BGC Derivative Markets, L.P

Rule Implementation Submission 2015-01

January 14, 2015

1. The texts of the amended Rules are appended as Attachment A. Any additions are 

underlined and any deletions are struck through.

2. The date of intended implementation for these rules is ten business days following the 

filing of this submission.

3. Attached, please find a certification that: (1) these rules comply with the Commodity 

Exchange Act (“Act”), and the Commission’s regulations thereunder; and (2) concurrent 

with this submission, BGCDMLP posted on its website: (i) a notice of pending 

certification of the rule amendments with the Commission; and (ii) a copy of this 

submission.

4. A concise explanation and analysis of the operation, purpose, and effect of each of the 

amended rules appears below.

5. There were no opposing views expressed regarding these amended rules.

6. Confidential treatment is not requested.

CONCISE EXPLANATION AND ANALYSIS OF THE OPERATION, PURPOSE, AND 

EFFECT OF THE RULE AMENDMENT AND ITS COMPLIANCE WITH APPLICABLE

PROVISIONS OF THE ACT, INCLUDING CORE PRINCIPLES AND THE 

COMMISSION’S REGULATIONS THEREUNDER

Pursuant to Commission Rule 40.6(a)(7)(vi), the following is a concise explanation and analysis 

of the operation, purpose, and effect of the amended rules. The attached amendments are 

cumulative and in response to suggestions and guidance from the staff during the course of the 

staff review of the BGCDMLP application for registration as a Swap Execution Facility. These 

amendments are either: 

(1) technical corrections to align the rules more closely with the language of Commission 

Rules; and/or 

(2) amendments made in response to guidance of Commission staff.

The following chart identifies the changed rules and notes the effect of the change and an 

explanation of the operation, purpose, and effect of the change. 

ActiveUS 139784271v.1
CONCISE EXPLANATION AND ANALYSIS OF THE OPERATION, PURPOSE, AND 

EFFECT OF THE RULE AMENDMENT AND ITS COMPLIANCE WITH APPLICABLE 

PROVISIONS OF THE ACT

Rule Rule Title Effect

101 Named Party in Interest Amend text to track the language of Rule 

209(a)(iv).

204(a) Disciplinary Committee Clarify that composition of disciplinary 

committee meets the provisions of CFTC

Rule 1.64, insofar as it would apply.

207 Restrictions on Directors, Officers, 

Committee Members, Employees 

and Consultants

Amend text to track the language of 

Commission Regulation 1.59(b).

209(a)(iv) Conflicts of Interest Amend definition of “named party in 

interest” to incorporate by reference the 

definition of Commission Regulation 

1.69.

304(a)(iii) Denial of Admission Delete redundant language.

403(f) Record-keeping and Reporting 

Requirements

Add provision addressing BGC’s Audit 

Trail Review Program, conducted by 

NFA.

803(a) Clearing Authorization Required Clarify that Clearing Participants are 

subject to the SEF’s jurisdiction.

1001 Scope Clarify scope shall apply to any Person 

subject to and bound by Rules of the 

Facility.

1011 Penalties Add provision specifying monetary 

sanctions; clarify that all sanctions take 

into account the respondent’s disciplinary 

history as required by 37.206(e).

1016(b) Action Against Non-Participants Conforming change – add “impose any 

Penalty authorized under Rule 1011”.

1017 Conflicts of Interest or Bias Conforming change – “Chief Executive 

Officer” to “Chief Compliance Officer”.

2

ActiveUS 139784271v.1
CERTIFICATIONS PURSUANT TO SECTION 5c OF THE COMMODITY EXCHANGE 

ACT, 7 U.S.C. §7A-2 AND COMMODITY FUTURES TRADING COMMISSION RULE 40.6, 

17 C.F.R. §40.6

I hereby certify that: 

(1) the amended Rules above comply with the Commodity Exchange Act, and the 

Commodity Futures Trading Commission’s regulations thereunder; and 

(2) concurrent with this submission, BGC Derivative Markets, L.P. posted on its website: 

(a) a notice of pending certification of the above Rules with the Commission; and (b) 

a copy of this submission

_________________________

By: Michael C. Sulfaro

Title: Chief Compliance Officer

Date: January 14, 2015

3

ActiveUS 139784271v.1
BGC Derivative Markets, L.P. Rules

PART 1. MEANING OF TERMS.

