June 21, 2022July 12, 2023

Nodal Clear Rulebook
NODAL CLEAR, LLC RULEBOOK

June 21, 2022July 12, 2023

TABLE OF CONTENTS

Page No.

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

1.1 Definitions........................................................................................................... 1

1.2 Rules of Interpretation ........................................................................................ 9

SECTION II GOVERNANCE................................................................................... 10

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

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

2.3 Eligibility/Fitness.............................................................................................. 12

2.4 Committees....................................................................................................... 13

2.5 Treatment and Use of Non-Public Information ................................................ 14

2.6 Information-Sharing Arrangements.................................................................. 15

2.7 Conflicts of Interest........................................................................................... 15

2.8 Maintenance of Books and Records by Clearing House .................................. 17

2.9 Emergencies...................................................................................................... 18

SECTION III CLEARING .......................................................................................... 20

3.1 Categories of Clearing Membership ................................................................. 20

3.2 Qualification of Clearing Members.................................................................. 20

3.3 Applications for Membership ........................................................................... 21

3.4 Appeal of Clearing Membership Decisions...................................................... 21

3.5 Duties and Responsibilities of Clearing Members............................................ 21

3.6 Prohibited Practices .......................................................................................... 23

3.7 Termination; Restriction on Activity................................................................ 23

3.8 Authorized Users .............................................................................................. 24

3.9 Capital Requirements........................................................................................ 25

3.10 Position Risk ..................................................................................................... 25

3.11 Financial Reporting Requirements ................................................................... 26

3.12 Guaranty Requirement...................................................................................... 27

3.13 Notices Required of Clearing Members ........................................................... 28

3.14 No Transfer of Membership.............................................................................. 30

3.15 Adequate Assurances........................................................................................ 30

3.16 Acceptance for Clearing; Novation .................................................................. 30

3.17 Transfers of Open Positions.............................................................................. 31

3.18 Approved Financial Institutions........................................................................ 32

3.19 Liens Held by the Clearing House .................................................................... 33

3.20 Initial Margin; Additional Margin .................................................................... 33

3.21 Variation Margin............................................................................................... 34

3.22 Cash Margin Deposits....................................................................................... 35

3.23 Margin Payments.............................................................................................. 35

3.24 Deposit of Non-Cash Collateral as Initial Margin ............................................ 38

3.25 Finality of Settlement........................................................................................ 39

3.26 Bank Holidays................................................................................................... 40
NODAL CLEAR, LLC RULEBOOK

June 21, 2022July 12, 2023

ii

3.27 Segregation of Customer Funds........................................................................ 40

3.28 Fees................................................................................................................... 40

3.29 Defaults............................................................................................................. 40

3.30 Liquidation on Termination or Suspension of Clearing Member..................... 41

3.31 Method of Closing Out ..................................................................................... 42

3.32 Amounts Payable to the Clearing House .......................................................... 43

3.33 Reinstatement of Suspended Member .............................................................. 43

3.34 Guaranty Fund .................................................................................................. 43

3.35 Monetary Defaults; Use of Guaranty Fund; Assessments................................ 48

3.36 Liquidity Event ................................................................................................. 56

3.37 Withdrawal of Clearing Members; Termination............................................... 58

3.38 Close-Out Netting............................................................................................. 61

3.39 Settlement Price ................................................................................................ 64

3.40 Variation Margin Gains Haircutting ................................................................. 64

3.41 Partial Tear-Ups and Full Tear-Ups.................................................................. 66

3.42 Non-Petition...................................................................................................... 67

3.43 Reimbursement of Recovered Losses............................................................... 67

SECTION IV CODE OF CONDUCT ......................................................................... 69

4.1 Ethical Standards .............................................................................................. 69

4.2 Termination of Connection............................................................................... 70

4.3 Information Disclosure and Documentation..................................................... 70

4.4 Compliance ....................................................................................................... 70

SECTION V DISCIPLINE AND ENFORCEMENT; CLEARING MEMBER 

EMERGENCIES............................................................................................................... 71

5.1 Disciplinary and Enforcement Procedures – General....................................... 71

5.2 Summary Fines................................................................................................. 84

5.3 Clearing Member Emergencies; Summary Actions ......................................... 84

5.4 Rights and Responsibilities After Suspension or Termination ......................... 86

5.5 Notice to the Parties, the CFTC and the Public ................................................ 86

SECTION VI RESERVED.......................................................................................... 87

SECTION VII MISCELLANEOUS ............................................................................. 88

7.1 Trading by Clearing House Officials Prohibited; Misuse of Material, NonPublic Information............................................................................................ 88

7.2 Market Data ...................................................................................................... 89

7.3 Recording of Communications......................................................................... 90

7.4 Force Majeure ................................................................................................... 90

7.5 Extension or Waiver of Rules........................................................................... 90

7.6 Notice and Effect of Amendment, Repeal or New Rule................................... 91

7.7 Signatures.......................................................................................................... 91

7.8 Governing Law; Legal Proceedings.................................................................. 91

7.9 LIMITATION OF LIABILITY; NO WARRANTIES..................................... 92

7.10 Indemnification Obligations of Clearing Members.......................................... 94
NODAL CLEAR, LLC RULEBOOK

June 21, 2022July 12, 2023

iii

7.11 Large Trader Reports........................................................................................ 94

7.12 Public Information ............................................................................................ 95

7.13 Confidential Information .................................................................................. 95

SECTION VIII RULES IN SATISFACTION OF EUROPEAN COMMISSION 

CONDITIONS ............................................................................................................... 97

8.1 House Account Minimum Liquidation Period.................................................. 97

8.2 Funded Financial Resources............................................................................. 97

8.3 Measures to Mitigate Procyclicality ................................................................. 97

SECTION IX PHYSICAL SETTLEMENT AND DELIVERY.................................. 98

9.1 Clearing Member Duties to the Clearing House............................................... 98

9.2 Reports and Notifications ................................................................................. 98

9.3 Delivery Procedures for Nodal Deliverable US Environmental Contracts ...... 98

9.4 Delivery Procedures for Nodal Deliverable Renewable Identification Numbers 

(RINs) Contracts............................................................................................. 100
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

1

SECTION I DEFINITIONS

1.1 Definitions

Unless the context otherwise requires, the terms defined in this Rule have the 

meanings specified below for all purposes under the Rules:

Affected Clearing Member has the meaning set forth in Rule 9.1.2

Affiliate. A Person that directly or indirectly, controls, is controlled by, or 

is under common control with another Person.

Allowance has the meaning set forth in Rule 9.3.2.

Appeals Committee. A panel comprised of a chair and two individuals 

appointed by the Board to consider appeals under Section V.

Applicable Law. With respect to any Person, any statute, law, regulation, 

rule or ordinance of any Governmental Authority or Self-Regulatory Organization 

applicable to such Person, including the CEA and CFTC Regulations.

Approved Financial Institution. A bank or trust company designated by 

the Board pursuant to Rule 3.18.

Assessments has the meaning set forth in Rule 3.35(b)(vi).

Authorized User. A natural person who is either employed by or is an agent 

of a Clearing Member and who is authorized by the Clearing House as an 

Authorized User in accordance with Rule 3.8. 

Bankruptcy Event has the meaning set forth in Rule 3.38.1.

Base Margin Amount has the meaning set forth in Rule 3.34.1(b).

Base Uncovered Stress Loss Amount has the meaning set forth in Rule 

3.34.1(c).

Base Volume Amount has the meaning set forth in Rule 3.34.1(d).

Board. The Board of Directors of the Clearing House. 

Business Day. Any day on which the Clearing House is open for business.

CEA. The Commodity Exchange Act. 

CFTC or Commission. The Commodity Futures Trading Commission.

CFTC Regulations. The regulations of the CFTC.
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

2

Chairman. The Chairman of the Board of the Clearing House.

Chief Compliance Officer. The individual appointed by the Board to serve 

as the chief compliance officer of the Clearing House.

Chief Executive Officer. The individual appointed by the Board to serve 

as the chief executive officer of the Clearing House.

Chief Risk Officer. The individual appointed by the Board to serve as the 

chief risk officer of the Clearing House.

Clearing Activity. Any clearing business conducted pursuant to the Rules 

or which is required to be conducted pursuant to the Rules.

Clearing House. Nodal Clear, LLC, a Delaware limited liability company 

registered with the CFTC as a derivatives clearing organization.

Clearing House Official. Any Officer or employee of the Clearing House 

and any member of the Board or committee established by the Board. 

Clearing Member. An entity meeting the requirements of, and approved 

for, clearing membership at the Clearing House that is authorized pursuant to Rule 

3.3 to clear trades in one or more Exchange Contracts. Except for those Clearing 

Members that clear solely for one or more House Accounts (each, a “House-Only 

Clearing Member”), all other Clearing Members must be registered with the 

CFTC as FCMs (each, an “FCM Clearing Member”).

Clearing Member Agreement. An agreement between the Clearing House 

and a Clearing Member, which must be executed in order for a Clearing Member 

to have access to the Clearing House for the purpose of clearing Exchange 

Contracts.

Clearing System. The systems, software, equipment, hardware, apparatus, 

appliances, gateways, application programming interfaces and other components 

used by or on behalf of the Clearing House to perform its clearing functions.

Collateral. At any time, such property as may be delivered by a Clearing 

Member to the Clearing House as collateral for the obligations of such Clearing 

Member to the Clearing House, and all proceeds of the foregoing and all proceeds 

of any of the foregoing, held in or for the accounts of a Clearing Member in 

connection with the financial obligations of such Clearing Member, however 

created, arising or evidenced, whether direct or indirect, absolute or contingent,

existing, due or to become due.

Compliance Manager has the meaning set forth in Rule 5.1.1.

Confidential Information has the meaning set forth in Rule 7.13.
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

3

Contract Specifications. The descriptions of the contractual items for each 

Exchange Contract as set forth in the Exchange Rules. 

Customer has the meaning set forth in CFTC Regulation 39.2.

Customer Account means an account established by a Clearing Member 

with the Clearing House in which the Clearing Member maintains trades, positions 

and Margin solely for Customers of the Clearing Member.

Default. Any event that would constitute a default under Rule 3.29.

Deliverable has the meaning set forth in the Contract Specifications of 

Physically Settled Exchange Contracts.

Delivery Default means a Clearing Member failing to guaranty Participant 

delivery obligations in full under or in connection with any Physically Settled 

Exchange Contract, unless such failure constitutes a Force Majeure Event affecting 

the relevant Participant or Clearing Member.

Delivery Facility means any Person or facility used for the delivery of 

Deliverables, including but not limited to, warehouses appearing on the list of 

nominated warehouses as published by the Exchange, facilities and systems 

operated by such Persons, and Registries.

Delivery Margin has the meaning set forth in Rule 3.20.1

Director. An individual serving on the Board.

Disciplinary Action has the meaning set forth in Rule 5.1.1.

Disciplinary Panel. Either or both of a Review Panel and a Hearing Panel, 

as the context requires.

Emergency means any occurrence or circumstances which, in the opinion 

of the Board, Chief Executive Officer, Chairman or Chief Risk Officer, requires 

immediate action, and that threatens, or may threaten, the fair and orderly 

settlement or integrity of any Exchange Contract, including: 

(a) any circumstance that may materially affect the performance of an

Exchange Contract; 

(b) any action taken by a Governmental Authority, Self-Regulatory 

Organization, state or local governmental body, or foreign or domestic exchange or 

market that may have an adverse effect on the clearing of Exchange Contracts 

through the Clearing House or the settlement, legality or enforceability of any 

Exchange Contract; 
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

4

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

manipulative activity or undue concentration of positions in an Exchange Contract; 

(d) any other circumstance that may have a severe, adverse effect upon 

the functions and facilities of the Clearing House, including, but not limited to, acts 

of God, pandemics, fire or other natural disasters, bomb threats, acts of terrorism 

or war, severely inclement weather, failure or malfunction of all or a portion of the 

Clearing System, or other system breakdowns or interruptions such as power, 

computer, communication or transportation systems or the Internet; 

(e) the Insolvency of any Clearing Member or the imposition of any 

injunction or other restraint by any Governmental Authority, court or arbitrator 

upon a Clearing Member which may affect the ability of a Clearing Member to 

satisfy its obligations; 

(f) any circumstance in which it appears to the Board that a Clearing 

Member: 

(i) has failed to perform on an Exchange Contract; 

(ii) is Insolvent; 

(iii) is otherwise in Default; or

(iv) is in such financial or operational condition or is conducting 

business such that the Clearing Member cannot be permitted 

to continue in business without jeopardizing the safety of 

funds of Customers, Clearing Members or the Clearing 

House; or 

(g) any other unusual, unforeseeable or adverse circumstance as 

determined by the Board or the Chief Executive Officer (or, as applicable, the 

Chairman or Chief Risk Officer).

EMTS has the meaning set forth in Rule 9.4.2.

Exchange. A company designated by the CFTC as a contract market that

has entered into a clearing services agreement with the Clearing House.

Exchange Contract. Any contract available for trading on an Exchange and 

for clearing through the Clearing House.

Exchange Contract Segment has the meaning set forth in 3.34.1(f).

Exchange Rules. Any rule, interpretation, stated policy, or instrument 

corresponding to any of the foregoing as adopted from time to time by the relevant

Exchange.
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

5

Expiry. An Exchange Contract with a specific date of expiration.

Financial Performance has the meaning set forth in Rule 9.1.2.

Force Majeure Event means, in relation to delivery obligations pursuant to 

any Physically Settled Exchange Contract, any event that is an event of force 

majeure (or similar event, howsoever defined) for that Physically Settled Exchange 

Contract under the Contract Specifications or Exchange Rules.

FCM. A futures commission merchant as defined in CEA §1a(28) and

CFTC Regulation 1.3(p) that is registered with the CFTC as such.

General Counsel. The individual appointed by the Board to serve as the 

general counsel of the Clearing House.

Governmental Authority. Any domestic or foreign government (or 

political subdivision), governmental or regulatory authority, agency, court, 

commission or other governmental or regulatory entity.

Guaranty Fund. The fund comprising the monies, securities and 

instruments deposited by Clearing Members pursuant to Rule 3.12, which fund 

shall be used as provided in Rule 3.35 to reimburse the Clearing House for losses 

sustained by the Clearing House as a result of the failure of any Clearing Member 

to discharge its obligations in accordance with the Rules.

Guaranty Fund Deposit Requirement has the meaning set forth in 

Rule 3.34.2(a).

Guaranty Fund Deposit Surcharge has the meaning set forth in 

Rule 3.34.1(e).

Hearing Panel. A Disciplinary Panel that will, pursuant to the procedures 

set forth in Section V, adjudicate disciplinary cases pursuant to a notice of charges 

and execute other duties as provided in Section V. The members of the Hearing 

Panel will be appointed in accordance with Rule 5.1.12.

House Account has the meaning set forth in CFTC Regulation 39.2.

Initial Margin. The initial amount of Collateral that must be deposited with 

or paid to the Clearing House by Clearing Members in accordance with the Rules 

as a performance bond in respect of the Exchange Contracts held in the House 

Account and Customer Account of such Clearing Members.

Insolvency and Insolvent means the occurrence of any of the following 

events with respect to a Clearing Member:

(a) the Clearing Member is determined to be insolvent by a 

Governmental Authority or Self-Regulatory Organization;
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

6

(b) if the Clearing Member is a member of the Securities Investor 

Protection Corporation, a court of competent jurisdiction finds that 

the Clearing Member meets any one of the conditions set forth in 

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

Investor Protection Act of 1970;

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

court, Governmental Authority or other supervisory authority of 

competent jurisdiction: (i) adjudging the Clearing Member as 

bankrupt or insolvent; (ii) approving as properly filed a petition 

seeking reorganization, arrangement, liquidation, dissolution, 

adjustment or composition of or in respect of the Clearing Member

under the Bankruptcy Code or any other applicable federal, state or 

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

reorganization, liquidation, dissolution or similar law; 

(iii) appointing a custodian, liquidator, provisional liquidator, 

administrator, provisional administrator, assignee, trustee, 

sequestrator or other similar official for the Clearing Member or for 

any substantial part of its property; (iv) ordering the winding up or 

liquidation of the Clearing Member’s affairs; or (v) consenting to 

the institution by the Clearing Member of proceedings to be 

adjudicated as a bankrupt or insolvent;

(d) the filing by the Clearing Member of a petition, or any case or 

proceeding, seeking reorganization or relief under the Bankruptcy 

Code or any other applicable federal, state or other U.S. or non-U.S. 

law, including any bankruptcy, insolvency, reorganization, 

liquidation, dissolution or similar law, or the consent by the Clearing 

Member to the filing of any such petition, case or proceeding or to 

the appointment of a custodian, liquidator, provisional liquidator, 

administrator, provisional administrator, assignee, trustee, 

sequestrator or other similar official for the Clearing Member or for 

any substantial part of its property, or the making by the Clearing 

Member of an assignment for the benefit of its creditors, or the 

admission by the Clearing Member in writing of its inability to pay 

its debts generally as they become due, or the taking of corporate or 

similar action by the Clearing Member in furtherance of the 

foregoing;

(e) notwithstanding the above, the appointment of the Federal Deposit 

Insurance Corporation as receiver for purposes of resolution 

pursuant to Title II of the Dodd-Frank Act, or the appointment of a 

foreign government authority as receiver for purposes of resolution 

under an analogous resolution regime, is excluded from the 

definition of Insolvency or Insolvent.

Investigation Report has the meaning as set forth in Rule 5.1.6.
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

7

LLC Agreement. The Limited Liability Company Agreement of the 

Clearing House, as it may be amended or restated from time to time.

Liquidity Event. A Liquidity Event means an event that causes the Clearing 

House to require financial liquidity: (i) to satisfy payment obligations of a Clearing 

Member that is in Default or has been suspended; (ii) to satisfy payment obligations 

associated with the transfer of account(s) of a Clearing Member that is in Default 

or has been suspended; or (iii) as a result of a payment or wire transfer delay, 

liquidity constraint, or default by an Approved Financial Institution. The decision 

to declare a Liquidity Event shall be in the sole discretion of the Clearing House. 

Margin. Initial Margin and Variation Margin or either of them.

NFA. National Futures Association.

Nodal Deliverable RINs Contracts has the meaning set forth in Rule 9.4.1.

Nodal Deliverable US Environmental Contract has the meaning set forth 

in Rule 9.3.1.

Officer has the meaning set forth in Rule 2.2.1.

Participant has the meaning set forth in the Exchange Rules.

Person means an individual, sole proprietorship, partnership, limited 

liability company, association, firm, trust, corporation or other entity, as the context 

may require.

Physically Settled has the meaning set forth in the Exchange Rules.

President. The individual appointed by the Board to serve as the president 

of the Clearing House.

Public Director. A Director having the qualifications set forth in 

Rule 2.1.6.

Registry has the meaning set forth in Rule 9.3.2.

Registry Operator has the meaning set forth in Rule 9.3.2.

RINs has the meaning set forth in Rule 9.4.2.

Replenishment has the meaning set forth in Rule 3.34.7(b).

Respondent. A Clearing Member, Authorized User or any Person using the 

User ID of an Authorized User that is under investigation for alleged Rule 

violation(s) or against which charges have been filed.
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

8

Review Panel. A disciplinary panel that will, pursuant to the procedures set 

forth in Section V, review Investigation Reports submitted to it by the Chief 

Compliance Officer. The members of the Review Panel will be appointed in 

accordance with Rule 5.1.12.

Routine Request is a request, inquiry, or order of (i) the CFTC that is not 

pursuant to Part 11 of the CFTC Regulations or (ii) the Securities and Exchange 

Commission, a securities self-regulatory organization, or a futures self-regulatory 

organization that does not trigger a notice requirement under CFTC Regulation 

1.12(m).

Rules. Any rule, interpretation, stated policy, or instrument corresponding 

to any of the foregoing, including these Rules, as adopted from time to time by the 

Clearing House. 

Self-Regulatory Organization has the meaning set forth in CFTC 

Regulation 1.3 and in section 3(a)(26) of the Securities Exchange Act of 1934 and 

includes a derivatives clearing organization that is registered as such with the 

CFTC.

Settlement Price has the meaning set forth in Rule 3.39.

Termination Event means the occurrence of any of the following: 

(a) the expiration or termination of the Clearing Member Agreement 

between a Clearing Member and the Clearing House; 

(b) a representation or warranty made by the Clearing Member to the 

Clearing House under or in connection with any agreement between 

the Clearing House and the Clearing Member shall be false or 

misleading in any material respect as of the date on which made or 

repeated; 

(c) the Clearing Member does not meet the qualifications for Clearing 

Members set forth in Rule 3.2; or 

(d) the breach by the Clearing Member of the Rules or any of the terms 

or provisions of any agreement between the Clearing House and the 

Clearing Member.

Tender has the meaning set forth in Rule 9.3.2 or 9.4.2, as applicable.

Treasury Securities. United States Treasury bills, Treasury notes and 

Treasury bonds.

User ID. The unique identifier that is assigned by the Exchange to each 

Authorized User.
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

9

Variation Margin means (i) on the Business Day an Exchange Contract has 

been accepted for clearing by the Clearing House, the difference between the price 

at which such Exchange Contract was bought or sold and the Settlement Price for 

such Exchange Contract; and (ii) thereafter, the difference, as applicable, between 

(x) the Settlement Price on a given Business Day and the preceding Settlement Price 

for such Exchange Contract, or (y) the price at which such Exchange Contract was 

closed on the books of the Clearing House and the preceding Settlement Price for 

such Exchange Contract.

Withdrawal Date has the meaning set forth in Rule 3.37.1(b).

Withdrawal Deposit has the meaning set forth in Rule 3.37.7.

1.2 Rules of Interpretation

For all purposes of these Rules, except as otherwise expressly provided herein or 

unless the context otherwise requires: 

(a) terms defined in the Rules include the plural as well as the singular 

and vice versa; 

(b) words importing gender include all genders; 

(c) any reference to a Rule refers to a Rule of these Rules; 

(d) any reference in a Rule to a paragraph or clause is to the referenced 

paragraph or clause in such Rule;

(e) any reference to “the Rules” or “these Rules” refers to these Rules, 

and the words “herein,” “hereof,” “thereto,” “hereto,” “hereunder” 

and words of similar import refer to these Rules as a whole and not 

to any particular Section, Rule or any other subdivision; 

(f) references to days, months and years refer to calendar days, months 

and years, respectively; and

(g) all references to “including” are deemed to be followed by the words 

“without limitation.”
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

10

SECTION II GOVERNANCE

2.1 Composition of the Board; Board Powers

2.1.1 The Board is authorized to oversee the day-to-day management and 

business operations of the Clearing House in accordance with the LLC 

Agreement.

2.1.2 The Board will approve Rules, provided that the Board may delegate the 

authority to approve such Rules to a Board committee or one or more 

Officers of the Clearing House; provided further that certifications or 

applications with respect to any such Rules will be submitted to the CFTC 

as required by Applicable Law. 

2.1.3 The Board has the power to call for review, and to affirm, modify, suspend 

or overrule, any and all decisions and actions of committees or special 

committees of the Board or one or more Officers of the Clearing House 

related to the day-to-day business operations of the Clearing House. 

2.1.4 To serve as a Director, an individual must possess the ability to contribute 

to the effective oversight and management of Clearing House, taking into 

account the needs of Clearing House and such factors as the individual’s 

experience, perspective, skills and knowledge of the industry in which 

Clearing House operates. This shall include sufficient expertise, where 

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

2.1.5 At all times not less than thirty-five percent (35%) of the Directors with 

voting authority, but not fewer than two (2) individuals, shall be Public 

Directors. 

2.1.6 To qualify as a Public Director, an individual must be found, by action of 

the Board, to have no material relationship with the Clearing House. 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 than annually. A “material relationship” 

is one that reasonably could affect the independent judgment or decisionmaking of the Director. The Board need not consider previous service as 

a Director of the Clearing House to constitute a “material relationship.” A 

Director shall be considered to have a “material relationship” with the 

Clearing House if any of the following circumstances exist or have existed 

within the past year:

(a) such Director is an Officer or an employee of the Clearing House, 

or an officer or an employee of an Affiliate of the Clearing House;

(b) such Director has an ownership interest in the Clearing House;
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

11

(c) such Director is a director, officer, or employee of a Clearing 

Member, Exchange participant or Person with an ownership interest 

in the Clearing House;

(d) such Director, or an entity of which the Director is a partner, officer

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

payments for legal, accounting, or consulting services from the 

Clearing House or any of its Affiliates. Compensation for services 

as a Director of Clearing House or as a director of an 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;

(e) Any of the “material relationships” set forth above apply to the 

“immediate family” of such Director (i.e., spouse, parents, children, 

and siblings, in each case, whether by blood, marriage or adoption).

(f) A Public Director of the Clearing House may serve as a director of 

an Affiliate of the Clearing House if he or she otherwise qualifies as 

a Public Director in accordance with this Section 2.1.6.

2.1.7 The Board shall have procedures, as may be further set forth in policies 

that Clearing House may adopt, to remove a member from the Board where 

the conduct of such member is likely to be prejudicial to the sound and 

prudent management of the Clearing House.

2.1.8 The Board shall establish arrangements to permit consideration of the 

views of Clearing Members in connection with the functioning of the 

Clearing House and with additions or amendments to the Rules and shall 

make a description of such arrangements available to the public and to the 

CFTC. Major decisions of the Board will be disclosed to Clearing 

Members and the CFTC. Major decisions of the Board with a broad 

market impact will be disclosed to the public.

