NEX SEF LIMITED

Facility Rulebook

Version 1.71.8

JanuaryMay 2018

© Copyright 2018 NEX SEF Limited

All Rights Reserved.

NEX SEF-2018-R-3-Exhibit D
FACILITY RULEBOOK

TABLE OF CONTENTS PAGE

DEFINITIONS 1

CHAPTER 1 MARKET GOVERNANCE 10

Rule 101 Board of Directors and Officers 10

Rule 102 Limitation of Liability 10

Rule 103 Confidentiality 11

Rule 104 Emergency Action 12

Rule 105 Suspension of Trading 15

Rule 106 Risk Controls for Trading 15

Rule 107 Market Data 15

Rule 108 Intellectual Property 16

CHAPTER 2 TRADING PRIVILEGES 19

Rule 201 Trading Privilege Holders 19

Rule 202 Authorised Traders and Authorised Trading Firms 21

Rule 203 Financial Integrity 24

Rule 204 Clearing 24

Rule 205 Application for and Grant of Trading Privileges 27

Rule 206 Participant and Customer Obligations; Suspension or Termination of Access 29

Rule 207 Customers 31

Rule 208 Recordkeeping 3132

Rule 209 Communications of NEX SEF with Participants 33

Rule 210 Required Disclosures to NEX SEF 34

Rule 211 Dues, Fees and Expenses 35

Rule 212 Market Maker Programs 35

Rule 213 Independent Software Vendors 36

Rule 214 Withdrawal of Participant 37

Rule 215 Prime Broker Transactions 38

CHAPTER 3 TRADING PROCEDURES 40

Rule 301 Trading Sessions 40

Rule 302 Information about, and access to, NEX SEF's Order Book 40

Rule 303 Required Transactions 4041

Rule 304 Permitted Transactions 41

Rule 305 [Reserved] 4142

Rule 306 [Reserved] 4142

Rule 307 Acceptable Bids and Offers 4142

Rule 308 [Reserved] 4142

Rule 309 Reporting and Data Collection 4142

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Rule 310 Bid/Offer Cancellation 43

Rule 311 [Reserved] 44

Rule 312 Enforceability of Transactions 44

Rule 313 Intermediated Transactions 45

Rule 314 Bunched Orders 4546

Rule 315 NEX SEF Authority over Transactions 46

Rule 316 Reporting Counterparty 51

Rule 317 Direct Electronic Access 5152

CHAPTER 4 TRADING STANDARDS 5253

Rule 401 Fraudulent Statements and Acts 5253

Rule 402 Abusive Trading Practices 5253

Rule 403 Good Faith Bids/Offers 5253

Rule 404 Pre-Execution Discussions and Pre-Arranged Transactions 5253

Rule 405 Manipulation and Price Distortion 5253

Rule 406 Disruptive Trading Practices 5354

Rule 407 General Offences 5354

Rule 408 Position Limits and Position Accountability 5355

CHAPTER 5 RULE ENFORCEMENT 5556

Rule 501 Jurisdiction 5556

Rule 502 Facility Market Regulation Staff Powers and Duties 5556

Rule 503 The Review Panel 5657

Rule 504 Notice of Charges 5758

Rule 505 Answer; Request for Hearing; Failure to Answer or Deny Charges 5859

Rule 506 Selection of Hearing Panel 5859

Rule 507 Challenge to Members of the Hearing Panel 5859

Rule 508 Hearing on Sanctions in the Event of Failure to Deny Charges; Failure to Request Hearing

Deemed Acceptance of Sanctions 5960

Rule 509 Settlement Prior to Commencement of Hearing 5960

Rule 510 Hearing Procedures 5960

Rule 511 Written Decision of Hearing Panel 6162

Rule 512 Liability for Expenses 6263

Rule 513 Effective Date of Sanctions 6263

Rule 514 Summary Suspension 6263

Rule 515 Extension of Time Limits 6364

Rule 516 Summary Fines 6364

CHAPTER 6 CONTRACTS TO BE TRADED 6566

Rule 601 Listing Procedures 6566

Rule 602 Swaps Not Readily Susceptible to Manipulation 6566

CHAPTER 7 GOVERNING LAW, JURISDICTION AND DISPUTE RESOLUTION 6667

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Rule 701 Choice of Law 6667

Rule 702 Disputes Among Trading Privilege Holders, Authorised Traders, Authorised Trading Firms and

Customers 6667

Rule 703 Complaints to and Disputes With NEX SEF 6667

CHAPTER 8 CONTRACT SPECIFICATIONS 6768

Rule 801 NDF Product Descriptions 6768

Rule 802 Interest Rate Swaps Products Descriptions 6970

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DEFINITIONS

Except where the context requires otherwise, the following terms shall have the following meanings when

used in the Rules. Use of the singular shall include the plural and vice versa, unless the context requires

otherwise.

Act means the U.S. Commodity Exchange Act, as amended from time to time.

Active Region means the following regions according to the relevant time in UTC:

Tokyo: 10:30 p.m. – 5:59 am

London: 6:00 a.m. – 1:59 p.m.

New York: 2:00 p.m. – 10:29 p.m.

Affiliate means, with respect to any person, any other person who controls, is controlled by or is under

common control with such person.

Affirm means the process by which the counterparties to a Cleared Contract verify that they agree on the

details of the transaction after execution on the Facility but prior to submission to the relevant DCO, which

may be done by any means acceptable to the counterparties, including the use of an Affirmation Hub,

and "Affirmations" shall be construed accordingly.

Affirmation Hub means a third-party service designated by NEX SEF to route Cleared Contracts to

DCOs and which may provide Participants with the opportunity to Affirm the Cleared Contracts.

Answer shall have the meaning set forth in Rule 505.

Applicable Law means, with respect to any person, any statute, law, regulation, rule or ordinance of any

Competent Authority applicable to such person, including but not limited to the FCA's rules, any

provisions of EU law (including, without limitation, MiFID II, MiFIR and CRD IV), the Act and Commission

Regulations.

Arbitrator Components means those components of the System that contain the core matching logic,

based in London, New York and Tokyo.

API means the application programming interface authorised by NEX SEF for accessing an Order Book.

ASX means ASX Clear (Futures) PTY Limited.

ATS Operator means either (i) a natural person who administers, operates and/or monitors a single

Automated Trading System, or (ii) an ATS Team.

ATS Team means multiple natural persons who simultaneously work together to administer, operate

and/or monitor a single Automated Trading System.

Authorised Trader means an individual or ATS Operator designated as such by, and acting on behalf of,

a Trading Privilege Holder or an Authorised Trading Firm to enter Bids/Offers, submit Pre-Arranged

Crosses, access a Trading Platform and execute transactions in Contracts.

Authorised Trading Firm means an entity designated as such by a Trading Privilege Holder, including

an Intermediary, to enter Bids/Offers, submit Pre-Arranged Crosses, access a Trading Platform and

execute as a Participant entering Bids/Offers on the EBS Order Book in the name of the Trading Privilege

Holder.

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Automated Trading System or ATS means a system that automates the generation and routing of

Bids/Offers and/or other messages to an Order Book.

BASIC shall have the meaning set forth in Rule 205(g).

Bid/Offer means a bid or offer entered into a Trading Platform operated by NEX SEF.

Board means the Board of Directors of NEX SEF.

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

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

event that the Cleared Contract is rejected from clearing.

Broker Component means an intermediate component of Order routing technology for the System,

between the Participant and the Arbitrator Component.

Business Day means any day on which a Contract is available for trading on the Facility.

CF10 means the person approved by the FCA to perform the CF10 (Compliance Oversight Function) for

NEX SEF, or one duly authorised to act with the authority of the CF10.

Chairman of the Board means the chairman of the Board.

Chief Compliance Officer means the chief compliance officer of NEX SEF, or one duly authorised to act

with the authority of such officer.

Chief Executive Officer means the chief executive officer of NEX SEF, or one duly authorised to act with

the authority of such officer.

Class means, with respect to any Swap, a Contract covering the same Underlying Interest.

Cleared Contract means any Contract that is listed for clearing by NEX SEF.

Clearing Firm means a clearing member of a DCO that is authorised pursuant to the rules of such DCO

to clear transactions in any or all Contracts.

Clearing Firm Representation shall have the meaning set forth in Rule 204 (f).

CME means Chicago Mercantiile Exchange Inc.

Commission means the U.S. Commodity Futures Trading Commission or any successor regulatory

body.

Commission Regulations means any rule, regulation, order, directive and any interpretation thereof

promulgated by the Commission, as amended.

Commodity shall have the same meaning as in the Act.

Commodity Interest shall have the meaning set forth in Commission Regulation 1.3.

Competent Authority means any domestic or foreign government (or political subdivision),

governmental or regulatory authority, agency, court, commission or other governmental or regulatory

entity (including any self-regulatory association) with jurisdiction over the operations and activities of NEX

SEF.

Compliance Function means the Chief Compliance Officer and CF10 together.

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Confirmation shall have the same meaning as in Commission Regulation 45.1.

Confidential Information means all non-public information that is stated to be or that can reasonably

expected to be of a confidential or trade secret nature in any form obtained by a Participant from NEX

SEF in accessing or using the Systems, including, but not limited to, any processes, or proprietary data,

information or documents regarding the Systems, save to the extent that such information: (i) is already

in the public domain at the time of disclosure; (ii) enters the public domain other than by a breach of any

obligation of confidentiality; (iii) is required to be disclosed by reason of Applicable Law, provided that,

where permitted by Applicable Law, prior notice of such disclosure shall be provided to NEX SEF as soon

as practicable in order to permit NEX SEF to seek a protective order or take other appropriate action to

safeguard the Confidential Information; or (iv) is permitted to be disclosed pursuant to the Rules.

Contract means any Swap listed for trading on the Facility.

CRD IV means Directive 2013/36/EU.

CRR means Regulation (EU) No. 575/2013.

Credit Institution shall have the meaning in Article 4(1)(1) CRR, being "an undertaking the business of

which is to take deposits or other repayable funds from the public and to grant credits for its own account"

which is authorizedauthorised in the European Union.

Customer means any person (including another Trading Privilege Holder), or such person's agent with

the legal ability to direct trading on behalf of such person, that transacts on the Facility through a Trading

Privilege Holder or Authorised Trading Firm acting as an Intermediary.

Customer Type Indicator Codes shall have the meaning set forth in Rule 208.

DCO means, with respect to any Swap, a derivatives clearing organisation authorised to clear such

Swap.

Delivery Month means, with respect to any Contract, the month in which delivery of an Underlying

Interest is to be made pursuant to the terms of such Contract.

Derived Information means Information that has been altered, enhanced, modified or from which

derivative information has been created.

Direct Electronic Access has the meaning given in Article 4(1)(41) MiFID II, being "an arrangement

where a member or participant or client of a trading venue permits a person to use its trading code so the

person can electronically transmit orders relating to a financial instrument directly to the trading venue

and includes arrangements which involve the use by a person of the infrastructure of the member or

participant or client, or any connecting system provided by the member or participant or client, to transmit

the orders (direct market access) and arrangements where such an infrastructure is not used by a person

(sponsored access)".

Director means a member of the Board.

Disorderly Trading Conditions means where (i) the performance of the Facility being significantly

affected by delays and interruptions, which in these Rules means that the Arbitrator Component of the

Active Region from time to time is down for more than 5 minutes (during the trading hours defined in Rule

801), resulting in the inability to trade for greater than 40% of EBS Trading Platform trading floor codes;

(ii) multiple erroneous Bids/Offers or transactions, which in these Rules means 10 or more erroneous

Bids/Offers or transactions occurring as a result of the Facility incorrectly modifying Participants' original

Bid/Offer submissions within 5 minutes; or (iii) the capacity of the Facility to provide services becoming

insufficient, which in these Rules means that the median round-trip time as measured by point of (A)

Bid/Offer entry point to the Arbitrator Component and back exceeds 250 milliseconds over a 60 minute

calculation period for immediate-or-cancel ("IOC") Bids/Offers, or (B) the Broker Component submitting

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the Bid/Offer to the Arbitrator Component acknowledging the Bid/Offer exceeds 25 milliseconds over a 60

minute calculation period for good-till-cancel ("GTC") Bids/Offers.

DTCC means DTCC Data Repository (U.S.) LLC.

EBS Contract means a Contract that is a non-deliverable foreign exchange forward contract or other

Contract executed through the EBS Order Book.

EBS Order Book means the Order Book for the EBS Trading Platform.

EBS Trading Platform means a Trading Platform operated pursuant to technology licensed from EBS

Dealing Resources Inc., an affiliate of the Facility.

Eligible Counterparty has the meaning given in the FCA Handbook.

Emergency shall have the meaning set forth in Rule 104.

Erroneously Cleared Transactions shall have the meaning set forth in Rule 315(i).

Error shall have the meaning set forth in Rule 315(h).

Eurex means Eurex Clearing AG.

Facility means the venue provided by NEX SEF for the execution of Contracts, as set out in this Facility

Rulebook.

Facility Subject Person means any person that has consented to the jurisdiction of the Facility and

agreed to be bound by and comply with the Rules pursuant to Rule 206(a).

Fair Usage Policy means the policy with that name available on the Facility's website.

FCA means the UK Financial Conduct Authority, or any successor regulatory body.

Financial Entity has the meaning set forth in the Act.

Governance Policy means the Governance Policy of NEX SEF available on the Facility's website.

Hearing Date shall have the meaning set forth in Rule 506.

Hearing Panel shall have the meaning set forth in the Governance Policy.

Hearing Panel Chairman shall have the meaning set forth in Rule 506.

Hearing Record shall have the meaning set forth in Rule 510.

ID shall have the meaning set forth in Rule 302.

Indemnified Party shall have the meaning set forth in Rule 108(f).

Indemnifying Party shall have the meaning set forth in Rule 108(f).

Information shall have the meaning set forth in Rule 107.

Intellectual Property Rights means all right, title and interest in and to (i) trademarks, service marks,

brand names and other indications of origin and the goodwill associated with the foregoing; (ii) inventions,

patents, trade secrets, know-how, processes and systems; (iii) copyright and database rights; and

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(iv) any other intellectual property or similar proprietary rights in any jurisdiction, in each case whether

registrable or not.

Intermediary means any person that enters Bids/Offers into a Trading Platform or submits Pre-Arranged

Crosses to the Facility as a Trading Privilege Holder or Authorised Trading Firm on behalf of Customers,

including without limitation, any futures commission merchant, introducing broker or commodity trading

adviser registered with the Commission.

Intermediated Transaction means any transaction on the Facility conducted through an Intermediary.

Investment Firm shall have the meaning in Article 4(1)(1) MiFID II, being "any legal person whose

regular occupation or business is the provision of one or more investment services to third parties and/or

the performance of one or more investment activities on a professional basis".

ISDA means the International Swaps and Derivatives Association, Inc.

ISDA Reporting Party Rules means the reporting party rules set forth in the document published by

ISDA entitled "Dodd Frank Act – Swap Transaction Reporting Party Requirements" dated July 15, 2013,

as set forth in Annex 1.

Kill Functionality Policy means the policy with that name available on the Facility's website.

Last Trading Day means, with respect to any Swap, the last day on which trading is permitted for such

Swap in accordance with the Rules.

LCH. Clearnet means LCH.Clearnet, Limited.

Legal Entity Identifier or LEI shall have the same meaning as in Commission Regulations.

Losses shall have the meaning set forth in Rule 102(a).

Major Swap Participant shall have the same meaning as in the Act and Commission Regulations.

MAR means Regulation (EU) No. 596/2014.

Market Regulation Advisory Notice or MRAN means a notice published or issued by NEX SEF to

Participants from time to time. MRANs form part of the Rules.

Market Regulation Staff means the personnel designated by NEX SEF as members of the Market

Regulation Staff, any agents of NEX SEF that assist in the implementation, surveillance, and enforcement

of its rules and related obligations, and NEX SEF's Regulatory Services Provider.

MiFID II means Directive 2014/65/EU.

MiFIR means Regulation (EU) No.600/2014.

MMA shall have the meaning set forth in Rule 212(b).

MTF means a multilateral trading facility, as defined in the FCA Handbook.

NAL means Commission No-Action Letter.

NEX SEF means NEX SEF Limited (Company Number: 6292563).

NEX SEF Indemnified Party shall have the meaning set forth in Rule 108(f).

NFA means the National Futures Association.

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Non-Cleared Contract means a Contract that is not a Cleared Contract.

Non-Cleared Contract Agreement means an agreement that governs the performance and settlement

of a Non-Cleared Contract including, without limitation, any ISDA master agreements, other master

agreements, terms supplements, master confirmation agreements, incorporated industry definitions and

any applicable credit support and default provisions.

Notice shall have the meaning set forth in Rule 504.

Order means an instruction by a Customer to an Intermediary to execute a transaction on behalf of such

Customer.

Order Book means a Trading Platform in which all Trading Privilege Holders have the ability to enter,

observe and transact on multiple Bids/Offers.

Organisational Requirements CDR means the European Commission Delegated Regulation (EU)

No. 2017/565.

Package Transaction means a transaction executed on the Facility or subject to the Rules involving two

or more instruments: (i) that is executed between two or more parties that are Participants; (ii) that is

priced or quoted as one economic transaction with simultaneous or near simultaneous execution of all

components; (iii) for which no component is subject to section 2(h)(8) of the Act; and (iv) where the

execution of each component is contingent upon the execution of all other components.

Participant means any Trading Privilege Holder, Authorised Trader or Authorised Trading Firm.

Participant Indemnified Party shall have the meaning set forth in Rule 108(f).

Participation Committee shall have the meaning set forth in the Governance Policy.

Permitted Transaction means any transaction involving a Swap that is not subject to the trade execution

requirement in section 2(h)(8) of the Act.

person means any individual, sole proprietorship, corporation, limited liability company, limited liability

partnership, partnership, association, estate, trust, governmental agency, unincorporated organisation or

any other legal entity.

Physical Emergency shall have the meaning set forth in Rule 104(e).

Position Limit means the maximum position, either net long or net short, in one Series or a combination

of various Series of a particular Class that may be held or controlled by one person, or subject to

aggregation with such person's position, as prescribed by NEX SEF and/or Commission.

Pre-Arranged Cross means a Permitted Transaction pre-arranged pursuant to Rule 304 (b).

Pre-Trade Controls shall have the meaning in Rule 310(c).

Prime Broker means a person that has authorised a Trading Privilege Holder to execute Prime Broker

Transactions in the name of and on behalf of such person pursuant to a Prime Broker Agreement. A

Prime Broker shall not be a Customer of such authorised Trading Privilege Holder; instead all Prime

Broker Transactions shall be executed pursuant to Rule 215.

Prime Broker Agreement means an agreement between a Prime Broker and a Trading Privilege Holder

that governs the performance and settlement of a Non-Cleared Contract that is a Permitted Transaction,

including any applicable credit support and default provisions.

Prime Broker Limit shall have the meaning set forth in Rule 215.

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Prime Broker Representation shall have the meaning set forth in Rule 215.

Prime Broker Transaction means a transaction executed pursuant to Rule 215: (i) in a Non-Cleared

Contract that is a Permitted Transaction; and (ii) where the Prime Broker has no knowledge of such

transaction until after the transaction's execution.

Proceeding shall have the meaning set forth in Rule 108(f).

Professional Client has the meaning given in the FCA Handbook.

Proprietary Data and Personal Information means any and all data (whether Bids/Offers, Pre-Arranged

Crosses, quotes, Orders, Confirmations or otherwise) and information submitted to the Facility by or

through a person with respect to that person, including information that separately discloses business

transactions, market positions or trade secrets of a person with respect to that person, but excludes

information in a Confirmation that discloses the identity of another person.

Public Director means any person who qualifies as a "public director" within the meaning set forth in the

Commission Regulations.

Regulatory Agency means any Competent Authority, including the FCA, the Commission and the SEC,

the NFA and any other SRO, and any organisation, whether domestic or foreign, granted authority under

statutory or regulatory provisions to regulate its own activities and the activities of its members, not

including NEX SEF.

Regulatory Oversight Committee shall have the meaning set forth in the Governance Policy.

Regulatory Services Provider means an outside organisation which provides regulatory services to

NEX SEF pursuant to an agreement.

Rejected Leg shall have the meaning set forth in Rule 315 (i).

Rejected Transactions shall have the meaning set forth in Rule 315 (i).

Related Parties shall have the meaning set forth in Rule 107.

Request for Quote or RFQ means a request by one Participant to at least such minimum number of

Participants as may be required by Commission Regulations from time to time for a market quote that

shall constitute a Bid/Offer. The SEF does not currently offer RFQ functionality.

Required Transaction means any transaction involving a Swap that is subject to the trade execution

requirement in section 2(h)(8) of the Act.

Respondent shall have the meaning set forth in Rule 504(a).

Review Panel shall have the meaning set forth in the Governance Policy.

Risk-Based Limits means the risk-based limits established by a Clearing Firm in accordance with

Commission Regulation 1.73.

Rule or Rules means the rules, resolutions, interpretations, statements of policy, decisions, directives

and orders of the Facility (including this Rulebook).

Secretary means the individual appointed by the Board from time to time to serve as secretary of NEX

SEF.

SEC means the U.S. Securities and Exchange Commission.

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SEF means swap execution facility, as defined in the Act.

Series means all Contracts of the same Class having identical terms.

SRO means self-regulatory organisation.

Swap shall have the same meaning as in the Act and Commission Regulations.

Swap Data Repository or SDR shall have the same meaning as in the Act.

Swap Dealer shall have the same meaning as in the Act and Commission Regulations.

Systems means the Trading Platforms, including various proprietary and third party software, firmware,

hardware, keypads and supporting documentation to which Participants are granted access by NEX SEF.