101. Definitions.

* * *

“Named Party in Interest” means a “named party in interest” as defined in Rule 209(a)(iv). 

Section 1.69 of the Commission Regulations.

PART 2. GOVERNANCE.

204. Disciplinary Committee.

(a) Establishment of the Disciplinary Committee. The Disciplinary Committee is a 

committee of the Facility whose members shall consist of such members appointed by the 

Chief Executive Officer. The members of the Disciplinary Committee shall constitute 

the Facility’s Review Panel(s) and Hearing Panel(s). A member of a Hearing Panel may 

not serve as a member of the Review Panel in the same matter and each Hearing Panel 

and each Review Panel must include a member that is not a Participant of the Facility. 

207. Restrictions on Directors, Officers, Committee Members, Employees and 

Consultants.

(a) * * *

(iii) Restrictions on Trading by Officers and Employees. If any officer or employee of 

the Facility, or of any corporate affiliate that has access to material non-public 

information concerning any commodity interest, such person shall not trade, 

directly or indirectly, in that commodity interest traded on any registered entity 

operated by the Facility or cleared by any one of the Facility’s clearing 

organizations; in such commodity interest traded on any other Swap market or 

cleared by any other clearing organization; or in any related commodity interest.

(b) Restrictions on Trading by Officers and Employees. No employee or officer of the 

Facility, or of any corporate affiliate, may trade, directly or indirectly in: 

(i) Any commodity interest traded on or cleared by the Facility; 

(ii) Any related commodity interest; 

(iii) A commodity interest traded on contract markets or swap executions facilities or 

cleared by derivative clearing organizations other than the Facility if the person 

4

ActiveUS 139784271v.1
has access to material, non-public information concerning such commodity 

interest; or

(iv) A commodity interest traded on or cleared by a linked exchanged if the person has 

access to material, non-public information concerning such commodity interest. 

[Subsections (b) and (c) are renumbered as (c) and (d) respectively.]

209. Conflicts of Interest.

(a) * * *

(iv) the term “named party in interest” shall mean a “named party in interest” as 

defined in Section 1.69 of the Commission Regulations. a Person or entity that is 

identified by name as a subject of any matter of a Rule enforcement nature or any 

disciplinary matter or appeal being considered by the Board, a disciplinary 

committee or oversight panel.

PART 3. PARTICIPANTS.

304. Denial of Admission.

(a) * * *

(iii) has had any fine, cease and desist order, denial of trading privileges, censure or 

other sanction or discipline (whether through an adverse determination, voluntary 

settlement or otherwise) imposed on such Person by any Governmental Agency;

PART 4. OBLIGATIONS OF PARTICIPANTS.

403. Record-keeping and Reporting Requirements.

* * *

(f) Responding to Information Requests. (i) Each Participant, and as applicable, Broker, 

shall timely furnish the information relating to the Facility as may from time to time be 

requested by any representative of the Facility acting within the scope of the jurisdiction 

of the Facility and in the course of its, his or her duties, including the NFA acting in its 

capacity as a regulatory services provider, except to the extent prohibited by Applicable 

Law. Any representative of the Facility, and the NFA, when engaged in the examination 

of any subject within the Facility’s jurisdiction, has the power to summon and examine 

any Participant or Broker and any employee, officer, partner, or agent thereof in order to 

carry out the Facility’s functions, except to the extent prohibited by Applicable Law. The 

5

ActiveUS 139784271v.1
representative of the Facility may require such individual to submit a sworn statement of 

his or her information.

(ii) The NFA, acting in its capacity as regulatory services provider to the Facility, from 

time-to-time shall review each Participant’s and each Broker’s compliance with the 

applicable recordkeeping and audit trail requirements of the Facility, including, but not 

limited to the requirements of this Rule 403, Rule 407, Rule 510, Rule 512 and Rule 603.

[Subsections (f), (g), (h), (i), (j), (k), (l), and (m) are renumbered as (g), (h), (i), (j), (k), (l), (m) 

and (n) respectively.]

PART 8. CLEARING AND FINANCIAL INTEGRITY OF CONTRACTS.