2.2 Officers

2.2.1 The Clearing House shall appoint from time to time one or more 

individuals with appropriate experience, skills and integrity to serve as the 

Chairman, Chief Executive Officer, President, Chief Risk Officer, Chief 

Compliance Officer, General Counsel and may further appoint such other 

officers of the Clearing House or any subsidiary of the Clearing House 

(each, an “Officer”) as deemed necessary or appropriate, with such titles, 

duties, and authority as the Clearing House shall approve, to carry out the 

business of the Clearing House or any subsidiary of the Clearing House, 

and upon such terms and conditions as the Board shall determine.
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

12

2.2.2 Except as otherwise provided in Rule 2.3.1, any Officer may also be a 

director, officer, partner or employee of the Clearing House or any of its 

Affiliates.

2.2.3 The Chief Risk Officer shall be responsible for implementing the risk 

management policies, procedures and controls of the Clearing House and 

for making recommendations regarding risk management functions to the 

Risk Management Committee and the Board.

2.2.4 The Chief Compliance Officer, in consultation with the Risk Management 

Committee and the Board, shall be responsible for developing and 

enforcing appropriate compliance policies and procedures, to fulfill the 

duties and obligations of the Clearing House set forth in the CEA and 

CFTC Regulations.

2.2.5 The Officers shall have such other powers and duties in the management 

of Clearing House as the Board may prescribe from time to time, subject 

to the terms of the LLC Agreement.

2.3 Eligibility/Fitness

2.3.1 An individual may not serve as a Board member, serve on a committee 

established by the Board or hold a 10% or greater ownership interest in the 

Clearing House, if the individual:

(a) within the prior three (3) years has been found, by a final decision 

in any action or proceeding brought in a court of competent 

jurisdiction, or by any Governmental Authority or Self-Regulatory 

Organization to have committed a disciplinary offense;

(b) within the prior three (3) 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;

(c) is currently suspended from trading on or 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: (A) a 

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

proceeding brought in a court of competent jurisdiction, 

Governmental Authority or Self-Regulatory Organization; or (B) 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;

(d) is currently subject to an agreement with a Governmental Authority 

or Self-Regulatory Organization not to apply for registration with 

such Governmental Authority or for membership in such SelfRegulatory Organization;
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

13

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

revocation or suspension of registration by a Governmental 

Authority or Self-Regulatory Organization;

(f) 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; or

(g) is subject to a statutory disqualification pursuant to Section 8a(2) of 

the CEA.

For purposes of this Rule 2.3.1, the terms “disciplinary offense,” “final 

decision” and “settlement agreement” have the meaning given those terms 

in CFTC Regulation 1.63(a).

2.3.2 Prior to appointment to the Board or to a committee established by the 

Board, each individual shall certify that he or she is not disqualified 

pursuant to Rule 2.3.1. In addition, each Director will certify on at least 

an annual basis regarding his or her continued compliance with Rule 2.3.1.

2.4 Committees

2.4.1 The Board shall have at least the following standing committees: the 

Nominating Committee and the Risk Management Committee, each with 

the roles and responsibilities set out below.

2.4.2 Nominating Committee. The Nominating Committee of the Board shall 

consist of at least 51% Public Directors. The Nominating Committee 

reports to the Board and shall be chaired by a Public Director. The 

Nominating Committee shall be responsible for: (i) identifying individuals 

qualified to serve on the Board, consistent with the criteria that the Board

may require and any composition requirement promulgated by the CFTC; 

and (ii) administering a process for the nomination of Board candidates. 

2.4.3 Risk Management Committee. The Risk Management Committee of the 

Board reports to the Board and shall consist of at least 35% Public 

Directors. The Risk Management Committee shall oversee the Clearing 

House risk program on behalf of the Board with the authority to: 

(i) monitor the risk program of the Clearing House for sufficiency, 

effectiveness and independence; and (ii) oversee all facets of the risk 

program, including:

(a) Clearing Member membership criteria;

(b) risk management policy, financial safeguards and financial 

surveillance;
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

14

(c) surveillance, audits, examinations, and other regulatory 

responsibilities with respect to Clearing Members (including 

compliance with, as applicable, financial integrity, financial 

reporting, recordkeeping and other requirements);

(d) reviewing the size and allocation of the risk and compliance budgets

and resources, and the number, hiring, termination and 

compensation of risk and compliance personnel;

(e) supervising the Chief Risk Officer, who will report to the Risk 

Management Committee in addition to the Chief Executive Officer;

(f) supervising the Chief Compliance Officer, who will report to the 

Risk Management Committee in addition to the Chief Executive 

Officer;

(g) authorizing its Chairman and the Chief Risk Officer to establish a 

Risk Advisory Committee to meet as needed and to be chaired by 

the Chief Risk Officer, which Committee will include Clearing 

Member representation in order to provide recommendations to the 

Clearing House and the Risk Management Committee upon request;

(h) recommending changes to ensure fair, vigorous, and effective 

regulation and risk management; and

(i) reviewing regulatory proposals prior to implementation and 

advising the Board as to whether and how such changes may impact 

regulation. 

The Risk Management Committee shall take such other actions as 

may be required by the Rules or as otherwise delegated to it by the 

Board. 

2.4.4 In addition to the standing committees, the Board shall have the power and 

authority to create and terminate, in accordance with the LLC Agreement, 

special committees of the Board and designate their composition, 

responsibilities and powers. 

2.5 Treatment and Use of Non-Public Information 

2.5.1 All information received by the Clearing House regarding past or current 

positions carried by the Clearing House or any other clearing organization 

for a Clearing Member or an Affiliate of such Clearing Member, margin 

payments between the Clearing House or any other clearing organization 

and a Clearing Member or an Affiliate of such Clearing Member, and

financial statements filed with the Clearing House by any Clearing 

Member, shall be treated as confidential and will not be disclosed to any 

other Person except as follows:
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

15

(a) upon written consent of the Clearing Member involved;

(b) to the Exchange and Affiliates of the Exchange, as deemed 

appropriate by the Clearing House;

(c) to the CFTC, the United States Department of Justice, or other 

Governmental Authority, upon request pursuant to the requirements 

of Applicable Law;

(d) pursuant to subpoena or order of a court, Governmental Authority 

or Self-Regulatory Organization of competent jurisdiction;

(e) to any contract market or trading facility for audit, compliance, or 

market surveillance purposes, subject to terms and conditions as the 

Clearing House may deem appropriate; or 

(f) pursuant to Rule 2.6.

2.5.2 No member of the Board or any committee established by the Board or by 

or pursuant to the Rules will use or disclose any material non-public 

information obtained in connection with such member’s participation on 

the Board or such committee for any purpose other than the performance 

of his or her official duties as a member of the Board or such committee.

2.5.3 No Officer, employee or agent of the Clearing House may disclose to any 

other Person material non-public information obtained in connection with 

such employee’s, Officer’s or agent’s employment, except where such 

disclosure is in the course of such employee’s, Officer’s, or agent’s duties 

to the Clearing House or as permitted in Rule 2.5.1. 

2.5.4 For the purposes of this Rule 2.5, the terms “material information” and 

“non-public information” each shall have the meaning set forth in CFTC 

Regulation 1.59(a).

2.6 Information-Sharing Arrangements

The Clearing House may enter into any arrangement with any Person or body 

(including any Governmental Authority or Self-Regulatory Organization) if the 

Clearing House considers such arrangement to be in furtherance of the Clearing 

House’s purpose or duties under the Rules or Applicable Law. Information shared 

thereunder will be subject to confidentiality provisions to the extent permitted by 

Applicable Law.

2.7 Conflicts of Interest

2.7.1 Named Party In Interest Conflict
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

16

(a) No member of the Board will knowingly participate in such body’s 

deliberations or voting in any matter involving a named party in 

interest where such member: (i) is a named party in interest in the 

matter; (ii) is an employer, employee or fellow employee of a named 

party in interest; (iii) has any other significant, ongoing business 

relationship with a named party in interest, excluding relationships 

limited to Exchange Contracts; or (iv) has a family relationship with 

a named party in interest.

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

interest, any member of the deliberating body who has a potential 

conflict of interest and chooses not to abstain from deliberations and 

voting will disclose to the Chief Compliance Officer whether such 

member has one of the relationships listed in paragraph (a) above 

with a named party in interest.

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

of the relevant deliberating body who does not choose to abstain 

from deliberations and voting is subject to a conflicts restriction 

under this paragraph (c). Such determination will be based upon a 

review of the following information: (i) information provided by 

such member pursuant to paragraph (b) above; and (ii) any other 

source of information that is held by and reasonably available to the 

Clearing House.

2.7.2 Financial Interest in a Significant Action Conflict

(a) No member of the Board will participate in such body’s 

deliberations and voting on any significant action if such member 

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

as determined pursuant to paragraph (c) below.

(b) Prior to consideration of any significant action, any individual who 

has a potential conflict of interest and chooses not to abstain from 

deliberations and voting will disclose to the Chief Compliance 

Officer any information that may be relevant to a determination of 

whether such member has a direct and substantial financial interest 

in the result of the vote.

(c) The Chief Compliance Officer will determine whether any 

individual who does not choose to abstain from deliberations or 

voting is subject to a conflicts restriction under this paragraph (c). 

Such determination will be based upon a review of the following 

information: (i) the most recent large trader reports and clearing 

records available to the Clearing House; (ii) information provided 

by such member pursuant to paragraph (b) above; and (iii) any other 

information reasonably available to the Clearing House, taking into 
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

17

consideration the exigency of the significant action being 

contemplated.

(d) Any member of the Board or any committee of the Board who would 

otherwise be required to abstain from deliberations and voting 

pursuant to paragraph (a) above may participate in deliberations, but 

not voting, if the deliberating body, after considering the factors 

specified below, determines that such participation would be 

consistent with the public interest; provided, however, that before 

reaching any such determination, the deliberating body will fully 

consider the information specified in paragraph (b) above which is 

the basis for such member’s substantial financial interest in the 

significant action that is being contemplated. In making its 

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

member’s participation in the deliberations is necessary to achieve 

a quorum; and (ii) whether such member has unique or special 

expertise, knowledge or experience in the matter being considered.

2.7.3 The minutes of any meeting to which the conflicts determination

procedures set forth in this Rule apply will reflect the following 

information:

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

attended such meeting in person or who otherwise participated in 

such meeting;

(b) the name of any member of the relevant deliberating body who 

voluntarily recused himself or herself or was required to abstain 

from deliberations or voting on a matter and the reason for the 

recusal or abstention, if stated;

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

deliberating body; and 

(d) any determination made in accordance with paragraph (d) of 

Rule 2.7.2.

2.8 Maintenance of Books and Records by Clearing House

2.8.1 The Clearing House shall keep, or cause to be kept, complete and accurate 

books and records of accounts of the Clearing House, including all books 

and records required to be maintained pursuant to the CEA and CFTC 

Regulations.

2.8.2 The Clearing House shall retain all such books and records for at least five 

(5) years in accordance with CFTC Regulations and shall make such books 

and records readily accessible for inspection by the CFTC and the U.S. 
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

18

Department of Justice during the first two (2) years of such five-year 

period. 

2.9 Emergencies

2.9.1 During an Emergency, the Board may implement temporary emergency 

procedures and rules (“Emergency Rules”), subject to applicable 

provisions of the CEA and CFTC regulations. If the Chief Executive 

Officer (or, in the event that the Chief Executive Officer is unavailable, 

the Chairman or the Chief Risk 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

(or, if applicable, the Chairman or the Chief Risk Officer) shall have the 

authority, without Board action, to implement such Emergency Rules with 

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

to respond to such Emergency.

2.9.2 Pursuant to this Rule 2.9, Emergency Rules may require or authorize the 

Clearing House, the Board, any Committee, the Chief Executive Officer 

(or, if the Chief Executive Officer is unavailable, the Chairman or Chief 

Risk Officer) or any other officer of the Clearing House to take actions 

necessary or appropriate to respond to the Emergency, including:

(a) suspending or curtailing clearing or limiting clearing to liquidation 

only (in whole or in part);

(b) extending or shortening the expiration date and/or the last settlement 

date for Exchange Contracts;

(c) providing alternative settlement mechanisms;

(d) ordering the liquidation of Exchange Contracts, the fixing of a 

Settlement Price, or the reduction of positions;

(e) extending, limiting or changing the hours of operation of the 

Clearing House;

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

(g) changing the amount of money to be paid in connection with an

Exchange Contract, whether previously or thereafter settled;

(h) requiring Clearing Members to meet special Margin requirements;

(i) imposing or modifying limits on the size of positions that may be 

carried by Clearing Members; and/or
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

19

(j) with respect to an Emergency that is specific to one or more Clearing 

Members, employing the procedures set forth in Rule 5.3.

2.9.3 Whenever the Clearing House takes action to respond to an Emergency 

(including, without limitation, the actions set forth in Rule 2.9.2), it will, 

where possible, ensure that timely notice is given to Clearing Members.

2.9.4 The Clearing House 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, the Clearing House will 

notify the CFTC as soon as reasonably practicable, but in all circumstances 

within twelve hours of the implementation, modification or termination of 

such Emergency Rule.

2.9.5 Upon taking any action in response to an Emergency, the Clearing House 

will document the decisions and deliberations related to such action for 

review by the Board as soon as practicable. Such documentation will be 

kept for at least five years following the date on which the Emergency 

ceases to exist or to affect the Clearing House, and all such documentation 

will be provided to the CFTC upon request.
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

20

SECTION III CLEARING 

3.1 Categories of Clearing Membership 

There shall be two categories of Clearing Members: (i) FCM Clearing Members; 

and (ii) House-Only Clearing Members.

3.2 Qualification of Clearing Members

3.2.1 Each applicant for qualification as a Clearing Member must satisfy the 

following requirements:

(a) it shall be a corporation, limited liability company, partnership or 

other entity in good standing in its jurisdiction of formation;

(b) it shall be qualified to conduct business in the State of New York or 

have an agency agreement in place with an entity qualified in the 

State of New York that provides an agent for service of process and 

other communications from the Clearing House in connection with 

the business of the Clearing Member;

(c) it shall be engaged in or demonstrate its capacity to engage in the 

conduct of the business of a Clearing Member;

(d) it shall have received all necessary registrations, approvals and 

consents from all applicable regulatory authorities and 

Governmental Authorities to permit it to conduct the business of a 

Clearing Member;

(e) it shall demonstrate such fiscal integrity as would justify the 

Clearing House’s assumption of the risks inherent in clearing 

Exchange Contracts;

(f) it shall demonstrate financial capitalization commensurate with 

Clearing House requirements as set by the Risk Management 

Committee from time to time, provided that the minimum capital 

requirement shall not be more than $50,000,000;

(g) if it is clearing on behalf of Customers, it shall be registered as an 

FCM;

(h) it shall have established satisfactory relationships with, and 

designated to the Clearing House, an Approved Financial Institution 

for confirmation and payment of all Initial Margin, Variation 

Margin and other settlements with the Clearing House;

(i) it shall maintain back-office facilities staffed with experienced and 

competent personnel or have entered into a facilities management 
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

21

agreement in form and substance acceptable to the Clearing House; 

and

(j) it shall have adequate operational capacity, including the ability to 

process expected peak volumes and values within required time 

frames, fulfill Collateral payment and delivery obligations imposed 

by the Clearing House and participate in default management 

activities.

3.2.2 A Clearing Member shall promptly notify the Clearing House if it fails to 

satisfy any of the qualifications for membership in Rule 3.2.1.

3.2.3 The Board may grant exemptions to the qualifications for membership in 

Rule 3.2.1 if it is determined that such an exemption would not jeopardize 

the financial or operational integrity of the Clearing House.

3.3 Applications for Membership

Any Person desiring to become a Clearing Member shall execute a Clearing 

Member Agreement and submit an application in such form as shall be prescribed 

by the Clearing House, which shall include a certification that the applicant has 

received, reviewed and agrees to abide by the Rules and perform the duties and 

responsibilities of a Clearing Member. Only Persons found to meet the 

qualifications set forth in Rule 3.2 will be permitted to be Clearing Members. For 

the purpose of determining whether any applicant or Clearing Member is so 

qualified, the Clearing House may examine the books and records of any applicant 

or Clearing Member and may take such other steps as it may deem necessary to 

assess the qualifications of an applicant or Clearing Member. An applicant for 

Clearing Member status shall be conclusively deemed to have agreed to have no 

recourse against the Clearing House in the event that its application to become a 

Clearing Member is rejected.

3.4 Appeal of Clearing Membership Decisions

An applicant that fails to be approved for membership shall be informed by the 

Clearing House and shall have seven (7) Business Days thereafter to file an appeal 

to the Board seeking further consideration. The Board may approve the applicant 

by a majority vote if it determines that the decision to deny the application was in 

error.

3.5 Duties and Responsibilities of Clearing Members

Each Clearing Member shall, and where applicable, shall cause all of its Authorized 

Users and employees to:

(a) comply with and act in a manner consistent with the Rules and any 

rules of or agreement with a Delivery Facility, as applicable;
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

22

(b) ensure that all Clearing Activity conducted by the Clearing Member 

is performed in a manner that is consistent with the Rules;

(c) ensure that only the Clearing House’s facilities are used to conduct 

Clearing Activity;

(d) ensure that the Clearing House’s facilities are used in a responsible 

manner and are not used for any improper purpose;

(e) meet all financial requirements provided by the Rules;

(f) guarantee and assume complete responsibility for all Exchange 

Contracts submitted by it or which it has authorized another Person 

to submit for clearing in its name;

(g) maintain its deposit in the Guaranty Fund as required by the Rules;

(h) observe high standards of integrity, market conduct, commercial 

honor, fair dealing and just and equitable principles of trade while 

conducting any Clearing Activity, or any aspect of any business 

connected with or concerning the Clearing House;

(i) immediately inform the Clearing House of any changes to the 

account information provided by the Clearing Member;

(j) keep User IDs and passwords confidential;

(k) promptly review and, if necessary, respond to all communications 

sent by the Clearing House;

(l) keep, or cause to be kept, complete and accurate books and records 

as required to be maintained pursuant to the CEA and CFTC 

Regulations for the time and in the manner specified by CFTC 

Regulations; and make such books and records available for 

inspection by a representative of the Clearing House, the CFTC or

other Governmental Authority of competent jurisdiction;

(m) not knowingly mislead or conceal any material fact or matter in any 

dealings or filings with the Clearing House or in connection with a 

Disciplinary Action;

(n) be responsible, even after it has withdrawn as a Clearing Member, 

for any violations of Rules committed by it while it was a Clearing 

Member; 

(o) cooperate with the Clearing House and any Governmental Authority 

in any inquiry, investigation, audit, examination or proceeding; 
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

23

(p) adopt, adhere to and enforce risk management and other policies and 

procedures that are designed to address the risks that the Clearing 

Member poses to the Clearing House (including whether a Customer 

presents a heightened risk profile) and promptly provide, upon 

request by the Clearing House or the CFTC, information related to 

the risk management policies, procedures and practices of the 

Clearing Member; and

(q) coordinate with the Clearing House to develop and test business 

continuity and disaster recovery plans that enable effective 

resumption of daily processing, clearing and settlement following a 

disruption.

3.6 Prohibited Practices

3.6.1 Clearing Members are prohibited from engaging in practices that may 

cause degradation of the Clearing System or the Clearing House’s other 

services or facilities.

3.6.2 Clearing Members, Authorized Users and other Persons subject to the 

jurisdiction of the Clearing House are prohibited from engaging in acts or 

practices contrary to the purposes of the Clearing House, and from 

committing any act or engaging in any conduct that is likely to bring the 

Clearing House into disrepute. These prohibited practices include, but are 

not limited to: (i) engaging in any activity that presents a risk of harm to 

the Clearing House, Clearing Members or the public and (ii) engaging in 

conduct or practices that are detrimental to the best interests of the Clearing 

House or that adversely affect the integrity of the Clearing House or the 

Clearing System.

3.7 Termination; Restriction on Activity

3.7.1 Upon the occurrence of a Termination Event, the Board may, in its sole 

discretion, impose limitations, conditions and restrictions upon a Clearing 

Member or terminate the status of the Clearing Member. In such 

circumstances, the Board may, in its sole discretion:

(a) decline to accept new positions in Exchange Contracts for the House 

Accounts and/or Customer Accounts of such Clearing Member;

(b) permit transactions in Exchange Contracts to be tendered for 

liquidation only;

(c) cause open Exchange Contracts to be settled in cash or liquidated in 

the open market; and

(d) otherwise take or omit to take such actions, or any combination 

thereof, as it deems necessary or appropriate in the circumstances.
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

24

3.7.2 Failure to comply with the Rules may subject a Clearing Member to a 

suspension or revocation of clearing privileges. In addition, or in the 

alternative, and in either case in its sole discretion, the Board shall be 

authorized to:

(a) impose on such Clearing Member such additional capital, Initial 

Margin or other requirements as it shall deem appropriate for the 

protection of the Clearing House and its Clearing Members;

(b) allow such Clearing Member to submit Exchange Contracts for 

liquidation only; and

(c) limit or restrict the type of Exchange Contracts that may be cleared 

by such Clearing Member in any of its accounts with the Clearing 

House.

3.8 Authorized Users

3.8.1 Each Clearing Member shall designate one or more Authorized Users who 

will be responsible for all Clearing Activity conducted on behalf of the 

Clearing Member. Each Clearing Member must provide the Clearing 

House with current contact information and any other requested 

information for each of its Authorized Users so that the Clearing House is 

able to immediately contact the Authorized Users. The Clearing House 

will not accept the registration as an Authorized User of any individual 

who is an employee of the Clearing House.

3.8.2 To designate an Authorized User, a Clearing Member must follow the 

procedures established by the Clearing House. The Clearing House may 

establish criteria that individuals must fulfill to become an Authorized 

User. By agreeing to become an Authorized User, an individual agrees to 

be bound by the duties and responsibilities of an Authorized User and to 

be subject to, and comply with, the Rules applicable to Authorized Users.

3.8.3 The Clearing House will promptly notify a Clearing Member of the 

approval of nominated Authorized Users, and will maintain a list of all 

appointed Authorized Users for each Clearing Member.

3.8.4 The Clearing House shall promptly notify a Clearing Member if it declines

to approve, revokes or suspends the designation of an Authorized User.

3.8.5 To request the termination of the designation of an Authorized User, the 

Clearing Member or Authorized User must notify the Clearing House 

following the procedures established by the Clearing House.

3.8.6 The Clearing House may, in its sole discretion, refuse to accept a request 

to terminate the registration of an Authorized User, or may postpone the 

effective date of the termination of registration if the Clearing House 
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

25

considers it necessary for the protection of Clearing Members or in the 

Clearing House’s best interest. 

3.8.7 Based on the information provided to, and other information gathered by, 

the Clearing House regarding the request to terminate the registration of 

an Authorized User, the Clearing House will:

(a) accept the request to terminate the designation;

(b) postpone the effective date of termination of the designation; and/or

(c) impose any terms or conditions before or after the effective date of 

termination of the designation.

3.8.8 After termination or revocation of the designation or during any period of 

suspension of an Authorized User, the Authorized User remains subject to 

the Rules and the jurisdiction of the Clearing House for acts done and 

omissions made while acting as an Authorized User. Any Clearing House 

proceeding relating to an Authorized User shall occur as if the Authorized 

User were still designated as such.

3.9 Capital Requirements

3.9.1 A Clearing Member must at all times maintain minimum regulatory capital 

of the greater of (i) $10,000,000, or (ii) the capital requirements imposed 

by any Government Agency, Self-Regulatory Organization or other 

examining authority or regulator to which such Clearing Member is 

subject by statute, regulation or agreement. 

3.9.2 The Risk Management Committee may prescribe additional capital 

requirements with respect to any Clearing Member.

3.10 Position Risk

3.10.1 The Clearing House shall have authority to develop and implement risk 

control policies for Customer and House Account transactions and 

positions. Further, the Clearing House shall have authority to take such 

action, including but not limited to: (i) imposing enhanced capital 

requirements; (ii) imposing enhanced Margin requirements; 

(iii) prohibiting an increase or requiring a reduction in positions; and 

(iv) liquidating or transferring positions when, in the sole discretion of the 

Clearing House, such action is necessary to effectively manage risk posed 

to the Clearing House by a Clearing Member. 

3.10.2 Where any two or more Clearing Members are Affiliates, the Board may 

impose risk limits on the aggregate positions that such Clearing Members 

may carry with the Clearing House. 
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

26

3.11 Financial Reporting Requirements

3.11.1 Each Clearing Member shall file with the Clearing House:

(a) A financial statement in the form prescribed in Rule 3.11.2 within 

sixty (60) days after the end of such Clearing Member’s fiscal year, 

together with a summary description in reasonable detail of the risk 

management, policies, procedures and systems that were maintained 

by such Clearing Member during such fiscal year and a financial 

statement in the form prescribed in Rule 3.11.2 within seventeen 

(17) days after the end of each month; and 

(b) A copy of each financial statement, financial report, or notice 

pursuant to CFTC Regulation 1.12, which it files with any 

Governmental Authority or Self-Regulatory Organization of which 

it is a member or participant at the same time it files such statement,

report, or notice with any such Governmental Authority or SelfRegulatory Organization, and if such statement, report, or notice is 

other than a routine periodic statement, report, or notice required 

under the bylaws, rules or regulations of such entity, such copy shall 

be accompanied by a written statement, pursuant to CFTC 

Regulation 1.12, setting forth (to the extent known) the reasons why 

such Clearing Member is filing such statement, report, or notice.