System Protocol means the terms from time to time in force upon which a Participant may access a

specific Trading Platform, including any supplemental written guidelines provided by NEX SEF to the

Participant, as amended from time to time. The System Protocols are set forth in confidential Chapter 9

of this Facility Rulebook. In the event of any inconsistency between the provisions of any System

Protocol and the Rules, the terms of the System Protocol shall prevail.

Terms Incorporated by Reference shall have the meaning set forth in Rule 312.

Trading Platform means any of the separate electronic central limit order books and other systems

administered by or on behalf of NEX SEF for the trading of Contracts pursuant to specific System

Protocols for each such system.

Trading Privilege Holder means an individual or entity with Trading Privileges on the Facility granted

pursuant to Rule 201 (intermediary an Intermediary), but does not include an Authorised Trading Firm or

Authorised Trader.

Trading Privileges means permission from NEX SEF given to any Trading Privilege Holder in

accordance with Rule 201 to access the Facility, or to any Authorised Trading Firm or Authorised Trader

in accordance with Rule 202 to access the Facility.

Trading Session means, with respect to any Contract, the period of hours on any Business Day during

which such Contract is available for trading, as specified in the Rules governing such Contract.

Underlying Interest means the interest which is the subject of a Swap.

Violation means a violation of any of the Rules.

Waiver shall have the meaning set forth in Rule 309(f).

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GENERAL

Regulatory Status

United Kingdom and the EEA

NEX SEF Limited (FRN 472944) is regulated by the FCA and is authorised, among other things, to:

• arrange (bring about) deals in investments;

• make arrangements with a view to transactions in investments; and

• operate a MTF (as set in the relevant System Protocol).

NEX SEF has passporting rights under MiFID II in relation to certain of its permissions.

United States of America

NEX SEF is registered as a SEF with the Commission.

Compliance Oversight

The Chief Compliance Officer and the CF10, both appointed by the Board, assist NEX SEF in meeting its

regulatory obligations, as set out by the Commission and the FCA respectively.

References in this Facility Rulebook and any other related document to the Compliance Function is

intended to mean, for Commission related considerations, the Chief Compliance Officer and, for FCA

related considerations, the CF10. To the extent any of the activities concern both the Commission and

FCA, the Chief Compliance Officer and the CF10 will cooperate to ensure compliance with the respective

regulations.

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CHAPTER 1

MARKET GOVERNANCE

Rule 101 Board of Directors and Officers

(a) Management. The Board manages, operates and sets policies, including the

Governance Policy, for NEX SEF and the Facility. The Board has the power to appoint such officers of

NEX SEF as it may deem necessary or appropriate from time to time.

(b) Governance Policy. The Governance Policy shall be deemed to be part of the Rules,

and shall be deemed to be incorporated herein, to the same extent and with the same force and effect as

if set forth herein in their entirety.

Rule 102 Limitation of Liability

(a) TO THE EXTENT PERMITTED BY APPLICABLE LAW, AND EXCEPT FOR PRIVATE

RIGHTS OF ACTION UNDER SECTION 22(B) OF THE ACT OR IN INSTANCES WHERE A NEX SEF

PARTY (AS DEFINED BELOW) HAS BEEN FINALLY ADJUDICATED TO HAVE ENGAGED IN

NEGLIGENCE, WILFUL DEFAULT OR FRAUD, NEX SEF (INCLUDING ITS RESPECTIVE

SUBSIDIARIES AND AFFILIATES) AND THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES,

AGENTS, CONSULTANTS AND LICENSORS (EACH, A "NEX SEF PARTY"), SHALL NOT BE LIABLE

TO ANY PERSON FOR ANY LOSSES, DAMAGES, COSTS OR EXPENSES (INCLUDING, BUT NOT

LIMITED TO, LOSS OF PROFITS, LOSS OF USE, AND DIRECT, INDIRECT, INCIDENTAL,

CONSEQUENTIAL OR PUNITIVE DAMAGES) IN CONTRACT, TORT, OR OTHERWISE AND

WHETHER THE CLAIM IS BROUGHT DIRECTLY OR AS A THIRD PARTY CLAIM, ARISING FROM:

(1) ANY FAILURE, MALFUNCTION, FAULT IN DELIVERY, DELAY, OMISSION,

SUSPENSION, INACCURACY, INTERRUPTION, TERMINATION, OR ANY OTHER CAUSE, 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 NEX SEF OR ANY NEX SEF PARTY, OR SERVICES, EQUIPMENT OR

FACILITIES USED TO SUPPORT SUCH SYSTEMS AND SERVICES, INCLUDING WITHOUT

LIMITATION ELECTRONIC ORDER ENTRY/DELIVERY, TRADING THROUGH ANY

ELECTRONIC MEANS, ELECTRONIC COMMUNICATION OF MARKET DATA OR

INFORMATION, WORKSTATIONS USED BY PARTICIPANTS, PRICE REPORTING SYSTEMS

AND ANY AND ALL TERMINALS, COMMUNICATIONS NETWORKS, CENTRAL COMPUTERS,

SOFTWARE, HARDWARE, FIRMWARE AND PRINTERS RELATING THERETO; OR

(2) ANY FAILURE OR MALFUNCTION, FAULT IN DELIVERY, DELAY, OMISSION,

SUSPENSION, INACCURACY, INTERRUPTION OR TERMINATION, OR ANY OTHER CAUSE,

OF ANY SYSTEM OR SERVICE OF NEX SEF OR ANY NEX SEF PARTY, OR SERVICES,

EQUIPMENT OR FACILITIES USED TO SUPPORT SUCH SYSTEMS OR SERVICES,

CAUSED BY ANY THIRD PARTIES INCLUDING, BUT NOT LIMITED TO, INDEPENDENT

SOFTWARE VENDORS AND NETWORK PROVIDERS; OR

(3) ANY ERRORS OR INACCURACIES IN INFORMATION PROVIDED BY NEX

SEF OR ANY NEX SEF PARTY OR ANY OF NEX SEF'S OR NEX SEF PARTY'S SYSTEMS,

SERVICES OR FACILITIES; EXCEPT FOR INCORRECT ORDER STATUS; OR

(4) ANY UNAUTHORISED ACCESS TO OR UNAUTHORISED USE OF ANY OF

NEX SEF'S OR NEX SEF PARTY'S SYSTEMS, SERVICES OR FACILITIES BY ANY PERSON.

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(b) NO EXPRESS OR IMPLIED WARRANTIES OR REPRESENTATIONS (INCLUDING

BUT NOT LIMITED TO WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR

PURPOSE OR USE) ARE PROVIDED BY NEX SEF OR ANY NEX SEF PARTY, THEIR RESPECTIVE

OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, CONSULTANTS, OR LICENSORS RELATING TO

ANY SYSTEMS OR SERVICES OF NEX SEF OR NEX SEF PARTY OR SERVICES, EQUIPMENT OR

FACILITIES USED TO SUPPORT SUCH SYSTEMS OR SERVICES, INCLUDING A TRADING

PLATFORM, WHICH ARE PROVIDED "AS IS" TO PARTICIPANTS. NEITHER NEX SEF NOR EBS

MAKE ANY REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED THAT ANY SYSTEMS

OR SERVICES OF NEX SEF OR EBS (INCLUDING EACH OF THEIR RESPECTIVE SUBSIDIARIES

AND AFFILIATES) OR SERVICES, EQUIPMENT OR FACILITIES USED TO SUPPORT SUCH

SYSTEMS OR SERVICES, INCLUDING A TRADING PLATFORM, WILL MEET A PARTICIPANT'S

REQUIREMENTS, HAVE UNINTERRUPTED OR ERROR-FREE OPERATION, BE AVAILABLE

DURING ANY SPECIFIED BUSINESS HOURS (WHETHER ADVERTISED OR NOT) OR OPERATE IN

CONJUNCTION WITH OTHER SOFTWARE.

(c) ANY DISPUTE ARISING OUT OF THE USE OF SYSTEMS OR SERVICES OF NEX

SEF OR ANY NEX SEF PARTY OR SERVICES, EQUIPMENT OR FACILITIES USED TO SUPPORT

SUCH SYSTEMS OR SERVICES IN WHICH NEX SEF OR A NEX SEF PARTY IS A PARTY MUST BE

BROUGHT WITHIN ONE YEAR FROM THE TIME THAT A CAUSE OF ACTION HAS ACCRUED. ANY

SUCH DISPUTE MAY ONLY BE LITIGATED SUBJECT TO THE RULES OF THIS RULEBOOK AND

WILL BE GOVERNED BY THE LAWS SET OUT IN THIS RULEBOOK.

(d) EXCEPT IN INSTANCES WHERE A NEX SEF PARTY HAS BEEN FINALLY

ADJUDICATED TO HAVE ENGAGED IN NEGLIGENCE, WILLFUL DEFAULT OR FRAUD, IN NO

EVENT SHALL THE NEX SEF PARTIES' TOTAL COMBINED AGGREGATE LIABILITY FOR ALL

CLAIMS ARISING OUT OF ANY NEGLIGENCE, FAILURES, MALFUNCTIONS, FAULTS IN DELIVERY,

DELAYS, OMISSIONS, SUSPENSIONS, INACCURACIES, INTERRUPTIONS, TERMINATIONS,

ORDER STATUS ERRORS OR ANY OTHER CAUSES, IN CONNECTION WITH THE FURNISHING,

PERFORMANCE, OPERATION, MAINTENANCE, USE OF OR INABILITY TO USE ALL OR ANY PART

OF ANY OF NEX SEF'S OR A NEX SEF PARTY'S SYSTEMS OR SERVICES, OR SERVICES,

EQUIPMENT OR FACILITIES USED TO SUPPORT SUCH SYSTEMS AND SERVICES, OR THE

NEGLIGENCE OF NEX SEF OR A NEX SEF PARTY STAFF, EXCEED $50,000 FOR ALL LOSSES

FROM ALL CAUSES SUFFERED BY ALL PERSONS ON A SINGLE DAY; $200,000 FOR ALL LOSSES

SUFFERED BY ALL PERSONS FROM ALL CAUSES IN A SINGLE CALENDAR MONTH; AND

$500,000 FOR ALL LOSSES FROM ALL CAUSES SUFFERED BY ALL PERSONS IN A SINGLE

CALENDAR YEAR.

(e) A CLAIM AGAINST NEX SEF OR A NEX SEF PARTY ARISING OUT OF ANY FAILURE

OR MALFUNCTION SHALL ONLY BE ALLOWED IF SUCH CLAIM IS BROUGHT IN ACCORDANCE

WITH THIS RULE.

(f) NOTWITHSTANDING THE FOREGOING, THE LIMITATION OF LIABILITY PURSUANT

TO THIS RULE 102 IS LIMITED TO CLAIMS ARISING OUT OF NEX SEF'S AND A NEX SEF PARTY'S

OPERATION OF THE FACILITY AND/OR PROVISION OF SERVICES TO NEX SEF.

Rule 103 Confidentiality

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(a) NEX SEF shall not, and shall cause its Affiliates not to, use for business or marketing

purposes any Proprietary Data or Personal Information it or any of its Affiliates collects or receives, from

or on behalf of any person, for the purpose of fulfilling NEX SEF's regulatory obligations, unless the

person who provided such data or information provides prior written consent to NEX SEF's use of such

data or information for such purposes. In furtherance of Applicable Law, NEX SEF may share such data

and information with its Affiliates, the Commission, the FCA, one or more SEFs, SDRs, DCOs or

Designated Contract Markets registered with the Commission, and, to the extent permitted by Applicable

Law, other Competent Authorities, including those in countries outside the U.S. and UK. NEX SEF may,

upon request of a Trading Privilege Holder, provide a list of current Trading Privilege Holders on a

confidential basis. The receiving Trading Privilege Holder shall not disclose the contents of the list

without the prior consent of NEX SEF. Proprietary Data and Personal Information shall not include

aggregated price and volume information not identified with a specific Participant or Customer, and NEX

SEF may use such aggregated information for business and marketing purposes.

(b) No NEX SEF employee shall trade, directly or indirectly, in any:

(1) Contract;

(2) Commodity Interest related to a Contract;

(3) Commodity Interest traded on designated contract markets or SEFs or cleared

by DCOs if the employee has access to material, non-public information concerning such

Commodity Interest; or

(4) Commodity Interest traded on or cleared by a linked exchange if the employee

has access to material, non-public information concerning such Commodity Interest.

(c) No NEX SEF Affiliate, member of the Board or any committee established by the Board

or by or pursuant to the Rules of the Facility, or any officer or other employee or consultant of NEX SEF

shall, either during or after service with NEX SEF:

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

any Contract or Commodity Interest, on the basis of any material information or, non-public

information obtained through special access related to the performance of such person's official

duties;

(2) absent prior written consent of NEX SEF, use, directly or indirectly, information

that is deemed to be non-public information, or disclose non-public information to others, except

(i) to others within NEX SEF, NEX SEF's Affiliates or to outside advisers thereof or other service

providers for NEX SEF, provided that such advisors and service providers are subject to

confidentiality obligations, and that, in each case, such disclosure is necessary for the

performance of Facility-related duties by the individual or entity, (ii) if required by a Regulatory

Agency, or (iii) if compelled to do so by valid legal process, provided that the individual or entity

notifies NEX SEF in advance thereof to the extent permitted; and

(3) enter into any Contract where they have a direct or indirect material interest in

the outcome of that Contract, other than obtaining a fee or commission for its execution.

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(d) Subject to Rule 103(a), NEX SEF shall not, except as reasonably necessary to operate

any Trading Platform, to fulfill its obligations under this Rulebook or to comply with Applicable Law or any

request of the Commission or the FCA, without the prior written consent of a Trading Privilege Holder in

each instance, (i) use in advertising, publicity, marketing or other promotional materials, the name, trade

name, trademark, trade device, service mark or symbol of such Trading Privilege Holder or any of its

Affiliates, or (ii) represent that any product or any service provided by NEX SEF has been approved or

endorsed by such Trading Privilege Holder or any of its Affiliates.

(e) For purposes of this Rule 103, the terms "employee", "material information" and "nonpublic information" have the meanings ascribed to them in Commission Regulation § 1.59.

Rule 104 Emergency Action

(a) Definitions. As used in this section:

The term "Emergency" shall mean any occurrence or circumstance which, in the opinion of NEX SEF,

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

the liquidation of, or delivery pursuant to, any Contracts on the Facility, including any manipulative or

attempted manipulative activity; any actual, attempted, or threatened corner, squeeze, congestion, or

undue concentration of positions; any circumstances which may materially affect the performance of

Contracts traded on the Facility, including failure of the payment system or the bankruptcy or insolvency

of any Participant; any action taken by any Competent Authority, or any other board of trade, swap

execution facility, market or facility which may have a direct impact on trading on the Facility and any

other circumstance which may have a severe, adverse effect upon the functioning of the Facility.

(b) Emergency action may be taken by the following:

(1) by the Board in the case of any Emergency;

(2) by any two members of the Board in the case of any Emergency where it is

impracticable in the opinion of the Chairman of the Board or in his or her absence, any two

members of the Board, to call a meeting of the Board to deal with the Emergency; or

(3) by any committee of NEX SEF pursuant to powers conferred on said committee

under the Rules or by the Board.

(c) Vote Required. The vote required of the Board or committee authorised to take any

Emergency action hereunder shall be:

(1) in the case of action by the Board, the affirmative vote of a majority of the

members of the Board present and voting at a meeting at which there is a quorum; or

(2) in the case of action by a committee, the affirmative vote of two or more persons

constituting not less than a majority of the members of said committee present and voting at a

meeting at which there is a quorum.

The consent in writing to any Emergency action of all members of the Board or of a committee, as

applicable, shall be sufficient to take such Emergency action without a meeting. A member of the Board

or of a committee shall be deemed present or in attendance at a meeting if such a person participates in

the meeting by means of a conference telephone or similar communications equipment allowing all

persons participating in the meeting to hear each other at the same time.

(d) Action which may be taken:

(1) In the event of an Emergency, NEX SEF may, subject to Part 40 of the

Commission Regulations under the Act, place into immediate effect a Rule which may provide

for, or may authorise NEX SEF, or any committee, to undertake actions which, in the opinion of

13
NEX SEF are necessary or appropriate to meet the Emergency, including, but not limited to, such

actions as:

(i) extending or shortening the expiration date for trading in Contracts;

(ii) extending the time of delivery under or expiration of Contracts;

(iii) extending, limiting or changing hours of Trading Sessions;

(iv) imposing or modifying price limits;

(v) imposing or modifying Position Limits;

(vi) imposing or modifying intraday market restrictions;

(vii) ordering the liquidation or transfer of open positions in any Contract;

(viii) ordering the establishment of a settlement price;

(ix) suspending trading pursuant to Rule 105 or curtailing trading in any

Contract;

(x) removing any one or more Contracts from trading on the facility;

(xi) cancelling any Bid/Offer;

(xii) altering any Contract's settlement terms or conditions prior to execution

and adjusting or cancelling any executed transaction pursuant to Rule

315;

(xiii) modifying or suspending any provision of the Rules; and

(xiv) adjusting, winding down or closing the Facility.

(2) In the event of an Emergency when a quorum of the Board is not available, all

trading on the Facility may be suspended by an affirmative vote of a majority of the Directors

present, or by action of one Director if only one Director is present, for such period of time as in

their or his or her judgment is necessary. In the event of an Emergency which prevents normal

attendance at a meeting of the Board, when no Director is present, any authorised officer of NEX

SEF shall have authority to order suspension of trading on the Facility for such period of time as

in his or her judgment is necessary. Any action taken under this paragraph (d) shall be subject to

review and modification by the Board.

(3) Whenever any action is taken under this Rule pursuant to which trading is

suspended or other changes in procedure are made, all matters relating to notices, deliveries and

other obligations may be suspended or deferred in such manner as the Board or committee, as

the case may be, may determine.

(4) NEX SEF may be required to take an Emergency action when directed by the

FCA or the Commission. If a Contract is traded both on the Facility and on one or more other

SEFs, any Emergency action to liquidate or transfer of open positions in any Contract will be

made in consultation with the Commission or Commission staff.

(e) Physical Emergencies

(1) In the event the physical functions of the Facility or NEX SEF are, or are

threatened to be, severely and adversely affected by a physical emergency, such as fire or other

casualty, bomb threat, substantial inclement weather, power failure, communication or

14
transportation breakdown, computer malfunction, screen-based Trading Platform break-down,

malfunction of plumbing, heating, ventilation and air conditioning systems, or a backlog or delay

in clearing or in the processing of data related to clearing Cleared Contracts (a "Physical

Emergency"), the Chairman of the Board, or in his or her absence the Chief Executive Officer, or

in both of their absences any other authorised officer may take any action which, in the opinion of

such officer is necessary or appropriate to deal with the Physical Emergency, including, but not

limited to, suspending trading in any one or more Contracts, delaying the opening of trading in

any one or more Contracts, extending the Last Trading Day and/or the time of trading.

(2) In the event a designated officer has ordered suspension of trading, the

Chairman of the Board or the Chief Executive Officer, or in their absence any other authorised

officer may order restoration of trading on the Facility, or may remove other restrictions so

imposed, if such officer determines that the Physical Emergency has sufficiently abated to permit

the physical functions of NEX SEF or the Facility to continue in an orderly manner.

(f) NEX SEF will promptly submit a written report detailing any action taken hereunder to the

Commission and the FCA and such written report shall explain the decision-making process, the reasons

for the exercise of emergency authority and how any conflicts of interest were addressed. Any

emergency Rule or Rule amendment shall be filed with the Commission in accordance with Part 40 of the

Commission Regulations under the Act.

(g) In exercising its authority under this Rule 104, NEX SEF shall, in its reasonable

discretion, and where appropriate, permitted by Applicable Law and not precluded by exigent

circumstances, consult and coordinate with DCOs, other swap execution facilities, boards of trade,

relevant Participants, and other parties in considering what actions to take hereunder.

(h) In exceptional circumstances and following a request from a Participant, NEX SEF may

decide, in its absolute discretion, to authorise a specific order or set of orders which exceed the

parameters of the Pre-Trade Controls. Any such request by a Participant must be in written or electronic

form and must be sent to the Compliance department of NEX SEF. NEX SEF shall communicate its

decision as to authorizationauthorisation in written or electronic form. Any authorizationauthorisation

given pursuant to this sub-paragraph shall be temporary and shall be restricted to the order(s) specified

by NEX SEF.

Rule 105 Suspension of Trading

The Board may, in its discretion, by an affirmative vote of a majority of the Directors present at a meeting

at which there is a quorum (which, in an Emergency other than a Physical Emergency, may be held

without previous notice):

(a) suspend or remove any one or more of the Contracts in accordance with its business

needs; and

(b) suspend or remove from trading any one or more Contracts which no longer complies

with the Rules unless such suspension or removal would be likely to cause significant damage to the

interests of Participants or Customers or the orderly functioning of the market.

Any decision made by the Board in accordance with this Rule 105 to suspend or remove from trading any

one or more Contracts shall be made public on the Facility's website and shall be communicated to the

relevant Competent Authority.

Rule 106 Risk Controls for Trading

The Regulatory Oversight Committee may impose controls to reduce the potential risk of market

disruption, including, but not limited to, market restrictions that pause, halt or constrain trading in specified

market conditions.