803. Clearing Authorization Required.

(a) Clearing Participant Authorization. (i) Every cleared trade executed on the Trading 

System or subject to the rules of the Facility shall be cleared through a Clearing 

Participant authorized by the designated Clearing Organization for the given product. (ii) 

Each Clearing Participant by entering into a relationship to intermediate clearing on 

behalf of a Trading Participant as provided in subsection (b) of this Rule 803, shall be 

subject to, and shall be considered to have consented to, the jurisdiction of the Facility, in 

respect of such transactions, including the jurisdiction of the Facility to impose sanctions 

for violations under Rule 1016. 

PART 10. DISCIPLINARY PROCEEDINGS.

1001. Scope.

The procedures of this Part 10 shall apply to any Person that is subject to, and that is bound by, 

the Rules of the Facility.

1011. Penalties.

(a) The Hearing Panel of the Disciplinary Committee may impose any one or more of the 

following penalties for violation of the Rules against any Person that is subject to the 

jurisdiction of the Facility, including but not limited to, any Participant, Clearing 

Participant or Customer:

(i) a censure or reprimand; 

(ii) suspension of trading privileges;

6

ActiveUS 139784271v.1
(iii) termination as a Participant or its acceptability as a Clearing Participant;

(iv) a fine of up to $100,000 per violation; or 

(v) such other penalty (excluding fines) as the hearing panel in its discretion shall 

deem appropriate.

(b) In the case of any penalty imposed on a Respondent denying access in whole or in part to 

the Facility’s market, the Hearing Panel shall issue an order to all Participants prohibiting 

them from granting such access, directly or indirectly, and any knowing violation of such 

an order shall constitute a violation of the Rules.

(b)(c) Any penalty imposed under Rule 1011, 1012, 1013, 1014, 1015 or 1016 shall be 

commensurate with the violation committed, shall take into account the respondent’s 

disciplinary history and where applicable, shall include full customer restitution, except 

where the amount of restitution or to whom it should be provided cannot be reasonably 

determined.

1016. Action Against Non-Participants.

(a) * * *

(b) If, after hearing, the Disciplinary Committee determines that the actions of the nonParticipant violate the Commodity Exchange Act, the Commission Rules or these Rules, 

the Disciplinary Committee may: 1) issue a censure or reprimand; 2) order any Clearing 

Participant to liquidate all or any portion of such non-Participant’s position; 3) order that 

no Participant accept new positions on behalf of any such non-Participant; 4) deny or 

terminate access of such non-Participant to the Trading System and the Facility; or 5) 

impose any Penalty authorized under Rule 1011, or 6) order such other action as is 

necessary to prevent a threat to the Swap or further violations of the Commodity 

Exchange Act or these Rules.

1017. Conflicts of Interest or Bias.

(a) * * *

(b) Prior to the consideration of any matter involving a named party-in-interest, each member 

of a committee of the Facility must disclose to the Chief Executive Compliance Officer 

of the Facility (or to his or her designee) whether he or she has any one of the 

relationships listed in Rules 207 and 209 with the named party-in-interest.

(c) Any Respondent which is a named party-in-interest in any proceeding under this Part of 

the Rules may serve a written request on the Chief Executive Compliance Officer of the

Facility for disqualification of any member of any committee of the Facility on the 

7

ActiveUS 139784271v.1
grounds that such member has one of the relationships listed in Rules 207 or 209 or that 

any other cause exists which might cause the member to have a bias against such 

Respondent.

(d) The Chief Executive Compliance Officer (or his or her designee) shall determine whether 

or not any member of a committee of the Facility will be disqualified from deliberating, 

voting or otherwise participating in any matter based upon:

(i) information provided by such Participant pursuant to paragraph (b) of this Rule;

(ii) information provided by a Respondent which is a named party-in-interest 

pursuant to paragraph (c) of this Rule; and

(iii) any other source of information that is reasonably available to the Facility.

(e) The Chief Executive Compliance Officer (or his or her designee) shall promptly serve 

written notice of his or her determination on the member of the committee and on the 

Respondent which is the named party-in-interest, and such determination shall be final 

and not subject to appeal within the Facility.

No employee of the Compliance Department or any other employee of the 

Facility may serve in any investigatory, prosecutorial or decision-making capacity 

relating to any matter involving a named party-in-interest if he or she would be 

precluded from participating in deliberations and voting on such matters pursuant 

to Part 2 if he or she were a member of a committee of the Facility. The 

provisions of paragraphs (b) through (e) of this Rule shall be applicable to such 

employee of the Facility as though such person were a member of a committee of 

the Facility.

8

ActiveUS 139784271v.1