3.11.2 The financial statements required by subparagraph Rule 3.11.1 shall be 

submitted on Form 1-FR-FCM or FOCUS Report Part II, provided that if 

the Clearing Member is not required to submit Form 1-FR-FCM or a 

FOCUS Report it must provide financial information in the form and 

manner prescribed by the Clearing House. The financial statement for the 

fiscal year of a Clearing Member shall be certified by an independent 

public accountant, and the monthly financial statements shall be certified 

by the president, the chief financial officer or a general partner of the 

Clearing Member.

3.11.3 Each Clearing Member shall file with the Clearing House such financial 

or other information, in addition to that which is explicitly required by this 

Rule 3.11, as may be requested by the Clearing House from time to time.

3.11.4 In the event that a Clearing Member: (i) fails to meet any obligation to 

deposit or pay any Margin or option premium when and as required by any 

clearing organization of which it is a member; (ii) fails to be in compliance 

with any applicable financial requirements of any Governmental Authority 

or Self-Regulatory Organization; or (iii) becomes the subject of a 

bankruptcy petition, receivership proceeding or the equivalent, such 

Clearing Member shall immediately so advise the Clearing House both 

telephonically and in writing.
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

27

3.12 Guaranty Requirement

3.12.1 Unless waived by the Clearing House, each Clearing Member must 

provide and maintain with the Clearing House a correct roster of every 

Person (including natural persons) that directly or indirectly is the 

beneficial owner (determined in accordance with Rule 13d-3 under the 

Securities Exchange Act of 1934, as amended) of 5% or more of any class 

of equity security of the Clearing Member. For purposes of this rule, the 

term “equity security” includes any stock, partnership interest, 

membership interest or similar security, or any security convertible into 

such a security, or carrying any option, warrant or right to subscribe to or 

purchase such a security, or any other instrument or right that the Clearing 

House deems to be of similar nature and considers necessary or appropriate 

to treat as an equity security. If such Person owns its interest in the 

Clearing Member indirectly through one or more intermediaries, all such 

intermediaries must be disclosed, including:

(a) if a corporation, all shareholders who own 5% or more of any class 

of equity security of the Clearing Member;

(b) if a partnership, all general and any limited or other partners who 

have contributed 5% or more of the capital of such Clearing 

Member, or

(c) if a limited liability company, owners of membership interests of 

5% or more of such Clearing Member.

3.12.2 At the discretion of the Clearing House, a Clearing Member may be 

required to provide the Clearing House with a written guarantee, in a form 

reasonably satisfactory to the Clearing House, from any Person owning, 

directly or indirectly, 5% or more of any class of the equity securities of 

the Clearing Member pursuant to which such Person shall guarantee all 

obligations arising out of (i) accounts cleared by the Clearing Member that 

are non-Customer accounts, including proprietary accounts of the Clearing 

Member, and (ii) accounts carried by another Clearing Member if such 

accounts would be considered non-Customer Accounts, including 

proprietary accounts of the Clearing Member, if carried directly by the 

Clearing Member. Notwithstanding anything herein to the contrary, the 

guarantee required by this Rule 3.12.2 shall not apply to any obligation of 

the Clearing Member to pay an Assessment to the Clearing House pursuant 

to Rule 3.35.

3.12.3 A Clearing Member must provide a written guaranty of its obligations to 

the Clearing House when a Clearing Member reorganizes into a different 

form of legal entity (other than a reorganization arising from an Insolvency 

proceeding). The guaranty must be in a form reasonably satisfactory to 

the Clearing House and must run from the new Clearing Member to the 
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

28

existing Clearing Member with respect to all obligations of the existing 

Clearing Member to the Clearing House and all agreements entered into 

by the existing Clearing Member with the Clearing House.

3.13 Notices Required of Clearing Members

3.13.1 Financial Notices. 

A Clearing Member must provide immediate notice to the Clearing House, 

orally and in writing, if the Clearing Member:

(a) gives notice to the CFTC pursuant to CFTC Regulation 1.12 or to 

the Securities and Exchange Commission pursuant to Securities 

Exchange Act Rule 17a-11;

(b) changes its fiscal year;

(c) changes its public accountants; or

(d) fails to comply with additional accounting, reporting, financial 

and/or operational requirements prescribed by the Clearing House

or Delivery Facility; 

(e) an Initial Margin or Variation Margin call in any account exceeds 

the Clearing Member’s excess adjusted net capital; or

(f) is subject to any financial or business development that could 

materially affect the ability of the Clearing Member to comply with 

its obligations as a Clearing Member.

3.13.2 Operational Notices. 

A Clearing Member must provide immediate notice to the Clearing House, 

orally and in writing of:

(a) any material damage to, or failure or inadequacy of, the systems, 

facilities or equipment of the Clearing Member to effect transactions 

pursuant to the Rules or to timely perform the Clearing Member’s 

financial obligations under or in connection with Exchange

Contracts;

(b) any failure by such Clearing Member, or any guarantor or 

commonly owned or controlled Clearing Member to perform on any 

of its material contracts, obligations or agreements;

(c) any determination that it, or any guarantor, will be unable to perform 

on any of its material contracts, guarantees, obligations or 

agreements;
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

29

(d) the Insolvency of such Clearing Member or of any guarantor;

(e) the institution of any proceeding by or against the Clearing Member, 

any affiliate of the Clearing Member, or any Person with a beneficial 

ownership of greater than 5% in the Clearing Member, under any 

provision of the bankruptcy laws of the United States, or under the 

Securities Investor Protection Act of 1970, any other statute or 

equitable power of a court of like nature or purpose, in which such 

Clearing Member or Person is designated as bankrupt, debtor or 

equivalent, or if a receiver, trustee or similar official is appointed for 

the Clearing Member, such Person, or its or their property;

(f) the receipt by such Clearing Member, or the filing by such Clearing 

Member with a Self-Regulatory Organization, of a notice of material 

inadequacy; or

(g) the receipt by such Clearing Member from its independent auditors 

of an audit opinion that is qualified.

3.13.3 A Clearing Member must provide prompt written notice to the Clearing 

House of:

(a) any change in its name, business address, telephone or facsimile 

number, electronic mail address, or any number or access code for 

any electronic communication device used by it to communicate 

with the Clearing House;

(b) a change in any of its relevant key personnel; 

(c) any Person directly or indirectly becoming a beneficial owner of 5% 

or more of any class of its equity securities; 

(d) any refusal of admission to, withdrawal of any application for 

membership in, any suspension, expulsion, bar, material fine, 

censure, denial of membership, registration or license, withdrawal 

of any application for registration, cease and desist order, temporary 

or permanent injunction, denial of trading privileges, or any other

material sanction or discipline through an adverse determination, 

voluntary settlement or otherwise, by any Governmental Authority, 

Self-Regulatory Organization, Delivery Facility, or other business 

or professional association; or

(e) the imposition of any restriction or limitation on the business 

conducted by the Clearing Member on or with any Self-Regulatory 

Organization other than restrictions or limitations imposed generally 

on all members of or participants in such Self-Regulatory

Organization).
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

30

3.13.4 A Clearing Member must provide at least ten (10) Business Days prior 

written notice to the Clearing House of:

(a) any proposed change in the organizational or ownership structure or 

management of a Clearing Member, including any merger, 

combination or consolidation between the Clearing Member and 

another Person;

(b) the assumption or guaranty by the Clearing Member of all or 

substantially all of the liabilities of another Person in connection 

with a direct or indirect acquisition of all or substantially all of that 

Person’s assets;

(c) the sale of a significant part of the Clearing Member’s business or 

assets to another Person;

(d) a proposed change in the direct or indirect beneficial ownership of 

20% or more of the Clearing Member; or

(e) any change in the system provider used by such Clearing Member 

to process transactions in Exchange Contracts.

3.14 No Transfer of Membership

No membership in the Clearing House may be transferred to another Person except 

in connection with a merger or other business combination where such transfer of 

membership is approved by the Clearing House.

3.15 Adequate Assurances

If the Clearing House has reason to believe that a Clearing Member may fail to 

comply with any of the Rules, it may require the Clearing Member to provide it, 

within such timeframe, in such detail, and in such manner as the Clearing House 

shall determine, with adequate assurances that the Clearing Member will continue 

to comply with the Rules.

3.16 Acceptance for Clearing; Novation

3.16.1 The Clearing House will coordinate with the Exchange and FCM Clearing 

Members to accept or reject Exchange Contracts for clearing as quickly 

after execution as technologically practicable. The Clearing House will 

accept Exchange Contracts for clearing when such Exchange Contracts 

have been received by the Clearing System if the parties to such Exchange 

Contracts have clearing arrangements in place and have satisfied any 

applicable risk limits imposed by the Clearing Member, the Exchange or 

the Clearing House. Subject to the foregoing and to Rule 3.16.2, the 

Clearing House shall accept for clearing any Exchange Contract that has 

been executed pursuant to Exchange Rules and submitted by the Exchange 
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

31

to the Clearing House for clearance, and shall not accept for clearing any 

Exchange Contract submitted to it by any Person other than the Exchange. 

All Exchange Contracts accepted for clearing by the Clearing House shall 

be subject in all respects to these Rules.

3.16.2 The Clearing House, by accepting an Exchange Contract offered to it for 

clearing, shall assume, in the place of each Clearing Member that is a party 

to such Exchange Contract, all liabilities and obligations imposed by such 

Exchange Contract to the Clearing Member that is the other party thereto 

and shall succeed to and become vested with all rights and benefits 

accruing therefrom. Such assumption by the Clearing House shall 

terminate all liabilities and obligations of the Clearing Member whose 

Exchange Contract is so accepted to the other Clearing Member which was 

a party to such Exchange Contract.

3.16.3 The Clearing House shall be entitled to rely conclusively on the accuracy 

and authenticity of any information regarding any Exchange Contract

submitted to the Clearing House by the Exchange on behalf of a Clearing 

Member, whether or not the Clearing Member in fact authorized the 

submission of such Exchange Contract for clearing.

3.16.4 Where, as the result of novation under this Rule 3.16, a Clearing Member 

has bought and sold for the same account, (i) an Exchange Contracts with 

the same expiry or (ii) a put or call option with the same margining style

on the same Exchange Contract with the same strike price and expiry, such 

purchase and sale will be offset by the Clearing House. Such a Clearing 

Member shall be required to pay the loss or entitled to collect the profit, as 

the case may be, upon such offsetting transactions, and shall have no 

further rights or be under any further obligation with respect thereto. For 

purposes of this Rule, the first Exchange Contract made shall be deemed 

the first Exchange Contract offset.

3.16.5 THE LIABILITIES AND OBLIGATIONS OF THE CLEARING HOUSE ARISING 

PURSUANT TO THIS RULE 3.16.2 SHALL EXTEND ONLY TO CLEARING 

MEMBERS. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, THE 

CLEARING HOUSE SHALL NOT HAVE ANY LIABILITY OR OBLIGATION TO ANY 

CUSTOMER ARISING OUT OF OR WITH RESPECT TO ANY EXCHANGE 

CONTRACT OR TO ANY CLEARING MEMBER OR OTHER PERSON WITH 

RESPECT TO ANY EXCHANGE CONTRACT WHICH HAS NOT BEEN ACCEPTED 

FOR CLEARING BY THE CLEARING HOUSE.

3.17 Transfers of Open Positions

Any transfer of an Exchange Contract shall be subject to the following:

(a) subject to the limitations of Exchange position transfer rules, the 

Clearing House will approve a position transfer without requiring 
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

32

the prior close-out and re-booking of Exchange Contracts if the 

Clearing Member currently carrying a Customer Account (the

“Carrying Clearing Member”) notifies the Clearing House that a 

Customer has requested to transfer all or a portion of the positions 

in the Customer Account to another Clearing Member (the 

“Receiving Clearing Member”) provided that (i) the notification 

includes a representation that the Customer is not currently in 

default, the Customer’s name, account mnemonics and, if the 

transfer is not of an entire account, a description of which Exchange 

Contracts are to be transferred; and (ii) the Receiving Clearing 

Member agrees to accept the transfer, the transferred Exchange 

Contracts will have appropriate Margin at the Receiving Clearing 

Member and any remaining Exchange Contracts in the Customer’s 

Account at the Carrying Clearing Member will have appropriate 

Margin.

(b) if the transferor is in Default, transfers may only be effected at the 

latest Settlement Price unless the Clearing House in its discretion 

determines that, because of excess Margin on deposit or for other 

sufficient reason, accepting the transfer at other prices would not 

jeopardize the Clearing House; and

(c) if, in any case, the Clearing House in its discretion determines that 

it would be contrary to the best interests of the Clearing House to 

accept a transfer at a price other than the latest Settlement Price, it 

may, notwithstanding any provision to the contrary in the Exchange 

Rules, require such transfer to be effected at the Settlement Price.

3.18 Approved Financial Institutions

3.18.1 A bank or trust company may be designated by the Board as an Approved 

Financial Institution to act as a depository for Margin on behalf of Clearing 

Members or in such other capacity as the Board may approve. To become 

designated as an Approved Financial Institution, a bank or trust company 

must submit an application in such form and containing such information 

as the Clearing House from time to time may require and must meet such 

financial and other requirements as the Board may establish from time to 

time including requirements related to capitalization, creditworthiness, 

access to liquidity, operational reliability, and regulation and supervision. 

A bank or trust company that has been designated by the Board as an 

Approved Financial Institution for any purpose may act as such until such 

designation is suspended or terminated in accordance with Rule 3.18.2.

3.18.2 If a bank or trust company does not meet the requirements established by 

the Clearing House pursuant to this Rule 3.18, or if the Board determines 

that it would be in the best interest of the Clearing House or its Clearing 

Members, the Clearing House may:
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

33

(a) deny the application of such bank or trust company for designation 

as an Approved Financial Institution;

(b) suspend or terminate the status of such bank or trust company as an 

Approved Financial Institution for any or all purposes; or

(c) approve the application or permit the bank or trust company to 

continue as an Approved Financial Institution, subject in either case 

to such terms, conditions and limitations as the Clearing House, in 

its judgment, deems appropriate.

3.18.3 All wire transfers made by Clearing Members to the Clearing House must 

be drawn on or made by an Approved Financial Institution.

3.18.4 If at any time the Board suspends or terminates the status of an Approved 

Financial Institution, affected Clearing Members shall immediately 

replace the same with an active Approved Financial Institution complying 

with these Rules.

3.19 Liens Held by the Clearing House

The Clearing House shall have a first lien and perfected security interest in, and 

right of setoff against, all Margin, Guaranty Fund deposits, Collateral and other property

(including Exchange Contracts), and all proceeds of any of the foregoing, held in or for the 

accounts of a Clearing Member in connection with the financial obligations of such 

Clearing Member, however created, arising or evidenced, whether direct or indirect, 

absolute or contingent, existing, due or to become due.

3.20 Initial Margin; Additional Margin

3.20.1 Each Clearing Member shall deposit with or pay to the Clearing House 

Initial Margin for each cleared Exchange Contract in such amounts, in 

such forms, at such times and in accordance with such systems as may be 

prescribed by these Rules or by the Board. Initial Margin requirements 

shall be as determined by the Clearing House from time to time. Initial 

Margin requirements shall be calculated on a gross basis for each 

Customer, and Clearing Members are not permitted to net positions of 

different Customers against one another. Clearing Members shall collect 

Initial Margin from their Customers, for Customers with heightened risk 

profiles (consistent with the Clearing Member’s risk management policies 

and procedures), at a level that exceeds the Initial Margin amount 

determined by the Clearing House by such amount as the Clearing House 

shall specify from time to time. For Exchange Contracts that are equity 

style options, the Clearing House will determine option value for each 

option and the net option value of each portfolio. For a settlement cycle, 

(i) if the net option value of the portfolio is positive, such amount may be 

used to satisfy Initial Margin requirements for the portfolio, (ii) if the net 

option value of a portfolio is negative, such amount will increase the Initial 
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

34

Margin requirements for the portfolio. For Physically Settled Exchange

Contracts, Delivery Margin is a component of Initial Margin.

3.20.2 The Clearing House will review the adequacy of its Initial Margin 

requirements each Business Day. Whenever the Chief Risk Officer or his 

or her delegate concludes that unstable conditions relating to one or more 

Exchange Contracts exist, or that the maintenance of an orderly market or 

the preservation of the fiscal integrity of the Clearing House requires 

additional Initial Margin, or that any Clearing Member is carrying 

Exchange Contracts or incurring risks in its House Account or Customer 

Account that are larger than is justified by the financial or operational 

condition of the Clearing Member, the Chief Risk Officer or his or her 

delegate may require additional Initial Margin to be deposited with the 

Clearing House within such time as may be specified by the Chief Risk 

Officer, or his or her delegate, or limit withdrawals of excess Initial Margin 

on deposit from such Clearing Member for such time as may be specified 

by the Chief Risk Officer, or his or her delegate. Such additional Margin 

may be for one or more Exchange Contracts from one or more Clearing 

Members and for long and/or short positions.

3.20.3 Without limitation of the Clearing House’s other rights to use or apply a 

Clearing Member’s Initial Margin as permitted in these Rules, under 

Applicable Law or otherwise, the Clearing House may: (i) invest any cash 

deposited as Initial Margin in accordance with the Clearing House’s 

investment policies and CFTC Regulation 1.25 and any interest, capital 

gain or other income earned on such investments shall belong and be 

credited to the Clearing House; (ii) use a Clearing Member’s cash or 

securities constituting Initial Margin in its House Account from time to 

time to meet temporary liquidity needs of the Clearing House (whether or 

not such Clearing Member is in Default), in a manner consistent with the 

Clearing House’s liquidity policies and Applicable Law, including by way 

of assignment, transfer, pledge, repledge or creation of a lien on or security 

interest in such Initial Margin in connection with borrowing, repurchase 

transactions or other liquidity arrangements to support payment 

obligations of the Clearing House in respect of Exchange Contracts; and 

(iii) charge and collect any operational fees or expenses incurred by the 

Clearing House in connection with the deposit by a Clearing Member of 

Margin and the Clearing House shall have the right to instruct each 

Approved Financial Institution to debit the House Account maintained by 

each Clearing Member, and/or any other account designated by such 

Clearing Member for purposes of this Rule, for any payment of these fees 

or expenses due to the Clearing House.

3.21 Variation Margin

Where Exchange Contracts are accepted for clearing and the price of such 

Exchange Contracts is less than the Settlement Price therefor, the selling Clearing 
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

35

Member shall be obligated to pay Variation Margin to, and the buying Clearing 

Member shall be entitled to receive Variation Margin from, the Clearing House as 

set forth in Rule 3.23 and in the policies and procedures of the Clearing House. 

Where Exchange Contracts are accepted for clearing and the price of such 

Exchange Contracts is greater than the Settlement Price, the buying Clearing 

Member shall be obligated to pay Variation Margin to, and the selling Clearing 

Member shall be entitled to receive Variation Margin from, the Clearing House in 

accordance with the process set forth below and any other policies and procedures 

of the Clearing House. Thereafter, Clearing Members shall be obligated to pay or 

entitled to receive Variation Margin on open Exchange Contracts and on Exchange 

Contracts that have been closed on the books of the Clearing House. All Variation 

Margin payments to the Clearing House shall be made in immediately available 

funds. If an Approved Financial Institution fails to pay Variation Margin on behalf 

of a Clearing Member, such Clearing Member will remain obligated to pay such 

Variation Margin to the Clearing House notwithstanding such failure.

3.22 Cash Margin Deposits

Each Clearing Member shall establish and maintain House and, if applicable, 

Customer accounts at an Approved Financial Institution. A Clearing Member shall 

use such accounts for the payment of Variation Margin and Initial Margin. The 

Clearing House shall have the right to instruct such Approved Financial Institution 

to debit the Margin accounts maintained by a Clearing Member for any deposits of 

Initial Margin or payments of Variation Margin due to the Clearing House pursuant 

to these Rules and to deposit such funds into the appropriate Clearing House 

account.

3.23 Margin Payments

3.23.1 The Clearing House shall advise each Clearing Member of the amount of 

Initial Margin and Variation Margin owing to or from such Clearing 

Member after the close of trading on each Business Day and:

(a) If the aggregate net amount of Variation Margin for all Exchange

Contracts carried for Customers by such Clearing Member is owing 

to the Clearing House, the Clearing House shall instruct such 

Clearing Member’s Approved Financial Institution to transfer funds

from the Customer Margin account maintained by such Clearing 

Member with such Approved Financial Institution to the settlement 

account of the Clearing House at its bank in an amount equal to the 

amount so owing;

(b) If the aggregate net amount of Variation Margin for all Exchange

Contracts carried for Customers by such Clearing Member is owing 

to such Clearing Member, the Clearing House shall instruct its bank 

to transfer funds from the Clearing House’s settlement account to 

the Customer Margin account maintained by such Clearing Member 
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

36

with such Approved Financial Institution in an amount equal to the 

amount so owing;

(c) If the aggregate net amount of Variation Margin for all Exchange 

Contracts carried for House Accounts by such Clearing Member is 

owing to the Clearing House, the Clearing House shall instruct such 

Clearing Member’s Approved Financial Institution to transfer funds

from the proprietary Margin account maintained by such Clearing 

Member with such Approved Financial Institution to the settlement 

account of the Clearing House at its bank in an amount equal to the 

amount so owing;

(d) If the aggregate net amount of Variation Margin for all Exchange 

Contracts carried for House Accounts by such Clearing Member is 

owing to such Clearing Member, the Clearing House shall instruct 

its bank to transfer funds from the Clearing House’s settlement 

account to the House Margin account maintained by such Clearing 

Member with such Approved Financial Institution in an amount 

equal to the amount so owing; provided, however, that on any day 

on which Variation Margin for the Customer Account is owing by 

such Clearing Member to the Clearing House, the Clearing House 

shall not transfer funds owing to the Clearing Member in respect of 

the Clearing Member’s House Account until the amount owing by 

the Clearing Member to the Clearing House with respect to such 

Customer Account has been paid in full; provided further, that on 

any day on which the Clearing House is required to pay Variation 

Margin to a Clearing Member House Account but such Clearing 

Member is required to deposit Initial Margin or to increase the 

amount of its Guaranty Fund deposit, the Clearing House may net 

such amounts due from such Clearing Member against the Clearing 

House’s obligation to pay such Clearing Member Variation Margin 

and instead make a single payment to, or receive a single payment 

from, such Clearing Member;

(e) If the aggregate net amount of Initial Margin for all Exchange 

Contracts carried for Customers by such Clearing Member is owing 

to the Clearing House, the Clearing House shall instruct such 

Clearing Member’s Approved Financial Institution to wire transfer 

funds from the Customer Margin account maintained by such 

Clearing Member with such Approved Financial Institution to the 

Customer Margin account of the Clearing House at its bank in an 

amount equal to the amount so owing; and

(f) If the aggregate net amount of Initial Margin for all Exchange 

Contracts carried for House Accounts by such Clearing Member is 

owing to the Clearing House, the Clearing House shall instruct such 

Clearing Member’s Approved Financial Institution to wire transfer 
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

37

funds from the House Margin account maintained by such Clearing 

Member with such Approved Financial Institution to the House 

Margin account of the Clearing House at its bank in an amount equal 

to the amount so owing.

3.23.2 Variation Margin and Initial Margin payments to the Clearing House shall 

be made in immediately available funds. Variation Margin for any 

Exchange Contract shall be paid in the currency in which such Exchange 

Contract is settled pursuant to the Contract Specifications.

3.23.3 Notwithstanding any other provision of the Rules, if the Chief Risk Officer 

or his or her delegate, determines (i) that unstable conditions relating to 

one or more Exchange Contracts exist, or that the maintenance of an 

orderly market or the preservation of the fiscal integrity of the Clearing 

House so requires, or (ii) that any Clearing Member is carrying Exchange 

Contracts or incurring risks in its House Accounts or Customer Accounts 

that are larger than is justified by the financial or operational condition of 

the Clearing Member, the Clearing House may issue one or more intra-day 

calls requiring the deposit of Initial Margin with the Clearing House by 

such time as the Clearing House shall specify. An intra-day call based on 

a determination as to the conditions specified in clause (i) above may be 

issued to any or all Clearing Members. An intra-day call based on a 

determination as to the conditions specified in clause (ii) above may be 

issued to any Clearing Member with respect to which such determination 

is made. If the Clearing House makes an intra-day call for Initial Margin, 

the Clearing House shall:

(a) Give notice to each Clearing Member that is required to make 

payment to the Clearing House of the amount payable by such 

Clearing Member; and

(b) Immediately after giving or making reasonable efforts to give the 

notice described in paragraph (a), the Clearing House may instruct 

the Approved Financial Institution at which each such Clearing 

Member maintains Margin accounts to transfer immediately 

available funds from the appropriate account of each such Clearing 

Member into the appropriate account of the Clearing House in the 

amount as determined by the Clearing House.

3.23.4 Initial Margin shall initially be deposited in cash with the Clearing House 

as provided in Rule 3.23.1. Thereafter, the Clearing House may permit a 

Clearing Member to substitute securities for cash on deposit as Initial 

Margin or irrevocable letters of credit for Customer cash on deposit as 

Initial Margin. If irrevocable letters of credit are substituted, then such 

substitution shall be subject to Rule 3.24.3. If securities are substituted, 

such substitution shall be subject to Rule 3.24.1 and 3.24.2 in all respects 

and effected by delivering to the Clearing House securities and a request 
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

38

for the release of the cash Initial Margin for which the securities will be 

substituted by the time specified by the Clearing House on the day on 

which the Clearing Member wishes to make the substitution. Net income, 

if any, generated by any securities held by the Clearing House as Initial 

Margin for any Clearing Member shall belong and be credited to such 

Clearing Member.