15
Rule 107 Market Data

(a) Subject to Rule 103, and each Participant's and Customer's rights in its own Proprietary

Data and Personal Information, NEX SEF owns all rights, title and interest in and to all intellectual

property and other proprietary rights (including all copyrights, database rights, trademarks and trade

secrets, or similar proprietary rights in any jurisdiction whether or not registrable) in and to any data,

analytics, research or other information (including without limitation Bids/Offers, Pre-Arranged Crosses,

the contents of Confirmations, such Confirmations themselves, prices and volumes of transactions)

contained in, displayed on, generated by or derived from the Facility and the Trading Platforms

(collectively the "Information"). NEX SEF shall not decompile or reverse engineer any of a Participant's

or Customer's Proprietary Data and Personal Information for the purpose of ascertaining such

Participant's or Customer's trading strategies, except to the extent reasonably necessary for NEX SEF's

operations, to perform its surveillance and monitoring functions or to otherwise comply with Applicable

Law. Subject to each Participant's or Customer's rights in its own Proprietary Data and Personal

Information, each Participant and Customer (i) agrees to keep the Information confidential and cause

each of its employees, Affiliates, Authorised Trading Firms, Customers, agents, consultants, independent

software vendors and other persons affiliated with any of the foregoing, as applicable (collectively

"Related Parties"), to keep the Information confidential, and (ii) agrees not to, and shall cause its

applicable Related Parties not to, sell, lease, license, transfer, provide or otherwise make available to any

third party any form of access to or use of any of the Information.

(b) Subject to paragraph (c) of this Rule 107, each Participant and Customer agrees that it

shall not, and shall cause its Related Parties not to, license, sublicense, transfer, redistribute, resell, alter,

enhance, make derivative works of, download to computer or reverse engineer all or any part of the

Information (other than such Participant's and Customer's Proprietary Data and Personal Information).

(c) Notwithstanding paragraph (b) of this Rule 107, solely (i) for use in connection with a

Trading Privilege Holder's own trading activity (and not, for the avoidance of doubt, for use by a Trading

Privilege Holder's sales, risk management (except for use by such Trading Privilege Holder's compliance

and other risk departments for regulatory purposes), research, wealth management or asset

management departments/functions) or (ii) to the extent necessary for a Trading Privilege Holder's

information technology department to perform transaction-related support functions for such Trading

Privilege Holder, Trading Privilege Holders that pay the required monthly fees, as described in NEX

SEF's Trade Execution Fee Card, as amended from time to time, shall be entitled to (x) download

Information to a computer, (y) create Derived Information, and/or (z) redistribute Derived Information (and

only Derived Information).

(d) NEX SEF shall bear no liability for any Derived Information, and each Trading Privilege

Holder shall defend, indemnify and hold harmless each NEX SEF Indemnified Party (as defined in Rule

108) from and against any Losses to which any NEX SEF Indemnified Party may become subject, insofar

as such Losses arise out of or in connection with, or are based upon any Proceeding against a NEX SEF

Indemnified Party that arises out of or relates to any Derived Information created by or on behalf of such

Trading Privilege Holder or any of its Related Parties.

Rule 108 Intellectual Property

(a) The Systems are the exclusive Intellectual Property of NEX SEF or its affiliates or

licensors. Participants have no access to the Systems and no rights with respect to the Systems, except

as expressly granted by NEX SEF. Subject to any required approvals from any applicable Regulatory

Agency, NEX SEF shall have the right to modify at any time a System's functionality, configuration,

appearance, content and the Swaps made available for trading via a System.

16
(b) Upon granting Trading Privileges to a Participant, NEX SEF grants to that Participant a

revocable, non-exclusive, non-transferable license to access and use the Systems in accordance with the

Rules for the sole purpose of (i) entering into Swaps via the Systems, and (ii) receiving and transmitting

information generated by or made available through the Systems from time to time. Such license shall

terminate when the Participant's Trading Privileges terminate.

(c) Intellectual Property Rights

(1) By becoming a Participant, each Participant acknowledges and agrees that the

Intellectual Property Rights in the Systems are a valuable asset of NEX SEF or its affiliates or

licensors or their respective successors. Each Participant shall protect and safeguard the

Intellectual Property Rights in and to the Systems by using the same degree of care that the

Participant generally uses to protect its own Intellectual Property Rights and business assets, but

in any event with no less than a reasonable degree of care.

(2) Each Participant shall promptly notify NEX SEF upon becoming aware of any

infringement or misappropriation of any Intellectual Property Rights of NEX SEF or its affiliates or

licensors. Each Participant shall comply with all reasonable requests made by NEX SEF (at NEX

SEF's reasonable expense) to protect and enforce the Intellectual Property Rights of NEX SEF or

its affiliates or licensors in the Systems.

(d) Restrictions

(1) Subject to Rule 102, a Participant shall not sell, lease, license, transfer, provide

or otherwise make available to any third party (including an affiliate of Participant), any form of

access to or use of the System.

(2) A Participant shall not alter, enhance, make derivative works of, download to

computer, decompile, disassemble or reverse engineer all or any part of the Systems except

solely to the extent (i) expressly required by Applicable Law or permitted by the Rules, or

(ii) necessary in direct connection with support functions related to transactions on or subject to

the Rules.

(e) Notwithstanding Rule 102, NEX SEF represents and warrants that it owns or is licensed

all Intellectual Property Rights in or to the Systems.

(f) Indemnities

(1) NEX SEF shall defend, indemnify and hold harmless each Participant and its

officers, directors, employees and agents (each a "Participant Indemnified Party") from and

against all Losses as a result of any third party claim or proceeding of any nature ("Proceeding")

against a Participant Indemnified Party determining that the Systems (other than the EBS Trading

Platform, which includes but is not limited to the technology known as EBS Dealing Service and

Brokernet), or the use thereof by the Participant Indemnified Party as authorised hereunder,

violates any Intellectual Property Rights of any third party provided that such Losses do not result

from (i) any Participant Indemnified Party's fraud, gross negligence or willful misconduct;

(ii) violation of Applicable Law by the Participant Indemnified Party; or (iii) the Participant's breach

of the Rules.

(2) Each Participant shall defend, indemnify and hold harmless NEX SEF and each

NEX SEF Party (each a "NEX SEF Indemnified Party") from and against any Losses to which

any NEX SEF Indemnified Party may become subject, insofar as such Losses arise out of or in

connection with, or are based upon any Proceeding against a NEX SEF Indemnified Party that

arises out of or relates to any access, use or misuse of the Systems by the Participant or by any

person accessing the Systems using the Participant's ID provided that such Losses do not result

from: (i) a NEX SEF Indemnified Party's fraud, gross negligence or wilful misconduct; (ii) violation

17
of Applicable Law by the NEX SEF Indemnified Party; or (iii) the NEX SEF Indemnified Party's

breach of the Rules.

(3) If a Proceeding is commenced against a party entitled to indemnification under

this Rule 108 (the "Indemnified Party"), notice shall be given to the party obligated to provide

such indemnification (the "Indemnifying Party") as soon as reasonably practicable. The

Indemnifying Party shall be entitled to take control of the Proceeding and any settlement of it, and

the Indemnified Party shall give the Indemnifying Party, at the Indemnifying Party's reasonable

cost, all reasonable assistance in relation to the Proceeding.

(4) Notwithstanding anything to the contrary contained in Rule 102 or a System

Protocol, no limitation or exclusion of liability shall apply with respect to any direct losses or

claims based on confidentiality, or to NEX SEF's intellectual property infringement indemnification

obligations set forth in this Rule 108.

(g) Confidentiality

Each Participant shall keep confidential all Confidential Information of NEX SEF or NEX SEF's affiliates or

licensors, both during the term and after termination of the license granted by this Rule 108. Each

Participant may disclose Confidential Information to its professional advisers but otherwise may only

disclose Confidential Information to those of its employees and representatives who need to know such

Confidential Information for the purposes of exercising or performing the rights and obligations of

Participant under the Rules and have been informed of the confidential nature of the Confidential

Information divulged. No Participant will disclose Confidential Information to any third party except as

follows: (i) with the consent of NEX SEF; (ii) as necessary to a DCO of which such Participant is a

member or in connection with the clearing of a Swap; (iii) subject to appropriate confidentiality

requirements no less stringent than the confidentiality provisions hereunder, to any person providing

services to such party relating to transactions on or subject to the Rules; or (iv) to NEX SEF's Regulatory

Services Provider.

(h) Each Participant shall maintain commercially available virus checking software to protect

itself and the Systems from viruses, notify NEX SEF immediately of any defect in the System or any

unauthorised access or change to the System of which the Participant becomes aware and comply with

any security measures and procedures for authentication required by NEX SEF from time to time.

18
CHAPTER 2

TRADING PRIVILEGES

Rule 201 Trading Privilege Holders

(a) Trading Privileges

(1) General Privileges. Subject to the requirements and procedures set forth in this

Chapter 2, Trading Privileges will be granted on an impartial basis to all applicants from time to

time approved by NEX SEF as eligible to be Trading Privilege Holders, subject to any limitations

or restrictions from time to time imposed by NEX SEF. Trading Privileges are non-transferable

(except under certain limited circumstances which must be approved by NEX SEF), nonassignable and may not be sold or leased. Circumstances under which Trading Privileges may

be transferred, subject to NEX SEF approval, include, for example, transfers due to corporate

reorganisations. Each Trading Privilege Holder will have the right to access the Facility

(including, subject to the applicable System Protocol, any Trading Platform) including the right to:

(i) place Bids/Offers and Pre-Arranged Crosses for itself as principal or for

the accounts of Customers as an Intermediary pursuant to Rule

201(a)(2); and

(ii) appoint other persons to act on its behalf as an Authorised Trader or

Authorised Trading Firm pursuant to Rule 202.

(2) Approved Capacities. As approved by NEX SEF and where permitted under this

Rulebook and by Applicable Law, a Trading Privilege Holder may also act as:

(i) a Customer, and in this capacity may appoint one or more other entities

to act on its behalf as an Authorised Trading Firm pursuant to Rule 202;

(ii) an Intermediary, and in this capacity may place Bids/Offers and

Pre-Arranged Crosses in the name of and on behalf of Customers; or

(iii) a Prime Broker, and in this capacity may permit another Trading

Privilege Holder to enter into transactions in the name of and on behalf of

the Prime Broker pursuant to Rule 215.

(3) By virtue of obtaining Trading Privileges, a Trading Privilege Holder will not

obtain any equity or other interest in NEX SEF or the Facility, including voting rights or rights to

receive any dividends or other distributions, whether arising from a dissolution, merger or

consolidation involving NEX SEF, the Facility or otherwise.

(4) In granting Trading Privileges, NEX SEF may impose such restrictions or

limitations as it may deem necessary or appropriate, and in accordance with Applicable Law.

NEX SEF shall apply such restrictions or limitations to applicants in an impartial, nondiscriminatory manner, consistent with Applicable Law. NEX SEF will deny the grant of Trading

Privileges where an applicant has failed to meet any requirements for such grant.

(b) Financial Requirements

(1) Any person that wishes to have Trading Privileges must have sufficient

resources to guarantee the adequate settlement of transactions and must meet the other

financial and related reporting requirements set forth in this Rule 201.

19
(2) Each Trading Privilege Holder must provide a signed written or electronic

representation, prior to being granted access to the Facility, that it qualifies as an "eligible

contract participant" as defined in the Act upon initial application for Trading Privileges.

(3) Each Trading Privilege Holder shall, no less frequently than annually, provide

NEX SEF either with (i) its annual financial report that it provides to the Commission or (ii) a

written or electronic representation providing that such Trading Privilege Holder has been, and

continues to be as of such date, an "eligible contract participant" as defined in the Act.

(4) Each Trading Privilege Holder must notify NEX SEF's Compliance Function

immediately upon becoming aware that it fails to satisfy the minimum financial requirements

applicable to it.

(5) Unless and until a Trading Privilege Holder is able to demonstrate to NEX SEF

that it is in compliance with the minimum financial requirements applicable to it, such Trading

Privilege Holder may not engage in any transactions subject to the Rules of the Facility, except

for the purpose of closing open positions that were opened on the Facility.

(c) Fitness Standards

(1) NEX SEF may deny the grant of Trading Privileges, or may prevent a person

from becoming an Intermediary or a Trading Privilege Holder, if such person:

(i) is unable satisfactorily to demonstrate a capacity to adhere to all

applicable Rules of the Facility or any Regulatory Agency, Rule of any

DCO to which the Trading Privilege Holder submits Cleared Contracts

for clearing; Commission Regulations and SRO regulations, including

those concerning recordkeeping, reporting, financial requirements and

trading procedures;

(ii) would bring NEX SEF or the Facility into disrepute; or

(iii) is otherwise not fit and proper to be a Trading Privilege Holder or

Intermediary.

(2) NEX SEF may determine not to permit a Trading Privilege Holder or Intermediary

to keep its, his or her Trading Privileges or maintain its, his or her association with a Trading

Privilege Holder, as the case may be, if such Trading Privilege Holder or Intermediary:

(i) fails to meet any of the qualification requirements for Trading Privileges

or Intermediary status after such Trading Privileges or Intermediary

status have been approved;

(ii) fails to comply with any limitation placed by NEX SEF or under

Applicable Law on such Trading Privileges or Intermediary status; or

(iii) commits a material Violation.

(3) Any decision made by NEX SEF pursuant to this Rule 201 must be consistent

with both the provisions of this Rule and the Act and the requirements of Applicable Law.

(d) Regulatory status

Any person applying for Trading Privileges, and on an ongoing basis, must be an Investment

Firm or a Credit Institution; or satisfy the following criteria:

20
(1) be of sufficiently good repute;

(2) have a sufficient level of trading ability, competence and experience;

(3) have adequate organizational arrangements; and

(4) have sufficient resources for the role they are to perform in accordance with

Rule 201(b)(i).

(e) NEX SEF may (i) deny the grant of Trading Privileges, (ii) prevent a person from

becoming an Intermediary, or (iii) determine not to permit a Trading Privilege Holder or any Intermediary

that is not a Trading Privilege Holder to keep its, his or her Trading Privileges or maintain its, his or her

association with a Trading Privilege Holder, as the case may be, if such Trading Privilege Holder or

Intermediary causes or would cause NEX SEF to be in violation of Applicable Law.

(f) Intermediation

(1) A Trading Privilege Holder may not act as an Intermediary for any other entity or

person, unless the Trading Privilege Holder does so in accordance with Applicable Law.

(2) A Trading Privilege Holder may not transact as an Intermediary for any Customer

unless the Trading Privilege Holder has submitted a signed representation to NEX SEF that each

of its Customers is an "eligible contract participant" as defined in the Act and as an Eligible

Counterparty.

(3) A Trading Privilege Holder may appoint an Authorised Trading Firm to act as an

Intermediary upon the approval of NEX SEF.

Rule 202 Authorised Traders and Authorised Trading Firms

(a) Each Trading Privilege Holder may from time to time permit one or more persons to enter

Bids/Offers, submit Pre-Arranged Crosses, access a Trading Platform and effect transactions in

Contracts on the Facility. Such authority may be granted to one or more Authorised Traders or

Authorised Trading Firms.

(1) Authorised Traders.

(i) Each Trading Privilege Holder which is trading for its own account as a

principal may permit one or more individuals as Authorised Traders to

enter Bids/Offers and Pre-Arranged Crosses on its behalf. In such case,

the Trading Privilege Holder shall be principal to any resulting

transactions made on its behalf by such Authorised Traders or to one or

more Authorised Trading Firms.

(ii) Each Trading Privilege Holder which is an Intermediary trading for the

accounts of Customers may permit one or more individuals as

Authorised Traders to enter Bids/Offers and Pre-Arranged Crosses for

such Customers. In such cases, the Trading Privilege Holder has

responsibility for all actions and failures to act of such Authorised

Traders, but the Customer on whose behalf each transaction is made

shall be the principal to any transactions made on its behalf by such

Authorised Traders.

(iii) Each Trading Privilege Holder that is authorised by a Prime Broker under

a Prime Broker Agreement to enter into transactions in the name of and

on behalf of a Prime Broker and for which a Prime Broker

Representation has been accepted by the Facility may designate

21
Authorised Traders to enter Bids/Offers and Pre-Arranged Crosses on

behalf of the Prime Broker.

(iv) The Trading Privilege Holder shall be responsible to NEX SEF for acting

with reasonable care in granting Authorised Trader status.

(2) Authorised Trading Firms.

(i) Each Authorised Trading Firm which is an Intermediary trading for the

accounts of Customers may permit one or more individuals as

Authorised Traders to enter Bids/Offers and Pre-Arranged Crosses for

such Customers. In such cases, the Authorised Trading Firm has

responsibility for all actions and failures to act of such Authorised

Traders, but the Customer on whose behalf each transaction is made

shall be the principal to any transactions made on its behalf by such

Authorised Traders.

(ii) Each Trading Privilege Holder which is a Customer may designate one

or more Authorised Trading Firms to enter Bids/Offers and Pre-Arranged

Crosses on its behalf as an Intermediary. In such cases, the Trading

Privilege Holder has responsibility for all actions and failures to act of

such Authorised Trading Firm and its Authorised Traders.

(iii) The Trading Privilege Holder shall be responsible to NEX SEF for acting

with reasonable care in granting Authorised Trading Firm status.

(iv) Each Trading Privilege Holder will obtain a signed written or electronic

representation, prior to being granted access to the Facility, that each of

its Authorised Trading Firms continues to qualify as an "eligible contract

participant" as defined in the Act and provide such representation to NEX

SEF and shall notify NEX SEF if any Authorised Trading Firm no longer

qualifies as an "eligible contract participant".

(b) NEX SEF Approval

(1) No person may act as an Intermediary, Authorised Trader or Authorised Trading

Firm before being approved to do so by NEX SEF, which NEX SEF will do on an impartial basis.

(2) Each prospective Intermediary, Authorised Trader and Authorised Trading Firm,

or the Trading Privilege Holder on their behalf, will, prior to being permitted by NEX SEF to act as

an Intermediary, Authorised Trader or Authorised Trading Firm, as the case may be, submit an

application in the form required by NEX SEF and will satisfy such requirements as may be

prescribed by NEX SEF from time to time.

(3) Each prospective Authorised Trading Firm, or the Trading Privilege Holder on its

behalf, must provide a written or electronic representation, prior to being granted access to the

Facility, that the Authorised Trading Firm qualifies as (x) an "eligible contract participant" as

defined in the Act, and (y) a Professional Client or an Eligible Counterparty, and that it has all

registrations, licenses and consents required by its constituent documents and Applicable Law to

transact in Contracts. The foregoing representation may be provided directly to NEX SEF by the

Authorised Trading Firm in a form provided by NEX SEF or, alternatively, the Trading Privilege

Holder may provide NEX SEF evidence satisfactory to NEX SEF that the Authorised Trading Firm

has provided such consents, agreements and representations to the Trading Privilege Holder.

22
(c) Responsibilities to NEX SEF

(1) Each Trading Privilege Holder shall notify NEX SEF in writing if its relationship

with an Authorised Trader or Authorised Trading Firm has been terminated, and such Trading

Privilege Holder may at any time revoke any authorisation granted by it to any Authorised Trader

or Authorised Trading Firm by providing written notice of such revocation to NEX SEF.

(2) By permitting any of its Authorised Traders and/or Authorised Trading Firm to

access and use the Facility (including any Trading Platform) from any jurisdiction or to act as an

Intermediary for trades on behalf of Customers located in any jurisdiction, each Trading Privilege

Holder represents and warrants that each such access to or use of the Facility, or action as an

Intermediary, does not violate any law applicable to the Trading Privilege Holder, the Authorised

Trader, the Authorised Trading Firm or, to such Trading Privilege Holder's knowledge, NEX SEF.

(d) Fitness Standards

(1) NEX SEF may prevent a person from becoming an Intermediary, Authorised

Trader or Authorised Trading Firm, if such person:

(i) is unable satisfactorily to demonstrate a capacity to adhere to all

applicable Rules of the Facility or any Regulatory Agency, Rules of any

DCO to which the Trading Privilege Holder submits Cleared Contracts

for clearing, Commission Regulations and SRO regulations, including

those concerning recordkeeping, reporting, financial requirements and

trading procedures;

(ii) would bring NEX SEF or the Facility into disrepute; or

(iii) is otherwise not fit and proper and of sufficiently good repute to be an

Intermediary, Authorised Trader or Authorised Trading Firm.

(2) NEX SEF may determine not to permit an Authorised Trader or Authorised

Trading Firm to maintain its, his or her association with a Trading Privilege Holder or Authorised

Trading Firm, as the case may be, if such Authorised Trader or Authorised Trading Firm:

(i) fails to meet any of the qualification requirements for Authorised Trader

or Authorised Trading Firm status after such Authorised Trader or

Authorised Trading Firm status has been approved;

(ii) fails to comply with any limitation placed by NEX SEF on such

Authorised Trader or Authorised Trading Firm status; or

(iii) commits a material Violation.

(3) NEX SEF may prevent a person from becoming an Authorised Trader or

Authorised Trading Firm, if they do not have a sufficient level of trading ability and competence or

adequate organisational arrangements.

(4) Any decision made by NEX SEF pursuant to this Rule 202 must be consistent

with both the provisions of this Rule and the Applicable Law.

(e) Intermediation

(1) An Authorised Trading Firm may not act as an Intermediary for any other entity

or person, unless the Authorised Trading Firm does so in accordance with Applicable Law.

23
(2) An Authorised Trading Firm may not transact as an Intermediary for any

Customer unless the relevant Trading Privilege Holder has submitted a signed representation to

NEX SEF that each of the Authorised Trading Firm's Customers is an "eligible contract

participant" as defined in the Act and as an Eligible Counterparty.

(f) NEX SEF may (i) prevent a person from becoming an Authorised Trader or Authorised

Trading Firm, and (ii) determine not to permit an Authorised Trader or Authorised Trading Firm to

maintain its, his or her association with a Trading Privilege Holder or Authorised Trading Firm, as the

case may be, if such Authorised Trader or Authorised Trading Firm causes or would cause NEX SEF to

be in violation of Applicable Law.

