Rule

Tradition SEF may, in compliance with CFTC Regulation 37.4 and Part 40 of CFTC Regulations

and these Rules, amend or repeal any Rule and/or adopt new Rules. Any such amendment or

repeal of a Rule or adoption of a new Rule, shall, upon the effective date of such amendment,

repeal or adoption, as applicable, be binding on all Persons subject to the jurisdiction of Tradition

SEF (regardless of when any such Person became subject to Tradition SEF’s jurisdiction).

RULE 805 Signatures

Rather than rely on an original signature, Tradition SEF may elect to rely on a signature that is

transmitted, recorded or stored by any electronic, optical or similar means (including but not

limited to facsimile, imaging, photocopying, email, or electronic data interchange) as if it were (and

the signature shall be considered and have the same effect as) a valid and binding original.

RULE 806 Governing Law

The law of the New York governs the Rules regardless of the laws that would otherwise apply

under applicable choice-of-law principles.

RULE 807 Dispute Resolution

(a) Except as set forth in paragraphs (b) and (c), any dispute between and among

Participants and Customers, and their respective Authorized Traders, Authorized

Brokers and Authorized Agents, that relates to or arises out of any Swap on a Platform

or subject to the Rules, shall be brought in the State or Federal courts located in the

Borough of Manhattan in the City of New York, and each such Person expressly

consents to the jurisdiction of such court, waives any objection to venue therein, and

waives any right it may have to a trial by jury.

(b) Notwithstanding paragraph (a), if the parties to the dispute are members or associates

of NFA, the dispute shall be resolved in NFA Member Arbitration Program and

conducted pursuant to the Rules and the rules of the National Futures Association

Arbitration Program.

(c) Notwithstanding paragraphs (a) and (b), if the parties to the dispute have separately

agreed to another forum, the dispute shall be resolved in such forum.

RULE 808 Disputes with Tradition SEF

Any dispute between Tradition SEF (including any SEF Official) and any Participants and

Customers, and their respective Authorized Traders, Authorized Brokers and Authorized Agents,

or any ISV or Clearing Firm that relates to or arises out of Tradition SEF’s operation of any

Platform, any Swap on a Platform or subject to the Rules, or the Rules, shall be brought in the

State or Federal courts located in the Borough of Manhattan in the City of New York, and each

such Person expressly consents to the jurisdiction of such court, waives any objection to venue

therein, and waives any right it may have to a trial by jury. In the event that a claimant brings a

claim against Tradition SEF or any SEF Official, fails to prevail in a dispute against the Tradition

SEF (or any SEF Official), such claimant shall pay to Tradition SEF all expenses, including

reasonable attorneys’ fees, incurred by Tradition SEF in the defense of such proceeding.

80
CHAPTER 9

PRODUCT SPECIFICATIONS AND LISTINGS

RULE 901 Product Specifications

(a) Tradition SEF will permit trading in products that will be offered for trading by Tradition

SEF and submitted to the CFTC and certified pursuant to Part 40 of CFTC

Regulations, from time to time. The contract specifications for all such Swaps shall be

incorporated into these Rules as Appendices and published on the Tradition SEF’s

website.

(b) Participants may propose to Tradition SEF the listing of a Swap by submitting a

proposed product specification to Tradition SEF’s Compliance Department.

RULE 902 Swaps Not Readily Susceptible to Manipulation

Tradition SEF will permit trading only in Swaps that are not readily susceptible to manipulation and

will submit supporting information as set forth in Appendix C to Part 38 of CFTC Regulations, as

may be amended from time to time, when it submits its contracts for approval or certification

pursuant Part 40 of CFTC Regulations.

81
Appendix A

U.S. Dollar Interest Rate Swap Product Listing

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82
Appendix B

Credit Product Listing

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Appendix C

Foreign Currency Product Listing

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Appendix D

Equities Product Listing

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Appendix E

Commodities Product Listing

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