3.23.5 Subject to Rule 3.23.8, the Clearing House shall return to a Clearing 

Member the amount of any excess Initial Margin on deposit from such 

Clearing Member, provided that the Clearing House shall have received a 

request for such a release from such Clearing Member by such time as may 

be specified by the Clearing House on the day such release is to be made.

3.23.6 Excess Initial Margin shall not be released pursuant to Rule 3.23.5: (i) if 

the excess Margin is due to any House Account of Clearing Member unless 

the Clearing Member has deposited and paid all Margin and other amounts 

required from such Clearing Member for its House Account and Customer 

Account or otherwise pursuant to these Rules; or (ii) if the excess Margin 

is due to the Customer Account of the Clearing Member, unless the 

Clearing Member has deposited and paid all Margin required from its 

Customer Account pursuant to these Rules for such accounts. 

Notwithstanding any provision to the contrary in these Rules, the Clearing 

House may refuse to release the amount of excess Initial Margin on deposit 

in the House Accounts or Customer Accounts of a Clearing Member that 

has requested such release if the Chief Risk Officer or his or her delegate 

concludes that the financial or operational condition of the Clearing 

Member is such that the release of excess Initial Margin would be contrary 

to the fiscal integrity of the Clearing House unless the Clearing Member 

substantiates to the satisfaction of the Clearing House that the amount to 

be released will be returned to one or more Customers in accordance with 

Applicable Law.

3.23.7 A Clearing Member shall not permit a Customer to withdraw Margin from 

its account if such withdrawal would cause the Margin deposits that would 

remain in such account following the withdrawal to be less than the thenprevailing Initial Margin requirement.

3.23.8 Upon notice from the Clearing House that a transfer of funds from a 

Clearing Member’s account pursuant to Rule 3.23.1 was not effected as 

instructed by the Clearing House for any reason, the Clearing Member 

shall deliver to the Clearing House the amount required at such time and 

in such form as the Clearing House may prescribe.

3.24 Deposit of Non-Cash Collateral as Initial Margin

3.24.1 A Clearing Member may substitute securities for all or part of the cash it 

has on deposit with the Clearing House as Initial Margin, in accordance 
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

39

with Rule 3.23.1 and this Rule 3.24.1, provided, however, that the Board 

may prescribe limitations regarding the extent to which interests in any 

category of permitted securities may be substituted for cash Initial Margin.

(a) The only securities eligible for deposit as Initial Margin are Treasury 

Securities that have been approved for such purpose by the Risk 

Management Committee.

(b) Securities shall be valued in accordance with such methodology as 

may be adopted by the Risk Management Committee.

(c) Every deposit of Treasury Securities shall be made by wire transfer 

to an account of the Clearing House pursuant to such procedures and 

requirements prescribed by the Clearing House.

(d) Deposits of securities shall be made by such means and subject to 

such agreements and undertakings as may be prescribed by the 

Clearing House.

3.24.2 If securities deposited by a Clearing Member pursuant to this Rule 3.24

are sold by the Clearing House, the net proceeds thereof shall be deposited 

into one or more Initial Margin accounts maintained by the Clearing House 

and shall be credited to the appropriate Customer Account or House 

Account of such Clearing Member.

3.24.3 A Clearing Member may substitute irrevocable letters of credit from its 

Customers for Customer cash it has on deposit with the Clearing House as 

Initial Margin, in accordance with Rule 3.23.1 and this Rule 3.24.3, 

provided, however, that the Clearing House may prescribe limitations 

regarding the use of irrevocable letters of credit to meet Initial Margin 

requirements.

(a) Irrevocable letters of credit must be in a form acceptable to the 

Clearing House. 

(b) Irrevocable letters of credit must be drawable in the United States. 

(c) A Clearing Member shall not accept from a Customer irrevocable 

letters of credit that are issued by the Customer, an affiliate of the 

Customer, the Clearing Member, or an affiliate of the Clearing 

Member.

3.25 Finality of Settlement 

Payments or transfers of funds to and from the Clearing House, including but not 

limited to Margin payments and Guaranty Fund deposits, are irrevocable and 

unconditional when, as the case may be, they are debited from or credited to an 
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

40

account of the Clearing House at an Approved Financial Institution, provided that 

adjustments may be made after such time for the correction of errors.

3.26 Bank Holidays

If the Exchange is open for trading on any bank holiday, the following procedures 

will apply:

(a) On the Business Day preceding such bank holiday, each Clearing 

Member shall deposit or pay such Initial Margin and Variation 

Margin as may be required by the Clearing House. Such deposit or 

payment shall be made without offset or reduction by reason of 

excess Initial Margin held by the Clearing House for the account of 

such Clearing Member.

(b) On the Business Day following such bank holiday, deposits and 

payments of Initial Margin and Variation Margin, and withdrawals 

of excess Margin, shall be made to and by the Clearing House in 

accordance with these Rules, except that such deposits and 

payments shall be made with respect to transactions made on such 

bank holiday and on the Business Day preceding such bank holiday.

3.27 Segregation of Customer Funds

All Customer funds received by the Clearing House from a Clearing Member to 

purchase, Margin, guarantee, secure or settle the Exchange Contracts of the 

Clearing Member’s Customers, and all money accruing to such Customers as a 

result thereof, shall be segregated as customer funds in accordance with all relevant 

provisions of the CEA and CFTC Regulations. This Rule satisfies the requirement 

in CFTC Regulation 1.20(d)(1) that a Clearing Member must obtain a written 

acknowledgement from the Clearing House that such Customer funds are being 

held in accordance with such provisions.

3.28 Fees

The Clearing House shall have the right to instruct each Approved Financial 

Institution to debit the House Account maintained by each Clearing Member,

and/or any other account designated by such Clearing Member for purposes of this 

Rule, for any payment of fees, charges or other amounts (other than fines or 

penalties) due to the Clearing House or due to the Exchange (if and to the extent 

the Clearing House shall be acting as a collection agent for the Exchange). 

3.29 Defaults

3.29.1 If any of the following events occurs with respect to a Clearing Member 

(regardless of whether any such event is cured by any guarantor or other 

third party on behalf of such Clearing Member or otherwise), the Clearing 

Member shall be in Default:
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

41

(a) If such Clearing Member fails to meet any of its obligations under 

its Exchange Contracts with the Clearing House,

(b) If the Clearing Member is Insolvent,

(c) If such Clearing Member fails to pay when due any amounts owing 

to the Clearing House, or

(d) If such Clearing Member fails to make any required deposit to the 

Guaranty Fund when and as required by these Rules,

then, and in any such event, such Clearing Member shall automatically and 

without further action be suspended as a Clearing Member, except that 

such suspension may be temporarily postponed by the Chief Executive

Officer if the Chief Executive Officer determines that such suspension 

would not be in the best interests of the Clearing House, in which case the 

Chief Executive Officer shall immediately call a special meeting of the 

Board as soon as practicable, at which the Board may reinstitute such 

suspension or take such other action as may be provided for in the Rules.

3.29.2 If any of the following events occurs with respect to a Clearing Member 

(regardless of whether any such event is cured by any guarantor or other 

third party on behalf of such Clearing Member or otherwise):

(a) If the Clearing House determines that such Clearing Member is not 

in compliance with the provisions of Rule 3.2 and that such 

noncompliance poses an unacceptable risk to the Clearing House, or

(b) If the Clearing House determines that a Delivery Default occurred 

with respect to such Clearing Member,

then, and in any such event, the Clearing House may declare that the 

Clearing Member is in Default and may determine that such Clearing 

Member shall be suspended as a Clearing Member.

3.30 Liquidation on Termination or Suspension of Clearing Member

3.30.1 When a Person ceases to be a Clearing Member or is suspended as a 

Clearing Member, such Person shall be prohibited from establishing new 

positions and all open Exchange Contracts carried by the Clearing House 

for such Clearing Member shall be closed out as expeditiously as 

practicable such that:

(a) Open Exchange Contracts are transferred by the Clearing Member 

and accepted by one or more other Clearing Members, with the prior 

consent of the Clearing House, or transferred by the Clearing House 

to one or more other Clearing Members pursuant to an auction of 
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

42

the Exchange Contracts or other procedure instituted by the Clearing 

House;

(b) Exchange Contracts subject to outstanding delivery obligations are 

Physically Settled or transferred by the Clearing House to one or 

more other Clearing Members pursuant to an auction of the 

Exchange Contracts or other procedure instituted by the Clearing 

House;

(c) The Chief Executive Officer or Chief Risk Officer, or in the absence 

of both the Chief Executive Officer and the Chief Risk Officer, any 

Director with voting authority may determine that, in his or her 

opinion, liquidation be deferred for the protection of the financial 

integrity of the Clearing House; or

(d) Open Exchange Contracts are liquidated in the manner set forth in 

Rule 3.31 to the extent that paragraphs (a), (b), or (c) do not apply.

3.30.2 The Chief Executive Officer and Chief Risk Officer, or in the absence of 

either or both the Chief Executive Officer and the Chief Risk Officer, one 

or two Directors with voting authority may substitute for the Chief 

Executive Officer or Chief Risk Officer to jointly authorize the execution 

from time to time, solely for the purpose of reducing the risk to the 

Clearing House resulting from the continued maintenance of such open 

Exchange Contracts, the purchase or sale of Exchange Contracts or other 

hedging or risk reducing transactions. The Chief Executive Officer and 

the Chief Risk Officer may delegate to one or more Persons the authority 

to determine, within such guidelines as they may prescribe, the nature and 

timing of such transactions. 

3.31 Method of Closing Out

3.31.1 The open Exchange Contracts of a Clearing Member that, pursuant to 

Rule 3.30, are required to be liquidated pursuant to this Rule 3.31, shall be 

liquidated in such manner as the Clearing House, in its sole discretion, may 

direct. Without limiting the generality of the foregoing:

(a) Any such liquidation may be effected by executing block trades with 

one or more Clearing Members or Exchange participants or by 

directly entering orders into the Exchange’s trading platform for the 

purchase or sale of Exchange Contracts. The Chief Executive 

Officer or Chief Risk Officer may designate and authorize an 

individual, and may engage a third party, to be responsible for 

implementing such liquidation.

(b) Notwithstanding any other provision of this Rule 3.31.1, any such 

liquidation may be effected without placing orders for execution, by 

making appropriate book entries on the records of the Clearing 
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

43

House (including, without limitation, by pairing and canceling 

offsetting long and short positions in the Exchange Contracts carried 

by the Clearing Member) at a price equal to the Settlement Price on 

the day such liquidation is ordered or at such other price as the Board 

may establish; provided, however, if an order for relief has been 

entered with respect to such Person and its property is thereby 

subject to the control of a bankruptcy court, the Clearing House will 

not effect any such liquidation by book entry except as may be 

permitted by CFTC Regulations.

3.31.2 All liquidations made pursuant to this Rule 3.31 shall be for the account 

and risk of the Person which ceases to be a Clearing Member or which is 

suspended as a Clearing Member. The Clearing Member shall be liable to 

the Clearing House for any commissions or other expenses incurred in 

liquidating such Exchange Contracts.

3.32 Amounts Payable to the Clearing House

Upon completion of the liquidation or transfer of the positions of a Clearing 

Member pursuant to Rule 3.31, the Clearing House shall be entitled on demand to 

recover from such Clearing Member all amounts due to the Clearing House for all 

losses, liabilities and expenses (including without limitation legal fees and 

disbursements) incurred by the Clearing House in connection with such liquidation 

or transfer, and such Clearing Member’s Collateral, together with any other assets 

held by, pledged to or otherwise available to the Clearing House, including any 

guarantee issued pursuant to Rule 3.12.2, shall be applied by the Clearing House to 

discharge the Obligations of such Clearing Member to the Clearing House

(including any amounts, and costs and expenses associated with the liquidation, 

transfer or management of Exchange Contracts held in or for the accounts of such 

Clearing Member, and any fees, assessments or fines imposed by the Clearing 

House on such Clearing Member). 

3.33 Reinstatement of Suspended Member

Any Clearing Member suspended pursuant to Rule 3.30 may apply for 

reinstatement pursuant to Rule 3.3.

3.34 Guaranty Fund

3.34.1 The Clearing House shall establish and maintain a Guaranty Fund.

For the purposes of this Rule 3.34, the following terms shall have the 

following meanings: 

(a) “Initial Margin Amount” shall mean, as to any Clearing Member 

as of any day, such Clearing Member’s Initial Margin requirement 

for such Clearing Member’s House Account and Customer Account 
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

44

as determined by the Clearing House for the trading day (or for such 

other day in such months as the Board shall direct generally).

(b) “Base Margin Amount” shall mean that portion of each Clearing 

Member’s Guaranty Fund Deposit Requirement that is based upon 

the Initial Margin Amount.

(c) “Base Uncovered Stress Loss Amount” shall mean the portion of 

each Clearing Member’s Guaranty Fund Deposit Requirement that

is based upon the uncovered stress loss, as determined pursuant to 

the Clearing House’s risk policies.

(d) “Base Volume Amount” shall mean that portion of each Clearing 

Member’s Guaranty Fund Deposit Requirement that is based upon 

the volume of Exchange Contracts cleared by it, as determined 

pursuant to the Clearing House’s risk policies.

(e) “Guaranty Fund Deposit Surcharge” shall mean that portion of a 

Clearing Member’s Guaranty Fund Deposit Requirement that, if 

assessed, is linked to concerns regarding specific Clearing Members 

such as concentration risk, capital ratios, or other credit concerns. 

The Clearing Member’s Guaranty Fund Deposit Surcharge shall be 

determined pursuant to the Clearing House’s risk policies.

(f) “Exchange Contract Segment” shall mean an Exchange Contract 

or groups of Exchange Contracts as determined by the Clearing 

House.

3.34.2 Each Clearing Member shall deposit and maintain in the Guaranty Fund 

an amount calculated as follows: 

(a) For each Clearing Member, the amount to be deposited and 

maintained in the Guaranty Fund shall be the sum of the Clearing 

Member’s Base Margin Amount, Base Uncovered Stress Loss 

Amount, Base Volume Amount, and Guaranty Fund Deposit 

Surcharge, computed pursuant to Rule 3.34 (the “Guaranty Fund 

Deposit Requirement”) provided that:

(i) Each new Clearing Member shall be required to deposit such 

amount as determined by the Risk Management Committee; 

provided further, that in no event shall the amount of such 

deposit be less than seven hundred and fifty thousand dollars 

($750,000), or such other amount as the Risk Management 

Committee may establish from time to time; and

(ii) Subject to such thresholds as may be established by the Risk 

Management Committee from time to time, a Clearing 

Member whose Guaranty Fund Deposit Requirement has 
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

45

increased relative to its current contribution shall be required 

to deposit cash or Treasury Securities to remedy such 

deficiency.

(b) Subject to Rule 3.10, the Risk Management Committee shall have 

the authority to cause the Base Margin Amount, Base Uncovered

Stress Loss Amount, Base Volume Amount, and Guaranty Fund 

Deposit Surcharge of all Clearing Members to be recalculated at any 

time, and to require Clearing Members to immediately deposit in the 

Guaranty Fund any amounts required to meet the recalculated 

Guaranty Fund Deposit Requirements.

(c) The Clearing House shall have the authority to define and redefine 

the Exchange Contract Segments and to apportion the Guaranty 

Fund Deposit Requirement of each Clearing Member to the 

Exchange Contract Segment in which the Clearing Member holds 

Exchange Contracts. The Clearing House will determine whether a 

Clearing Member holds Exchange Contracts in an Exchange 

Contract Segment at the time the Guaranty Fund Deposit 

Requirement is recalculated. The Clearing House shall provide 

advance notice to Clearing Members when making: (1) a material 

change to an existing Exchange Contract Segment; or (2) a new 

Exchange Contract Segment. The Clearing House shall not make 

material changes to an Exchange Contract Segment when a Clearing 

Member is in Default and such Default is being actively managed

by the Clearing House.

3.34.3 Deposits in the Guaranty Fund may be made by any Clearing Member in 

the form of cash or Treasury Securities that are approved by the Risk 

Management Committee for this purpose; provided, however, that each 

Clearing Member shall deposit a minimum of 50% of its Guaranty Fund 

requirement in the form of cash. Treasury Securities shall be valued in 

accordance with methodology adopted by the Risk Management 

Committee, and shall be deposited by such means and subject to such 

agreements and undertakings as may be prescribed by the Clearing House. 

To the extent that any Clearing Member deposits Treasury Securities in 

the Guaranty Fund, such Clearing Member thereby represents and 

warrants that such securities are owned by it free and clear of any security 

interests, liens, encumbrances, charges or adverse claims of any kind. 

3.34.4 Guaranty Fund deposits shall be held in a bank approved for the purpose 

by the Clearing House, in an account or accounts separate from all other 

cash and securities held by the Clearing House. The Clearing House shall 

have the sole right to withdraw cash or securities from, or to authorize the 

sale or other disposition of any securities held in, such account or accounts 

subject to the rights of any assignee, pledgee or holder of a security interest 

in the Guaranty Fund or any cash or securities therein. 
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

46

3.34.5 So long as any Person is a Clearing Member and thereafter for the period 

until the Clearing House returns such Person’s Guaranty Fund deposits as 

provided in Rule 3.37, its Guaranty Fund deposits may be applied by the 

Clearing House: 

(a) against any amounts that become due from such Person to the 

Clearing House for any reason (including but not limited to Initial 

Margin, Variation Margin, fees, assessments, and fines) at any time 

it was a Clearing Member and for the period until the Clearing 

House returns such Person’s Guaranty Fund deposits as provided in

Rule 3.37; 

(b) against any amounts that are charged as provided in or pursuant to 

Rule 3.35 against the Guaranty Fund Deposit Requirements of all 

Clearing Members at any time that such Person was a Clearing 

Member and for the period until the Clearing House returns such 

Person’s Guaranty Fund deposits as provided in Rule 3.37; and 

(c) to provide such funds, on such terms and conditions, as the Board in 

its discretion, acting by a vote of not less than three-fourths of all 

Directors eligible to vote, may deem necessary or appropriate to 

facilitate the transfer of Customer Accounts from a Clearing 

Member experiencing financial difficulty to another Clearing 

Member, if the Board shall determine by such vote that to do so is 

in the best interest of the Clearing House. 

3.34.6 The Clearing House may at any time and from time to time assign, transfer, 

pledge, repledge or otherwise create a lien on or security interest in, the 

Guaranty Fund and/or the cash and securities held in the Guaranty Fund to 

secure the repayment of funds borrowed by the Clearing House (plus 

interest, fees and other amounts payable in connection therewith) or 

pursuant to a repurchase agreement or similar transaction. Any such 

borrowing or repurchase agreement or similar transaction shall be on terms 

and conditions deemed necessary or advisable by the Clearing House 

(including the collateralization thereof) in its sole discretion, and may be 

in amounts greater, and extend for periods of time longer, than the 

obligations, if any, of any Clearing Member to the Clearing House for 

which such cash or securities was pledged to or deposited with the Clearing 

House. Any funds so borrowed or obtained in repurchase agreements or 

similar transactions shall be used and applied by the Clearing House solely 

for the purposes for which cash or securities held in the Guaranty Fund are 

authorized to be used pursuant to the Rules; provided that the failure of the 

Clearing House to use such funds in accordance with this Rule 3.34.6 shall 

not impair any of the rights or remedies of any assignee, pledgee or holder 

of any such lien or security interest or repurchase transaction counterparty. 

Cash, securities and other property held in the Guaranty Fund, subject to 

the rights and powers of the Clearing House with respect thereto as set 
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

47

forth in the Rules and any agreements between any Clearing Member and 

the Clearing House, and subject to the rights and powers of any Person to 

which the Guaranty Fund or any cash or securities held therein shall have 

been assigned, transferred, pledged, repledged or otherwise subjected to a 

lien or security interest, shall remain the property of the respective 

Clearing Members depositing such cash and securities. 

3.34.7 Subject to the rights of any assignee, transferee, pledgee or holder of a lien 

or security interest as provided in Rule 3.34.6, if at any time the amount of 

any cash, plus the value of any securities, on deposit in the Guaranty Fund 

for any Clearing Member:

(a) shall exceed the amount required to be on deposit for such Clearing 

Member by more than such amount as the Clearing House may 

prescribe, the Clearing House will return the excess to such Clearing 

Member upon its written request. 

(b) shall be less than the amount required to be on deposit for such 

Clearing Member by more than such amount as the Clearing House 

may prescribe, such Clearing Member shall restore the deficiency 

(including, without limitation, a deficiency caused by the 

application of such Clearing Member’s deposits in the Guaranty 

Fund as described in Rule 3.34.5) on demand (a “Replenishment”); 

provided, however, that a Clearing Member that has withdrawn as a 

Clearing Member shall not be required to restore a deficiency 

occurring after its Withdrawal Date, subject to any limitations in this 

Rule 3.34. 

3.34.8 Any interest earned on securities deposited in the Guaranty Fund by a 

Clearing Member shall belong and be credited to such Clearing Member.

The Clearing House may invest cash deposited in the Guaranty Fund in 

securities which are direct obligations of the United States government and 

may engage in repurchase transactions with any cash or securities on 

deposit. Any interest, capital gain or other income earned on any such 

investments or repurchase transactions shall belong and be credited to the 

Clearing House.

3.34.9 If the Guaranty Fund or any part thereof is lost as a result of the Insolvency 

of any bank or other depository, embezzlement, defalcation or any reason 

other than use pursuant to Rule 3.35 of these Rules, such loss may, in the 

discretion of the Board, be restored by application of the following sources 

of funds in the order listed (each such source to be fully utilized before the 

next following source is applied):

(a) Such portion, if any, of the surplus of the Clearing House as the 

Board determines to be available for such purpose; and 
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

48

(b) Assessments levied by the Clearing House upon the Clearing 

Members, which Assessments shall be paid to the Clearing House 

at such time and in such manner as the Board may specify, which 

shall be no later than the normal end-of-day settlement time for the 

Business Day on which such assessment is levied.

3.34.10 In the event that the Guaranty Fund or any part thereof shall have been 

applied as described in Rule 3.34.5 or shall have been lost as described in 

Rule 3.34.9, and the Clearing House shall thereafter recover any amount 

so applied or lost from any Person liable therefore, the amount of such 

recovery (after deducting any expenses, including legal fees and expenses 

incurred in connection therewith) shall be credited to the Guaranty Fund 

deposits of each Clearing Member in that proportion which the amount 

required to be on deposit by such Clearing Member bears to the amount 

required to be on deposit by all Clearing Members as of the date upon 

which such application took place or such loss was incurred. 

3.34.11 Any expense, including legal fees and operational expenses, incurred by 

the Clearing House in connection with the deposit by a Clearing Member 

of assets into the Guaranty Fund, or the return thereof to such Clearing 

Member, may at the option of the Clearing House be charged to such 

Clearing Member. To collect these fees or expenses the Clearing House 

shall have the right to instruct each Approved Financial Institution to debit 

the House Account maintained by each Clearing Member, and/or any other 

account designated by such Clearing Member for purposes of this Rule, 

for any payment of these fees or expenses due to the Clearing House.

3.34.12 Notwithstanding anything to the contrary herein (but subject to Rule 

3.34.9(a) above), the Clearing House shall not be liable if the Guaranty 

Fund or any part thereof and/or any margin (whether for the house or 

customer account) or other assets provided by or held for the account of a 

Clearing Member are lost or decrease in value as a result of the insolvency 

or failure of any bank or other depository or third party settlement system.

Nothing in this paragraph Rule 3.34.12 will limit any liability of the 

Clearing House for its own gross negligence or willful misconduct.

3.35 Monetary Defaults; Use of Guaranty Fund; Assessments 

If any Clearing Member fails to deposit with, or pay to, the Clearing House in full 

any Initial Margin, Variation Margin, Guaranty Fund contribution, Assessment or 

other sum (not including any fees, dues or fines) under or in connection with any 

Exchange Contract, when and as required by or pursuant to the Rules, such failure 

shall constitute a “Monetary Default” and any payment obligations or losses, 

whether present or future, actual or contingent, shall constitute the “Defaulted 

Obligation.” If and at such times as the Clearing House has in effect a procedure 

whereby deposits or payments of sums with or to the Clearing House are effected 
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

49

by having the Clearing House instruct Approved Financial Institutions to transfer 

funds from Clearing Members’ accounts with such Approved Financial Institution 

directly to the accounts of the Clearing House, a Clearing Member shall be deemed 

to have failed to deposit or pay any sum when and as required if such Approved 

Financial Institution fails to wire transfer funds when and as instructed by the 

Clearing House. In the event that at any time a Monetary Default occurs on the part 

of any Clearing Member (the “Defaulting Clearing Member”), then:

(a) The following shall apply:

(i) If and to the extent a Monetary Default relates to an

Exchange Contract carried in any Customer Account of a 

Defaulting Clearing Member, the Defaulted Obligation shall

be reduced in the following priority order: (1) by the Margin

and such other assets of the Customer Account of the 

Defaulting Clearing Member; and (2) by the Guaranty Fund 

deposit, Margin, and such other assets of the House Account 

of the Defaulting Clearing Member, to the extent such funds 

have not been exhausted to fulfill the requirements of 

3.35(a)(ii).

(ii) If and to the extent a Monetary Default relates to an

Exchange Contract carried in the House Account of a 

Defaulting Clearing Member, the Guaranty Fund deposit, 

Margin and such other assets as are held for the House 

Account of the Defaulting Clearing Member, shall be 

applied to pay the Defaulted Obligation. 

(iii) The Defaulting Clearing Member shall immediately restore 

any deficiencies in its Margin and Guaranty Fund deposits 

resulting from any such applications. 