Rule 203 Financial Integrity

(a) Each Trading Privilege Holder, Customer and Authorised Trading Firm must be an

"eligible contract participant" as defined in the Act and a Professional Client or an Eligible Counterparty

(i) prior to obtaining access to the Facility, and (ii) at the time that such person enters into each

transaction on the Facility or subject to the Rules.

(b) For Cleared Contracts:

(1) each Trading Privilege Holder or Authorised Trading Firm transacting on the

Facility as a principal is required to demonstrate to NEX SEF, with appropriate documentary

evidence as required by NEX SEF from time to time, that such Trading Privilege Holder or

Authorised Trading Firm is a Clearing Firm or that it has clearing arrangements in place with a

Clearing Firm, including having the Clearing Firm Representation required by Rule 204 (f); and

(2) each Trading Privilege Holder and Authorised Trading Firm acting as an

Intermediary shall confirm that each of its Customers has clearing arrangements in place with a

Clearing Firm and obtain from its Customers any documentary evidence as required by NEX SEF

from time to time to that effect, including any Clearing Firm Representation required by Rule 204

(f). In either case, the Trading Privilege Holder shall provide such documentary evidence to NEX

SEF.

(c) For Contracts listed on the Facility as bilateral Contracts, each Participant that enters into

such Contracts as a principal must undergo such credit checks and provide such credit information as the

Facility may require from time to time.

Rule 204 Clearing

(a) All Contracts executed on the Facility that are subject to mandatory clearing under

Section 2(h) of the Act must be cleared through a DCO by a Clearing Firm. Any other Contracts

executed on the Facility may be cleared at the discretion of the parties to such transaction; provided that

such Contracts are able to be cleared through a DCO by a Clearing Firm. After being submitted to and

accepted by the relevant DCO, each Cleared Contract will be subject to the rules, policies and

procedures of such DCO.

(b) Pre-Execution Credit Check / Risk Screening.

(1) In advance of submitting each Bid/Offer or Pre-Arranged Cross to the Facility for

any Cleared Contract, each Trading Privilege Holder or Authorised Trading Firm shall identify the

Clearing Firm to which any resulting transaction will be submitted for clearing at the relevant DCO

and:

(i) if acting as principal, shall ensure that it has sufficient credit with such

Clearing Firm for the resulting transaction and that the resulting

transaction satisfies such Clearing Firm's Risk-Based Limits; and

24
(ii) if acting as an Intermediary, shall confirm that its Customer has sufficient

credit with the Customer's Clearing Firm for the resulting transaction and

that the resulting transaction satisfies such Clearing Firm's Risk-Based

Limits.

In the event that there is insufficient credit or the transaction does not satisfy a Clearing Firm's RiskBased Limits, the Trading Privilege Holder or Authorised Trading Firm may not submit such Bid/Offer or

Pre-Arranged Cross to the Facility.

(2) Each Clearing Firm that provides a Clearing Firm Representation for a

Participant or Customer may notify NEX SEF of the Risk-Based Limits it has established for such

Participant or Customer, and such Risk-Based Limits shall become effective upon

acknowledgment of receipt by NEX SEF. Any change to such Risk-Based Limits shall become

effective only upon acknowledgment of receipt by NEX SEF.

(c) A Clearing Firm that seeks to effect transactions on the Facility for its own account or the

account of any Customer must be a Trading Privilege Holder.

(d) NEX SEF may share information with any DCO that would assist such DCO in evaluating

and monitoring a Clearing Firm's compliance with these criteria. A Clearing Firm agrees to cooperate

with NEX SEF and each relevant DCO in any such monitoring.

(e) Clearing Firms shall clear Cleared Contracts in accordance with all applicable Rules and

DCO rules.

(f) Clearing Firm Representation

(1) Each Trading Privilege Holder or Authorised Trading Firm that is not a Clearing

Firm and is transacting in Cleared Contracts on the Facility as a principal shall obtain a

representation from a Clearing Firm, in form and substance satisfactory to, and approved by,

NEX SEF (a "Clearing Firm Representation"). Under such representation, the Clearing Firm

must accept for clearing all Cleared Contracts of each Trading Privilege Holder or Authorised

Trading Firm for which it clears Cleared Contracts, subject to any Risk-Based Limits that are in

effect pursuant to Rule 204(b)(2). Where a Trading Privilege Holder or Authorised Trading Firm

uses the services of multiple Clearing Firms, a Clearing Firm shall be responsible only to the

extent that it has been designated by such Trading Privilege Holder or Authorised Trading Firm to

clear a particular Cleared Contract.

(2) Each Trading Privilege Holder and Authorised Trading Firm acting as

Intermediary shall obtain from the Customer a Clearing Firm Representation from a Clearing Firm

pursuant to which the Clearing Firm accepts for clearing all transactions in Cleared Contracts

entered into by the Customer, subject to any Risk-Based Limits that are in effect pursuant to Rule

204(b)(2). Where a Customer uses the services of multiple Clearing Firms, a Clearing Firm shall

be responsible only to the extent that it has been designated by such Customer to clear a

particular Cleared Contract.

(3) Every Contract that is subject to a Clearing Firm Representation and results from

a Bid/Offer or Pre-Arranged Cross that is within any Risk-Based Limits that are in effect pursuant

to Rule 204(b)(2) is deemed accepted for clearing by the Clearing Firm upon execution.

(4) A Clearing Firm may at any time (but on prior written notice to NEX SEF) revoke

any Clearing Firm Representation made by it to a Trading Privilege Holder, Authorised Trading

Firm or Customer (as applicable) in accordance with paragraph (1) and/or (2) above, by providing

prior written notice of such revocation to NEX SEF. The Clearing Firm Representation will

remain in effect for all Contracts for which Bids/Offers or Pre-Arranged Crosses were submitted

25
to a Trading Platform prior to NEX SEF's acknowledgment of the revocation, which NEX SEF

shall undertake to effectuate as promptly as practicable.

(5) Each Trading Privilege Holder, Authorised Trading Firm or, if applicable,

Customer must assist its Clearing Firm and the DCO in the clearing of its Cleared Contracts.

(6) Upon notice that a Clearing Firm has revoked any authorisation granted and

Clearing Firm Representation made by it to a Trading Privilege Holder, Authorised Trading Firm

or Customer pursuant to this Rule 204(f), the right of such Trading Privilege Holder, Authorised

Trading Firm or Customer (as applicable) to enter into Cleared Contracts will be automatically

terminated, and such Trading Privilege Holder, Authorised Trading Firm or Customer must obtain

another Clearing Firm Representation from a Clearing Firm before the Trading Privilege Holder's,

Authorised Trading Firm's or Customer's right to access to trade Cleared Contracts via the

Facility will be reinstated.

(g) A DCO may be given access to the Facility for the purpose of obtaining any information

required by the DCO to clear contracts, including, without limitation, real-time data regarding Bids/Offers,

Pre-Arranged Crosses and the execution of transactions. NEX SEF may impose such restrictions on a

DCO's access that it determines, in its sole discretion, are necessary and appropriate.

(h) Failure to Clear

(1) Subject to a Clearing Firm's obligation to accept for clearing all Contracts

resulting from Bids/Offers or Pre-Arranged Crosses that satisfy the Risk-Based Limits in effect for

a Participant or Customer, any Cleared Contract, including one leg of a Package Transaction,

that is rejected for clearing by a Clearing Firm or DCO for any reason, including an error by NEX

SEF in permitting a Bid/Offer or Pre-Arranged Cross to be made that did not satisfy the RiskBased Limits in effect at the time the Bid/Offer or Pre-Arranged Cross was made, shall be void

ab initio and will be cancelled by NEX SEF. For the avoidance of doubt, any component leg of a

Package Transaction that was accepted for clearing will not be affected by the rejection of

another leg of the same Package Transaction.

(2) Any Contract, including any component leg of a Package Transaction, that was

executed on the Facility without the intent to be cleared, but later determined by the parties to the

transaction to be cleared, will not be void if rejected for clearing by a DCO to which the Contract

or component leg of the Package Transaction was submitted.

(3) In the event a Cleared Contract, including one leg of a Package Transaction, is

cancelled by NEX SEF pursuant to this Rule 204(h), NEX SEF will report such cancellation to the

relevant SDR pursuant to Part 43 of the Commission Regulations.

(4) Any transaction cancelled under this Rule 204(h) (except for transactions

rejected by a DCO for credit reasons) may be re-executed pursuant to the procedures set forth in

Rule 315(i).

(i) Submission of Cleared Contracts to DCOs

(1) NEX SEF shall route each Cleared Contract executed on the Facility and

accepted for clearing by a Clearing Firm to the DCO identified pursuant to Rule 208(d) as soon

as technologically practicable after execution, and in no event later than ten (10) minutes after

execution. NEX SEF may do so either by submitting the Cleared Contract directly to the DCO or

by routing the Cleared Contract through an Affirmation Hub.

(2) Cleared Contracts that are routed through an Affirmation Hub shall be routed in

accordance with the following procedures:

26
(i) All Cleared Contracts executed as Pre-Arranged Crosses or on the

Order Book with the assistance of a NEX SEF customer service

representative, must be Affirmed by Participants or Customers, as

applicable, as soon as technologically practicable after execution, and in

no event later than ten (10) minutes after execution; and

(ii) All other Cleared Contracts shall be automatically submitted by the

Affirmation Hub to the relevant DCO as soon as technologically

practicable after receipt from NEX SEF, without Participants or

Customers being provided the opportunity to Affirm.

(3) Failure by a Participant or Customer to Affirm a Cleared Contract routed through

an Affirmation Hub within the ten (10) minute time frame required by this Rule 204(i) shall be a

Violation; provided that:

(i) such failure shall be a Violation only by the Participant(s) or Customer(s),

as applicable, that failed to Affirm the Cleared Contract in accordance

with this Rule; and

(ii) no such failure shall be a Violation where the failure was substantially

the result of, as determined in NEX SEF's discretion, any errors or

delays caused by NEX SEF or any customer service representative.

(4) The Compliance Function or a designated member of the Market Regulation

Staff shall, on a monthly basis, review the previous month's Affirmations by Participants and

Customers for compliance with this Rule 204(i). Notwithstanding such regular monthly reviews,

the Compliance Function or any member of the Market Regulation Staff may investigate possible

Violations of this Rule 204(i) at any time upon becoming aware of such possible Violation.

Investigations of possible Violations of this Rule 204(i) shall be conducted in accordance with

502, including that the Compliance Function may determine to impose summary fines in

accordance with Rule 516. The Compliance Function or a designated member of the Market

Regulation Staff shall review each possible Violation of this Rule 204(i) in light of all the facts and

circumstances, including whether any errors or delays were caused by NEX SEF or any

customer service representative.

27
(j) Breakage Agreements Prohibited. Participants and Customers are prohibited from

requiring a Breakage Agreement from any other Participant or Customer as a condition of trading with

that other Participant or Customer.

Rule 205 Application for and Grant of Trading Privileges; Access Denial Actions

(a) Application Requirement. Each applicant for Trading Privileges will submit an application

to NEX SEF in a form and manner prescribed by NEX SEF. Each applicant will promptly update the

application materials if any of the information provided therein becomes inaccurate or incomplete after the

date of submission and prior to any approval of the application. NEX SEF will act upon, and approve or

disapprove, any such application without unreasonable delay.

(b) Due Diligence Review. Prior to granting Trading Privileges, NEX SEF will conduct a due

diligence process against the conditions for using the Facility as described in a MRAN available on NEX

SEF's website.

(c) Grant of Trading Privileges. Upon submission of an application and satisfaction of the

requirements and procedures set forth in this Chapter 2, and approval by NEX SEF, a person applying for

Trading Privileges will be granted Trading Privileges. If the application process is not completed by the

applicant within six months of submission of an application and payment of any applicable fee, the

application will be deemed to be withdrawn.

(d) Denial of Trading Privileges. If NEX SEF disapproves an application for Trading

Privileges, NEX SEF will promptly provide notice of such rejection. Any applicant who has been denied

Trading Privileges or Authorised Trader or Authorised Trading Firm status with a Trading Privilege

Holder, and any Trading Privilege Holder or Authorised Trader or Authorised Trading Firm of a Trading

Privilege Holder who is not permitted to keep its, his or her Trading Privileges or maintain his, her or its

status as an Authorised Trader or Authorised Trading Firm may request an appeal of NEX SEF's decision

pursuant to the procedures set forth in Rule 205(f). If no request for an appeal is made within seven days

after receiving notice of the disapproval of the relevant application or suspension or termination of access

to NEX SEF, the disapproval, suspension or termination shall be the final determination of NEX SEF. No

determination of NEX SEF to discontinue a person's Trading Privileges or Authorised Trader or

Authorised Trading Firm status will take effect until the review procedures hereunder have been

exhausted or the time for review has expired.

(e) Re-application. Any applicant to become a Trading Privilege Holder who has been

denied Trading Privileges pursuant to this Rule 204(a) will not be eligible for re-application during the six

months immediately following such denial.

(f) Appeal of Denial of Trading Privileges or Suspension or Termination of Access

(1) If NEX SEF, pursuant to this Rule, denies an application for Trading Privileges or

association with a Trading Privilege Holder as an Authorised Trader or Authorised Trading Firm,

or determines not to permit a person to keep its Trading Privileges or maintain its association as

an Authorised Trader or Authorised Trading Firm, or suspends or revokes a Participant's or

Customer's access to the Facility pursuant to Rule 206(c) or (g), then, in any such case, the

affected applicant, Trading Privilege Holder, Authorised Trader, Authorised Trading Firm,

Participant or Customer, as the case may be, within seven days after receiving written notice of

such decision, may request in writing that NEX SEF provide the reasons therefor in writing.

Within 14 days of receiving any such written request, NEX SEF will provide the applicant, Trading

Privilege Holder, Authorised Trader, Authorised Trading Firm, Participant or Customer, as the

case may be, with such reasons in writing. Within 14 days of receiving NEX SEF's written

response, the applicant, Trading Privilege Holder, Authorised Trader, Authorised Trading Firm,

Participant or Customer, as the case may be, may request, in writing, that the Participation

Committee reconsider NEX SEF's initial decision and may provide any written representations or

other information that the applicant, Trading Privilege Holder, Authorised Trader, Authorised

28
Trading Firm, Participant or Customer, as the case may be, believes is relevant to the

reconsideration.

(2) Within 28 days of receiving either a written request for reconsideration or written

representations or information from the applicant, Trading Privilege Holder, Authorised Trader,

Authorised Trading Firm, Participant or Customer, as the case may be, or a statement from such

person that no such representation or information is to be made or supplied, the Participation

Committee will either confirm, reverse or modify the initial decision and will promptly notify the

applicant, Trading Privilege Holder, Authorised Trader, Authorised Trading Firm, Participant or

Customer, as the case may be, accordingly. The Participation Committee may in its discretion

schedule a hearing or establish any other process that it believes is necessary and appropriate to

consider the request for reconsideration. Any decision by the Participation Committee pursuant

to this subparagraph (2) constitutes the final action of NEX SEF with respect to the matter in

question and is not subject to appeal.

(3) Any action that may be taken by the Participation Committee under this Rule

205(f) or (g) may be taken by the Board if no Participation Committee has been established.

(g) Effective Date of Denial of Trading Privileges or Suspension or Termination of Access

(1) If NEX SEF, pursuant to this Rule, makes a final determination to deny an

application for Trading Privileges or association with a Trading Privilege Holder as an Authorised

Trader or Authorised Trading Firm, or determines not to permit a person to keep its Trading

Privileges or maintain its association as an Authorised Trader or Authorised Trading Firm

pursuant to Rule 205(d) or (f), or suspends or revokes a Participant's or Customer's access to

NEX SEF pursuant to Rule 206(c) or (g), then the Participation Committee (or Board acting in

such capacity) shall provide written notice within thirty (30) days of its determination to the

applicant, Participant or Customer, as applicable. The written notice must include the information

required by Part 9 of the Commission Regulations. Unless otherwise determined by NEX SEF in

accordance with Part 9 of the Commission Regulations, the written notice will include:

(i) the name of the applicant, Participant or Customer;

(ii) a statement of the Participation Committee's (or Board’s when acting in

such capacity) reasons for the denial of Trading Privileges, suspension

or revocation of access to NEX SEF, including details regarding the

Contracts involved, if any, and a listing of any Rules the Participation

Committee determined were Violated and whether the Violation resulted

in any financial harm to Customers;

(iii) a statement of the conclusions and findings of the Participation

Committee (or Board acting in such capacity) with respect to each

Violation, or, in the event of a settlement, a statement specifying the

alleged Violations;

(iv) the terms of the denial of Trading Privileges, suspension or revocation of

access to NEX SEF;

(v) the date on which the determination was made and the effective date of

the determination; and

(vi) a statement informing the applicant, Participant or Customer that the

denial of Trading Privileges, suspension or revocation of access to NEX

SEF may be appealed to the Commission pursuant to Part 9 of the

Commission Regulations.

29
(2) NEX SEF shall also provide the written notice to the NFA through the NFA's

Background Affiliation Status Information Center ("BASIC"), or deliver the written notice to NFA to

be input into BASIC.

(3) Any decision by NEX SEF to deny Trading Privileges or to suspend or revoke

access to NEX SEF pursuant to this Rule shall be the final decision of NEX SEF and shall

become effective in accordance with the timeline set forth in Rule 513(b).

(4) If NEX SEF denies Trading Privileges or to suspends or revokes access to the

Facility pursuant to this Rule, it must publicly publish and maintain on its website the information

contained in the written notice provided pursuant to Rule 205(g)(1).

Rule 206 Participant and Customer Obligations; Suspension or Termination of Access

(a) Consent to Facility Rules. Prior to obtaining access to the Facility and each time a

Participant or Customer initiates or executes a transaction on the Facility, directly or through an

Intermediary, each Participant or Customer shall be deemed to have expressly consented to the

jurisdiction of the Facility and agreed to be bound by and comply with the Rules. At the time any Clearing

Firm provides a Clearing Firm Representation, each such Clearing Firm shall expressly consent to the

jurisdiction of the Facility and agree to be bound by and comply with the Rules.

(b) NEX SEF shall perform an annual risk-based assessment of the compliance by each

Participant and Customer with these Rules. Where necessary, NEX SEF shall undertake additional

assessments of compliance by a Participant or Customer.

(c) Each Participant and Customer must comply with these Rules and the provisions of

Applicable Law. Each Participant and Customer must also cooperate promptly and fully with NEX SEF,

its agents, its Regulatory Services Provider, and/or a Regulatory Agency in any due diligence process,

assessment, investigation, call for information, inquiry, audit, examination, or proceeding. Such

cooperation shall include a duty to provide supplemental verbal or other information if the Participant or

Customer learns that a previous response is incomplete or incorrect in any material respect. Additionally,

each Trading Privilege Holder must update its email address promptly after any change and update all

other material information provided in its application for Trading Privileges within five days after that

information has changed. If any Participant or Customer fails to satisfy these obligations, NEX SEF may

revoke or suspend the Participant's or Customer's access to the Facility in full or in part, including by

revoking or suspending the access to the Facility of a specific Automated Trading System.

(d) Each Participant and Customer consents to allow NEX SEF to provide all information

NEX SEF has about the Participant or Customer, including the Participant's or Customer's trading activity,

to the Regulatory Services Provider, the Commission or any other Regulatory Agency, law enforcement

authority, or judicial tribunal, including (as may be required by information sharing agreements or other

contractual, regulatory, or legal provisions) foreign regulatory or self-regulatory bodies, law enforcement

authorities, judicial tribunals and any other service provider to NEX SEF solely in connection with the

service provider's performance of services to NEX SEF and subject to the service provider's agreeing to

maintain such information as confidential, including that such service provider shall not:

(1) use such information for any purpose other than in connection with providing

services to the Facility (including that it may not otherwise use such information for its own

business or marketing purposes), unless specifically required in order to fulfill such service

provider's regulatory obligations; or

(2) disclose such information to any other person, except (i) to its employees or

Affiliates, provided that the employees or Affiliates are subject to confidentiality obligations at

least as stringent as those applicable to the service provider, and that, in each case, such

disclosure is necessary for the performance of services to the Facility by the service provider, or

30
(ii) if compelled to do so by valid legal or regulatory process, provided that the service provider

notifies NEX SEF in advance thereof to the extent permitted.

(e) Each Participant is required to review the "Notices" section of the Facility's website to

make itself aware of material changes to these Rules or other notices (including MRANs) that may affect

their rights and obligations as a Participant.

(f) Each Trading Privilege Holder must diligently supervise all activities of the Trading

Privilege Holder's employees and/or agents, including all Authorised Traders and Authorised Trading

Firms relating to transactions effected on the Facility. Any Violation by any employee of a Trading

Privilege Holder, including an Authorised Trader or Authorised Trading Firm, shall constitute a Violation

by such Trading Privilege Holder.

(g) NEX SEF may revoke or suspend a Participant's access to the Facility in full or in part if

the Participant acts as an Intermediary on behalf of a Customer and such Customer maintains a position

in any Contract that, when considered in light of the other positions maintained by the Participant through

which such Customer accesses the Facility, and any other factors that NEX SEF reasonably deems

relevant, NEX SEF reasonably believes could jeopardise the financial safety of such Participant or any of

such Participant's Customers. In making this determination, NEX SEF may consider any relevant factors,

including, as applicable, (i) the positions maintained by such Participant, such Participant's Authorised

Traders, Authorised Trading Firms and Customers, (ii) financial information provided by such Participant;

and (iii) in consultation and coordination with the relevant DCOs, the level of margin maintained by such

Participant at such Participant's Clearing Firm.

(h) Each Participant must undertake conformance tests within the NEX SEF testing

environment to ensure that the basic functioning of the Participant's trading system (including any

Automated Trading System), algorithm and strategy complies with these Rules prior to the deployment, or

a substantial update of:

(1) the access to the Facility; or

(2) the Participant's trading system (including any Automated Trading System),

trading algorithm or trading strategy.

