16-024

December	6,	2016

VIA	PORTAL

Commodity	Futures	Trading	Commission

Attention:		Christopher	Kirkpatrick,	Secretary

Three	Lafayette	Centre

1155	21st Street,	NW

Washington,	DC		20581

Re: CFTC	Regulation	40.6(a)	Certification:		Submission	of	Amendments	to	the	

Nodal	Exchange Rulebook

Dear	Mr.	Kirkpatrick:

Nodal	Exchange,	LLC	(“Nodal	Exchange”	or	“Exchange”)	is	notifying	the	Commodity	Futures	

Trading	Commission	(“CFTC”	or	“Commission”)	that it	is	self-certifying	amendments	to	the	

Nodal	Exchange	Rulebook	(“Rules”)	pursuant	to	Commission	Regulation	40.6(a).			The	

Exchange	is	amending	Rule	5.2	Clearing	Members,	which	is attached	hereto	and	indicates

the	specific	text	in	red	that	is	being	amended.		The	Exchange	intends	to	implement	the	

amended	Rules	in	10	business	days	on	December	20,	2016.

Rule	5.2 explains	the	function of	the	clearing	member	with	regards	to Exchange	

participants.	To	access	the	Exchange,	a qualified	participant must	either	be	a	clearing	

member of	Nodal	Clear	or have an	agreement	with	a	Nodal	Clear	clearing	member	that	is	

also	registered	as	a	futures	commission	merchant	(“FCM”)	to	guarantee	the	participant’s

Exchange	transactions for	clearing	purposes.	 With	this	submission,	Rule	5.2.1	is	being	

expanded	to	further	explain	that	participants	that	are clearing	members	of	Nodal	Clear	

have	direct	trading	access	granted	by	the	Exchange.		For	all	other	participants,	the	

authorization	for	direct	access	to	trade	on	the	Exchange	is	obtained	through	the	agreement	

with	the	FCM that	guarantees	its	trades.		The	FCM	clearing	member	independently	

determines	the	trade	risk	limits,	which	is	the	process	for	authorizing	direct	access	to	trade	

on	the	Exchange.		The	FCM	clearing	member	retains	the	right	to	suspend	trading	privileges	

at	any	time	without	regard	to	the	Exchange’s	disciplinary	procedures	(See	Rule	5.2.4).		

Although	the	Exchange	does	not	recognize	membership	or levels	of	participation,	the	

Exchange	recognizes	that	participants	that	are	also	clearing	members	of	Nodal	Clear	have	

trading	privileges	and	could	be	deemed	Nodal	Exchange	“members”	as	defined	in	

Regulation	1.3(q).		However,	Exchange	participants	that	establish	a	clearing	relationship	

with	an	FCM,	have	direct	access	that	is	controlled	by	the	FCM	clearing	member	and	

accordingly,	would	not	be	deemed	“members”	of	the	Exchange.	
16-024 2

Exchange	management	has	assessed	the	amendments	to	the	Rules,	and	their	compliance	

with	applicable	provisions	of	the	Commodity	Exchange	Act	(“Act”),	including	the	

Commissions	Regulations	and	the	Core	Principles.		Nodal	Exchange	has identified	that	the	

amendments	may	affect	the	following	Core	Principles	as	follows:

Core	Principle	2	- Compliance	with	the	Rules:		The	amendments	to	the	Rules provide	clarity	

and	consistency	with	the	CFTC	Regulations	in	order that	Exchange	participants	may	

effectively	comply with	the	Rules.	

Add	Core	Principle	7	– Availability	of	General	Information:	The	amended	Rules	will	be	

posted	on	the	Nodal	Exchange	website	(www.nodalexchange.com).	

Pursuant	 to	Section 5c(c)	 of	 the	Act	and	 the	Commission’s	Regulation	40.6,	 the	Exchange	

certifies	 that	 amended	 Rules	 comply	 with	 the	 Act	 and	 the	 Commission’s	 Regulations	

thereunder.		There	have	not	been	any	opposing	views	expressed	regarding	the	amendments	

to	the	Rules.

Nodal	Exchange certifies	 that	 this	submission	has	been	concurrently	posted	on	 the	Nodal	

Exchange website	at	www.nodalexchange.com.

If	you	have	any	question	or	need	additional	information	regarding	this	submission,	please	

contact	me	at	703-962-9853	or	Markotic@nodalexchange.com.

Sincerely,

/s/	Anita	Herrera

General	Counsel	and	Chief	Regulatory	Officer

Attachment:

Redline	of	Nodal	Exchange	Rule	5.2