(iv) Margin held by the Clearing House for the Customer 

Account shall not be used to cover losses in the House 

Account of a Defaulting Clearing Member.

(v) If the Defaulted Obligation is associated with an Exchange 

Contract Segment, the funds described in paragraphs (a)(i) 

and (a)(ii) of this Rule 3.35 associated with an Exchange 

Contract Segment shall first be used to reduce the Defaulted 

Obligation based on the Exchange Contract Segment(s)

giving rise to the loss, in accordance with Clearing House 

procedures. 

(b) If, after the application of funds in accordance with paragraph (a) of 

this Rule 3.35 the Defaulted Obligation has not been satisfied, and 

if the Defaulting Clearing Member fails to pay the Clearing House 
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

50

the amount of the deficiency on demand, such Defaulting Clearing 

Member shall continue to be liable therefor, but the amount of the 

deficiency, until collected from the Defaulting Clearing Member, 

shall be met from the following sources of funds, in the following 

order of priority, each of which shall be fully utilized before the next 

following source is applied: 

(i) such portion, if any, of the surplus of the Clearing House as 

the Board determines to be available for such purpose; 

(ii) if the President, with the concurrence of the Chairman, or, in 

the absence of the Chairman, any Director with voting 

authority, or in the absence of the President then any two 

Directors with voting authority, so determines, a loan or 

repurchase agreement or similar transaction on such terms 

and conditions as they may determine to be necessary or 

appropriate (including without limitation granting an 

assignment, pledge or other lien on or security interest in the 

Guaranty Fund or the cash and securities held in the 

Guaranty Fund or applying such cash and securities as 

provided in Rule 3.34.6); 

(iii) the Clearing House Contribution; 

(iv) subject to Rule 3.34.6 and the last paragraph of this 

Rule 3.35(b), the Guaranty Fund; in the following priority

allocated on a pro rata basis where possible:

(a) That portion of the Guaranty Fund allocated to an 

Exchange Contract Segment with a Defaulted 

Obligation that has not been satisfied (but only to the 

extent the unsatisfied Defaulted Obligation is 

associated with an Exchange Contract Segment);

(b) The entirety of the Guaranty Fund not applied under 

3.35(b)(iv)(a); 

(v) insurance proceeds, if any, received by the Clearing House 

in connection with the Monetary Default giving rise to the 

Defaulted Obligation; and 

(vi) assessments levied by the Clearing House upon all the 

Clearing Members (other than the Defaulting Clearing 

Member) as provided in this Rule 3.35 (“Assessments”). 

The total amount to be assessed at any one time pursuant to 

clause (vi) of this paragraph (b) is hereinafter called an 

“Assessment Amount.” For the avoidance of doubt, the 
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

51

Clearing House may at any time following the occurrence of 

a Monetary Default and in anticipation of any charge against 

the Guaranty Fund require Clearing Members to post 

Assessments, subject to the limitations set forth in these 

Rules in respect of such Assessments. 

As used herein, the “Clearing House Contribution” 

represents the obligation of the Clearing House to provide

funds, in an amount not to exceed $20 million, to be applied 

pursuant to paragraph (b)(iii). If the Clearing House 

Contribution is so applied, the Clearing House will have no 

obligation to provide additional funds to replenish such 

contribution or otherwise provide additional funds in respect 

thereof.

The amount of a Replenishment that each Clearing Member 

must deposit in the Guaranty Fund to satisfy its obligation, 

pursuant to Rule 3.34.7(b), to restore the Guaranty Fund 

deficiency in the event of the application of some part or all 

of the Guaranty Fund pursuant to paragraph (b)(iv) (the total 

Guaranty Fund amount so applied referred to herein as the

“Aggregate Guaranty Fund Deficiency”), shall be 

determined by multiplying the Aggregate Guaranty Fund 

Deficiency by a fraction, the numerator of which shall be the 

amount of the Clearing Member’s Guaranty Fund Deposit 

Requirement as of the time immediately prior to the 

Monetary Default that resulted in the Replenishment, and the 

denominator of which shall be the total of the Guaranty Fund 

Deposit Requirements as of such time for all Clearing 

Members (other than defaulting Clearing Members). The 

resulting product shall constitute the amount of the 

Replenishment that each Clearing Member must restore to 

the Guaranty Fund pursuant to Rule 3.34.7 as a result of the 

application of the Guaranty Fund pursuant to paragraph 

(b)(iv). 

(c) The amount of any Assessment shall be computed by multiplying 

the Assessment Amount by a fraction, the numerator of which shall 

be the amount of the Clearing Member’s Guaranty Fund Deposit 

Requirement as of the time immediately prior to the Monetary 

Default that resulted in the Assessment, and the denominator of 

which shall be the total of the Guaranty Fund Deposit Requirements 

as of such time for all Clearing Members (other than Defaulting 

Clearing Members) being assessed. The resulting product shall 

constitute the amount of the Assessment to be levied on such 

Clearing Member pursuant to this paragraph (c). 
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

52

(d) If the Assessment as determined pursuant to paragraph (c) of this 

Rule 3.35 would exceed the maximum set forth in paragraph (e) of 

this Rule 3.35, or if the amount assessed against any Clearing 

Member shall exceed the amount paid by such Clearing Member, 

the excess shall be assessed against the other Clearing Members 

(other than the Defaulting Clearing Member and any Clearing 

Member that shall have been assessed the maximum permitted by 

paragraph (e)) in accordance with such paragraph (c), as if the 

excess were the Assessment Amount. Assessments pursuant to this 

paragraph (d) shall be repeated until the entire Assessment Amount 

shall have been assessed, subject to the maximum limitations on 

Assessments set forth herein. 

(e) Notwithstanding anything to the contrary herein, no Clearing 

Member (other than a Defaulting Clearing Member) shall be liable 

to provide Assessments as a result of charges or applications against 

the Guaranty Fund in respect of a single Monetary Default of 

another Clearing Member in an amount exceeding 200% of its 

Guaranty Fund Deposit Requirement immediately prior to the 

occurrence of the Monetary Default. 

(f) If in any case, because of the limitations contained in paragraph (e), 

the maximum permitted Assessments are less than the Assessment 

Amount, the Board shall determine what if any further action to take, 

provided that under no circumstances may the Board levy 

Assessments on any Clearing Member that would exceed such 

limitations. 

(g) A Person that withdraws as a Clearing Member shall be subject only 

to Assessments imposed to meet: 

(i) Monetary Defaults occurring prior to the Clearing Member’s 

Withdrawal Date, subject to the limitations contained in 

paragraph (e); and

(ii) Assessments levied under Rule 3.34.9 prior to the Clearing 

Member’s Withdrawal Date.

(h) All Assessments shall be due and payable within such time as the 

Clearing House may prescribe, which shall be no later than the 

normal end of day settlement time for the Business Day on which 

such Assessment is levied. If any Person shall not pay any 

Assessment when due, such Person shall continue to be liable 

therefor, but the Clearing House may assess the Clearing Members 

(other than such Person, the Defaulting Clearing Member and any 

Clearing Member that shall have been assessed the maximum 

amount permitted by paragraph (e)) for the unpaid amount in 
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

53

accordance with paragraphs (c) and (d), subject to the limitations set 

forth herein. 

(i) If, after making any Assessments to meet any Defaulted Obligation 

owing by a Defaulting Clearing Member as referred to in paragraph 

(b), or to meet any Assessment not paid as referred to in paragraph 

(h), the Clearing House collects the amount of such Defaulted 

Obligation or such unpaid Assessment in whole or in part from the 

Person or Persons liable therefor, the Clearing House shall refund 

the amount so collected (net of any expenses, including without 

limitation any legal fees incurred in connection therewith) pro rata 

to the Clearing Members that had been assessed to meet such 

Defaulted Obligation or nonpayment and had paid the amount so 

assessed. 

(j) For clarity, Variation Margin Gains Haircutting provided for in Rule 

3.40 and Tear-Ups provided for in Rule 3.41 are not Assessments 

and are therefore not subject to the Assessment limits provided in 

Rule 3.35(e), Rule 3.35.1, or Rule 3.37.7.

(k) The Clearing House shall exercise the same degree of care in the 

administration, enforcement and collection of any claims against a 

Defaulting Clearing Member, any related guarantor, or its or their 

insolvency estate with respect to any Defaulted Obligation, unpaid 

Assessment or other deficiency of the Defaulting Clearing Member 

to the Clearing House (such claims, “Defaulting Clearing Member 

Claims”) as it exercises with respect to its own assets that are not 

subject to allocation pursuant to paragraph (i) above. In furtherance 

of the foregoing, the Clearing House may determine, in its 

reasonable discretion, whether or not to commence, continue, 

maintain, sell, dispose of or settle or compromise any litigation, 

arbitration or other action with respect to any Defaulting Clearing 

Member Claim, without the consent of any Clearing Member or 

other person. The Clearing House shall not be liable for losses 

arising from any error in judgment or for any action taken or omitted 

to be taken by it with respect to Defaulting Clearing Member 

Claims, except for such losses that result from the Clearing House’s 

gross negligence or willful misconduct. The Clearing House may, in 

its discretion, assign to Clearing Members any Defaulting Clearing 

Member Claim, in whole or in part, and such assignment shall 

satisfy in full the Clearing House’s obligations under Rule 3.35(i)

and (k) with respect to any such claim (or portion thereof) or 

recoveries therefrom.

(l) The Clearing House shall prioritize the use of Assessments collected 

from Clearing Members participating in an Exchange Contract 
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

54

Segment with a Defaulted Obligation to meet the Defaulted 

Obligation associated with that Exchange Contract Segment.

3.35.1 Cooling-off Periods

(a) The following terms shall have the following meanings:

The term “Cooling-off Period” shall mean the period commencing 

on the date of the Cooling-off Period Trigger Event and terminating

30 Business Days thereafter. A Cooling-off Period shall be 

automatically extended if a subsequent Cooling-off Period Trigger 

Event occurs 30 or fewer Business Days after the previous Coolingoff Period Trigger Event, in which case the Cooling-off Period will 

be extended until the date falling 30 Business Days after such 

subsequent Cooling-off Period Trigger Event.

The term “Cooling-off Period Trigger Event” shall mean any call 

for an Assessment to be made pursuant to paragraph (c) of Rule 3.35

arising from a Monetary Default or Monetary Defaults; or (ii) the 

occurrence of a Sequential Guaranty Fund Depletion.

The term “Sequential Guaranty Fund Depletion” shall mean, in 

respect of a particular Clearing Member that is not a Defaulting 

Clearing Member, the occurrence of circumstances in which: (i) 

there have been two or more Monetary Defaults relating to different 

Clearing Members within a period of 30 or fewer Business Days; 

(ii) contributions to the Guaranty Fund from non-Defaulting 

Clearing Members have been applied in respect of at least two such 

Monetary Defaults; and (iii) the total amount of Replenishments that 

the Clearing Member has as a result paid to the Clearing House to 

replenish its contributions to the Guaranty Fund exceeds its 

Guaranty Fund Deposit Requirement prior to the first such 

Monetary Default.

(b) Upon the occurrence of any Cooling-off Period Trigger Event, the 

Clearing House shall issue a notice to Clearing Members of the 

commencement of the Cooling-off Period, setting out the date on 

which such period is scheduled to end.

(c) From the commencement of, and solely for the duration of, the 

Cooling-off Period:

(i) The obligation to provide Replenishments under Rule 3.34.7

and Rule 3.35(b) shall continue to apply to a Clearing 

Member during the Cooling-off Period, subject to Rule 

3.35.1(c)(ii);
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

55

(ii) The aggregate of all Assessments due under Rule 3.35(c)

from a Clearing Member for all Monetary Defaults occurring 

or declared during the Cooling-off Period (or resulting in the 

Cooling-off Period) and all Replenishments due under Rule 

3.34.7 and paragraph (b) of Rule 3.35 shall not exceed 550% 

of the amount of the Clearing Member's Guaranty Fund 

Deposit Requirement immediately prior to the occurrence of 

the Monetary Default or Monetary Defaults as a result of 

which the Cooling-off Period commenced (with any 

Assessments or Replenishments levied in respect of the 

Monetary Default or Monetary Defaults as a result of which 

the Cooling-off Period commenced being counted towards 

such maximum amount) (the “Maximum Aggregate 

Cooling-off Period Contribution”). A Clearing Member that 

has provided Assessments and/or Replenishments in such 

maximum amount in respect of a Cooling-off Period shall 

not be liable for any further Replenishments of its 

contributions to the Guaranty Fund or Assessments in 

respect of any Monetary Default or Monetary Defaults 

occurring or declared during such Cooling-off Period, 

regardless of how many additional Monetary Defaults take 

place in such period; 

(iii) For the avoidance of doubt, the per Monetary Default cap on 

Assessments set forth in Rule 3.35(e) shall apply in respect 

of each Monetary Default occurring or declared during the 

Cooling-off Period; and

(iv) During the Cooling-off Period, the Clearing House may 

rebalance, re-set or recalculate Guaranty Fund Deposit 

Requirements to the Guaranty Fund or the total required 

contribution amount for purposes of determining liability for 

Replenishments or Assessments during the Cooling-off 

Period; provided that such adjustments will not affect the 

Maximum Aggregate Cooling-off Period Contribution or the 

other limitations provided in Rule 3.35.1);

provided, further, that the limits set out in this 3.35.1 shall 

only apply with respect to a Clearing Member if such 

Clearing Member continues during the Cooling-off Period to 

pay the Clearing House all other amounts when owed by it 

in all material respects (subject to the limitations set out in 

this paragraph (c) of Rule 3.35.1).

(d) At the end of the Cooling-off Period, the restrictions and 

requirements of Rule 3.35.1(c) shall cease to apply (other than the 
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

56

limitation on Assessments for Monetary Defaults occurring or 

declared during the Cooling-off Period).

(e)

(i) Nothing in this Rule 3.35.1 shall alter the Clearing House’s 

right to call for margin from any Clearing Member.

(ii) In addition to any margin otherwise required by the Clearing 

House under the Rules, if during the Cooling-off Period a 

Clearing Member has provided Replenishments and/or 

Assessments in the aggregate equal to its Maximum 

Aggregate Cooling-off Period Contribution, then if such 

Clearing Member would, but for the provisions of Rule 

3.35.1(c), at any time be required to provide a 

Replenishment, such Clearing Member shall provide to the 

Clearing House, by the open of business on the Business Day 

following request by the Clearing House and maintain with 

the Clearing House during the remainder of the Cooling-off 

Period, additional initial margin (in addition to the initial 

margin otherwise required with respect to its open positions) 

in an amount determined by the Clearing House based on the 

amount of additional initial margin needed for the Clearing 

House to maintain compliance with applicable minimum 

regulatory financial resources requirements during the 

remainder of the Cooling-off Period. Such additional initial 

margin shall be calculated separately with respect to each of 

the house account and the customer account, on a net basis 

in each case, but in both cases shall be charged to the house 

account.

3.36 Liquidity Event

In the event the Clearing House requires liquidity to enable it to promptly meet all 

of its payment obligations to Clearing Members, the Clearing House will first 

attempt to obtain liquidity through the sale of any pledged securities, followed by 

the application of any uncommitted funding arrangements, and then through the use 

of its committed lines of credit, if any. In the event the Clearing House is unable 

to obtain sufficient funds and liquidity to promptly effect settlement and payment 

through such means, the Clearing House may declare the occurrence of a Liquidity 

Event. In such an event, the Clearing House has the authority in its sole discretion 

to take the following actions, in the order listed, to secure same day liquidity: 

(a) Substitution of Guaranty Fund Cash. The Clearing House may 

substitute cash deposited by one or more Clearing Members in the 

Guaranty Fund with Treasury Securities deposited by any Clearing 

Member(s) that is(are) the initiating cause of the Liquidity Event. 
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

57

The amount of cash substituted shall be equivalent to the market 

value of such Treasury Securities (determined by the Clearing 

House as of the latest mark, using a recognized third-party source, 

after the application of haircuts). Any Treasury Securities 

transferred pursuant to this paragraph (a) shall be applied as a 

Guaranty Fund deposit on behalf of any such Clearing Member 

whose cash was substituted and will be allocated pro rata among 

Clearing Members with cash deposits who are not the initiating 

cause of the Liquidity Event. For any substitution of Treasury 

Securities for cash in the Guaranty Fund, the Clearing House will 

replace the cash within twenty-nine (29) Business Days of the date 

of the substitution. 

(b) Substitution of Initial Margin Cash. The Clearing House may 

substitute the cash deposited by one or more Clearing Members as 

Initial Margin with Treasury Securities held as Collateral by the 

Clearing House. The amount of cash substituted shall be equivalent 

to the market value of such Treasury Securities (determined by the 

Clearing House as of the latest mark, using a recognized third-party 

source, after the application of haircuts). Any Treasury Securities 

transferred pursuant to this paragraph (b) shall be applied as an 

Initial Margin deposit on behalf of any such Clearing Member 

whose cash was substituted and will be allocated pro rata among 

Clearing Members with cash deposits. For any substitution of 

Treasury Securities for cash as Initial Margin, the Clearing House 

will replace the cash within twenty-nine (29) Business Days of the 

date of the substitution. 

(c) Payment in Kind – Variation Margin. The Clearing House may 

satisfy Variation Margin obligations to any Clearing Member that is 

a primary dealer (or that has an Affiliate that is a primary dealer)

with Treasury Securities held as Collateral by the Clearing House at 

market value (determined by the Clearing House as of the latest 

mark, using a recognized third-party source, after the application of 

haircuts). To the extent that the Clearing House pays its Variation 

Margin obligations in Treasury Securities, if the receiving Clearing 

Member notifies the Clearing House the same day of the settlement 

that it will return the securities to the Clearing House on the next 

Business Day, then the Clearing House will pay on the next Business 

Day cash equal to the original value of the Clearing House’s 

Variation Margin obligation. 

(d) Payment in Kind – Portfolio Auction, Sale, or Transfer. In lieu of 

satisfying a payment owed from any auction, sale, or transfer of an 

Insolvent, Defaulted, or suspended Clearing Member’s House 

Account or Customer Account in cash to an auction winner, 

purchaser, or transferee, the Clearing House may satisfy such 
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

58

payment owed by transferring Treasury Securities at market value 

(determined by the Clearing House as of the latest mark, using a 

recognized third-party source, after the application of haircuts), 

equal to the amount of such obligation. 

3.37 Withdrawal of Clearing Members; Termination

3.37.1 The following terms will have the indicated meanings: 

(a) The term “Withdrawal Close-Out Deadline Date” shall mean: (i)

in the case of a Clearing Member whose status as a Clearing 

Member has been involuntarily terminated by the Clearing House, 

the date so designated by the Clearing House; and (ii) in the case of 

a Clearing Member that has delivered a Withdrawal Notice, the date 

falling 30 Business Days after such Clearing Member’s Withdrawal 

Notice Date or such later date as the Clearing House may in its 

discretion permit and notify in writing to the affected Clearing 

Member, provided such date is not in excess of the earlier of the end 

of the most recent Cooling Off Period existing as of the Withdrawal 

Notice Date or six months from the Withdrawal Notice Date. 

(b) The term “Withdrawal Date” shall mean in respect of the 

termination of Clearing Member status for a withdrawing Clearing 

Member, the later of: (i) where applicable, the Withdrawal CloseOut Deadline Date; and (ii) the date as of which all of the 

withdrawing Clearing Member’s open positions in respect of its 

House Account and Customer Account have been terminated or 

closed out in full and all obligations of the withdrawing Clearing 

Member in respect thereof have been satisfied and performed in full. 

(c) The term “Withdrawal Notice Date” shall mean the date on which 

a Clearing Member delivers a Withdrawal Notice to the Clearing 

House.

(d) The term “Withdrawal Notice” shall mean a notice served by the 

Clearing Member on the Clearing House under the Rules indicating 

that such Clearing Member intends to withdraw from being a 

Clearing Member (and thereby becomes a withdrawing Clearing 

Member). 

3.37.2 Notwithstanding any other provision of the Rules, a Clearing Member that 

has delivered a Withdrawal Notice pursuant to Rule 3.37 or whose status 

as a Clearing Member has been terminated by the Clearing House pursuant 
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

59

to Section V shall be subject to the following requirements, obligations 

and provisions: 

(a) it must use all reasonable endeavors to close out or transfer all open 

positions in its House Account and Customer Account prior to the 

Withdrawal Close-Out Deadline Date; 

(b) after the Withdrawal Notice Date, it shall only be entitled to submit 

transactions for clearing which it can demonstrate have the overall 

effect of reducing open positions or risks to the Clearing House, 

whether by hedging, transferring, terminating, liquidating or 

otherwise closing out Exchange Contracts; 

(c) the Clearing House may call for additional Initial Margin until such 

time as all such open positions have been terminated or transferred, 

and such Clearing Member shall provide to the Clearing House such 

additional Initial Margin as is requested in a timely manner;

(d) except as provided in paragraph (e), there shall be no rebalancing, 

resetting or recalculation of the Guaranty Fund Deposit 

Requirement or the liability limits set forth in 3.35(e) or 3.35.1(c)(ii)

of Replenishments or Assessments of a Clearing Member that has 

served a Withdrawal Notice; 

(e) if it has any open positions with the Clearing House (whether in the 

House Account or the Customer Account) after the Withdrawal 

Close-Out Deadline Date, the Clearing Member shall as from the 

Withdrawal Close-Out Deadline Date until its Withdrawal Date: 

(i) become liable to make any Replenishments or Assessments 

that would have fallen due but have not been paid and 

become liable to have applied any contribution to the 

Guaranty Fund that would have been applied but was not so 

applied, in each case to the extent that the same would have 

been payable or applied but for its service of a Withdrawal 

Notice and in each case in respect of any Monetary Default 

affecting a Clearing Member that has occurred subsequent 

to the Withdrawal Notice Date; 

(ii) become liable for further obligations to have any 

contributions to the Guaranty Fund applied or pay 

Assessments in the same way as any other Clearing Member 

in respect of any Monetary Default occurring prior to the 

Withdrawal Date; and 

(iii) be subject to the Clearing House exercising rights under 

Rule 3.31 to liquidate or transfer the open positions of the 

Clearing Member and otherwise deal with the Clearing 
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

60

Member’s Exchange Contracts and property in the same way 

as if the Clearing Member were a Defaulting Clearing 

Member. 

(f) following termination of all open positions to which a withdrawing 

Clearing Member was party in relation to its House Account and 

Customer Account and satisfaction in full by such withdrawing 

Clearing Member of all obligations in respect thereof, the Clearing 

House shall return the withdrawing Clearing Member’s unused 

contributions to the Guaranty Fund and any unused Withdrawal 

Deposit, as well as any other assets of the withdrawing Clearing 

Member not previously returned on the date that is sixty (60) days 

after the withdrawing Clearing Member’s Withdrawal Date, or such 

earlier date as is determined by the Clearing House. 

3.37.3 Notwithstanding anything in these Rules: 

(a) the Clearing House may at its discretion return amounts due to the 

withdrawing Clearing Member by way of transfer or return of 

Treasury Securities to the withdrawing Clearing Member; and

(b) the Clearing House may make partial payment of any amounts due, 

excluding the withdrawing Clearing Member’s Guaranty Fund 

contribution, prior to the time specified in this Rule 3.37.

3.37.4 Any Withdrawal Notice issued by a Clearing Member shall be irrevocable 

by the Clearing Member and membership may only be reinstated pursuant 

to a new application for membership following the close-out or transfer of 

all open Exchange Contracts in its House Account and Customer Account.

3.37.5 A Clearing Member whose membership has terminated shall, following 

the Withdrawal Date, cease to be liable for Replenishments or 

Assessments under Rules 3.35 in respect of Monetary Defaults that occur 

after the Withdrawal Date. 

3.37.6 This Rule 3.37 shall not apply to a Defaulting Clearing Member. 

3.37.7 In the event of an Emergency, or otherwise at the discretion of the Board, 

a Clearing Member that gives a Withdrawal Notice may be required by the 

Clearing House immediately upon delivery of the Withdrawal Notice to 

provide Assessments in an amount not to exceed 550% of its Guaranty 

Fund Deposit Requirement (as in effect immediately prior to the 

Withdrawal Notice Date), such amounts to be held by the Clearing House 

until the Withdrawal Date and applied only as permitted in accordance 

with these Rules (a “Withdrawal Deposit”). Any references in these 

Rules to Assessments being called or to Guaranty Fund Deposit 

Requirements to the Guaranty Fund being replenished or applied, in 

respect of a Clearing Member which has provided such a Withdrawal 
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

61

Deposit, shall be interpreted as a reference to such Withdrawal Deposit 

being applied as necessary in satisfaction of such requirements, and a 

Clearing Member that has served a Withdrawal Notice and made such 

Withdrawal Deposit shall not be liable for any further Assessments, 

regardless of how many Monetary Defaults take place. 

3.38 Close-Out Netting

3.38.1 Insolvency of the Clearing House. If at any time the Clearing House: (i) 

institutes or has instituted against it a proceeding seeking a judgment of 

bankruptcy or insolvency or any other relief under any bankruptcy or 

insolvency law or other similar law affecting creditors’ rights, or a petition 

is presented for its winding up or liquidation, and, in the case of any such 

proceeding or petition presented against it, such proceeding or petition 

results in a judgment of bankruptcy or insolvency or the entry of an order 

for relief or the making of an order for the Clearing House’s winding-up 

or liquidation, or (ii) approves resolutions authorizing any proceeding or 

petition described in clause (i) above (collectively, a “Bankruptcy 

Event”), all open positions in the Clearing House shall be closed promptly.