The conformance testing shall verify the following:

(1) the ability of the system or algorithm to interact as expected with the Facility's

matching logic and the adequate processing of the data flows from and to the Facility;

(2) the basic functionalities such as submission, modification or cancellation of an

order or an indication of interest, static and market data downloads and all business data flows;

and

(3) the connectivity, including the cancel on disconnect command, market data feed

loss and throttles, and the recovery, including the intra-day resumption of trading and the

handling of suspended instruments or non-updated market data.

Each Participant shall access the testing environment provided by NEX SEF in accordance with the Fair

Usage Policy.

NEX SEF shall deliver a report of the results of the conformance testing to the actual or prospective

Participant.

31
(i) Each Participant shall carry out appropriate testing of its algorithms to ensure that its

algorithmic trading systems cannot create or contribute to Disorderly Trading Conditions on the Facility

and each Participant shall certify that the algorithms that it develops have been tested to avoid

contributing to or creating Disorderly Trading Conditions prior to the deployment of or substantial update

to a trading algorithm or trading strategy and explain the means used for that testing. NEX SEF provides

a testing environment for the purposes of paragraph (h).

(j) Each Participant shall ensure that its business clocks used to record the time of

transactions adhere to the level of accuracy specified in a MRAN available on NEX SEF's website.

(k) Each Participant shall provide information on its organizational requirements and any

trading controls to NEX SEF on request.

(l) Each Trading Privilege Holder which is a Swap Dealer or Major Swap Participant and

enters into or facilitates a Swap that is subject to mandatory clearing under Section 2(h) of the Act shall

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

Rule 207 Customers

(a) No Trading Privilege Holder or Authorised Trading Firm shall act as an Intermediary

unless the Trading Privilege Holder or Authorised Trading Firm, as applicable, has entered into an

agreement with the Customer that provides that the Customer agrees that all Contracts shall be governed

by the Rules, the Act and the Commission Regulations and FCA rules, insofar as they are applicable to

that Contract, although no such agreement shall be required by these Rules when the Customer of a

Trading Privilege Holder is another Trading Privilege Holder.

(b) Where a Customer and Intermediary are both Trading Privilege Holders, the Customer

shall provide NEX SEF with such notice of the relationship as NEX SEF may require from time to time.

(c) Each Customer shall be the principal to all executed transactions resulting from any

Bids/Offers or Pre-Arranged Crosses entered on behalf of the Customer. Where a Trading Privilege

Holder or Authorised Trading Firm is acting as an Intermediary on behalf of a Customer, the Trading

Privilege Holder or Authorised Trading Firm shall have no liability, whether or not the identity of the

Customer has been disclosed, in respect of any transactions executed on behalf of a Customer, to any

other party, including any other Trading Privilege Holder or Authorised Trading Firm or the Customer of

any other Trading Privilege Holder or Authorised Trading Firm.

(d) Except to the extent that NEX SEF sends Confirmations of Contracts directly to the

relevant Customer, each such Customer authorises NEX SEF to send Confirmations of Contracts entered

into through an Intermediary to the Intermediary and authorises such Intermediary to accept such

Confirmations on behalf of the Customer.

Rule 208 Recordkeeping

(a) Each Participant and Customer must prepare and keep current all books, ledgers and

other similar records required to be kept by it pursuant to Applicable Law and the Rules of the Facility.

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(b) Each Participant and Customer shall keep records of the Swaps it trades on or subject to

the Rules, and of its trading in each index, instrument or commodity underlying such Swaps, as well as of

its trading of other derivatives that are based on any such index, instrument or commodity. These

records shall include records of purchases, sales, ownership, production, processing and use of such

Swaps, indices, instruments, commodities and derivatives, and may be in the form customarily generated

in accordance with sound commercial practices in the relevant markets.

(c) Each Participant and Customer must keep all books and records required to be kept by it

pursuant to the Rules for a period of five years from the date on which they are first prepared, unless

otherwise provided in the Rules or required by Applicable Law. Such books and records must be readily

accessible at all times. During such five- year period, all such books and records must, where Applicable

Law requires it, be made available for inspection by, and copies thereof must be delivered to NEX SEF,

NEX SEF's Regulatory Services Provider, the Commission, the U.S. Department of Justice, the FCA, any

other European Union regulatory agency governing a Participant and/or Customer and the authorised

representatives of the foregoing, upon request.

(d) The following information must be provided to NEX SEF by each Participant prior to

entering a Bid/Offer or Pre-Arranged Cross with respect to any Swap traded on the Facility:

• Authorised Trader ID;

• Trading Privilege Holder ID;

• Swap;

• Series, if applicable;

• DCO where Swap is to be cleared;

• Price;

• Quantity;

• Side of the Bid/Offer;

• Customer Type Indicator Code (defined below);

• Trading account and other relevant account information, including Clearing Firm;

• LEI of the Participant placing the Bid/Offer;

• For Intermediated Transactions, the LEI of the Customer;

• Yes/no indication of whether the Participant or Customer is a Swap Dealer for that Swap;

• Yes/no indication of whether the Participant or Customer is a Major Swap Participant;

• Yes/no indication of whether the Participant or Customer is a Financial Entity;

• Yes/no indication of whether the Participant or Customer is a U.S. person as defined by

the Commission;

• Yes/no indication of whether the Contract is a Prime Broker Transaction;

• If a Prime Broker Transaction, the identity of the relevant Prime Broker;

33
• For Cleared Contracts, confirmation of the availability of credit at the Clearing Firm to

which any resulting transaction will be submitted for clearing at the relevant DCO;

• Any information required by the applicable System Protocol; and

• If the Swap will be allocated:

o an indication that the Swap will be allocated;

o the LEI of the Account Manager;

o if the Swap is a pre-execution allocated Swap, the account and LEI for each

Customer that will receive allocations;

o an indication of whether the Swap is a post-execution allocation Swap; and

o if the Swap is a post-execution allocation Swap, the unique Swap identifier of the

original transaction between the reporting counterparty and the agent.

(1) For purposes of this Rule 208, the "Customer Type Indicator Codes" are as

follows:

(i) CTI 1 – Bid/Offer for the proprietary account of a Trading Privilege

Holder that is a natural person.

(ii) CTI 2 – Bid/Offer for the proprietary account of a Trading Privilege

Holder that is not a natural person.

(iii) CTI 3 – Bid/Offer which an individual Trading Privilege Holder or

Authorised Trader executes for the proprietary account of another

Trading Privilege Holder or for an account which the other Trading

Privilege Holder controls or has an ownership or financial interest in.

(iv) CTI 4 – Any Bid/Offer not meeting the definition of CTI 1, 2 or 3,

including those entered on behalf of Customers.

(e) The Rules regarding the recordkeeping obligations set forth in this Rule 208 shall be

promulgated to achieve the purposes and requirements of Applicable Law. While NEX SEF will have

sole discretion, subject to Applicable Law, to determine such Rules, NEX SEF will take into consideration

in doing so comparable requirements applicable to Participants.

Rule 209 Communications of NEX SEF with Participants

(a) Written Notices

NEX SEF will publish a notice with respect to each addition to, modification of, or clarification of the

Rules, or of any action taken to implement any Rule, in a form and manner that is reasonably designed to

enable each Trading Privilege Holder to become aware of and familiar with, and to implement any

necessary preparatory measures to be taken by it with respect to, such addition or modification, prior to

the effective date thereof; provided that any failure of NEX SEF to so publish a notice will not affect the

effectiveness of the addition or modification in question. Each Trading Privilege Holder will provide its

respective Authorised Traders, Authorised Trading Firms and Customers with copies of any such notice.

For purposes of publication in accordance with the first sentence of this Rule 209(a), it will be sufficient

(without limiting the discretion of NEX SEF as to any other reasonable means of communication) if a

notice is (a) sent to each Trading Privilege Holder by mail, recognised courier service, facsimile or

electronic mail (including by means of a hyperlink included in an electronic mail message), to the

address, facsimile number or electronic mail address (as applicable) provided by such Trading Privilege

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Holder for such purpose or (b) published on the Facility's website. Each Trading Privilege Holder, on its

own behalf, and on behalf of its Authorised Traders, Authorised Trading Firms and Customers, as

applicable, must monitor the Facility's website for any notices published under this Rule 209(a).

(b) Recording of Communications

(1) NEX SEF and Trading Privilege Holders may record conversations and retain

copies of electronic communications between officers, employees or agents of NEX SEF, on the

one hand, and Trading Privilege Holders (including their Affiliates), Authorised Traders,

Authorised Trading Firms or Customers, on the other hand. Any such recordings or other

records may be retained by NEX SEF or such Trading Privilege Holder, as the case may be, in

such manner and for such periods of time as NEX SEF, or such Trading Privilege Holder, as the

case may be, may deem necessary or appropriate.

(2) NEX SEF shall retain records of telephone conversations and other electronic

communications for a period of 5 years (7 years at the request of the FCA). Copies of such

records pertaining to a Trading Privilege Holder's or Customer's Bids/Offers are available to that

Trading Privilege Holder or Customer upon request. NEX SEF reserves the right to charge a fee

for the provision of such records.

Rule 210 Required Disclosures to NEX SEF

Each Trading Privilege Holder and Customer must promptly notify NEX SEF in writing upon becoming

aware:

(a) that the Trading Privilege Holder, any of the Trading Privilege Holder's officers or any of

the Trading Privilege Holder's Authorised Traders or Authorised Trading Firms has been the subject of a

material sanction, penalty or other adverse action by any Regulatory Agency which is related to

transactions in Swaps, futures, options on futures, securities, commodities, or Swaps-related banking;

(b) that the Trading Privilege Holder, any of the Trading Privilege Holder's officers or any of

the Trading Privilege Holder's Authorised Traders or Authorised Trading Firms has been convicted of,

pled guilty or no contest to, or entered in a plea agreement of a material nature in any domestic, foreign

or military court which involves:

(1) embezzlement, theft, extortion, fraud, fraudulent conversion, forgery,

counterfeiting, false pretences, bribery, gambling, racketeering, or misappropriation of funds,

securities or properties; or

(2) any transaction in or advice concerning Swaps, futures, options on futures,

securities, commodities, or Swaps-related banking;

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(c) that the Trading Privilege Holder, any of the Trading Privilege Holder's officers or any of

the Trading Privilege Holder's Authorised Traders or Authorised Trading Firms is subject to material

regulatory proceedings before any Regulatory Agency which are related to transactions in Swaps,

futures, options on futures, securities, commodities, or Swaps-related banking;

(d) that the Trading Privilege Holder, any of the Trading Privilege Holder's officers or any of

the Trading Privilege Holder's Authorised Traders or Authorised Trading Firms have been denied or

withdrawn any application for registration or license submitted to any Regulatory Agency, and of any

material revocation, suspension or conditioning of any registration or license granted by any Regulatory

Agency, which in each case is related to transactions in Swaps, futures, options on futures, securities,

commodities, or Swaps-related banking;

(e) that any of the Trading Privilege Holder's Authorised Traders or Authorised Trading Firms

have:

(1) had their status as an Authorised Trader or Authorised Trading Firm permanently

revoked by the Trading Privilege Holder, whether due to employment termination, termination of

status as a Customer or otherwise; or

(2) had their access to the Facility temporarily revoked by the Trading Privilege

Holder;

(f) of any material change:

(1) in any information contained in the Trading Privilege Holder's membership

application, or in an Authorised Trader's or Authorised Trading Firm's application pursuant to

Rule 202, including a Trading Privilege Holder's or Authorised Trading Firm's status as (i) an

"eligible contract participant" or (ii) a Professional Client or an Eligible Counterparty; or

(2) to a Trading Privilege Holder's or Authorised Trading Firm's signed

representation to NEX SEF that each of its Customers is an "eligible contract participant"

pursuant to Rule 202(e).

36
(g) of any withdrawal from membership by the Trading Privilege Holder, any of the Trading

Privilege Holder's officers or any of the Trading Privilege Holder's Authorised Traders or Authorised

Trading Firms, in any SRO, designated contract market, DCO or swap execution facility;

(h) of any damage to, or failure or inadequacy of, the systems, facilities or equipment used to

effect transactions or perform financial obligations under or in connection with Contracts of the Trading

Privilege Holder or any of its Authorised Traders or Authorised Trading Firms;

(i) of any change in the location of the principal office of the Trading Privilege Holder or any

of the Trading Privilege Holder's Authorised Traders or Authorised Trading Firms;

(j) of any failure to maintain segregated funds as required by the Commission when the

Trading Privilege Holder is a futures commission merchant registered with the Commission;

(k) of becoming subject to early warning reporting under Commission Regulation 1.12; and

(l) of becoming the subject of a bankruptcy proceeding or being unable to meet any financial

obligation as it becomes due.

Rule 211 Dues, Fees and Expenses

(a) The Board has the sole power to set the payment dates and amounts of any dues,

assessments or fees to be levied on Trading Privilege Holders, which dues, assessments or fees will be

paid to NEX SEF when due. Fees will be levied on a non-discriminatory basis and will therefore be

comparable for Trading Privilege Holders receiving comparable access to, or services from, NEX SEF.

(b) If a Trading Privilege Holder fails to pay when due any NEX SEF dues, assessments or

fees levied on such Trading Privilege Holder, and such payment obligation remains unsatisfied thirty

(30) days after its due date, NEX SEF may suspend, revoke, limit, condition, restrict or qualify the Trading

Privileges of such Trading Privilege Holder as it deems necessary or appropriate.

Rule 212 Market Maker Programs

(a) NEX SEF may from time to time adopt one or more programs under which one or more

Trading Privilege Holders or others may be approved and designated as market makers with respect to

one or more Contracts in order to provide liquidity and orderliness in the market or markets for such

Contract or Contracts. Any such program may provide for any or all of the following:

(1) qualifications, including any minimum net capital requirements, that any such

market maker must satisfy;

(2) the procedure by which Trading Privilege Holders or others may seek and

receive designation as market makers;

(3) the obligations of such market makers, including any applicable minimum bid and

offer commitments;

(4) the benefits accruing to such market makers, including priority in the execution of

transactions effected by Trading Privilege Holders or others as approved by NEX SEF in their

capacity as market makers, reduced transaction fees or the receipt of compensatory payments

from NEX SEF;

(5) the requirement that such designated market makers agree to abide by the Rules

and are subject to the jurisdiction of the Facility; and

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(6) any pre-trade trade transparency requirements that may apply to the best

Bid/Offer prices and volumes of any such market makers.

(b) In accordance with article 17(3) of MiFID II, a Trading Privilege Holder pursuing a

"market making strategy" by way of algorithmic trading on the Facility will be deemed to have accepted

the terms of the "Market Making Agreement between NEX SEF Limited and Market Makers on the NEX

SEF" that is available on the Facility's website (the "MMA", which is a Market Maker Programme), where

(in accordance with article 1(1) of the Market Making CDR), during half the Trading Days over a one

month period, in execution of its market making strategy, they:

(1) post Firm, Simultaneous Two-Way Quotes of Comparable Size and Competitive

Prices; and

(2) deal on their own account in at least one Instrument for at least 50% of the daily

trading hours of continuous trading on the Facility, excluding opening and closing auctions.

(c) Capitalised terms used in Rule 212(b) that are not otherwise defined in this Rulebook

have the meaning given to them in the MMA (and for the purposes of Rule 212(b), to the extent of any

inconsistency between the terms of the MMA and this Rulebook, the terms of the MMA shall prevail).

Rule 213 Independent Software Vendors

NEX SEF shall provide impartial access to independent software vendors who enter into a development

and maintenance agreement with NEX SEF (an "ISV Development and Maintenance Agreement").

Fees will be comparable for independent software vendors receiving comparable access to, or services

from, NEX SEF. Each independent software vendor that enters into an ISV Development and

Maintenance Agreement must satisfy the following criteria, which NEX SEF shall apply in a fair and non

discriminatory manner:

(a) if required to be registered in any capacity under Applicable Law, it has duly registered in

such capacity and such registration is in effect and has not lapsed or been revoked, suspended or

withdrawn;

(b) it complies with the applicable technical access standards, system compatibility

requirements, security protocols and technical specifications for connection to NEX SEF's electronic

systems as may be specified by NEX SEF from time to time;

(c) it must ensure that each person that uses the independent software vendors to access

the Facility is a Participant or a Customer of a Participant authorised as such in accordance with these

Rules;

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(d) it may provide data obtained from the Facility solely to such Participants or Customers of

Participants in connection with their actual and proposed trading activity in Contracts and similar

contracts, and shall not provide such data to any other SEF, security-based swap execution facility,

designated contract market, national securities exchange or other trading facility or system without the

prior written consent of NEX SEF;

(e) in the case of any Bid/Offer submitted to NEX SEF through an independent software

vendor, the independent software vendor will provide sufficient detail to identify the Participant (and, in

the case of an Intermediated Transaction, the Intermediary and Customer) as required by NEX SEF; and

(f) it satisfies such other impartial and transparent criteria as NEX SEF may specify from

time to time, subject to Applicable Law.

Rule 214 Withdrawal of Participant

(a) To withdraw from the Facility, a Participant must notify NEX SEF in writing, following

such procedures as may be established by NEX SEF.

(b) NEX SEF may, in its reasonable discretion, refuse to accept a Participant's withdrawal

request or may postpone the effective date of withdrawal of a Participant if NEX SEF considers it

necessary for the protection of the Participant's Customers, other Participants or otherwise in the

interests of NEX SEF.

(c) Based on the information provided to, and other information gathered by, NEX SEF

regarding a Participant's withdrawal request, NEX SEF will determine whether to: (i) accept the

withdrawal request; (ii) postpone the effective date of the withdrawal; or (iii) impose any terms or

conditions before or after the effective date of withdrawal.

(d) If NEX SEF refuses to accept a Participant's withdrawal request or postpones the

effective date of withdrawal of a Participant, NEX SEF may waive the obligation to pay some or all of the

fees, costs and charges that NEX SEF would have imposed during the period after the date on which the

requested withdrawal would have otherwise taken effect.

(e) When NEX SEF accepts the withdrawal of a Participant, all rights and privileges of such

Participant terminate (including the Trading Privileges and ability to access a Trading Platform). The

accepted withdrawal of a Participant shall not affect the rights of NEX SEF under the Rules or relieve the

former Participant of its obligations with respect to previously executed transactions (including any

contractual obligations relating to any Contracts entered into by such Participant, or the payment of any

fees, costs, or charges incurred prior to such withdrawal). Notwithstanding the accepted withdrawal of a

Participant, the withdrawn Participant remains subject to the jurisdiction of the Facility for acts done and

omissions made while a Participant, and must cooperate in any proceeding under Chapter 5 as if such

withdrawal had not taken place.

(f) Upon delivery of a withdrawal notice:

(1) the Participant shall promptly notify its Authorised Traders and Authorised

Trading Firms that they may no longer access the Facility on behalf of such Participant, and the

Participant shall with reasonable diligence, to the extent practicable, terminate electronic access

of its Authorised Traders and Authorised Trading Firms to the Facility; and

(2) NEX SEF shall suspend the Participant's access to the Facility, promptly notify its

relevant personnel that Participant and its Authorised Trading Firms may no longer access the

Facility on behalf of such Participant, and with reasonable diligence, to the extent practicable,

terminate electronic access of the Participant's Authorised Traders to the Facility.

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Rule 215 Prime Broker Transactions

(a) General

(1) All Prime Broker Transactions shall be executed pursuant to this Rule 215.

(2) A Prime Broker must be a Trading Privilege Holder approved to act as a Prime

Broker by NEX SEF in accordance with Rule 201(a)(2)(iii).

(3) Each Trading Privilege Holder that is the subject of a Prime Broker

Representation may enter Bids/Offers or Pre-Arranged Crosses with respect to Non-Cleared

Contracts in the name of and on behalf of the Prime Broker that provided the Prime Broker

Representation.

(4) A Prime Broker is not a Customer of another Trading Privilege Holder with

respect to any Prime Broker Transaction.

(b) Prime Broker Obligations

(1) Prime Broker Representation. Each Trading Privilege Holder shall obtain a

representation from a Prime Broker, in a form and substance satisfactory to, and approved by,

the Facility (a "Prime Broker Representation") that the Prime Broker:

(i) may make its credit available to the Trading Privilege Holder pursuant to

a Prime Broker Agreement;

(ii) will be financially responsible for any Prime Broker Transactions

executed in its name, subject to any Prime Broker Limits that are in effect

pursuant to this Rule 215; and

(iii) may cancel any Prime Broker Transaction only in accordance with

Rule 315(i).

(2) Prime Broker Limits. Each Prime Broker that provides a Prime Broker

Representation to a Trading Privilege Holder shall notify the Facility of any applicable limits,

terms or trading parameters it has established for such Trading Privilege Holder, including credit

limits and any categories of permissible Contracts ("Prime Broker Limits"), and such Prime

Broker Limits shall become effective upon acknowledgment of receipt by the Facility. Any

change to such Prime Broker Limits shall become effective only upon acknowledgment of receipt

by the Facility.

(3) Revocation of Prime Broker Representation. A Prime Broker may revoke any

Prime Broker Representation at any time by providing prior written notice of such revocation to

the Facility. The Prime Broker Representation will remain in effect for all Non-Cleared Contracts

for which Bids/Offers or Pre-Arranged Crosses were submitted to a Trading Platform prior to the

Facility's acknowledgement of the revocation.

(4) No Supervisory Responsibilities. A Prime Broker has no responsibility to

supervise the Trading Privilege Holder to which the Prime Broker provided the Prime Broker

Representation.

