LMX Labs, LLC d/b/a Coinbase Derivatives

December 12, 2023

VIA CFTC Electronic Portal

Mr. Christopher J. Kirkpatrick

Secretary of the Commission

Office of the Secretariat

Commodity Futures Trading Commission

Three Lafayette Centre

1155 21st Street, NW

Washington, DC 20581

Re: CFTC Regulation 40.6(a) Certification: Crypto Market Maker Program

Coinbase Derivatives Submission #2023-16

Dear Mr. Kirkpatrick:

Pursuant to Commodity Futures Trading Commission (“CFTC” or “Commission”)

Regulation 40.6(a), LMX Labs, LLC, d/b/a Coinbase Derivatives (the “Exchange”) hereby

submits for self-certification for its Crypto Maker Maker Program (the “Program”). The

purpose of the Program is to incentivize liquidity and volume in the Exchange’s products.

The terms and conditions of the Program are set forth in Exhibit A, attached hereto, and

will become effective on January 1, 2024.

Compliance with Core Principles

The Exchange has reviewed the designated contract market (“DCM”) core principles

(“Core Principles”) set forth in the Commodity Exchange Act and the CFTC rules

thereunder and has identified the following Core Principles that may be directly implicated

by Program:

Core Principle 2 – Compliance with Rules and Core Principle 4 – Prevention of Market

Disruption

All trading on the Exchange, including any trading and related activity by Participants

under the Program, is subject to the LMX Labs Rulebook (the “Rulebook”) including

Chapter 5, which prohibits fraud, non-competitive trading, market manipulation and

abusive and disruptive trade practices. Capitalized terms not otherwise defined herein are

defined in the Rulebook. Additionally, as with all trading on the Exchange, trading in the

Program’s products will be subject to monitoring and surveillance by the Market

Regulation Department, which has the authority to investigate and enforce Exchange

rules, as described in Chapter 7.

Core Principle 9 – Execution of Transactions

FOIA CONFIDENTIAL TREATMENT REQUESTED BY LMX LABS LLC PURSUANT TO 17 C.F.R. PART 145
The Program’s products are listed for trading on the Exchange’s trading system, which

provides for efficient, competitive, and open execution of transactions pursuant to the

Exchange Rulebook.

Core Principle 12 – Protection of Markets and Market Participants

Chapters 4 and 5 of the Rulebook require all Participants, including those participating in

the Program, to observe high standards of integrity, market conduct, commercial honor,

fair dealing, and just and equitable principles of trade and prohibits, among other things,

fraud, non-competitive trading, market manipulation, and abusive and disruptive trade

practices. As with all contracts traded on the Exchange, trading in the Program’s products

will be subject to monitoring and surveillance by the Market Regulation Department and

compliance with the Program will be monitored and enforced by the Exchange.

Core Principle 18 – Recordkeeping

Records related to the Program will be maintained by the Exchange in compliance with its

recordkeeping policies and the requirements of the Commodity Exchange Act and CFTC

Rules.

Certification

The Exchange is not aware of any substantive opposing views to the Program. The

Exchange certifies that the Program complies with the Commodity Exchange Act and the

rules and regulations promulgated thereunder.

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

Exchange’s website at: https://www.coinbase.com/derivatives/filings.

If you have any questions or require further information, please contact the undersigned at

jane.downey@coinbase.com.

Sincerely,

/s/ Jane Downey

Chief Regulatory Officer

Attachment: Exhibit A

FOIA CONFIDENTIAL TREATMENT REQUESTED BY LMX LABS LLC PURSUANT TO 17 C.F.R. PART 145
APPENDIX A

Crypto Marke Maker Program

Program Purpose

The purpose of the Crypto Market Maker Program (the “Program”) is to support the

development of the Exchange’s products by increasing liquidity in the Exchange’s central

limit order book and, therefore, benefit all Participants in the market.

Product Scope

Bitcoin Futures (BTI), Ether Futures (ETI). Nano Bitcoin Futures (BIT), Nano Ether

Futures (ET

1

Product Bitcoin Futures Ether Futures

Nano Bitcoin

Futures

Nano Ether

Futures

Contract size 1 10 0.01 0.1

Contract Notional ~$35,000 ~$20,000 ~$350 ~$200

Min tick size ($

value) 5 index pts ($5) 0.50 pts ($5) 5 pts ($0.05) 0.50 pts ($0.05)

Eligible Participants

The Program is open to any Participant who completes and submits the application and

agrees to make two-sided markets according to the Program’s quoting requirements. All

Participants who submit the application are subject to review and approval by the

Exchange’s onboarding team.

Participants that submit an application and begin quoting before the fifteenth calendar day

of a given month to be deemed a “Participating Participant” in the Program effective that

same month. If an application is submitted and quoting begins on the fifteenth calendar

day, or later, the Participating Participant will be added to the Program effective the first

business day for the following month.

Effective July 1, 2024, the Exchange will no longer accept new Participating Participants

into the Program. For the avoidance of doubt, those who have submitted an application

but have not executed a trade on CDE prior to July 1, 2024 will be placed on a waitlist

indefinitely (“Waitlist”) and/or may be required to compete for any open Program spots via

a bid process.

Should one or more Program spots become available, the Exchange may allocate the

open spot(s) objectively via an open, competitive, transparent bid process (“Initial Bid”).

The Exchange reserves sole discretion to establish a queue of Waitlist Participants based

on the results of the Initial Bid (“Waitlist Queue”).

1 The Exchange may in its discretion extend the Product Scope to include any Exchange listed

futures products. If extended, reasonable notice will be provided to Eligible Participants.

FOIA CONFIDENTIAL TREATMENT REQUESTED BY LMX LABS LLC PURSUANT TO 17 C.F.R. PART 145
Conversely, any Participant who has submitted an application and executed a trade prior

to July 1, 2024 will be ‘grandfathered’ in for purposes of securing eligibility to participate in

the Program, effective July 1, 2024 and for each subsequent Crypto Market Maker

Program2, provided the Participant meets the Obligations in four (4) of the six (6)

preceding months on a rolling ongoing basis.

Program Term

The Program becomes effective on January 1, 2024

3 and ends on June 30, 2024.

Obligations

[Redacted]

Monitoring and Termination of Status

The Exchange will monitor each Participant’s trading activity and performance and retains

the right to revoke participant’s status if it determines that a participant failed to meet the

obligations of the Program.

3 Subject to all applicable CFTC review periods

2 Subject to all applicable CFTC review periods

FOIA CONFIDENTIAL TREATMENT REQUESTED BY LMX LABS LLC PURSUANT TO 17 C.F.R. PART 145