3.38.2 Default of the Clearing House. If at any time the Clearing House fails to 

comply with an undisputed obligation to pay money or deliver property to 

a Clearing Member that is due and owing in connection with a transaction 

cleared by the Clearing House, for a period of thirty days from the date 

that the Clearing House receives notice from the Clearing Member of the 

past due obligation, the Clearing Member’s open proprietary and 

Customer positions at the Clearing House shall, at the election of that 

Clearing Member, be closed promptly.

3.38.3 Wind-Up of Exchange Contracts. If at any time the Board determines, by 

virtue of the number of withdrawing Clearing Members or otherwise, that 

a winding up (offset) of all outstanding positions at the Clearing House is 

prudent, then all open positions at the Clearing House shall be closed 

promptly.

3.38.4 Netting and Close-Out. At such time as a Clearing Member’s positions 

are closed, the obligations of the Clearing House to a Clearing Member in 

respect of such Clearing Member’s House Account, all Collateral and 

positions therein and deposits to the Guaranty Fund shall be netted, in 

accordance with the Bankruptcy Code, the CEA and CFTC Regulations 

against the obligations of that Clearing Member in respect of its House 

Account, all Collateral and positions therein, its obligations as guarantor 

of the performance of its Customers and its then-matured obligations to 

the Guaranty Fund, to the Clearing House and to the Exchange. For the 

avoidance of doubt, all of the property in a Clearing Member’s House 

Account on deposit with the Clearing House shall be deemed to be subject 

to a single master netting agreement with the result that any excess which 
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

62

is on deposit with the Clearing House shall be applied to reduce any 

deficiency or obligation of the Clearing Member. All obligations of the 

Clearing House to a Clearing Member in respect of such Clearing 

Member’s Customer Account and all positions and Collateral therein shall 

be separately netted against the positions, accounts and Collateral of such 

Clearing Member’s Customers in accordance with the requirements of the 

Bankruptcy Code, the CEA and CFTC Regulations. At the time a 

Bankruptcy Event takes place, the authority of the Clearing House, 

pursuant to Rule 3.35, to make new assessments and/or require a Clearing 

Member to cure a deficiency in its Guaranty Fund deposit, arising after the 

Bankruptcy Event, shall terminate. All positions open immediately prior 

to the close-out shall be valued in accordance with the procedures of Rule

3.38.5.

3.38.5 Valuation. As promptly as reasonably practicable, but in any event within 

thirty (30) days of: (i) the Bankruptcy Event; (ii) if a Clearing Member 

elects to have its open positions closed as described in Rule 3.38.2, the 

date of the election; or (iii) the determination by the Board to wind-up all 

outstanding positions as described in Rule 3.38.3, the Clearing House shall 

fix an amount (the “Close-Out Amount”) to be paid to or received from 

the Clearing House by each Clearing Member, after taking into account all 

applicable netting and offsetting pursuant to Rule 3.38.4. The Clearing 

House shall value open positions subject to close-out by using the market 

prices for the relevant market (including without limitation any over-thecounter or other futures markets) at the time that the positions were closed 

out, assuming the relevant markets were operating normally at such time. 

If the relevant markets were not operating normally at such moment, the 

Clearing House shall exercise its discretion, acting in good faith and in a 

commercially reasonable manner, in adopting methods of valuation 

expected to produce reasonably accurate substitutes for the values that 

would have been obtained from the relevant market if it were operating 

normally. In determining a Close-Out Amount, the Clearing House may 

consider any information that it deems relevant, including, but not limited 

to, any of the following:

(a) prices for underlying interests in recent transactions, as reported by 

the market or markets for such interests;

(b) quotations from leading dealers in the underlying interest, setting 

forth the price (which may be a dealing price or an indicative price) 

that the quoting dealer would charge or pay for a specified quantity 

of the underlying interest;

(c) relevant historical and current market data for the relevant market, 

provided by reputable outside sources or generated internally; and
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

63

(d) values derived from theoretical pricing models using available 

prices for the underlying interest or a related interest and other 

relevant data.

Amounts stated in a currency other than U.S. dollars shall be converted to 

U.S. dollars at the current rate of exchange, as determined by the Clearing 

House. If a Clearing Member has a negative Close-Out Amount, it shall 

promptly pay that amount to the Clearing House.

3.38.6 Interpretation in Relation to FDICIA. The Clearing House intends that 

certain provisions of this Rule 3.38 be interpreted in relation to certain 

terms (identified by quotation marks) that are defined in the Federal 

Deposit Insurance Corporation Improvement Act of 1991 (“FDICIA”), as 

amended, as follows:

(a) The Clearing House is a “clearing organization.”

(b) An obligation of a Clearing Member to make a payment to the 

Clearing House, or of the Clearing House to make a payment to a 

Clearing Member, subject to a netting agreement, is a “covered 

clearing obligation” and a “covered contractual payment 

obligation.”

(c) An entitlement of a Clearing Member to receive a payment from the 

Clearing House, or of the Clearing House to receive a payment from 

a Clearing Member, subject to a netting contract, is a “covered 

contractual payment entitlement.”

(d) The Clearing House is a “member,” and each Clearing Member is a 

“member.”

(e) The amount by which the covered contractual payment entitlements 

of a Clearing Member or the Clearing House exceed the covered 

contractual payment obligations of such Clearing Member or the 

Clearing House after netting under a netting contract is its “net 

entitlement.”

(f) The amount by which the covered contractual payment obligations 

of a Clearing Member or the Clearing House exceed the covered 

contractual payment entitlements of such Clearing Member or the 

Clearing House after netting under a netting contract is its “net 

obligation.”

(g) The Rules of the Clearing House, including this Rule 3.38, are a 

“netting contract.”
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

64

3.39 Settlement Price

As used in the Rules, “Settlement Price” means the settlement price for each 

Exchange Contract, as determined by the Exchange in accordance with Exchange 

Rules, except in the case of manifest error or where the Clearing House believes 

that such settlement price does not reasonably reflect the value or price of the 

Exchange Contract, in which case the Clearing House, using its best efforts to 

consult with the Exchange, shall determine the official settlement price; provided, 

that the Clearing House shall in such circumstances promptly notify the Exchange 

and Clearing Members, and the reasons for that determination and the basis for the 

settlement price determined by the Clearing House shall be published in a notice to 

the Exchange and Clearing Members.

3.40 Variation Margin Gains Haircutting

3.40.1 If at any time following a Monetary Default of a Clearing Member: (i) the 

assets available to cover the Defaulted Obligation under Rule 3.35 are 

insufficient to satisfy the Defaulted Obligation and obligations of the 

Clearing House to Clearing Members as a result of such default; or (ii) less 

than 25% of Maximum Aggregate Cooling-off Period Contribution is 

available to cover the Defaulted Obligation or the Clearing House’s 

obligations to Clearing Members, then the Clearing House shall, in a 

manner that is consistent with the requirements of the Commodity 

Exchange Act and the regulations adopted thereunder, conduct its next 

settlement cycle as described in Rule 3.40.2.

If the Defaulted Obligation is associated with an Exchange Contract 

Segment, the settlement cycle described in Rule 3.40.2 will be conducted 

for only the Exchange Contract Segment associated with the Defaulted 

Obligation, unless otherwise determined by the Chief Risk Officer.

3.40.2 The Clearing House shall provide notice to Clearing Members, such notice 

to be provided on the Clearing House’s website, and conduct a settlement 

cycle to determine settlement prices for all Exchange Contracts and the 

Variation Margin for each Clearing Member and its Customers, in 

accordance with the following:

(a) The net Variation Margin the Clearing House owes to a Clearing 

Member (a “Variation Margin Gain”), or the net Variation Margin 

the Clearing Member owes to the Clearing House (a “Variation 

Margin Loss”) shall be determined separately for: the Clearing 

Member’s House Account (“House Account Variation Margin 

Gain” or “House Account Variation Margin Loss”), and the 

Clearing Member’s Customer Accounts (“Customer Account 

Variation Margin Gain” or “Customer Account Variation 

Margin Loss”).
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

65

(b) The Risk Management Committee may determine a maximum 

amount of position liquidation expenses that may be subtracted from 

Clearing Members’ Variation Margin Gains, based upon then 

existing facts and circumstances, that it deems appropriate to 

mitigate further disruptions to the markets.

(c) The Clearing House shall then notify each Clearing Member of the 

amount of its remaining Assessment and each Clearing Member 

shall pay to the Clearing House all such amounts no later than the 

time required for the relevant settlement cycle. If a Clearing 

Member does not pay all such amounts to the Clearing House, the 

Clearing House shall determine such Clearing Member to be in 

Default.

(d) If the Variation Margin Loss payments received by the Clearing 

House exceed the Variation Margin Gains, the Clearing House shall 

calculate reimbursements of, and distribute, the excess funds in the 

reverse order of their collection by the Clearing House.

(e) If the Variation Margin Gains exceed the amount of Variation 

Margin Loss payments received by the Clearing House: 

(i) the Clearing House shall notify Clearing Members and 

provide an opportunity for Clearing Members and their 

customers to make voluntary contributions to the Clearing 

House;

(ii) If the amount of Variation Margin Gains continues to exceed 

the amount of Variation Margin Loss payments received by 

the Clearing House, after the Clearing House adds any 

voluntary contributions from Rule 3.40.2(e)(i) to the 

Variation Margin Loss payments, then the Clearing House 

shall apply Variation Margin Gains Haircuts (as defined 

below) to the House Variation Margin Gains and Customer 

Variation Margin Gains for the current settlement cycle and 

each successor settlement cycle on the current Business Day 

and, unless a Bankruptcy Event has occurred, each of the 

next two Business Days, in accordance with the following:

(a) House Variation Margin Gains and Customer 

Variation Margin Gains each shall be reduced on a 

pro rata basis according to the amount of such 

gains, to result in the aggregate amount necessary 

for Variation Margin Loss payments received by the 

Clearing House to equal Variation Margin Gains 

payments (such process, a “Variation Margin Gains 

Haircut”).
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

66

(b) Customer Variation Margin Gains shall be haircut 

by the Clearing House at the Customer Account 

level of each Clearing Member. 

(iii) The Risk Management Committee may instruct the Clearing 

House to extend or reduce the number of days during which

Variation Margin Gains Haircuts are applied, provided that 

in no circumstance may the Clearing House conduct 

settlement cycles in which Variation Margin Gains Haircuts 

are applied for longer than five Business Days; and

(iv) The Clearing House shall notify Clearing Members prior to 

each settlement cycle where Variation Margin Gains 

Haircuts will be applied. Where the Clearing House 

determines that Variation Margin Gains Haircuts are no 

longer necessary, it shall notify Clearing Members and 

specify the final date of Variation Margin Gains Haircuts as 

well as the date that normal settlement cycles will resume. 

After the end of Variation Margin Gains Haircuts the 

Clearing House shall resume calculating, collecting and 

paying Variation Margin in the ordinary course.

3.41 Partial Tear-Ups and Full Tear-Ups

3.41.1 The Clearing House may, at any time following a Default of a Clearing 

Member, notify Clearing Members and provide an opportunity for 

Clearing Members to voluntarily agree to have their House positions or, 

with a Customer’s consent, to agree to have each such Customer’s 

positions, extinguished by the Clearing House.

3.41.2 If House or Customer positions in Exchange Contracts of a Defaulting 

Clearing Member remain open (the “Open Defaulter Positions”) 

following the last settlement cycle conducted pursuant to Rule 3.40.2(c), 

the Clearing House shall extinguish the Open Defaulter Positions through 

a partial tear-up process (“Partial Tear-Up”) or a full tear-up process 

(“Full Tear-Up”) of House and Customer positions of non-defaulted 

Clearing Members and non-defaulted Customers of the Defaulting 

Clearing Member in accordance with the following:

(a) The Risk Management Committee shall determine the appropriate 

scope of each Partial Tear-Up or shall determine that a Full Tear-Up 

is appropriate. In making such determination, the Risk Management 

Committee shall consider then existing known facts and 

circumstances, any recommendations made by the Risk Advisory 

Committee, the furtherance of the integrity of the Clearing House 

and the stability of the financial system and the legitimate interests 

of Clearing Members and market participants.
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

67

(b) A Partial Tear-Up may include, but need not be limited to, the 

following methods:

(i) Line-by-Line Tear-Up against the Open Defaulter Positions 

to proportionately extinguish Exchange Contracts held by 

non-defaulted Clearing Members, their non-defaulted 

customers and the non-defaulted customers of the defaulted 

Clearing Member that are opposite to the Open Defaulter 

Positions and relative to the size of the Open Defaulter 

Positions; and

(ii) Tear-Up of All Positions in Exchange Contracts within a 

product or combination of products. Extinguish all open 

positions in Exchange Contracts for a product or 

combination of products.

(c) A Full Tear-Up would involve the extinguishment of all open 

positions in Exchange Contracts.

(d) The price for Full or Partial Tear-Up (the “Tear-Up Price”) shall 

equal the latest Settlement Price (which could be established at 

either an intra-day or end of day settlement) as of the date and time 

of such tear-up ensuring that the position subject to tear-up does not 

generate any variation margin obligations. 

3.42 Non-Petition

No Clearing Member and no Customer of a Clearing Member shall institute against, 

or join any other person in instituting against, the Clearing House or the Exchanges

any bankruptcy, reorganization, arrangement, insolvency, moratorium, liquidation 

or examinership proceedings, or other similar proceedings under U.S. federal or 

state bankruptcy laws or other applicable law arising out of any claimed default by 

the Clearing House on an Exchange Contract as a result of the extinguishment, 

partial extinguishment, or Variation Margin Gains Haircut, of such Exchange 

Contract and related payments in accordance with these Rules.

3.43 Reimbursement of Recovered Losses

Losses caused by a Defaulting Clearing Member are amounts due to the Clearing 

House from such Defaulting Clearing Member, and shall remain legal obligations 

thereof notwithstanding the Clearing House’s recourse to the loss-mutualization 

provisions of Rules 3.35 – 3.41, and the Clearing House shall exercise the same 

degree of care as it exercises with respect to its own assets in the administration and 

collection of such amounts (including claims submitted in an insolvency or 

resolution proceeding). If any portion of these amounts is subsequently recovered 

by the Clearing House, the net amount of such recovery shall be credited to nondefaulted Clearing Members (whether or not they are still clearing members at the 

time of recovery) in the following order on a pro rata basis based on (1) the amount 
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

68

of their (and their Customers’, if applicable) voluntary contributions with respect 

to such default, (2) the amount of their (and their Customers’, if applicable) 

Variation Margin Gains Haircuts with respect to such default, (3) the amount of 

their Assessments utilized by the Clearing House with respect to such default, and 

(4) the amount of their Guaranty Fund contribution utilized by the Clearing House 

with respect to such default, each in the order listed, and then to the Clearing House 

for the amount of the Clearing House Contribution utilized by the Clearing House 

with respect to such default.
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

69

SECTION IV CODE OF CONDUCT

Preamble

This Code of Conduct defines and reaffirms the values, principles and internal 

controls that Clearing Members and Authorized Users, as applicable, must follow 

in conducting their Clearing Activities. The Code of Conduct supplements other 

requirements of the Rules and is intended to complement the internal principles and 

practices of Clearing Members and their Authorized Users and to guide Clearing 

Members and their Authorized Users as they use the services of the Clearing House. 

Compliance with the Code of Conduct allows Clearing Members to assure the 

Clearing House, Governmental Authorities, the public, other Clearing Members 

and Approved Financial Institutions that their business activities on the Clearing 

House are, and will continue to be, conducted with integrity. In addition, 

compliance with the Code of Conduct gives assurance that unlawful and unethical 

trading practices are not tolerated, that public disclosures of information are 

accurate, and that Clearing Members will abide by these ethical standards and 

maintain sound practices. 

Violations of this Code of Conduct may result in penalties including, but not limited 

to, temporary or permanent loss of access to the Clearing House. 

4.1 Ethical Standards

Conducting activities in an honorable and principled manner consistent with the 

Code of Conduct is the essence of ethical conduct with respect to the Clearing 

House. Each Clearing Member shall act, and shall cause its Authorized Users to 

act, in accordance with these standards of ethics with regard to its Clearing House 

activity: 

4.1.1 Regulatory Compliance. No Clearing Member (or any of its Authorized 

Users) shall engage in conduct that is a violation of these Rules and will 

conduct its business in accordance with Applicable Law and in good faith.

4.1.2 Fraud. No Clearing Member (or any of its Authorized Users) shall engage 

in any fraudulent act or engage in any scheme to defraud, deceive, trick or 

mislead in connection with or related to any Exchange Contract or the 

business and affairs of the Clearing House.

4.1.3 Good Faith. No Clearing Member (or any of its Authorized Users) shall 

knowingly use the Clearing System other than for its intended and 

legitimate business purpose in good faith. 

4.1.4 Antitrust. No Clearing Member (or any of its Authorized Users) shall 

engage in any activity to collude or otherwise unlawfully restrain 

competition. 
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

70

4.2 Termination of Connection

The Clearing House, in its sole discretion, shall have the right to summarily 

terminate the connection of any Clearing Member or the access of any User ID to 

the Clearing House. Additionally, the Clearing House, in its sole discretion, shall 

have the right to direct a Clearing Member to immediately terminate any 

Authorized User’s access to the Clearing House.

4.3 Information Disclosure and Documentation 

4.3.1 Markets depend on trust in the accuracy of market information provided.

4.3.2 Clearing Members must: (i) provide information relating to the Clearing 

House in compliance with Applicable Law and continue to cooperate with 

the Clearing House as reasonably necessary to assist in its understanding 

of the markets; and (ii) ensure that any information disclosed to the 

Clearing House is accurate and consistent. 

4.3.3 No existing or prospective Clearing Member shall make any false 

statements or misrepresentations in any application, report or other 

communication to the Clearing House.

4.4 Compliance

Each Clearing Member must have a compliance program commensurate with the 

size and scope of its Clearing House activities that is designed to achieve 

appropriate, timely and ongoing compliance with the Rules and this Code of 

Conduct.
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

71

SECTION V DISCIPLINE AND ENFORCEMENT; CLEARING MEMBER 

EMERGENCIES

5.1 Disciplinary and Enforcement Procedures – General

5.1.1 All Clearing Members and their Authorized Users are subject to the 

jurisdiction of the Clearing House. Except for (i) Rule violations that 

result in summary fines as described in Rule 5.2 and (ii) summary actions 

taken by the Clearing House pursuant to Rule 5.3, a Clearing Member, 

Authorized User or Person using the User ID of an Authorized User that

is alleged to have violated or to have aided and abetted a violation of any 

Rule will be subject to the disciplinary and enforcement procedures set 

forth in this Rule 5.1. Investigatory and disciplinary responsibilities and 

duties are conducted by employees who are authorized by the Chief 

Executive Officer to provide investigation of clearing activities to ensure 

compliance with the Rules and Applicable Law (“Compliance 

Manager”). Matters will be referred by the Chief Compliance Officer or 

his/her designee to the Compliance Manager, which will act on behalf of 

the Clearing House in connection with the matter. Any employee within 

the office of the Compliance Manager must recuse himself or herself and 

notify the Chief Compliance Officer of the recusal if such employee has a 

relationship of a type listed in Rule 2.7 with a Person subject to any 

Disciplinary Action, whereby the Chief Compliance Officer and the Board 

shall appoint a Compliance Manager without such conflict for the specific 

Disciplinary Action giving rise to the conflict. Any inquiry, investigation, 

disciplinary proceeding, appeal from a disciplinary proceeding, summary 

imposition of fines, summary suspension or other summary action except 

as described in Rule 5.2 and Rule 5.3, (collectively, “Disciplinary 

Action”) shall be governed by this Rule 5.1. 

5.1.2 Except as otherwise provided in the Rules, no Clearing House Official will 

interfere with or attempt to influence the process or resolution of any 

Disciplinary Action. Any Person subject to a Disciplinary Action may be 

represented by counsel or any other representative of its choosing (other 

than a Clearing House Official or any person substantially related to the 

underlying investigation, such as a material witness or Respondent), at its 

own expense, in all stages of such Disciplinary Action.

5.1.3 At the discretion of the Clearing House, any Respondent found in violation 

of the Rules may be required to pay to the Clearing House any and all 

expenses incurred as a result of the investigation of the violation and 

prosecution of such Respondent. This assessment is in addition to any 

monetary fines imposed for the Rule violation(s).

5.1.4 If a hearing has been held in accordance with Rule 5.1.13, the Hearing 

Panel may order a Respondent to pay some or all of the costs associated 

with the disciplinary proceedings, including costs that the Hearing Panel 
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

72

believes were unnecessarily caused by the Respondent, regardless of the 

outcome of any disciplinary proceeding. Costs may include costs 

associated with the inquiry or investigation, the prosecution by the 

Compliance Manager, legal and professional assistance, the hearing, and 

administrative and other expenses incurred by the Hearing Panel.

5.1.5 Investigations.

(a) The Compliance Manager will investigate any enforcement matter 

within the Clearing House’s jurisdiction that is referred by the Chief 

Compliance Officer or otherwise brought to the attention of the 

Compliance Manager. The Compliance Manager will commence an 

investigation upon the receipt of a request from Commission staff or 

upon the discovery or receipt of information by the Clearing House

that, in the judgment of the Compliance Manager, indicates a 

possible basis for a finding that a violation has occurred or will 

occur. The Compliance Manager shall determine the nature and 

scope of the investigations in his or her sole discretion and will 

operate independently of the commercial interests of the Clearing 

House. Absent mitigating circumstances, the Compliance Manager

must complete an investigation within twelve (12) months after the 

date the investigation is opened. Permissible mitigating 

circumstances include the complexity of the investigation, the 

number of firms or individuals involved as potential respondents, 

the number of potential violations to be investigated and the volume 

of documentation and data that must be analyzed.

(b) Upon request by the Compliance Manager, each Person subject to 

the Clearing House’s jurisdiction: 

(i) is obligated to appear and testify and respond in writing to 

inquiries within the time period required by the Compliance 

Manager in connection with:

(a) any Rule;

(b) any inquiry or investigation; or

(c) any preparation by and presentation during a 

Disciplinary Action;

(ii) is obligated to produce books, records, papers, documents or 

other tangible evidence in its, his or her possession, custody 

or control within the time period required by the Compliance 

Manager in connection with:

(a) any Rule;
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

73

(b) any inquiry or investigation; or

(c) any preparation by and presentation during a 

Disciplinary Action;

(iii) may not impede or delay any Disciplinary Action.

5.1.6 Reports of Investigations.

The Compliance Manager will submit a written report of each investigation

to the Chief Compliance Officer and maintain a log of all investigations and 

their disposition. The written report of the investigation (the “Investigation 

Report”) will include the reasons for initiating the investigation, all 

relevant facts and evidence gathered, analysis and conclusions, the 

Respondent’s disciplinary history, and will consist of one of the following 

recommendations:

(a) closing the investigation without further action;

(b) negotiating a settlement;

(c) entering into a summary action;

(d) preparing and serving a notice of charges to initiate a disciplinary 

proceeding; or

(e) 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 Respondent during a rolling 12-month period.

5.1.7 Review of Reports of Investigations.

After the completion of the Investigation Report and the receipt of any 

submission made by the Respondent pursuant to Rule 5.1.8, the Chief 

Compliance Officer will (i) review the Investigation Report or (ii) establish 

a Review Panel pursuant to Rule 5.1.8 and forward the Investigation Report 

to such Panel. The Chief Compliance Officer or Review Panel, as 

appropriate, will review an Investigation Report promptly after receipt and

determine for each Respondent whether to authorize:

(a) the informal disposition of the investigation (by issuing a warning 

letter or otherwise) because disciplinary proceedings are 

unwarranted;
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

74

(b) the closing of the investigation without any action because no 

reasonable basis exists to believe that a violation within the Clearing 

House’s jurisdiction has occurred or is about to occur; or

(c) the commencement of disciplinary proceedings because a 

reasonable basis exists to believe that a violation within the Clearing 

House’s jurisdiction has occurred or is about to occur.

5.1.8 Opportunity to Respond.

The Compliance Manager may, upon the approval of the Chief Compliance 

Officer, notify the Respondent(s) that formal disciplinary charges are 

recommended and allow the Respondent to submit, within a specified time 

period, an offer of settlement or a written statement explaining why 

disciplinary proceedings should not be instituted or why one or more of the 

charges should not be brought.

5.1.9 Service of Notice of Charges.

(a) Once the Chief Compliance Officer or Review Panel, as appropriate, 

authorizes disciplinary proceedings, the Compliance Manager will 

prepare and serve a notice of charges that will provide as follows:

(i) state the acts, practices or conduct that the Respondent is 

alleged to have engaged in;

(ii) state the Rule or provision of Applicable Law alleged to have 

been violated or about to be violated;

(iii) state the proposed sanctions;

(iv) advise the Respondent of its right to a hearing;

(v) 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, other 

than a Clearing House Official or any person substantially 

related to the underlying investigation, such as a material 

witness or Respondent;

(vi) state the period of time within which the Respondent can 

request a hearing on the notice of charges, which will not be 

less than twenty (20) days after service of the notice of 

charges;

(vii) 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
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

75

(viii) advise the Respondent that any allegation in the notice of 

charges that is not expressly denied will be deemed to be 

admitted.

(b) The service of notice upon the Respondent shall be deemed 

complete either personally or by leaving the notice 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 

Respondent’s last known place of business or residence. Service 

shall also be deemed complete via electronic mail to the 

Respondent’s last known electronic mail address.