(c) Trading Privilege Holder Obligations

(1) Each Trading Privilege Holder must notify its Prime Broker as soon as

technologically practicable after execution of each Prime Broker Transaction executed on or

40
pursuant to the rules of the Facility to which the Prime Broker is a counterparty, and provide to

the Prime Broker the Confirmation for the Prime Broker Transaction issued by the Facility.

(2) In advance of submitting each Bid/Offer to the Facility for any Non-Cleared

Contract pursuant to this Rule 215, each Trading Privilege Holder shall ensure the Bids/Offers or

Pre-Arranged Crosses comply with its Prime Broker Limits. In the event that the Bid/Offer does

not comply with Prime Broker Limits, the Trading Privilege Holder shall not submit such Bid/Offer

to the Facility.

(3) Upon receiving notice that a Prime Broker has revoked any Prime Broker

Representation made with respect to a Trading Privilege Holder, the Trading Privilege Holder

shall cancel any unfilled Bids/Offers and Pre-Arranged Crosses and shall not submit any

additional Bids/Offers or Pre-Arranged Crosses with respect to Prime Broker Transactions.

41
(1)

CHAPTER 3

TRADING PROCEDURES

Rule 301 Trading Sessions

Except as otherwise provided in these Rules or determined by the Board, transactions in any Contract will

only be executed during the Trading Session for such Contract. NEX SEF may from time to time modify

its regular Trading Session and establish Trading Sessions, in addition to the regular Trading Sessions,

as it deems appropriate.

Rule 302 Information about, and access to, NEX SEF's Order Book

(a) User Identifications and Passwords

(1) (a) Each Authorised Trader and each Trading Privilege Holder that is an

individual will receive a user identification ("ID") and password. As a Trading Privilege Holder or

Authorised Trader, such person will be able to access NEX SEF's Order Book, which functions

as an electronic central limit order book and provides the highest priority to Bids/Offers with the

best price, for trading in the Swap asset classes or sub-products approved for such Trading

Privilege Holder or Authorised Trader, enter and accept Bids/Offers, and otherwise access

information regarding, or perform functions for, such person's account using its ID and password.

(b) For account security and audit trail purposes, each Trading Privilege Holder and Authorised

Trader agrees that NEX SEF may maintain logs of the IP address used to log on to any Order Book.

(2) Each ID shall represent an Authorized Trader that is:

(i) a natural person physically responsible for manually accessing an Order

Book through either (A) NEX SEF’s web-based portal or (B) a NEX SEF

work station; or

(ii) an ATS Operator of an Automated Trading System accessing an Order

Book through an API.

(3) Each ID issued:

(i) for a natural person manually accessing an Order Book may only be

used by that natural person and may not be used by any other natural

person or entity and may not be used as the ID for an Automated

Trading System; and

(ii) for an ATS Operator of an Automated Trading System may only be used

by that ATS Operator for a single Automated Trading System and may

not be used for any other Automated Trading System and may not be

used as the ID for any other natural person or entity. An ATS Operator

that operates multiple Automated Trading Systems must obtain a

separate and unique ID for each Automated Trading System that the

ATS Operator operates.

(4) For an ATS Operator that consists of an ATS Team, the Trading Privilege Holder

or Authorised Trading Firm of such ATS Operator, as the case may be, shall collect and maintain

accurate, complete and up-to-date records for the ATS Operator’s ID, including the time period

that each natural person was monitoring the Automated Trading System.

42
(5) (c) Each Trading Privilege Holder will be responsible for protecting from improper

disclosure its ID and password, and the IDs and passwords of its Authorised Traders. In

addition, a Trading Privilege Holder may not knowingly or negligently permit any person not

authorised by NEX SEF and by the Trading Privilege Holder to use the ID and password to

access the Order Book. Each Trading Privilege Holder is required to immediately notify NEX

SEF if it knows, or has reason to believe, that its ID and/or password, or the ID and/or password

of any Authorised Trader have been disclosed to any person not authorised by NEX SEF and the

Trading Privilege Holder to use such ID and/or password.

(6) (d) Except as otherwise provided in Rule 102:

(i) (1) each Trading Privilege Holder will be liable for all costs and any

losses that it may incur from transactions executed on the Facility by any

person, authorised or not, using its ID and password or the ID and/or

password of any of its Authorised Traders; and

(ii) (2) NEX SEF will not be responsible in any way for unauthorised

transactions for a Trading Privilege Holder's account.

(b) For account security and audit trail purposes, each Trading Privilege Holder and

Authorised Trader agrees that NEX SEF may maintain logs of the IP address used to log on to any Order

Book.

(c) (e) Each Trading Privilege Holder is responsible for contracting with a network provider

through which it will access the Facility and for having a backup service provider if the Trading Privilege

Holder deems it necessary. Each Trading Privilege Holder is also responsible for maintaining a network

connection speed adequate for its needs. NEX SEF will not be responsible in any way for any

Bids/Offers delayed or transactions missed or not executed in a timely fashion because of failure of the

Trading Privilege Holder's Internet service provider or slowness of its network connection speed. No

communication from a Trading Privilege Holder will be deemed to have been received by NEX SEF until

that communication is logged by the Order Book server.

Rule 303 Required Transactions

NEX SEF does not currently offer any Contracts that are Required Transactions. Accordingly, NEX SEF

does not currently offer RFQ functionality.

43
Rule 304 Permitted Transactions

(a) Participants may enter Bids/Offers for Permitted Transactions directly into the Facility's

Order Book for that Contract.

(b) Participants may submit to the Facility's pre-arranged crossing Trading Platform for

execution Permitted Transactions negotiated and agreed to outside the Facility's Order Book, at prices

mutually agreed, with regard to Contracts that have been designated by NEX SEF for such purpose

(each such transaction a "Pre-Arranged Cross"). Pre-Arranged Crosses that are submitted to the

Trading Platform for execution must be submitted by the seller, unless otherwise agreed to by the parties;

however, in the case of an Intermediated Transaction, the Participant acting as the Intermediary shall

have the obligation to submit the Pre-Arranged Cross to the Trading Platform. The Participant submitting

the Pre-Arranged Cross to the Trading Platform must provide the information required by Rule 208(d).

(c) A NEX SEF customer service representative may facilitate the negotiation and execution

of a Pre-Arranged Cross by two Participants only as follows: upon request of a Participant, the customer

service representative may, without using any Trading Platform or Order Book, contact one or more other

Participants to determine interest in a Pre-Arranged Cross.

(d) Upon execution of the Permitted Transaction on the Facility, NEX SEF will report the

transaction to the SDR as soon as technologically practicable after execution in accordance with Rule

309.

(e) Each Participant that is party to, or Intermediary in, a Pre-Arranged Cross executed

pursuant to section (b) of this Rule 304 must record the following details of the transaction: the Contract

(including the Delivery Month) to which such transaction relates; the number of Contracts traded; the

price of execution or premium; the identity of the counterparty; and, if applicable, details regarding the

Customer for which the transaction was executed, as well as, if applicable, the Underlying Interest and

whether the transaction involved a put or a call and the strike price. Upon request by NEX SEF, such

Participant must produce satisfactory evidence, including the transaction information referred to in the

preceding sentence that the transaction meets the requirements set forth in this Rule.

Rule 305 [Reserved]

Rule 306 [Reserved]

Rule 307 Acceptable Bids and Offers

The Bid/Offer types shall be as specified in the appropriate System Protocol.

44
Rule 308 [Reserved]

Rule 309 Reporting and Data Collection

(a) In furtherance of Applicable Law, NEX SEF will capture and retain all transaction data, so

as to be able to reconstruct all transactions within a reasonable period of time and to provide evidence of

any Violations.

(b) In furtherance of Applicable Law, NEX SEF will retain records for all transactions

executed on the Facility. This includes (but is not limited to) all Bids/Offers and Pre-Arranged Crosses,

whether accepted, unaccepted, cancelled or modified, and all acceptances of such transactions.

(c) In furtherance of Applicable Law, NEX SEF shall maintain an electronic transaction

history database, which includes a history of all Bids/Offers, Pre-Arranged Crosses and transactions, and

also includes: (i) all data that are input into the trade entry system; (ii) the categories of Participant or

Customer for which each transaction is executed, including whether the Participant or Customer executed

the transaction for its own account or the transaction was executed by an Intermediary; (iii) timing and

sequencing data adequate to reconstruct trading; and (iv) subject to Rule 309(h), identification of each

Participant or Customer to which fills are allocated.

(d) NEX SEF will use the electronic transaction history database to reconstruct trading and

identify possible Violations. In furtherance of Applicable Law, NEX SEF will conduct an annual review of

compliance by all Participants and Customers that are responsible for, or in control of, the creation of

audit trail records with its audit trail and recordkeeping requirements and will identify Participants and

Customers that may have failed to comply with such requirements. Such Participants and Customers will

be subject to investigation by the Market Regulation Staff for possible disciplinary action. The annual

review must include, but is not limited to, reviews of randomly-selected samples of front end audit trail

data for order routing systems; a review of the process by which user identifications are assigned and

user identification records are maintained; a review of usage patterns associated with user identifications

to monitor for violations of user identification Rules; and reviews of account numbers and Customer Type

Indicator Codes in transaction records to test for accuracy and improper use.

(e) All such information will be maintained by NEX SEF in a manner that protects it from

unauthorised alteration, as well as from accidental erasure or other loss.

(f) NEX SEF will publish trading information as required by:

(1) Core Principle 9, Commission Regulation § 37.901 and Part 16 of the

Commission Regulations; and

(2) FCA rules and MiFIR.

Under certain conditions, the FCA may grant a trading venue permission not to make public

current Bid and Offer prices for a Contract and the depth of trading interest at those prices (a

"Waiver"). NEX SEF will notify Participants of any such Waiver obtained from the FCA.

(g) Reporting to SDRs

(1) NEX SEF will report all transactions in Contracts executed on the Facility or

pursuant to the Rules to an SDR of NEX SEF's choice as soon as technologically practicable

after the execution of such transaction. NEX SEF will report such transactions as set forth below:

(i) For Cleared Contracts, including all legs of a Package Transaction, in all

asset classes: NEX SEF reports to DTCC.

45
(ii) For Non-Cleared Contracts, including all legs of a Package Transaction,

in all asset classes: NEX SEF reports to DTCC.

(2) As soon as technologically practicable after the execution of a Contract, NEX

SEF will report to both counterparties and to the DCO, if any, that will clear the Contract: (i) the

identity of the SDR to which the Contract was reported; and (ii) the Contract's unique Swap

identifier.

(3) All real-time data required by Part 43 of the Commission Regulations and all

creation data, including primary economic terms and confirmation data, required by Part 45 of the

Commission Regulations will be reported to the relevant SDR as provided for under Part 43 and

Part 45 of the Commission Regulations.

(4) NEX SEF will disseminate swap transaction and pricing data relating to

Contracts to Participants no earlier than the transmittal of such information to the relevant

registered SDR.

(5) After becoming aware of or being notified of any errors or omissions in the

transaction or pricing data set forth in a Confirmation by a Participant pursuant to Rule 312(d),

the Facility shall then promptly submit corrected data to the relevant SDR.

(6) Neither the Facility nor any Participant may submit or agree to submit a

cancelation or correction for the purposes of re-reporting Swap transaction and pricing data in

order to gain or extend a delay in public dissemination of accurate Swap transaction or pricing

data or to otherwise evade the reporting requirements of Part 43 of the CFTC Regulations.

(h) Post Trade Allocations

(1) In reliance on NAL 1517-6854, expiring November 15, 20172020, NEX SEF will

not capture post-trade allocations in its audit trail data or conduct associated audit trail reviews of

post-trade allocations.

(2) Each Participant and Customer shall provide NEX SEF post-trade allocation

information to the SEF upon the request of NEX SEF.

(3) During the course of any trade practice surveillance or market surveillance

investigation into any trading activity involving post-trade allocations, upon the request of the

CFTC or otherwise, NEX SEF shall ascertain whether a post-trade allocation was made. Upon

determining that such an allocation was made, NEX SEF shall request, obtain and review the

post-trade allocation information as part of its investigation.

46
Rule 310 Bid/Offer Cancellation

(a) A Participant can submit instructions to either cancel or modify a Bid/Offer which that

Participant has placed on the Facility if that Bid/Offer has not yet been accepted. Upon receipt of

instructions to cancel a Bid/Offer that has not been executed, a Trading Platform will withdraw the

Bid/Offer and confirm the cancellation of the Bid/Offer. If a Participant modifies a Bid/Offer that has not

been executed, NEX SEF will treat the modified Bid/Offer as a new Bid/Offer.

(b) NEX SEF will attempt to cancel or modify an existing Bid/Offer after a Participant enters a

cancellation or modification instruction. However, the Bid/Offer may be executed before NEX SEF is able

to cancel or modify it. If a Bid/Offer has been filled in whole or in part, a Participant may modify or cancel

only that portion of the Bid/Offer (if any) that has not been executed. Once cancelled by NEX SEF, a

Bid/Offer will not be executed.

(c) NEX SEF shall automatically reject Bids/Offers which exceed pre-determined volume and

price thresholds or are clearly erroneous ("Pre-Trade Controls"). Further details on the Pre-Trade

Controls are provided by means of a MRAN available on NEX SEF's website. Any further detail on the

Pre-Trade Controls shall be communicated to Trading Privilege Holders by means of an additional

MRAN.

(d) NEX SEF may cancel unexecuted Bid/Offer in the following circumstances:

(1) upon request of a Participant where the Participant is technically unable to delete

its own Bids/Offers or Bids/Offers it submitted on behalf of a Customer;

(2) where the Order Book contains erroneous duplicated Bids/Offers; and

(3) following a suspension of trading on the Facility initiated either by NEX SEF or by

a Competent Authority.

NEX SEF shall ensure that when cancelling unexecuted Bids/Offers in accordance with this Rule 310 (d),

it acts in accordance with the Kill Functionality Policy.

(e) Each Participant shall be able to cancel immediately, as an emergency measure, any or

all of its unexecuted Bids/Offers submitted to the Facility, including Bids/Offers it submitted on behalf of a

Customer.

(f) Upon suspension or revocation of a Participant's trading privileges by NEX SEF, any

unaccepted Bid/Offer on the Facility for such Participant shall be cancelled by NEX SEF.

Rule 311 [Reserved]

Rule 312 Enforceability of Transactions

(a) Settlement

(1) Each Participant or, where a transaction is on behalf of a Customer, the relevant

Customer, is obligated to settle all transactions executed, pursuant to the Rules in this Chapter 3.

(2) A transaction executed on the Facility or subject to the Rules shall not be void,

voidable, subject to rescission, otherwise invalidated or rendered unenforceable as a result of:

(i) a violation by the Facility of Section 5h of the Act or Part 37 of the

Commission Regulations;

47
(ii) any Commission proceeding to alter or supplement a rule, term or

condition under Section 8a(7) of the Act or to declare an emergency

under Section 8a(9) of the Act; or

(iii) any other proceeding the effect of which is to: (A) alter or supplement a

specific term or condition or trading rule or procedures; or (B) require the

Facility to adopt a specific term or condition, trading rule or procedure, or

to take or refrain from taking a specific action.

(b) Issuance of Facility Confirmations for Cleared Contracts. Participants and Customers

are obligated to submit for clearing all Contracts so required by the Act, Commission Regulations and any

other applicable law. For Cleared Contracts, NEX SEF will provide the Trading Privilege Holder a

Confirmation of all the terms of each transaction executed on the Facility at the time of execution;

provided that where a Trading Privilege Holder is a Customer in an Intermediated Transaction, the

confirmation will be provided to the Intermediary in accordance with Rule 313 (c). The Confirmation

provided by NEX SEF for Cleared Contracts will be the final legally binding confirmation of the terms of

any transaction executed on the Facility and will supersede any conflicting confirmation or agreement

provided to, or between, as applicable, Participants and Customers, regardless of when such other

confirmation is provided.

(c) Issuance of Facility Confirmations for Uncleared Transactions

(1) With respect to an uncleared transaction, the Facility will issue to each applicable

Participant and/or Customer a written communication when a transaction is executed on the

Facility which will serve as the Confirmation for the transaction. The Confirmation will contain the

economic terms specific to the transaction agreed by each Participant on the Facility and it will

incorporate by reference the documents and agreements (including, without limitation, ISDA

master agreements, other master agreements, terms supplements, master confirmation

agreements, and incorporated industry definitions) governing such transaction existing at the time

of such commitment to which each Participant and/or Customer are party (the "Terms

Incorporated by Reference").

(2) In satisfaction of the obligations imposed on NEX SEF under Commission

Regulation 37.6(b), (i) each Confirmation is deemed to incorporate the Terms Incorporated by

Reference set forth in this Rule 312(b) upon issuance of the Confirmation, (ii) each Participant

and Customer hereby agrees that the provisions of Rule 312(c)(3) shall govern any conflicting

terms, and (iii) the resulting Confirmation takes place at the time of execution of, and contains all

the terms of, the transaction.

(3) In the event of any conflict between (x) the Confirmation and (y) the Terms

Incorporated by Reference, the Confirmation shall prevail to the extent of any inconsistency and

each Confirmation shall state the same.

(4) In accordance with NAL 17-17, expiring on the effective date of any changes in

Commission Regulation 37.6(b), upon the request of NEX SEF, each Participant and Customer

shall provide copies of the Terms Incorporated by Reference to NEX SEF.

(5) In accordance with NAL 17-17, expiring on the effective date of any changes in

Commission Regulation 37.6(b), upon the request of the Commission, NEX SEF shall request the

Terms Incorporated by Reference from the relevant Participant or Customer and shall provide

such Terms Incorporated by Reference to the Commission as soon as possible after receipt from

the Participant or Customer.

48
(d) Review of Confirmations. Each Participant shall review the contents of each

Confirmation issued to it pursuant to this Rule 312 and shall promptly report any errors or omissions in

the transaction or pricing data therein to the counterparty to the Contract. Each Participant that is the

reporting counterparty for such Contract, as determined pursuant to Rule 316, shall report all such errors

or omissions to the Facility as soon as technologically practicable after becoming aware of the errors or

omissions.

Rule 313 Intermediated Transactions

(a) Participants who are Intermediaries shall immediately submit all Orders to the Facility to

be immediately entered into a Trading Platform and shall immediately submit all Pre-Arranged Crosses to

the Facility. If an Order or Pre-Arranged Cross cannot be immediately entered into a Trading Platform or

submitted to the Facility, as applicable, an electronic record which includes the account identifier that

relates to the account owner, time of receipt, and terms of the Order or Pre-Arranged Cross must

immediately be created, and the Order or Pre-Arranged Cross must be entered into a Trading Platform or

submitted to the Facility, as applicable, as soon as practicable.

(b) Priority of execution. Non-discretionary executable Customer Orders received by a

Participant who is an Intermediary shall be entered into Facility in the sequence received. Nondiscretionary Orders that cannot be immediately entered must be entered when the Orders become

executable, in the sequence in which the Orders were received.

(c) NEX SEF shall provide all Confirmations of Intermediated Transactions to the

Intermediary upon execution of the transaction. Except to the extent that NEX SEF sends Confirmations

of Contracts directly to the relevant Customer, any Participant that transacts as an Intermediary for any

Customer shall be responsible for ensuring that such Customers receive all Confirmations of Contracts

entered into on behalf of such Customers as soon as technologically practicable after receipt of the

Confirmation from NEX SEF.

Rule 314 Bunched Orders

Bunched Orders must be allocated and recorded in accordance with Commission Regulation 1.35(b)(5)

and the NFA's Interpretive Notice related to Compliance Rule 2-10. Bunched Orders may be entered

using a designation for a group of accounts or suspense account number; provided, however that:

(1) the Bid/Offer or Pre-Arranged Cross is being placed by a Participant who is, or is

acting on behalf of, an account manager for multiple accounts eligible for post execution

allocation; or

(2) a written, pre-determined allocation scheme that defines the group of accounts

has been provided to the Clearing Firm accepting or clearing the Bid/Offer prior to the time that

such Bid/Offer is entered.

Rule 315 NEX SEF Authority over Transactions

(a) NEX SEF Authority Regarding Cancellations, Price Adjustments and Errors

NEX SEF has authority to cancel any transaction, to adjust the price of any transaction executed on the

Facility, or to execute or require the execution of a new or offsetting transaction: (i) when NEX SEF

determines in its sole discretion such action is necessary to mitigate system defects or market disrupting

events, Disorderly Trading Conditions and breaches of capacity limits caused by the improper or

erroneous use of a Trading Platform; (ii) at any time NEX SEF determines, in its sole discretion, that

allowing a transaction to stand as executed may have a material adverse effect on the integrity of the

market; or (iii) in accordance with Rule 315(c), (d), (h) or (i). All decisions of NEX SEF regarding NEX

SEF's cancellation of transactions or the adjustment of transaction prices and the execution of new or

offsetting transactions shall be final, subject to 315(d).

49
(b) Determination to Review a Transaction's Price

(1) NEX SEF may determine to review a transaction's price based on its

independent analysis of market activity or upon a Participant's request. A Participant's request

for review must be made (i) for an uncleared Pre-Arranged Cross, within one Business Day of the

execution of such transaction, and (ii) for any other transaction executed on the Facility within 15

minutes of the execution of such transaction. In the absence of a timely request for review, NEX

SEF may determine whether or not a transaction will be subject to review in its sole discretion.

Notwithstanding the foregoing, subject to Applicable Law, NEX SEF shall amend the terms of, or

cancel, any transaction that the parties, together with the DCO, as applicable, mutually agree to

amend or cancel, in the event that such amendment or cancellation is not submitted to NEX SEF

within the applicable review period specified above.

(2) If NEX SEF determines to review a transaction's price, it will promptly issue an

alert to all Participants via a Trading Platform or electronic mail indicating that the transaction is

under review.