5.1.10 Answer to Service of Notice of Charges.

(a) If the Respondent determines to answer a notice of charges, the 

Respondent must file a written answer within twenty (20) days after 

being served with such notice, or within such other time period as 

stated in such notice of charges. The Respondent must answer the 

notice of charges in writing as follows:

(i) for each allegation set forth in the notice of charges,

(a) admit such allegation,

(b) deny such allegation, or

(c) affirmatively state that the Respondent does not have 

and is unable to obtain sufficient information to 

admit or deny such allegation, which shall have the 

effect of a denial of such allegation;

(ii) specify any specific facts that contradict the notice of 

charges;

(iii) specify any affirmative defenses to the notice of charges;

(iv) sign and serve the answer on the Compliance Manager; and

(v) if applicable, request a hearing before a Hearing Panel.

(b) Failure by the Respondent to timely serve an answer to the notice of 

charges will be deemed to be an admission to the allegations in such 

notice. Any allegation in a notice of charges that the Respondent 

fails to expressly deny will be deemed admitted. A general denial 

by the Respondent, without more, will not satisfy the requirements 

herein.

5.1.11 Settlement Offers.
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

76

(a) At any time after a notice of charges has been issued, a Respondent 

may at any time submit to the Chief Compliance Officer a written 

offer of settlement related to anticipated or instituted disciplinary 

proceedings. If the Respondent submits the settlement offer any 

time before the Hearing Panel is formed pursuant to Rule 5.1.12, the 

Chief Compliance Officer will, in his or her discretion, (i) determine 

whether to accept or reject the settlement offer or (ii) if a Review 

Panel has been established in accordance with Rule 5.1.12, 

determine whether to recommend to accept or reject the offer and 

forward the basis for its recommendation to the Review Panel for 

final determination.

(b) If the Respondent submits the settlement offer any time after the 

Hearing Panel is formed pursuant to Rule 5.1.12, the Chief 

Compliance Officer will forward his or her recommendation to the 

Hearing Panel for final determination.

(c) The Chief Compliance Officer or Disciplinary Panel, as applicable, 

may permit the Respondent to settle disciplinary proceedings 

without admitting or denying the Rule violations if the Respondent 

consents to the entry of findings and sanctions imposed. When 

accepting the settlement offer, the Chief Compliance Officer or 

Hearing Panel may not alter the terms of the offer unless the 

Respondent agrees. The offer of settlement must detail the Rule 

violations, including the basis for the conclusions of the Chief 

Compliance Officer or Disciplinary Panel, as applicable, and any 

sanctions imposed. If a settlement offer is accepted without the 

agreement of the Chief Compliance Officer, the decision should 

adequately support the Disciplinary Panel’s acceptance of the 

settlement. If applicable, the decision must also include a statement 

that the Respondent has accepted the sanctions imposed without 

either admitting or denying the Rule violations.

(d) The acceptance of a settlement offer by either the Chief Compliance

Officer or Hearing Panel, as applicable, constitutes a waiver of the 

Respondent’s right to notice, opportunity for a hearing and review, 

and appeal under the Rules. If the settlement offer is not accepted, 

fails to become final, or is withdrawn by the Respondent, the matter 

will proceed without prejudice as if the offer had not been made and 

the offer and all documents related to it will not become part of the 

record.

5.1.12 Disciplinary Panels.

(a) A Review Panel may be established, in the sole discretion of the 

Chief Compliance Officer, pursuant to Rule 5.1.7 to review a 

completed Investigation Report and determine whether a reasonable 
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

77

basis exists for finding a violation of the Rules and authorizing the 

issuance of a notice of charges.

(b) If a Respondent requests a formal hearing on charges denied in the 

answer to the notice of charges per Rule 5.1.10, a Hearing Panel

shall be convened and a hearing will commence within sixty (60)

days.

(c) Each Disciplinary Panel, appointed by the Board at the 

recommendation of the Chief Compliance Officer, shall be 

composed of not less than three individuals from among individuals 

with knowledge and experience in the electric power or financial 

markets, who are not members within the office of the Compliance 

Manager or involved in any other stage of the same proceeding or 

the conduct giving rise to the alleged Rule violations. No group or 

class of Clearing Members may dominate or exercise 

disproportionate influence on the Disciplinary Panel. The chair of 

the Disciplinary Panel will be an individual qualified to be a Public 

Director.

(d) Within ten (10) days of being notified of the appointment of the 

Disciplinary Panel, either party may seek to disqualify any 

individual named to the Disciplinary Panel for any grounds provided 

in paragraph (c) above or Rule 2.7 by serving notice to the Chief 

Compliance Officer. Legal counsel, other than the Chief 

Compliance Officer, will decide the merits of any request for 

disqualification within his or her sole discretion. Such decision will 

be final and not subject to appeal. Legal counsel, other than the 

Chief Compliance Officer, may also remove any member of the 

Disciplinary Panel for cause. Unless otherwise disqualified or 

removed for cause, the individuals on the Disciplinary Panel will 

serve until the related proceedings are completed. If a vacancy shall 

occur on a Disciplinary Panel after it has begun its proceedings, the 

remaining members shall complete consideration and disposition of 

the matter.

5.1.13 Hearings.

(a) Prior to the commencement of the hearing, the Respondent will be 

given the opportunity to review all books, records, documents, 

transcripts of testimony and other tangible evidence in the 

possession or under the control of the Clearing House to be used by 

the Compliance Manager to support the allegations and proposed 

sanctions in the notice of charges, except for any information that 

(i) is protected by attorney-client privilege or the work-product 

doctrine, (ii) was prepared by the Compliance Manager or an 

employee of the Clearing House but will not be offered in evidence 
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

78

in the disciplinary proceedings, (iii) may disclose a technique or 

guideline used in examinations or Disciplinary Actions or (iv) 

discloses the identity of a confidential source. The Compliance 

Manager may redact, edit or code 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 Compliance Manager. 

However, the Compliance Manager may not redact, edit or code 

information that would impair the Respondent’s ability to defend 

against allegations or proposed sanctions in the notice of charges.

(b) The following Rules shall apply in each case presented before the 

Hearing Panel:

(i) The Compliance Manager, with legal counsel as appropriate,

shall prosecute the case.

(ii) Formal rules of evidence do not apply.

(iii) The Respondent has the power to cross-examine witnesses 

and present documentary evidence.

(iv) The burden of proof is on the Compliance Manager.

(v) A majority vote of the Hearing Panel is needed to find a 

violation of the Rules.

(c) No Person shall serve on the 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 be 

obtained while serving as a member of the Hearing Panel, except for 

disclosures when reporting to the Board, the Compliance Manager, 

the Chief Compliance Officer, upon request by the Commission or 

other governmental agency, or when compelled to testify in a 

judicial or administrative proceeding. The hearing will be 

conducted privately and confidentially. Notwithstanding the 

confidentiality of the 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.

(d) The chair of the Hearing Panel shall 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. Legal 

counsel, other than the Chief Compliance Officer, will provide 

guidance to the chair of the Hearing Panel on the conduct of the 
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

79

hearing. At the hearing, the Hearing Panel or the Compliance 

Manager and each Respondent may:

(i) appear personally;

(ii) present evidence and facts determined relevant and 

admissible by the chair of the Hearing Panel;

(iii) call and examine witnesses; and

(iv) cross-examine witnesses called by other parties.

(e) The Clearing House will require persons within its jurisdiction that 

are called as witnesses to appear at the hearing and produce 

evidence, and will make reasonable efforts to secure the presence of 

all other persons called as witnesses whose testimony would be 

relevant.

(f) 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 crossexamining 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.

(g) Reasonable notice, confirmed in writing, specifying the date, time, 

and place of the hearing will be given to persons entitled or required 

to appear before the Hearing Panel. The Hearing Panel may impose 

sanctions on any person that impedes or delays the progress of the 

hearing. Interlocutory appeals of rulings by the Hearing Panel or 

the chair of the Hearing Panel are not permitted.

(h) Promptly following a hearing, the Hearing Panel will render a 

written decision based on the weight of the evidence contained in 

the record of the disciplinary proceedings. Pursuant to the written 

decision, the Hearing Panel may take the following actions or 

impose the following sanctions against the Respondent: (i) a 

warning letter, which shall indicate each specific Rule that the 

Respondent was found to have violated; (ii) a cease and desist order; 

and/or (iii) any sanctions or remedies prescribed in Rule 5.1.14. The 
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

80

Hearing Panel will serve a copy of the written decision on the 

Respondent, the Compliance Manager, and the Chief Compliance 

Officer. The written decision will include the following 

information:

(i) the notice of charges or a summary of the charges;

(ii) the answer, if any, or a summary of the answer;

(iii) a summary of the evidence introduced at the hearing or, 

where appropriate, incorporation by reference of the 

Investigation Report;

(iv) a statement of findings and conclusions with respect to each 

charge, and a complete explanation of the evidentiary and 

other bases for such findings and conclusions with respect to 

each charge;

(v) an indication of each specific Rule that the Respondent was 

found to have violated; and

(vi) a declaration of all actions taken or sanctions imposed 

against the Respondent, including the basis for such 

sanctions and the effective date of such sanctions. 

(i) The Clearing House will arrange for any hearing conducted in 

connection with disciplinary proceedings to be recorded verbatim, 

or substantially verbatim, in a manner capable of accurate 

transcription, and a copy of such recordings shall become a part of 

the record of such proceedings. If the Respondent requests a copy 

of all or portions of the recording of a hearing, the chairman of the 

Hearing Panel may, within his or her sole discretion, order the 

Respondent to pay the costs for transcribing the recording of the 

hearing.

(j) The Respondent may appeal the Hearing Panel decision within 

twenty (20) days of receiving the order by filing a written notice of 

appeal pursuant to Rule 5.1.15. The order of the Hearing Panel’s 

decision will become final upon expiration of twenty (20) days after 

the order is served on the Respondent, and such final order will not 

be subject to appeal within the Clearing House. 

5.1.14 Sanctions.

(a) After notice and opportunity for hearing in accordance with the

Rules, the Clearing House will impose sanctions if any Respondent

is found to have violated or to have attempted to violate a Rule of 

the Clearing House or provision of Applicable Law for which the 
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

81

Clearing House possesses disciplinary jurisdiction. Disciplinary 

sanctions imposed by the Clearing House shall be commensurate 

with the violations committed, and shall be clearly sufficient to deter 

recidivism or similar violations by other Clearing Members, 

Authorized Users or any Persons using the User ID of an Authorized 

User. All sanctions must take into account the Respondent’s 

disciplinary history. The Clearing House may impose one or more 

of the following sanctions or remedies:

(i) censure;

(ii) limitation on clearing privileges, ability to otherwise access 

Nodal Clear, and/or other activities, functions or operations;

(iii) suspension of clearing privileges and/or ability to otherwise 

access Nodal Clear;

(iv) fine;

(v) restitution or disgorgement;

(vi) termination of clearing privileges and/or ability to otherwise 

access Nodal Clear; or

(vii) any other sanction or remedy deemed to be appropriate.

(b) The Clearing House may impose a fine of up to $1,000,000 for each 

violation of the Rules 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. The 

Clearing House has sole discretion to select the bank on whose 

quotations to base the prime rate. Clearing Member will be 

responsible for paying any fine or other amount imposed on, but not 

paid by, any of its Authorized Users or Persons using the User ID of 

an Authorized User.

5.1.15 Appeal Procedures.

(a) A Respondent found by the Hearing Panel to have violated a Rule 

or Applicable Law pursuant to Rule 5.1.13 or who is subject to any 

summary action imposed pursuant to Rule 5.2 may appeal the order 

or decision within the time permitted in Rule 5.1.13(j) or Rule 5.2, 

as applicable, by filing a notice of appeal with the Chief Compliance

Officer. The Chief Compliance Officer may also appeal any order 

by a Hearing Panel prior to the order becoming final pursuant to 

Rule 5.1.13(j). Except for summary suspensions imposed pursuant 
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

82

to Rule 5.3.1, Hearing Panel orders and summary imposition of fines 

shall be suspended while the appeal is pending.

(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. The Respondent may give notice of appeal on 

the grounds that:

(i) the order or decision was arbitrary, capricious, an abuse of 

discretion, or not in accordance with the Rules; or

(ii) the order or decision exceeded the authority or jurisdiction 

of the Hearing Panel or the Clearing House.

(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 Compliance 

Manager 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 the supporting brief, the appellee must 

file and serve its brief in opposition with the Chief Compliance 

Officer.

(d) Within 30 days after the last submission filed, the Board will appoint 

an Appeals Committee at the recommendation of the Chief 

Compliance Officer, which shall be composed of not less than three 

individuals from among individuals with knowledge and experience 

in the electric power or financial markets, who are not members 

within the office of the Compliance Manager or involved in any 

other stage of the same proceeding or the conduct giving rise to the 

alleged Rule violations. No group or class of Clearing Members

may dominate or exercise disproportionate influence on the Appeals 

Committee. The chair of the Appeals Committee will be an 

individual qualified to be a Public Director.

(e) Within ten (10) days of being notified of the appointment of the 

Appeals Committee, either party may seek to disqualify any 

individual named to the Appeals Committee for any grounds 

provided in paragraph (d) above or Rule 2.7 by serving notice to the 

Chief Compliance Officer. Legal counsel, other than the Chief 

Compliance Officer, will decide the merits of any request for 

disqualification within his or her sole discretion. Such decision will 

be final and not subject to appeal. Legal counsel, other than the 

Chief Compliance Officer, may also remove any member of the 

Appeals Committee for cause. Unless otherwise disqualified or 
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

83

removed for cause, the individuals on the Appeals Committee will 

serve until the related proceedings are completed. If a vacancy shall 

occur on an Appeals Committee after it has begun its proceedings, 

the remaining members shall complete consideration and 

disposition of the matter.

5.1.16 Review by the Appeals Committee.

(a) The Appeals Committee will hold a hearing before all the members 

of such Appeals Committee to allow parties to present oral 

arguments. Any hearing will be conducted privately and 

confidentially. Notwithstanding the confidentiality of hearings, the

Appeals Committee may appoint individuals to attend any hearing 

and assist in the deliberations if such individuals agree to be subject 

to appropriate confidentiality agreements. In determining 

procedural and evidentiary matters, the Appeals Committee will not 

be bound by any evidentiary or procedural rules or law. Except for 

good cause shown, the review by the Appeals Committee shall only 

consider the record before the Hearing Panel, the written exceptions 

filed by the parties, and the oral and written arguments of the parties. 

(b) Upon completing its review, the Appeals Committee may affirm, 

modify or reverse the Hearing Panel decision or summary action 

under appeal. Modifications by the Appeals Committee may 

include 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.

(c) As promptly as reasonably possible following its review, the 

Appeals Committee will issue a written decision based on the weight 

of the evidence before the Appeals Committee. To the extent that 

the Appeals Committee reaches a different conclusion from that of 

the Hearing Panel, the written decision will include the following 

information:

(i) the notice of charges or a summary of the charges;

(ii) the answer, if any, or a summary of the answer;

(iii) a summary of the evidence introduced at the hearing or, 

where appropriate, incorporation by reference of the 

Investigation Report;

(iv) a statement of findings and conclusions with respect to each 

charge, and a complete explanation of the evidentiary and 
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

84

other bases for such findings and conclusions with respect to 

each charge;

(v) an indication of each specific Rule that the Respondent was 

found to have violated; and

(vi) a declaration of all sanctions imposed against the 

Respondent, including the basis for such sanctions and the 

effective date of such sanctions.

(d) The order by the Appeals Committee will be the final action of the 

Clearing House and will not be subject to further appeal within the 

Clearing House. 

5.2 Summary Fines

5.2.1 The Clearing House may publish a schedule of fines for Clearing Members 

that fail to make timely and accurate submissions to the Clearing House of 

notices, reports, or other information required under the Rules of the 

Clearing House and other minor violations of the Rules. The minimum 

fine shall be not less than $1,000 for any one violation. 

5.2.2 The Chief Compliance Officer may summarily impose a fine against a 

Clearing Member as provided in Rule 5.2.1. The Chief Compliance 

Officer shall, in such event, provide written notice to the Risk Management 

Committee and Clearing Member that specifies: (i) the date of the Rule 

violation(s); (ii) the amount of the fine; and (iii) the provision(s) of the 

relevant Rule(s).

5.2.3 Within ten (10) days of the Chief Compliance Officer’s notice, the 

Clearing Member must pay the fine. There shall be no right to appeal to 

the Board.

5.3 Clearing Member Emergencies; Summary Actions

5.3.1 Emergency Procedures

In the event the Chief Executive Officer or, in his or her absence, the Chief Risk 

Officer or the Board, determines that an Emergency exists or may exist with respect 

to a Clearing Member, the Chief Executive Officer or, in his or her absence, the 

Chief Risk Officer or the Board, may suspend, or take any other action against one 

or more Clearing Members as the Chief Executive Officer or, in his or her absence, 

the Chief Risk Officer or the Board, may deem necessary or appropriate including, 

but not limited to, ordering such Clearing Member(s) to deposit additional Margin

or transfer Exchange Contracts to one or more Clearing Members as appropriate. 
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

85

5.3.2 Emergency Hearing

(a) Any action taken against any Clearing Member pursuant to this Rule 

shall be taken after notice and opportunity to be heard, unless the 

Clearing Member waives the right to such notice and opportunity or 

Chief Executive Officer or, in his or her absence, the Chief Risk 

Officer or the Board, determines that such notice or opportunity to 

be heard before taking action is not practicable under the 

circumstances and there is reason to believe that immediate action 

is necessary to protect the best interests of the Clearing House. In 

the event such immediate action is taken, the Clearing House will 

give the Clearing Member(s) notice and an opportunity to be heard 

by the Board promptly thereafter. Such notice, to be provided no 

less than one (1) hour before the hearing, will state the action that 

has been taken, the reasons therefor, and the effective date, time, and 

anticipated duration thereof.

(b) The Board will not be bound by formal rules of evidence and shall 

conduct the hearing in a manner it deems best suited to obtain and 

address the information necessary to achieve a fair and impartial 

hearing. The Chief Risk Officer or his or her designee shall present 

evidence to demonstrate that an Emergency exists or that substantial 

question that an Emergency exists regarding the Clearing Member. 

The Clearing Member may present evidence to demonstrate that no 

such Emergency or substantial question exists. The Clearing 

Member may be represented by legal counsel or other appropriate 

representative. A substantially verbatim record of the hearing shall 

be made, but need not be transcribed unless the Clearing Member or 

the CFTC so requests or the Clearing House so determines.

(c) The Board shall issue a written decision, with a copy to the Chief 

Risk Officer and the Clearing Member, that will include a copy of 

any transcript of the hearing (if previously transcribed) and citations, 

as appropriate, to any documents presented at the hearing. The 

Board decision shall state: (i) the Board’s determination as to 

whether an Emergency exists or there is a substantial question as to 

whether an Emergency exists regarding the Clearing Member; and 

(ii) the Board’s decision whether to affirm, modify, or reverse any 

action theretofore taken and the effective date and duration of the 

action. The Board’s decision shall be the final action of the Clearing 

House and will not be subject to appeal within the Clearing House.

5.3.3 Any action or decision that may or is required to be taken or made by the 

Board pursuant to this Rule 5.3 may be taken or made by the Risk 

Management Committee or by a committee of the Board that has been 

specially constituted for that purpose. Voting and quorum requirements 

imposed by the Rules or Applicable Law shall not apply to the Board, the 
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

86

Risk Management Committee or any such committee in relation to the 

discharge of its authority and duties under this Rule 5.3.

5.4 Rights and Responsibilities After Suspension or Termination

5.4.1 When a Clearing Member’s right to access the Clearing House is 

suspended, none of its rights (including the right to hold oneself out to the 

public as a Clearing Member) shall apply, except for the right of the 

Clearing Member 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 Clearing Member in question of its obligations under the 

Rules, or for any fees, costs or charges incurred during the suspension. 

5.4.2 When a Clearing Member’s right to access the Clearing House is 

terminated, all of its rights will terminate except for the right of the 

Clearing Member 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 Clearing Member may only seek to reinstate its right to 

access the Clearing House by filing an application in accordance with Rule 

3.3. The Clearing House will consider the application of a terminated 

Clearing Member at its sole discretion.

5.4.3 A suspended or terminated Clearing Member or Authorized User remains 

subject to the Rules and the jurisdiction of Clearing House for acts and 

omissions prior to the suspension of termination, and must cooperate with 

requests by the Clearing House as if the suspended or terminated Clearing 

Member or Authorized User still had the right to access the Clearing House 

or was still associated with a Clearing Member.

5.5 Notice to the Parties, the CFTC and the Public

The Clearing House will provide written notice of Disciplinary Actions to the 

parties and the CFTC consistent with CFTC Regulations. Whenever the Clearing 

House suspends, expels, fines, or otherwise disciplines, or denies any Person access 

to the Clearing House, Clearing House will make public disclosures as required by 

CFTC Regulations.
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

87

SECTION VI RESERVED
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

88

SECTION VII MISCELLANEOUS

7.1 Trading by Clearing House Officials Prohibited; Misuse of Material, NonPublic Information

7.1.1 Terms used in this Rule 7.1 and not otherwise defined in the Rules shall 

have the meanings set forth in CFTC Regulations 1.3 and 1.59. 

7.1.2 No Officer or employee of the Clearing House may trade, directly or 

indirectly: (i) any Exchange Contract or commodity interest cleared by 

the Clearing House or any related financial instrument; or (ii) any 

Exchange Contract or related commodity interest where such Officer or 

employee has access to material, non-public information concerning such 

Exchange Contract or related commodity interest.

7.1.3 No member of the Board, member of any committee established by the 

Board, or agent or independent contractor of the Clearing House shall 

trade, directly or indirectly, in any Exchange Contract or commodity 

interest cleared by the Clearing House or any related financial instrument 

where such Person has access to any material, non-public information 

obtained in connection with the performance of his or her official duties.

7.1.4 The Chief Compliance Officer (or, in the case of the Chief Compliance 

Officer, the Board) may grant exemptions from the provisions of Rule 

7.1.2 or Rule 7.1.3 to Clearing House Officials on a case-by-case basis 

under circumstances which are not contrary to the purposes of this Rule 

and CFTC Regulation 1.59. Such circumstances may include, but are not 

necessarily limited to:

(a) participation in pooled investment vehicles where such Clearing 

House Official has no direct or indirect control over transactions 

effected by or for the account of the pool;

(b) service by such Clearing House Official as an executor or 

administrator of an estate;

(c) service by such Clearing House Official in any other fiduciary 

capacity, such as an officer of a charitable organization, in which 

such Clearing House Official receives no pecuniary benefit from the 

trading of Exchange Contracts or other financial instruments;

(d) trading in Exchange Contracts or financial instruments executed on 

or subject to the rules of a swap execution facility, a designated 

contract market or a national securities exchange under 

circumstances in which such Clearing House Official’s access to 

material non-public information in respect of such financial 

instruments is sufficiently minimal or attenuated so as to be 

insignificant; and
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

89

(e) such other circumstances as the Chief Compliance Officer (or, in the 

case of the Chief Compliance Officer, the Board) may determine.

7.1.5 For the avoidance of doubt, participation by a Clearing House Official in 

a retirement plan sponsored by the Clearing House or any of its Affiliates 

shall not be deemed to constitute trading directly or indirectly in an

Exchange Contract or financial instrument, notwithstanding such plan’s 

trading of Exchange Contracts or financial instruments.

7.1.6 Any Clearing House Official that has received an exemption under Rule 

7.1.4 must:

(a) furnish to the Clearing House (or, in the case of the Chief 

Compliance Officer, to the Board) account statements and other 

documents relevant to the trading activities that are so exempted; 

and

(b) inform the Chief Compliance Officer (or, in the case of the Chief 

Compliance Officer, the Board) within one (1) Business Day of any 

material change of information that may affect such Clearing House

Official’s qualification for such exemption.

7.2 Market Data

Each Clearing Member, on behalf of itself and each of its Affiliates, Authorized 

Users and other Persons affiliated with any of the foregoing, hereby acknowledges 

and agrees that the Clearing House owns and shall retain all right, title and interest 

in and to the Clearing System, all components thereof, including without limitation 

all related applications, all application programming interfaces, user interface 

designs, software and source code and any and all intellectual property rights 

therein, including, without limitation all registered or unregistered, as applicable 

(a) copyright, (b) trademark, (c) service mark, (d) trade secret, (e) trade name, (f) 

data or database rights, (g) design rights, (h) moral rights, (i) inventions, whether 

or not capable of protection by patent or registration, (j) rights in commercial 

information or technical information, including know-how, research and 

development data and manufacturing methods, (k) patent, and (l) other intellectual 

property and ownership rights, including applications for the grant of any of the 

same, in or to the Clearing House and all other related proprietary rights of the 

Clearing House and/or any of its Affiliates (together, with any and all 

enhancements, corrections, bug fixes, updates and other modifications to any of the 

foregoing and any and all data or information of any kind transmitted by means of 

any of the foregoing, including, without limitation, the market data of the Clearing 

House, the “Proprietary Information”). Each Clearing Member, on behalf of 

itself and each of its Affiliates, Authorized Users and other Persons affiliated with 

any of the foregoing, further acknowledges and agrees that the Proprietary 

Information is the exclusive, valuable and confidential property of the Clearing 

House. Each Clearing Member acknowledges and agrees that it shall not and shall 
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

90

not permit its Affiliates, Authorized Users and other Persons affiliated with any of 

the foregoing to, reverse engineer, copy, bug fix, correct, update, transfer, 

reproduce, republish, broadcast, create derivative works based on or otherwise 

modify, in any manner, all or any part of the Clearing House or the Proprietary 

Information. Each Clearing Member further agrees that it will and will cause each 

of its Affiliates, Authorized Users and other Persons affiliated with any of the 

foregoing to, keep the Proprietary Information confidential and not to transfer, rent, 

lease, loan, sell or distribute, directly or indirectly, all or any portion of the Clearing 

System or any Proprietary Information.