(c) Review of a Transaction's Price

(1) In reviewing a transaction's price, NEX SEF shall determine the fair value price

for the Swap at the time the transaction under review occurred. NEX SEF may consider any

relevant information, including, but not limited to, the last transaction price of the Swap or a better

Bid/Offer, a more recent price for a different maturity date, the price of the same or related Swap

established in another venue or another market, the market conditions at the time of the

transaction.

(2) If NEX SEF determines that the price of a transaction is a fair value price, NEX

SEF will issue an alert indicating that the transaction shall stand as executed.

(3) If NEX SEF determines that the price of a transaction is not a fair value price,

NEX SEF shall have the right, in its sole discretion, to cancel or adjust the price of such

transaction.

(d) Alternative Resolution by Agreement of Parties for Transactions Reviewed for Price

(1) With the approval of NEX SEF, parties to a transaction that is under review for

price or that has had its price adjusted may instead, together with the DCO, as applicable,

mutually agree to cancel or otherwise adjust the price of the transaction.

(2) With the approval of NEX SEF, parties to a transaction that is cancelled may

instead, together with the DCO, as applicable, mutually agree to adjust the price of such

transaction to a fair value price.

(3) Subject to sections (d)(i) and (d)(ii), parties to a transaction that is cancelled or

that has had its price adjusted may mutually agree to a cash adjustment.

(4) Any cancellation or adjustment made pursuant to sections (d)(i), (d)(ii) or (d)(iii)

must be reported to the Facility by the parties within one (1) Business Day and the parties must

maintain a record of such adjustment.

(e) Liability for Losses Resulting from Cancellations or Price Adjustments

(1) A party that through error or mistake enters a Bid/Offer or Pre-Arranged Cross

that results in a cancellation or price adjustment shall be responsible for demonstrated claims of

realised losses incurred by persons whose transaction prices were cancelled or adjusted;

50
provided, however, that a claimant shall not be entitled to compensation for losses incurred as a

result of the claimant's failure to take reasonable actions to mitigate the loss.

(2) A claim for a loss pursuant to this Rule 315 must be submitted to the Facility

within one (1) Business Day of the event giving rise to the claim. NEX SEF will reject any claim

that is not filed in a timely manner and such decision shall be final. Eligible claims shall be

forwarded by NEX SEF to the party responsible for the Bid/Offer or Pre-Arranged Cross that

resulted in a cancellation or a price adjustment of a transaction and the Participant through which

the transaction was submitted to the Facility. Such party, or Participant on behalf of such party,

shall, within ten (10) Business Days of receipt of the claim, admit or deny responsibility in whole

or in part. Failure to respond to the claim within ten (10) Business Days shall be deemed a denial

of liability.

(3) To the extent that liability is admitted, payment shall be made within ten

(10) Business Days. Unless otherwise agreed upon in writing by the parties, failure to make the

payment within ten (10) Business Days shall be deemed a denial of liability for the purposes of

this Rule 315. A copy of any such written agreement must be provided to NEX SEF.

(4) To the extent that liability is denied, the party making the claim may submit the

claim for arbitration pursuant to Rule 702. Such claims must be submitted to NEX SEF within ten

(10) Business Days of the date the party was issued notification that liability was denied.

(f) [Reserved]

(g) Reporting and Recording of Cancellations and Price Adjustments

(1) Cancelled transactions and any prices that have been adjusted shall be

cancelled in NEX SEF's official records.

(2) Transactions that have had their price adjusted shall be reflected in NEX SEF's

official records at the adjusted price.

(h) Review of Transactions for Errors

(1) If a Participant, Customer or Clearing Firm believes that any transaction in one or

more Contracts was executed, cleared or rejected from clearing as a result of an Error, as

defined in Rule 315(h)(3), such person may request review of the transaction.

(2) Upon receipt of a request for review of a transaction, or if NEX SEF determines

on its own initiative to conduct such a review, NEX SEF will review its records to determine if an

Error occurred.

(3) NEX SEF may cancel or adjust the transaction, or execute or require the

execution of a new or offsetting Cleared Contract under the procedures of Rule 315(i), as

appropriate, if the review described in this Rule reveals that:

(i) a Trading Platform made a material mistake or that a mistake occurred

as a result of a malfunction in a Trading Platform or by human error; or

(ii) a Bid/Offer or Pre-Arranged Cross was incorrectly displayed and/or

executed and/or reported; or

(iii) a Trading Platform, Participant or Customer made a clerical or operating

error or omission that caused a transaction to be rejected from clearing

and void ab initio; or

51
(iv) a Clearing Firm or DCO rejected a leg of a Package Transaction for

clearing because of the sequencing of submission for clearing of the legs

of the applicable Package Transaction (each of the foregoing, an

"Error").

(4) If the review described in this Rule reveals that no Error occurred, NEX SEF will

inform any person who requested the review that NEX SEF has determined that the transaction

was properly handled, the evidence supporting that determination, and that a cancelation,

adjustment or a new or offsetting transaction under Rule 315(i) will not be made.

(5) NEX SEF will document in writing all requests for review of transactions received

by NEX SEF, or any review on its own initiative, the time and manner in which NEX SEF

reviewed its electronic audit trail in response to the request or review on its own initiative, the

outcome of that review, and the action or actions taken by NEX SEF in response to that review.

(6) If a transaction is reviewable for price under Rule 315(b), the procedures of this

Rule 315(h) shall not apply.

(i) Procedures for Correcting Errors

(1) The procedures of this Rule 315(i) are in accordance with NAL 17-27, expiring on

the effective date of revised Commission regulations governing swaps with clerical and

operational errors executed on a swap execution facility, and are limited to:

(i) A Cleared Contract that was rejected for clearing and void ab initio

because of a clerical or operational error or omission by NEX SEF, a

Participant or a Customer (each, a "Rejected Transaction"),

(ii) A leg of a Package Transaction that was rejected for clearing because of

the sequencing of submission for clearing of the legs of the applicable

Package Transaction and only for such rejected leg (each, a "Rejected

Leg"), and

(iii) A Cleared Contract that is carried on a DCO's books as a result of a

clerical or operational error or omission by NEX SEF, a Participant or a

Customer that was not identified until after the Cleared Contract had

been cleared (each, an "Erroneously Cleared Transaction"),

in each case where the Facility has affirmatively determined that the transaction or a term

thereof resulted from an Error.

(2) For Rejected Transactions and Rejected Legs, if a Participant, Customer or

Clearing Firm believes that a transaction qualifies as a Rejected Transaction or a Rejected Leg,

such Participant, Customer or Clearing Firm shall request review of the transaction pursuant to

Rule 315(h).

(i) Upon completion of the review of the transaction pursuant to Rule

315(h), if NEX SEF determines that an Error resulted in a Rejected

Transaction or a Rejected Leg and:

A. If NEX SEF is able to determine how to correct the Error, NEX

SEF shall execute a new Cleared Contract with the same terms

as the Rejected Transaction or Rejected Leg, other than the

Error, without obtaining consent of the Participant that submitted

the Rejected Transaction or Rejected Leg or the Customer on

whose behalf such transaction was submitted. The new Cleared

Contract must be submitted by a NEX SEF customer service

52
representative as a Pre-Arranged Cross, and such Pre-Arranged

Cross shall be subject to pre-execution credit check and risk

screening pursuant to Rule 204(b).

B. If NEX SEF is unable to determine how to correct the Error, NEX

SEF shall consult with the Clearing Firms for the Rejected

Transaction or Rejected Leg and the Participants and

Customers involved in such transaction, as necessary, and the

Clearing Firms for such transactions may, with the consent of

each respective Customer or Participant, agree to a new

Cleared Contract with the same terms as the Erroneously

Cleared Contract, other than the Error. Such Customer or

Participant consent may not be obtained in advance, and must

be sought and obtained by each Clearing Firm on a case-bycase basis, after the Cleared Contract has been rejected. If

there is such agreement and consent, the new Cleared Contract

must be submitted by the Participant specified in Rule 304(b) as

a Pre-Arranged Cross pursuant to the procedure in Rule 304(b),

and such Pre-Arranged Cross shall be subject to pre-execution

credit check and risk screening pursuant to Rule 204(b).

(ii) Upon execution of such Pre-Arranged Cross by NEX SEF to replace a

Rejected Transaction or Rejected Leg, NEX SEF shall submit the

transaction to the DCO for clearing as quickly as technologically

practicable, but in any case no later than 60 minutes from the issuance

of the notice of rejection by the DCO to the Clearing Firms.

(iii) If the new Cleared Contract resulting from such Pre-Arranged Cross is

rejected from clearing, it is void ab initio and no additional new Cleared

Contract will be permitted to be submitted under the procedure in this

Rule 315(i)(2).

(iv) NEX SEF shall report Swap transaction data to the relevant SDR

pursuant to Rule 309(f) for a new Cleared Contract that clears with the

same terms as the Rejected Transaction or Rejected Leg, as applicable,

other than the Error, including: a Part 43 cancellation for the original

transaction, a Part 45 termination indicating the original transaction is

void ab initio, and swap transaction data pursuant to Parts 43 and 45 for

the new Cleared Contract. Such data shall reference the original

cancelled trade, indicate that it has been reported pursuant to the

procedures described in this Rule 315(i)(2) and link the original cancelled

trade to the new trade for reporting to the relevant SDR under Part 43

and Part 45 of the Commission Regulations.

(v) The procedures in this Rule 315(i)(2) are not available for Rejected Legs

of Package Transactions that are rejected for clearing by a Clearing Firm

or DCO because the Package Transaction as a whole failed to satisfy

the applicable Risk-Based Limits.

(3) For Erroneously Cleared Transactions, if a Participant, Customer or Clearing

Firm believes that a Cleared Contract is carried on the books of a DCO as a result of an Error,

such Participant, Customer or Clearing Firm may request review of the transaction pursuant to

Rule 315(h).

53
(i) Upon completion of the review of the transaction pursuant to Rule

315(h), if NEX SEF determines that an Error resulted in an Erroneously

Cleared Transaction and:

A. If NEX SEF is able to determine how to correct the Error, NEX

SEF shall execute a Cleared Contract that offsets the

Erroneously Cleared Transaction carried on the books of the

relevant DCO through the same Clearing Firms that cleared the

Erroneously Cleared Transaction and NEX SEF shall execute a

new Cleared Contract with the same terms as the Erroneously

Cleared Transaction, other than the Error, in each case without

obtaining consent of the Participant that submitted the

Erroneously Cleared Transaction or the Customer on whose

behalf such transaction was submitted; provided that, where an

Erroneously Cleared Transaction did not satisfy the Risk-Based

Limits of a Participant's Clearing Firm, NEX SEF shall obtain the

consent of the relevant Clearing Firm prior to executing such

offsetting Cleared Contract. The new Cleared Contract must be

submitted by a NEX SEF customer service representative as a

Pre-Arranged Cross, and such Pre-Arranged Cross shall be

subject to pre-execution credit check and risk screening

pursuant to Rule 204(b).

B. If NEX SEF is unable to determine how to correct the Error, NEX

SEF shall consult with the Clearing Firms for Erroneously

Cleared Transactions and the Participants and Customers

involved in such transaction, as necessary, and the relevant

Customer or Participant may agree to execute a Cleared

Contract that offsets the Erroneously Cleared Transaction

carried on the books of the relevant DCO through the same

Clearing Firms that cleared the Erroneously Cleared Transaction

and to execute to a new Cleared Contract with the same terms

as the rejected Cleared Contract, other than the Error. The new

Cleared Contracts must be submitted by the Participant specified

in Rule 304(b) as Pre-Arranged Crosses pursuant to the

procedure in Rule 304(b), and such Pre-Arranged Crosses shall

be subject to pre-execution credit check and risk screening

pursuant to Rule 204(b).

(ii) Upon execution of such Pre-Arranged Crosses by NEX SEF to offset an

Erroneously Cleared Transaction and to enter into a new Cleared

Contract, NEX SEF shall submit the transactions to the DCO for clearing

as quickly as technologically practicable, but in any case no later than

three days after the Erroneously Cleared Transaction was executed.

(j) For the avoidance of doubt, the procedures of this Rule 315(i) are not applicable to any

transaction rejected by a DCO for credit reasons.

(k) Prime Broker Transactions

(1) A Prime Broker shall have the right to have the Facility cancel any Prime Broker

Transaction within 48 hours after the execution of such transaction if such transaction was

executed in excess of a Prime Broker Limit established by the Prime Broker with respect to the

Prime Broker Transaction.

54
(2) The Prime Broker shall communicate the cancellation request directly to the

Facility and the counterparty and indicate which Prime Broker Limit was exceeded with respect to

the Prime Broker Transaction.

(3) In the event a Prime Broker Transaction is canceled by the Facility pursuant to

this Rule 315(k), the Facility will report such cancellation to the relevant SDR pursuant to Part 43

of the Commission Regulations.

(4) In the event the counterparty to the canceled Prime Broker Transaction disputes

the right of the Prime Broker to have the Facility cancel such transaction, the dispute will be

resolved in accordance with the procedures of Chapter 7.

Rule 316 Reporting Counterparty

(a) For each Contract executed on or subject to the Rules, NEX SEF shall report all required

data to an SDR in accordance with Rule 309(g), and shall include in such creation data the identification

of the reporting counterparty. The reporting counterparty will be determined by NEX SEF, if possible, in

accordance with Commission Regulation 45.8 (a) – (f) and in the event the counterparties to the Contract

are of the same hierarchy level, the ISDA Reporting Party Rules, the relevant portion of which is attached

to this Rulebook as Annex 1, and identify to the counterparties which is the reporting counterparty. If

NEX SEF is unable to determine the reporting counterparty in accordance with Commission

Regulation 45.8(a) – (f) and the ISDA Reporting Party Rules, NEX SEF will identify the buyer of the

Contract as the reporting counterparty in the creation data. By executing the Contract on the Facility, the

counterparties agree to the use of the ISDA Reporting Party Rules and where necessary, the

identification of the buyer as reporting counterparty, and waive the opportunity to agree separately upon a

reporting counterparty and to receive notice from NEX SEF, as provided in Commission

Regulation 45.8(d) and 45.8(f).

(b) For each Contract executed on or subject to the Rules, the reporting counterparty and/or

the relevant DCO is responsible for reporting continuation data to the SDR to which the creation data for

the Contract was first reported in accordance with Commission Regulations 45.4 and 45.10.

Rule 317 Direct Electronic Access

No Participant may provide Direct Electronic Access to the Facility to its underlying clients.

55
CHAPTER 4

TRADING STANDARDS

Rule 401 Fraudulent Statements and Acts

(a) No Participant or Customer shall make or attempt to make any untrue or misleading

statement of a material fact or to omit to state a material fact necessary in order to make the statements

made not untrue or misleading, in connection with or related to any transaction on or other activity related

to NEX SEF or the Facility.

(b) No Participant or Customer may engage in or attempt to engage in any fraudulent act, or

engage in or attempt to engage in any manipulative device, scheme or artifice to cheat, defraud or

deceive, in connection with or related to any transaction on or other activity related to NEX SEF or the

Facility.

Rule 402 Abusive Trading Practices

(a) No Participant or Customer shall create fictitious or wash transactions on the Facility or

execute any Bid/Offer for a fictitious or wash transaction with knowledge of its nature.

(b) No Participant or Customer shall engage in trading on the Facility or subject to the Rules

for the purpose of passing money or transferring equity from one account to another.

(c) No Participant trading as an Intermediary on behalf of a Customer shall engage in trading

ahead of a Customer Order, trading against a Customer Order without the Customer's consent, front

running a Customer Order, accommodation trading or improper cross trading.

Rule 403 Good Faith Bids/Offers

(a) A Participant or Customer shall not knowingly enter, or cause to be entered, a Bid/Offer

into the Facility other than in good faith for the purpose of executing bona fide transactions.

(b) A Participant or Customer shall not knowingly enter, or cause to be entered, a Bid/Offer

unless such Participant or Customer has sufficient funds to provide the required collateral for the related

Contract should the Contract be executed.

Rule 404 Pre-Execution Discussions and Pre-Arranged Transactions

No Participant or Customer shall prearrange or pre-negotiate or non-competitively execute any

transaction on the Facility except as follows:

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(a) Permitted Transactions executed pursuant to Rule 304 are not subject to this prohibition.

(b) Where a transaction is executed pursuant to Rule 315(i), communications concerning

such transaction shall not be considered pre-execution communications prohibited by this Rule 404.

Rule 405 Manipulation and Price Distortion

(a) Any manipulation or attempted manipulation of the price of any Contract is prohibited.

(b) Bids/Offers or Pre-Arranged Crosses entered into a Trading Platform for the purpose of

upsetting the equilibrium of the market in any Contract or creating a condition in which prices do not or

will not reflect fair market values are prohibited and it shall also be prohibited for any Participant or

Customer to make or assist in entering any such Bid/Offer or Pre-Arranged Cross with knowledge of the

purpose thereof or, with such knowledge, to assist in carrying out any plan or scheme for the entering of

any such Bid/Offer or Pre-Arranged Cross.

(c) Any other manipulative and disruptive behaviour not otherwise prohibited by the Rules is

prohibited to the extent prohibited by the Act or Commission Regulations, including but not limited to

Sections 6(c)(1) and (3), 9(a)(2), 4c(a)(5)(A) and (C) of the Act and Commission Regulations 180.1(a)

and 180.2.

Rule 406 Disruptive Trading Practices

(a) No Participant or Customer shall enter or cause to be entered any Bid/Offer or

Pre-Arranged Cross or other message with the intent to adversely impact, or with reckless disregard for

the adverse impact on, the orderly conduct of trading or the fair execution of transactions.

(b) (a) No Participant or Customer shall enter or cause to be entered any Bid/Offer or

Pre-Arranged Cross or other message with the intent to:

(1) mislead other Participants;

(2) overload, delay, or disrupt the Order Book, any Trading Platform or any other

systems of the Facility or other Participants; and

(3) disrupt the orderly conduct of trading or the fair cancel any Bid/Offer before

execution of transactionsor to modify the Bid/Offer to avoid execution.

(c) (b) No Participant or Customer shall engage in any trading, practice or conduct on the

Facility or subject to the Rules that (i) violates Bids/Offers; (ii) demonstrates intentional or reckless

disregard for the orderly execution of transactions during the closing period; (iii) is, is of the character of,

or is commonly known to the trade as, "spoofing" (entering a Bid/Offer with the intent to cancel the

Bid/Offer before execution); or (iv) is any other manipulative or disruptive trading practice prohibited by

the Act or Commission Regulations.

Rule 407 General Offences

It will be an offence for a Participant or Customer to:

(a) violate any Rule regulating the conduct or business of a Participant or Customer or any

agreement made with NEX SEF;

(b) engage in any act detrimental to NEX SEF's operations or self-regulatory function or NEX

SEF's ability to enforce its Rules or is detrimental to the interest or welfare of the Facility;

(c) fail to observe the proper standards of conduct expected of market participants;

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(d) engage in any conduct which tends to impair the dignity or good name of the Facility;

(e) engage in conduct inconsistent with just and equitable principles of trade;

(f) engage in dishonourable or uncommercial conduct;

(g) aid or abet the commission of any Violation by another person;

(h) fail to supervise its employees or agents in the conduct of the Participant's or Customer's

business related to the Facility; and

(i) engage in conduct in violation of Applicable Law or the rules of any DCO which clears a

Cleared Contract in connection with or related to any transaction on or other activity related to the Facility.

Rule 408 Position Limits and Position Accountability

(a) To reduce the potential threat of market manipulation or congestion, the Facility shall

adopt for each Contract, as is necessary and appropriate, Position Limits or position accountability levels

for speculators.

(b) NEX SEF hereby adopts the Commission's Position Limits for any Contract for which the

Commission has adopted a Position Limit. In no event will NEX SEF set its Position Limits at a level

higher than the Commission's Position Limits.

(c) For Permitted Transactions, NEX SEF may set and enforce position accountability levels

or send the Commission a list of the Permitted Transactions transacted on the Facility.

(d) All Participants and Customers must comply with all NEX SEF and Commission

requirements regarding Position Limits or position accountability levels.

(e) Each Participant required to file any report, statement, form or other information with the

Commission pursuant to Commission Regulations concerning a Position Limit on any Contract or

commodity underlying a Contract must simultaneously file a copy of such report, statement, form or other

information with NEX SEF. Such information shall include, for Participants who are Intermediaries,

information concerning the Customers for which transactions are made on the Facility.

(f) Any Participant or Customer who exceeds a NEX SEF or Commission Position Limit by

entering into a transaction on the Facility shall be deemed in Violation. In addition, any Participant or

Customer entering bids or offers, if accepted, which would cause that Participant or Customer to exceed

the applicable NEX SEF or Commission Position Limit, shall be in Violation.

(g) Without limiting any provision of these Rules, NEX SEF shall have the authority to obtain

from any Participant or Customer, on request, information with respect to all positions of such Participant

or Customer in Contracts which are equivalent, for purposes of NEX SEF or Commission Position Limits,

to those transacted in by the Participant on the Facility.

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CHAPTER 5

RULE ENFORCEMENT

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Rule 501 Jurisdiction

(a) NEX SEF shall have the authority to initiate and conduct investigations, and prosecute

Violations committed by Facility Subject Persons, and to impose sanctions for such Violations as

provided in these Rules.

(b) Each Participant and Clearing Firm, upon becoming a Participant and Clearing Firm and

thereafter upon any change of address shall file with NEX SEF a written notice designating an address

for receiving service of documents. If a Participant or Clearing Firm fails to designate such an address,

service by mail to its address on file with NEX SEF shall be good service, and delivery thereof shall be

deemed to have occurred as of the date of such mailing.