7.3 Recording of Communications

The Clearing House may record conversations and retain copies of electronic 

communications between Clearing House Officials and Clearing Members, their 

Authorized Users or other agents. Any such recordings may be retained by the 

Clearing House in such manner and for such periods of time as the Clearing House 

may deem necessary or appropriate, including as may be required by Applicable 

Law. The Clearing House may use such recordings as evidence in any Disciplinary 

Action or legal proceeding.

7.4 Force Majeure

Notwithstanding any other provision of the Rules, the Clearing House shall not be 

obligated to perform its obligations under the Rules or any agreement with a 

Clearing Member, or to compensate any Person for losses occasioned by any delay 

or failure of performance, to the extent such delay or failure of performance is the 

result of circumstances that may have a material adverse effect upon the functions 

and facilities of the Clearing House, including, but not limited to, acts of God, fire 

or other natural disasters, bomb threats, acts of terrorism or war or severely 

inclement weather. If the Clearing House shall, as a result of any of the abovedescribed events, fail to perform any of its obligations, such failure shall be excused 

for a period equal to the period of delay caused by such event. In such an event, 

the Clearing House shall give written notice thereof to affected Clearing Members 

as soon as reasonably practicable and shall attempt diligently to remediate such 

condition.

7.5 Extension or Waiver of Rules

The performance of any act required by the Rules or the time fixed by the Rules for 

the performance thereof may be waived or extended by the Clearing House if such 

waiver or extension is necessary or in the best interest of the Clearing House. A 

written report of any such waiver or extension, stating the pertinent facts and the 

reason such waiver or extension was deemed necessary or expedient, shall be 

presented to the Board at its next regular meeting. 
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

91

7.6 Notice and Effect of Amendment, Repeal or New Rule

7.6.1 The Clearing House may, in compliance with the CEA and CFTC 

Regulations, amend or repeal any Rule and/or adopt new Rules. The 

Clearing House will publish a notice with respect to each amendment or 

repeal of any Rule or adoption of any new Rule at the time the Clearing 

House files such Rules with the CFTC. The Clearing House also will 

publish notice of any action taken to implement any Rule, in a form and 

manner that is reasonably designed to enable Clearing Members to become 

aware of and familiar with, and to implement any necessary preparatory 

measures to be taken with respect to, such addition or modification, prior 

to the effective date thereof. For purposes of this Rule 7.6, it will be 

sufficient (without limiting the discretion of the Clearing House as to any 

other reasonable means of communication) if notice is published on the 

Clearing House’s website.

7.6.2 Any 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 Clearing House 

(regardless of when any such Person became subject to Clearing House’s 

jurisdiction) and all Exchange Contracts (regardless of whether any such 

Exchange Contract was entered into before, on or after such effective 

date).

7.7 Signatures

Rather than rely on an original signature, Clearing House 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 telecopy, imaging, photocopying, electronic 

mail, electronic data interchange, telegram, or telex) as if it were (and the signature 

shall be considered and have the same effect as) a valid and binding original.

7.8 Governing Law; Legal Proceedings

7.8.1 The Rules, and the rights and obligations of the Clearing House and 

Clearing Members under the Rules, shall be governed by, and construed 

in accordance with, the laws of the State of New York applicable to 

contracts executed and performed wholly within the State of New York 

without regard to any provisions of New York law that would apply the 

substantive law of a different jurisdiction.

7.8.2 Any action, suit or proceeding against the Clearing House, its limited 

liability company members, Clearing House Officials, agents, or any 

member of any committee must be brought within one (1) year from the 

time that a cause of action has accrued. Any such action, suit or proceeding 

shall be brought in the State or Federal courts located within Borough of 

Manhattan in the City of New York. Each Clearing Member expressly 
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

92

consents, for itself and its Authorized Users, to the jurisdiction of any such

court, waives any objection to venue therein, and waives any right it may 

have to a trial by jury.

7.8.3 In the event that a Clearing Member or an Affiliate of such Clearing 

Member fails to prevail in a lawsuit or other legal proceeding related to the 

business of the Clearing House that is instituted by such Clearing Member 

or such Affiliate against the Clearing House, any Affiliate of the Clearing 

House, or any of their respective officers, directors, equity holders, 

employees, agents, or any member of any committee (each such Persons,

a “Clearing House Party”), such Clearing Member shall pay to the 

affected Clearing House Parties all reasonable expenses, including 

attorneys’ fees, incurred by such Clearing House Parties in the defense of 

such proceeding.

7.9 LIMITATION OF LIABILITY; NO WARRANTIES

7.9.1 EXCEPT AS OTHERWISE PROVIDED IN THIS RULE 7.9, AND EXCEPT IN 

INSTANCES IN WHICH THE DISCLAIMING PARTY (DEFINED BELOW) HAS BEEN 

FINALLY ADJUDICATED TO HAVE BEEN GROSSLY NEGLIGENT OR TO HAVE 

ENGAGED IN FRAUD OR WILLFUL OR WANTON MISCONDUCT, IN WHICH CASE 

THE DISCLAIMING PARTY FOUND TO HAVE ENGAGED IN SUCH CONDUCT 

CANNOT AVAIL ITSELF OF THE PROTECTIONS IN THIS RULE 7.9, NEITHER THE 

CLEARING HOUSE, NOR ANY AFFILIATE OF THE CLEARING HOUSE, NOR ANY 

OF THEIR RESPECTIVE MANAGERS, OFFICERS, DIRECTORS, EMPLOYEES,

EQUITYHOLDERS, AGENTS, CONSULTANTS OR SERVICE PROVIDERS, NOR ANY 

MEMBER OF ANY COMMITTEE OR OTHER GOVERNING BODY OF ANY 

AFFILIATE OF THE CLEARING HOUSE (EACH OF THE FOREGOING, AS 

APPLICABLE, THE “DISCLAIMING PARTY” AND, COLLECTIVELY,

“DISCLAIMING PARTIES”), SHALL BE LIABLE TO ANY PERSON FOR ANY 

LOSSES ARISING OUT OF OR IN CONNECTION WITH:

(a) 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 OF THE SYSTEMS AND SERVICES OF THE 

CLEARING HOUSE, OR SERVICES, EQUIPMENT OR FACILITIES USED TO 

SUPPORT SUCH SYSTEMS AND SERVICES, AND ANY AND ALL 

TERMINALS, COMMUNICATIONS NETWORKS, CENTRAL COMPUTERS,

SOFTWARE, HARDWARE AND FIRMWARE RELATING THERETO; OR

(b) ANY FAILURE OR MALFUNCTION, FAULT IN DELIVERY, DELAY,

OMISSION, SUSPENSION, INACCURACY, INTERRUPTION OR 

TERMINATION, OR ANY OTHER EVENT, OF ANY SYSTEM OR SERVICE OF 

THE CLEARING HOUSE, OR SERVICES, EQUIPMENT OR FACILITIES USED 

TO SUPPORT SUCH SYSTEMS OR SERVICES, CAUSED BY ANY THIRD 
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

93

PARTIES INCLUDING, BUT NOT LIMITED TO, INDEPENDENT SOFTWARE 

VENDORS AND NETWORK PROVIDERS; OR

(c) ANY ERRORS OR INACCURACIES IN INFORMATION PROVIDED BY THE 

CLEARING HOUSE OR ANY OF THE CLEARING HOUSE’S SYSTEMS,

SERVICES OR FACILITIES; OR

(d) ANY UNAUTHORIZED ACCESS TO OR UNAUTHORIZED USE OF ANY OF 

THE CLEARING HOUSE’S SYSTEMS, SERVICES, EQUIPMENT OR 

FACILITIES BY ANY PERSON; OR

(e) IN CONNECTION WITH THE PERFORMANCE OR NON-PERFORMANCE OF 

ANY REGISTRY, REGISTRY OPERATOR, OR EMTS.

THE FOREGOING LIMITATIONS OF LIABILITY SHALL APPLY WHETHER A CLAIM 

IS BASED ON BREACH OF CONTRACT, TORT, INCLUDING, WITHOUT 

LIMITATION, NEGLIGENCE (OTHER THAN GROSS 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.

7.9.2 THERE ARE NO EXPRESS OR IMPLIED WARRANTIES OR REPRESENTATIONS 

PROVIDED BY THE CLEARING HOUSE OR ANY OTHER DISCLAIMING PARTY 

RELATING TO ANY SYSTEMS OR SERVICES OF THE CLEARING HOUSE OR 

SERVICES, EQUIPMENT OR FACILITIES USED TO SUPPORT SUCH SYSTEMS OR 

SERVICES, AND THE CLEARING HOUSE 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 SERVICES, WHETHER 

EXPRESS, IMPLIED OR STATUTORY, ARISING BY LAW, CUSTOM, PRIOR ORAL 

OR WRITTEN STATEMENTS BY THE CLEARING HOUSE 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 SYSTEMS OR 

SERVICES OF THE CLEARING HOUSE OR SERVICES, EQUIPMENT OR 

FACILITIES USED TO SUPPORT SUCH SYSTEMS OR SERVICES.

7.9.3 NOTWITHSTANDING ANY OTHER PROVISION OF THESE RULES, IN NO EVENT 

SHALL ANY PERSON BRING ANY LEGAL ACTION, REGARDLESS OF WHETHER 

LIABILITY IS BASED ON BREACH OF CONTRACT, TORT (INCLUDING, WITHOUT 

LIMITATION, NEGLIGENCE, STRICT LIABILITY, NEGLIGENT 

MISREPRESENTATION), RESTITUTION, BREACH OF STATUTORY DUTY,
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

94

BREACH OF WARRANTY OR OTHERWISE AND REGARDLESS OF WHETHER THE 

CLAIM IS BROUGHT DIRECTLY OR AS A THIRD-PARTY CLAIM, FOR INDIRECT,

SPECIAL, INCIDENTAL, CONSEQUENTIAL, EXEMPLARY, OR PUNITIVE 

DAMAGES OF ANY KIND (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, AND REGARDLESS OF 

WHETHER THE PARTY FROM WHOM SUCH DAMAGES WOULD BE SOUGHT HAS 

BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES OR WHETHER SUCH 

DAMAGES OTHERWISE COULD HAVE BEEN FORESEEN OR PREVENTED. THE 

PROVISIONS OF THIS RULE 7.9.3 SHALL NOT APPLY TO THE EXTENT THAT THE 

PERSON FROM WHICH DAMAGES ARE SOUGHT HAS BEEN FINALLY 

ADJUDICATED TO HAVE ENGAGED IN FRAUD OR WILLFUL OR WANTON 

MISCONDUCT.

7.9.4 EXCEPT IN ANY CASE WHERE A DISCLAIMING PARTY HAS BEEN FINALLY 

ADJUDICATED TO HAVE ENGAGED IN FRAUD OR WILLFUL OR WANTON 

MISCONDUCT, IN NO EVENT SHALL THE DISCLAIMING PARTIES’ TOTAL 

COMBINED AGGREGATE LIABILITY FOR ALL CLAIMS 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 $1,000,000 FOR ALL LOSSES 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,

SINGLE MONTH OR SINGLE YEAR 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.

7.10 Indemnification Obligations of Clearing Members

A Clearing Member or former Clearing Member shall indemnify and hold harmless 

the Clearing House and its Affiliates, and its and their equityholders, officers, 

directors, employees, and agents (collectively, the “Indemnified Parties”), for any 

and all losses, damages, costs and expenses (including attorneys’ fees) incurred by 

the Indemnified Parties as a result (direct or indirect) of such Clearing Member’s 

violation or alleged violation of the Rules or Applicable Law.

7.11 Large Trader Reports

The Clearing House will obtain copies of all reports that are required to be filed by 

Clearing Members pursuant to Part 17 and Part 20 of the CFTC Regulations from 

Clearing Members or the Exchange. A Clearing Member shall provide such reports 

to the Clearing House as directed by the Clearing House.
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

95

7.12 Public Information

The Clearing House shall make public the terms and conditions of each Exchange 

Contract, all fees charged by the Clearing House, the Margin-setting methodology 

used by the Clearing House, the size and composition of the Guaranty Fund, and 

Settlement Prices, volume and open interest for each Exchange Contract. The 

Clearing House will also make its Rulebook, list of Clearing Members and daily 

trading information available on the Clearing House website. The Clearing House 

will provide public notice of a Default on the Clearing House website.

7.13 Confidential Information

Any and all non-public information, in any form, obtained by Clearing Members or 

the Clearing House arising out of or related to the provision or use of the Clearing 

System, services of the Clearing House, or other property of the Clearing House

shall be deemed to be “Confidential Information.” Without limiting the generality 

of the foregoing, the Clearing House’s Confidential Information shall specifically 

include all source code of the Clearing System, and all trade secrets, processes, 

computer software and other proprietary data, research, information or 

documentation related thereto. Notwithstanding the foregoing, “Confidential 

Information” does not include any information that: (i) is in or becomes part of the 

public domain (other than by disclosure by the recipient or its directors, officers, 

employees, agents or contractors (“Representatives”) in violation of the Rules); 

(ii) was previously known to the recipient free of restriction; (iii) is independently 

developed by the recipient, without reference to the Confidential Information of the 

disclosing party; or (iv) is lawfully obtained by the recipient from a third party 

having the right to furnish such information.

The Clearing House and the Clearing Member (each, a “Party” and, collectively, 

the “Parties”) shall hold in strict confidence the Confidential Information of the 

other Party, shall use the same degree of care in protecting the confidentiality of 

the Confidential Information as it uses in protecting its own information of a similar 

type, and shall not disclose Confidential Information of the other Party to any third 

party or use Confidential Information of the other Party for any purpose not 

expressly permitted in the Rules; except that a Party may disclose Confidential 

Information of the other Party solely to those of its Representatives who have a 

need to know such Confidential Information to facilitate compliance with the Rules. 

The receiving Party will inform its Representatives of the confidential nature of the 

Confidential Information, will be responsible for protecting the confidentiality of 

the Confidential Information as to its Representatives, and will take such action, 

legal or otherwise, as may be reasonably necessary to cause them to protect the 

confidentiality of the Confidential Information. Notwithstanding the foregoing, 

Confidential Information may be disclosed: (i) by the Clearing House in accordance 

with the Rules relating to the use of Confidential Information; (ii) to the extent 

required by Applicable Law or regulation or the rules of a Self-Regulatory 

Organization of competent jurisdiction; (iii) by the Clearing House upon request by 

the CFTC, the Federal Energy Regulatory Commission, Government Authority, 
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

96

any regulatory or self-regulatory body, or any other organization, in each case 

having competent jurisdiction over the Clearing House; (iv) by the Clearing 

Member upon request from any federal or state agency, any regulatory or selfregulatory body, or any other organization, in each case having competent 

jurisdiction over such Clearing Member; and (v) pursuant to a subpoena or order of 

a court or legislative, regulatory or self-regulatory body of competent jurisdiction, 

provided that, in the case of clauses (iv) and (v) above, to the extent the disclosure 

is not in connection with a Routine Request, the disclosing Party shall, to the fullest 

extent permitted by law, immediately notify the other Party of such disclosure and 

cooperate with such Party to obtain appropriate confidential treatment of any 

Confidential Information to be so disclosed. 
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

97

SECTION VIII RULES IN SATISFACTION OF EUROPEAN COMMISSION 

CONDITIONS

8.1 House Account Minimum Liquidation Period

With respect to Clearing Member House Account positions, the Clearing House 

shall ensure Initial Margin requirements are calculated and collected using a 

liquidation period of not less than two (2) days calculated on a net basis.

8.2 Funded Financial Resources

The Clearing House shall maintain funded financial resources sufficient to enable 

the Clearing House to meet its financial obligations to Clearing Members 

notwithstanding a default by the two Clearing Members creating the largest 

combined loss to the Clearing House in extreme but plausible market conditions. 

If a Clearing Member controls another Clearing Member or is under common 

control with another Clearing Member, the affiliated Clearing Members shall be 

deemed to be a single Clearing Member for financial resources calculations under 

this rule.

8.3 Measures to Mitigate Procyclicality

The Clearing House shall establish Initial Margin requirements designed to limit 

the likelihood of procyclical changes in Initial Margin requirements and mitigate 

costly and disruptive adjustments to Initial Margin requirements in periods of high 

market volatility. Specifically, the Clearing House shall ensure that the Initial 

Margin model meets Option (b) as listed in Article 28 (Procyclicality) of Delegated

Regulation (EU) No. 153/2013, which reads: “assigning at least 25% weight to 

stressed observations in the lookback period in accordance with Article 26.” 
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

98

SECTION IX PHYSICAL SETTLEMENT AND DELIVERY

9.1 Clearing Member Duties to the Clearing House

9.1.1 A Clearing Member carrying an account, House or Customer, that is 

required to make or accept delivery agrees to guarantee and assume 

complete responsibility for the performance of all delivery obligations set 

forth in the Rules and the Exchange Rules.

9.1.2 In the event a Clearing Member fails to guaranty performance of 

Participant delivery obligations pursuant to Physically Settled Exchange 

Contracts, such failure may be deemed a Delivery Default pursuant to Rule 

3.29. In a Delivery Default, the Clearing House shall ensure financial 

performance to the Clearing Member whose actions or omissions did not 

cause or contribute to the Delivery Default (the “Affected Clearing 

Member”). In this regard, the Clearing House powers will include, but 

will not be limited to, the right to sell or liquidate the commodity subject 

to delivery and to distribute the proceeds as appropriate. “Financial 

Performance” means payment of commercially reasonable costs of the 

Affected Clearing Member related to replacement of the failed delivery 

and includes any related fines, penalties and fees and does not include 

physical performance or legal fees. An Affected Clearing Member seeking 

Financial Performance from the Clearing House shall provide prompt 

notice to the Clearing House of the delivery failure and a good faith 

estimate of any Financial Performance being sought no later than 1 hour 

after the delivery deadline for the respective Physically Settled Exchange 

Contract, which may be extended upon request by the Affected Clearing 

Member by the Chief Executive Officer of the Clearing House or the Chief 

Executive Officer’s designee due to extenuating circumstances. As soon 

as reasonably practicable thereafter, the Affected Clearing Member 

seeking Financial Performance shall provide to the Clearing House a 

detailed statement, with supporting documentation, of all amounts sought.

9.2 Reports and Notifications

The Clearing House will issue Tenders and invoices via email to relevant 

Participants and Clearing Members. Unless otherwise specified, the Clearing 

House will make the reports and confirmations it issues as part of the delivery 

processes available to the Clearing Members electronically via the Clearing 

System. 

9.3 Delivery Procedures for Nodal Deliverable US Environmental Contracts

9.3.1 These delivery procedures apply to all Physically Settled Exchange

Contracts based on environmental products specified in the relevant 

Contract Specifications (“Nodal Deliverable US Environmental 

Contracts”).
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

99

9.3.2 The following additional definitions apply to these delivery procedures:

(a) “Allowance” means an instrument, certificate, permit, asset, 

security, right, contract or allowance that is designated as a 

deliverable instrument for a Nodal Deliverable US Environmental 

Contract in the relevant Contract Specifications.

(b) “Registry” means a registry, custodian, depository or other system 

used for physical delivery of Allowances pursuant to the Contract 

Specifications of a Nodal Deliverable US Environmental Contract.

(c) “Registry Operator” means the operator of a Registry.

(d) “Tender” means a notice given pursuant to these delivery 

procedures and/or Rules, of an obligation to make or take delivery 

of a Deliverable.

9.3.3 Deliveries pursuant to Nodal Deliverable US Environmental Contracts are 

effected by the transfer of required Allowances directly from a Participant 

seller to a Participant buyer through a Registry.

9.3.4 Delivery under a Nodal Deliverable US Environmental Contract is based 

on open positions after expiration of the relevant Physically Settled 

Exchange Contract. Delivery is a three Business Day process consisting of 

three Business Days, as provided in the table below:

All times are to U.S. Eastern Prevailing Time

T Last Trading 

Day of the 

Exchange

Contract 

COB The Clearing House will make delivery assignments, 

matching Participant buyers to Participant sellers for 

the purposes of Physical Settlement and will issue

Tender and invoice notices to the impacted Participants 

and responsible Clearing Members.

The Clearing House will calculate Initial Margin for 

Nodal Deliverable US Environmental Contracts for 

each Participant and include it in the end of day 

(“EOD”) Margin requirements of their Clearing 

Members. 

T+1 Position Day Initial Margin is collected as part of the EOD Margin 

run. It is held in each subsequent Margin run (midday 

and EOD) until Physical Settlement.

T+2 Notice Day By 13:00 Clearing House receives notice whereby Participant 

buyer provides Participant seller with information of 

the account at the Registry to which Allowances are to 

be transferred.
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

100

T+3 Delivery & 

Payment Day 

Delivery by 

13:00

The Clearing Member shall ensure that the Participant 

seller has electronically submitted the transfer 

instructions in respect of all Allowances required to be 

transferred pursuant to the Nodal Deliverable US 

Environmental Contract to the relevant Registry.

After fulfilling its delivery obligations, the Clearing 

Member for the Participant seller must confirm 

delivery as completed via the Clearing System.

Following 

Delivery

Following receipt of required Allowances, the Clearing 

Member for the Participant buyer must confirm 

delivery as completed via the Clearing System. Such 

confirmation will constitute a representation and 

warranty from the Clearing Member to the Clearing 

House that the Participant buyer has received delivery 

of all required Allowances pursuant to the Nodal 

Deliverable US Environmental Contract under 

delivery, and that the Clearing Member is not aware of 

any dispute relating to the Allowances that have been 

delivered.

Following 

Confirmation

Following confirmation by the respective Clearing 

Member(s) for the Participant seller and the Participant 

buyer that delivery has been completed, payments will 

be processed as part of the midday Margin run on the 

same day as the delivery confirmation.

If the Clearing House receives delivery confirmation 

after 11:45 AM on the Delivery & Payment Day or any 

subsequent day, it will be treated as if it were received 

on the next Business Day and payments to the Clearing 

Member for the Participant seller shall be delayed 

accordingly.

9.4 Delivery Procedures for Nodal Deliverable Renewable Identification Numbers

(RINs) Contracts

9.4.1 These delivery procedures apply to all Physically Settled Exchange

Contracts based on RINs (“Nodal Deliverable RINs Contracts”). 

9.4.2 The following additional definitions apply to these delivery procedures:

(a) “RINs” means that which is designated as the deliverable pursuant 

to the Contract Specifications of Nodal Deliverable RINs Contracts.
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

101

(b) “EMTS” means the EPA Moderated Transaction System or other 

system used for physical delivery of RINs pursuant to the Contract 

Specifications of Nodal Deliverable RINs Contracts.

(c) “Tender” means a notice given pursuant to these delivery 

procedures and/or Rules, of an obligation to make or take delivery 

of a Deliverable.

9.4.3 Deliveries pursuant to Nodal Deliverable RINs Contracts are effected by 

the transfer of RINs (as described in the Contract Specifications) directly 

from a Participant seller to a Participant buyer through the EMTS. 

9.4.4 Deliveries pursuant to the Contract Specifications of Nodal Deliverable 

RINs Contracts are based on open positions after expiration of the relevant 

Physically Settled Exchange Contract. Delivery is a three Business Day 

process consisting of three Business Days, as provided in the table below:

All times are to U.S. Eastern Prevailing Time

T Last Trading 

Day of the 

Exchange

Contract 

COB The Clearing House will make delivery assignments, 

matching Participant buyers to Participant sellers for 

the purposes of Physical Settlement and will issue

Tender and invoice notices to the impacted Participants 

and responsible Clearing Members.

The Clearing House will calculate Initial Margin for 

Nodal Deliverable RINs Contracts for each Participant 

and include it in the end of day (“EOD”) Margin 

requirements of their Clearing Members.

T+1 Position Day Initial Margin is collected as part of the EOD Margin 

run. It is held in each subsequent Margin run (midday 

and EOD) until Physical Settlement.

T+2 Notice Day By 13:00 Clearing House receives notice whereby Participant 

buyer provides Participant seller with information of 

the account at the EMTS, including organization ID 

and organization name, to which RINs are to be 

transferred.

T+3 Delivery & 

Payment Day 

Delivery by 

13:00

The Clearing Member shall ensure that the Participant 

seller has submitted the transfer instructions in respect 

of all RINs required to be transferred pursuant to the 

Contract Specifications of the Nodal Deliverable RINs

Contract to the EMTS.

After fulfilling its delivery obligations, the Clearing 
NODAL CLEAR, LLC RULEBOOK 

June 21, 2022July 12, 2023

102

Member for the Participant seller must confirm 

delivery as completed via the Clearing System.

Following 

Delivery

Following receipt of RINs (as described in the Contract 

Specifications), the Clearing Member for the 

Participant buyer must confirm delivery as completed 

via the Clearing System. Such confirmation will 

constitute a representation and warranty from the 

Clearing Member to the Clearing House that the 

Participant buyer has received delivery of all RINs

pursuant to the Contract Specification of the Nodal 

Deliverable RINs Contract under delivery.

Following 

Confirmation

Following confirmation by the respective Clearing 

Member(s) for the Participant seller and the Participant 

buyer that delivery has been completed, payments will 

be processed as part of the midday Margin run on the 

same day as the delivery confirmation.

If the Clearing House receives delivery confirmation 

after 11:45 AM on the Delivery & Payment Day or any 

subsequent day, it will be treated as if it were received 

on the next Business Day and payments to the Clearing 

Member for the Participant seller shall be delayed 

accordingly.