Rule 502 Facility Market Regulation Staff Powers and Duties

(a) It shall be the duty of the Compliance Function to enforce these Rules, and shall have the

authority to inspect the books and records of all Facility Subject Persons and the authority to require any

Facility Subject Person to appear before it to answer questions regarding matters being investigated by

the Market Regulation Staff. The Compliance Function may also delegate such authority to Market

Regulation Staff who shall consist of personnel of NEX SEF, and such other Regulatory Services

Providers as NEX SEF may hire on a contract basis. The Compliance Function shall ensure that

surveillance systems are established to monitor trading to prevent manipulation, price distortion and any

other form of market abuse, identify system disruptions in relation to the Contracts and Disorderly Trading

Conditions and otherwise ensure compliance with these Rules. Such monitoring may be done by the

Market Regulation Staff or a third party provider, and shall include real-time monitoring and the ability to

conduct comprehensive and accurate transaction reconstructions.

(b) The Market Regulation Staff shall conduct investigations of possible Violations, prepare

written reports respecting such investigations, furnish such reports to the Review Panel and conduct the

prosecution of such Violations. An investigation must be commenced upon receipt of a request from any

Regulatory Agency, its staff or receipt of information (such as data produced by automated surveillance

systems) by NEX SEF that in the judgment of the Market Regulation Staff indicates a reasonable basis

for finding that a Violation may have occurred or will occur. Absent mitigating factors, each investigation

will be completed no later than 12 months after the investigation is opened. Mitigating factors include the

complexity of the investigation, the number of firms or individuals involved as potential wrongdoers, the

number of potential Violations to be investigated and the volume of documents and data to be examined

and analysed by Market Regulation Staff.

(c) If, in any case, the Compliance Function or another member of the Market Regulation

Staff, designated for this purpose by the Compliance Function, concludes that there is a reasonable basis

for finding a Violation, he or she shall (i) present an investigation report concerning the matter to the

Review Panel or (ii), in the case of Violations subject to summary suspension under Rule 514or summary

fines under Rule 516 proceed in accordance with Rule 514 or Rule 516, as applicable. The investigation

report must include the reason the investigation was initiated; a summary of the complaint, if any; the

relevant facts; Market Regulation Staff's analysis and conclusions; and a recommendation as to whether

disciplinary action should be pursued. The report may also include the Facility Subject Person's

disciplinary history at the Facility, including copies of any warning letters. The Market Regulation Staff

may issue a warning letter, including for minor transgressions. However, no more than one warning letter

may be issued to the same person found to have committed the same Violation more than once in a

rolling 12-month period.

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(d) If, in any case, the Compliance Function or another member of the Market Regulation

Staff, designated for this purpose by the Compliance Function, concludes that no reasonable basis exists

for finding a Violation, he or she must prepare a written investigation report including the reason the

investigation was initiated; a summary of the complaint, if any; the relevant facts; and Market Regulation

Staff's analysis and conclusions. The Compliance Function or another member of the Market Regulation

Staff may issue a warning letter in any case where it is concluded that no reasonable basis exists for

finding a Violation, without limitation on the number of warning letters issued to a person.

(e) Before presenting an investigation report to the Review Panel, the Market Regulation

Staff may, in its sole discretion, inform the prospective Respondent that it intends to submit the matter to

the Review Panel, and at such time the proposed Respondent may submit an offer of settlement to the

Hearing Panel, in accordance with the procedures of Rule 509, prior to presentation of the investigation

report to the Review Panel.

(f) NEX SEF has contracted with NFA to act as Regulatory Services Provider to provide

certain regulatory services to NEX SEF, including reviews of the Facility's audit trail information for

potential Violations. NEX SEF will retain ultimate decision-making authority with respect to any regulatory

services to be provided by NFA.

(g) NEX SEF or its Regulatory Services Provider shall have the right with such prior

reasonable advance notice as is practicable under the circumstances (unless in furtherance of regulatory

purposes in which case without prior notice to Facility Subject Persons), in connection with determining

whether all Rules are being, will be, or have been complied with by the Facility Subject Person, to:

(i) inspect systems, equipment and software of any kind operated by the Facility Subject Person in

connection with accessing, and the Facility Subject Person's transacting on, the Facility, wherever

located; (ii) access, either physically or electronically, the systems, equipment, software, and the

premises on which the systems, equipment, and software are located, any data stored in any of the

systems or equipment, during the regular business hours; and/or (iii) copy or reproduce any data to which

NEX SEF has access under this Rule. Each Facility Subject Person shall provide the Regulatory

Services Provider with the same access to its books and records and offices as it is required to provide to

NEX SEF under the Rules and Applicable Law.

Rule 503 The Review Panel

(a) The Review Panel shall have the power to direct that an investigation of any suspected

Violation be conducted by the Market Regulation Staff, and shall hear any matter referred to it by the

Market Regulation Staff regarding a suspected Violation.

(b) The Review Panel shall be appointed by the Board, and shall be comprised of five

persons, including at least two Participants and at least two non-Participants. In the case where the

subject of the investigation is a Clearing Firm, at least one member of the Review Panel shall be a

Clearing Firm. The Board shall appoint as chairman (the "Review Panel Chairman") of the Review

Panel a person who would not be disqualified from serving as a "Public Director" as defined in

Commission Regulations. Three panel members shall constitute a quorum for any action, so long as they

are in attendance at the time of the relevant action. The Review Panel may not include any members of

the Market Regulation Staff, any person involved in adjudicating any other stage of the same Proceeding,

or any person with a history of disciplinary offenses that would be disqualifying under CFTC Regulation

§ 1.63(c). The Review Panel shall include at least one member that is not a member of NEX SEF

whenever the Review Panel is: (i) acting with respect to a disciplinary action in which the Respondent is

a member of the Board, the Review Panel or the Hearing Panel; or (ii) when the suspected Violation

involves manipulation (or attempted manipulation) of the price of a Contract or conduct which directly

results in financial harm to a non-member of NEX SEF. The Review Panel shall include sufficient

different membership interests so as to ensure fairness and to prevent special treatment or preference for

any person.

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(c) All information, records, and documents provided to the Review Panel, and all related

records and documents shall be treated as confidential and shall not be disclosed, except as necessary

to further a NEX SEF investigation or as required by Applicable Law.

(d) Upon receipt of an investigation report, the Review Panel shall promptly review the report

and, within thirty (30) days of receipt, take one of the following actions:

(1) if the Review Panel determines that additional investigation or evidence is

needed, it shall promptly direct the Market Regulation Staff to conduct further investigation;

(2) if the Review Panel determines that no reasonable basis exists for finding a

Violation or that prosecution is otherwise unwarranted, it may direct that no further action be

taken. Such determination must be in writing and must include a written statement setting forth

the facts and analysis supporting the decision; or

(3) if the Review Panel determines that a reasonable basis exists for finding a

Violation and adjudication is warranted, it must direct that the Facility Subject Person alleged to

have committed the Violation be served with a notice of charges as set forth in Rule 504.

(e) If the Review Panel determines that there may have been a Violation but that no

adjudication is warranted, the Review Panel may issue a warning letter to the Facility Subject Person

informing it that there may have been a Violation and that such continued activity may result in

disciplinary sanctions. Where a Violation is determined to have occurred, no more than one warning

letter for the same potential Violation may be issued to the same person during a rolling 12 month period.

Rule 504 Notice of Charges

(a) If the Review Panel determines that a reasonable basis exists for finding a Violation and

adjudication is warranted, the Compliance Function shall serve a notice of charges (a "Notice") on the

Facility Subject Person alleged to have been responsible for the Violation (such Facility Subject Person,

the "Respondent"). Such Notice shall state:

(1) the acts, practices or conduct with which the Respondent is charged;

(2) the Rules allegedly violated and how such acts, practices or conduct constitute a

Violation of such Rules;

(3) that the Respondent is entitled, upon written request filed with NEX SEF, within

thirty (30) days of service of the Notice, to a formal hearing on the charges;

(4) that the failure of the Respondent to request a hearing within thirty (30) days of

service of the Notice, except for good cause shown, shall be deemed a waiver of its right to a

hearing;

(5) that the failure of the Respondent to file an Answer (as defined in Rule 505) with

the Market Regulation Staff within thirty (30) days of service of the Notice shall be deemed an

admission of all of the acts, practices or conduct alleged in the Notice; and

(6) that the failure of the Respondent to expressly deny a particular charge

contained in the Notice shall be deemed an admission of such acts, practices or conduct.

(7) A Respondent shall have the right to be represented by legal counsel or any

other representative of its choosing in all succeeding stages of the disciplinary process, except by

any member of the Board, Review Panel or Hearing Panel, any employee of NEX SEF or any

person substantially related to the underlying investigation, such as a material witness or

Respondent.

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Rule 505 Answer; Request for Hearing; Failure to Answer or Deny Charges

(a) The Respondent shall serve on the Compliance Function a written answer (an "Answer")

to the Notice and a written request for a hearing on the charges within thirty (30) days of the date of

service of the Notice. The Answer must include a statement that the Respondent admits, denies, or does

not have and is unable to obtain sufficient information to deny each allegation. A statement of lack of

sufficient information shall have the effect of a denial of the allegation.

(b) The Respondent's failure to file an Answer within such thirty (30) day period shall be

deemed an admission of all allegations contained in the Notice.

(c) The Respondent's failure to expressly deny a particular charge contained in the Notice

shall be deemed an admission of such acts, practices or conduct.

(d) The Respondent's failure to request a hearing within such thirty (30) day period, absent

good cause shown, shall be deemed a waiver of Respondent's right to a hearing.

Rule 506 Selection of Hearing Panel

(a) Formal hearings on any Notice shall be conducted by the Hearing Panel selected by the

Board. The Hearing Panel shall include at least two Participants and at least two non-Participants. In the

case where the subject of the investigation is a Clearing Firm, at least one member of the Hearing Panel

shall be a Clearing Firm. The Board shall also select, as chairman of the Hearing Panel ("Hearing Panel

Chairman"), a person who would not be disqualified from serving as a "Public Director" as defined in

Commission Regulations. The Hearing Panel Chairman, in his or her sole discretion, shall set a date for

the hearing (the "Hearing Date"). The Hearing Panel may not include any members of the Market

Regulation Staff, any person involved in adjudicating any other stage of the same Proceeding, or any

person with a history of disciplinary offenses that would be disqualifying under CFTC Regulation

§ 1.63(c). The Hearing Panel shall include at least one member that is not a member of NEX SEF

whenever the Hearing Panel is: (i) acting with respect to a disciplinary action in which the Respondent is

a member of the Board, the Review Panel or the Hearing Panel; or (ii) when the suspected violation

involves manipulation (or attempted manipulation) of the price of a Contract or conduct which directly

results in financial harm to a non-member of NEX SEF. The Hearing Panel shall include sufficient

different membership interests so as to ensure fairness and to prevent special treatment or preference for

any person.

(b) The Hearing Panel Chairman shall notify the Market Regulation Staff and the

Respondent of the Hearing Date and the names of the members of the Hearing Panel at least fifteen

(15) days prior to the Hearing Date.

(c) No member of the Hearing Panel shall hear a case in which that member has a direct

financial, personal or other interest in the matter under consideration.

Rule 507 Challenge to Members of the Hearing Panel

Within ten (10) days after service on the Respondent of notice of the Hearing Date and names of the

members of the Hearing Panel, the Respondent may challenge, in writing, the inclusion of any member of

the Hearing Panel for cause, including without limitation, if the member has a direct financial, personal or

other interest in the matter under consideration. The merits of such challenge shall be finally decided by

the Regulatory Oversight Committee. If said written challenge is not received within such ten (10) day

period, absent good cause shown, any such right to challenge is deemed waived.

Rule 508 Hearing on Sanctions in the Event of Failure to Deny Charges; Failure to Request

Hearing Deemed Acceptance of Sanctions

In the event the Respondent fails to file an Answer or admits or fails to deny the charge of a Violation

contained in the Notice, the Hearing Panel shall find the Respondent guilty of each such Violation and

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may impose a sanction for each such Violation subject to the limitations set forth in Rule 511(b)(7). The

Hearing Panel shall promptly notify the Respondent of any such sanction and of the Respondent's right to

a hearing on the sanction within the period of time which shall be stated in the notice, after the imposition

of such sanction. Failure to request a hearing on the sanction in a timely manner, absent good cause

shown, shall be deemed to be acceptance of the sanction.

Rule 509 Settlement Prior to Commencement of Hearing

(a) Prior to the commencement of the hearing, the Hearing Panel may accept a written offer

of settlement from the Respondent, whereby the Respondent, without either admitting or denying any

Violations, may agree to:

(1) a cease and desist order;

(2) a fine for each Violation plus the monetary value of any benefit received as a

result of the Violation (provided that in no case shall any fine exceed $100,000 per Violation);

(3) restitution of any counterparty harm; and/or

(4) revocation or suspension of Trading Privileges or Customer or Clearing Firm

status of the Respondent.

(b) If the Hearing Panel accepts an offer of settlement, it must issue a written decision

specifying each Violation it has reason to believe was committed, including the basis for the Hearing

Panel's conclusions. The sanctions must include full counterparty restitution where counterparty harm is

demonstrated, except where the amount of restitution or to whom it should be provided cannot be

reasonably determined. If an offer of settlement is accepted without the support of the Market Regulation

Staff, the decision must adequately support the Hearing Panel's acceptance of the settlement. Where

applicable, the decision must include a statement that the Respondent has accepted the sanctions

imposed without either admitting or denying any Violations. Any sanctions imposed pursuant to an offer

of settlement must take into account the Respondent's disciplinary history.

(c) The Respondent may withdraw an offer of settlement at any time before final acceptance

by the Hearing Panel. If an offer is withdrawn after submission, or is rejected by the Hearing Panel, the

Respondent may not be deemed to have made any admissions by reason of the offer of settlement and

may not be otherwise prejudiced by having submitted the offer of settlement.

Rule 510 Hearing Procedures

(a) In every instance where a Respondent has requested a hearing on a charge that is

denied, or on a sanction set by the Hearing Panel pursuant to Rule 508, the Respondent will have the

opportunity for a hearing in accordance with the procedures of this Rule.

(b) The Hearing Panel shall determine the procedures to be followed in any hearing before it,

except that the following shall apply in every case:

(1) The hearing must be fair and must be promptly convened after reasonable notice

to the Respondent.

(2) The prosecution shall be conducted by the Market Regulation Staff.

(3) The Respondent shall be allowed to appear personally at the hearing, and to be

represented by legal counsel or any other representative of its choosing and, either personally or

through such representative, to present witnesses and documentary evidence and to crossexamine witnesses.

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(4) The Market Regulation Staff and the Respondent shall deliver to each other a

statement listing the witnesses expected to be called and the documents expected to be

introduced into evidence, together with copies of such documents, by ten (10) days' prior notice

to the hearing or as the Hearing Panel may reasonably specify. Unless the Hearing Panel, in its

discretion, waives compliance with this requirement, no witness may testify and no documentary

evidence may be introduced into evidence unless listed in and, in the case of documents,

furnished with such statement. On written request, the Market Regulation Staff shall provide the

Respondent with access to all books, documents or other tangible evidence in the possession or

under the control of NEX SEF which are to be relied upon by the Market Regulation Staff or

which are relevant to the charges; provided, however, that protected attorney work product,

attorney-client communications and investigative work product, including the investigation report,

are neither discoverable by a Respondent nor subject to review by a Respondent as part of the

investigation file.

(5) NEX SEF shall require that persons within its jurisdiction who are called as

witnesses participate in 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.

Failure by a Facility Subject Person to so participate and produce evidence when requested by

NEX SEF shall be a Violation.

(6) No formal rules of evidence shall apply, and the Hearing Panel shall be free to

accept or reject any and all evidence it considers proper, but the hearing may not be so informal

as to deny a fair hearing.

(7) Neither the Market Regulation Staff, the Respondent, any witnesses testifying

before the Hearing Panel nor any other person within the Facility's jurisdiction shall engage in

conduct that may impede the progress of a hearing or the fair and just resolution of the subject

matter thereof, and any such conduct may itself constitute a Violation.

(8) Ex parte contacts by any of the parties with members of the Hearing Panel shall

not be permitted.

(9) A substantially verbatim record capable of being accurately transcribed shall be

made of the Proceeding, provided, however, that such record need not be transcribed, unless the

transcript is requested by the Respondent or an applicable regulator, or unless the decision is

appealed to the Commission or reviewed by the Commission on its own motion. In all other

instances, a summary record of the hearing is permitted.

(10) The cost of transcribing the record of the hearing must be borne by a

Respondent who requests the transcript, or whose application for Commission review of the

disciplinary action has been granted. In all other instances, the cost of transcribing the record will

be borne by NEX SEF.

(11) The Notice, the Answer, any stenographic transcript of the hearing, the

documentary evidence and any other material presented to the Hearing Panel by either party with

notice to the other shall constitute the record of the hearing (the "Hearing Record").

(12) The burden of proof shall be on the prosecution to prove a Violation by a

preponderance of the evidence. A finding of a Violation shall be made by majority vote based on

the Hearing Panel's decision as to the weight of the evidence contained in the Hearing Record.

(13) All sanctions imposed by the Hearing Panel must be commensurate with the

Violations committed and must be clearly sufficient to deter additional similar Violations by the

Respondent and similar Violations by other Facility Subject Persons. All sanctions must take into

account the Respondent's disciplinary history. In the event of demonstrated counterparty harm,

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any sanctions must include full counterparty restitution, except where the amount of restitution or

to whom it should be provided cannot be reasonably determined.

Rule 511 Written Decision of Hearing Panel

(a) Promptly following a hearing conducted in accordance with Chapter 5 of the Rules, the

Hearing Panel shall render a written decision based upon the weight of evidence in the Hearing Record

and must provide a copy to the Respondent within thirty (30) days of such decision.

(b) The written decision shall include:

(1) the name of the Respondent;

(2) the Notice or a summary of the charges alleged in the Notice;

(3) the Answer, if any, or a summary of the Answer;

(4) a summary of the evidence produced at the hearing or, where appropriate,

incorporation by reference of the investigation report;

(5) a statement of the findings and conclusions of the Hearing Panel with respect to

each charge, and a complete explanation of the evidentiary and other basis for such findings and

conclusions with respect to each charge, or in the event of a settlement, a statement specifying

the alleged Violations;

(6) an indication of the Contract involved, if any, and each specific Rule that the

Respondent was found to have violated and whether the Violation resulted in any financial harm

to any Participants or Customers;

(7) an order stating any sanctions imposed, including the basis for the sanctions,

any terms of the sanctions, the date the determination to impose sanctions was made and the

effective date of such sanctions; the sanctions that may be imposed on the Respondent shall be

one or more of the following:

(i) a cease and desist order;

(ii) a fine for each Violation plus the monetary value of any benefit received

as a result of the Violation (provided that in no case shall any fine exceed

$100,000 per Violation);

(iii) restitution of counterparty harm, except where the amount of restitution

or to whom it should be provided cannot be reasonably determined;

and/or

(iv) the issuance of a suspension or revocation of Trading Privileges or

Customer or Clearing Firm status of the Respondent; and

(8) a statement informing the respondent that the imposition of sanctions may be

appealed to the Commission pursuant to Part 9 of the Commission Regulations.

(c) The Hearing Panel shall take into consideration the Respondent's disciplinary history

prior to imposing any disciplinary sanctions.

(d) NEX SEF shall also provide the written decision to the NFA through BASIC, or deliver the

written decision to the NFA to be input into BASIC.

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(e) If NEX SEF suspends or revokes the Trading Privileges or Customer or Clearing Firm

status of the Respondent, or otherwise disciplines the Respondent, it must publicly publish and maintain

on its website the information contained in the written notice pursuant to Rule 511(b).

Rule 512 Liability for Expenses

Any Respondent that, after notice and opportunity for hearing, has been found to have committed a

Violation may, in the discretion of the Hearing Panel appointed in the matter, be required to pay to NEX

SEF an amount equal to any and all reasonable and documented out-of-pocket expenses incurred by

NEX SEF in connection with the prosecution of such Violations, in addition to any fine or other monetary

sanction which may be imposed upon such Respondent by virtue of the Violations found by the Hearing

Panel.

Rule 513 Effective Date of Sanctions

(a) If a Respondent submits an offer of a settlement to the Hearing Panel, any sanction

included as a part of such settlement shall become final and effective on the date that the Hearing Panel

approves such settlement, or on such other date as is specified in the decision.

(b) Subject to Rule 513(c) and (d), any decision (including any sanctions) by a Hearing

Panel pursuant to this Chapter 5 or the Participation Committee (or Board acting in such capacity)

pursuant to (a) shall be the final decision of NEX SEF and shall become effective fifteen (15) days, or

such longer time as the Hearing Panel or Participation Committee (or Board acting in such capacity) may

specify, after a copy of the written decision of the Hearing Panel or Participation Committee (or Board

acting in such capacity) has been served on the Respondent, applicant, Participant or Customer as

applicable.

(c) In any case where a Respondent, applicant, Participant or Customer has consented to

the action taken and to the timing of its effectiveness, the Hearing Panel or Participation Committee (or

Board acting in such capacity) may cause the decision involving any disciplinary action (including any

sanctions) to become effective prior to the fifteen (15) day period.

(d) Any decision (including any sanctions) by a Hearing Panel or the Participation Committee

(or Board acting in such capacity) may become effective prior to the time set forth in Rule 513(b) if:

(1) NEX SEF reasonably believes, and so states in its written decision, that

immediate action is necessary pursuant to Rule 514(a);

(2) NEX SEF determines and so states in its written decision, that the actions of a

Facility Subject Person have impeded the progress of a disciplinary hearing; or

(3) NEX SEF determines a Facility Subject Person has violated Rules relating to

timely submission of accurate records required for clearing or verifying each day's transactions or

other similar activities.

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(e) If a decision is to become effective earlier than the time set forth in Rule 513(b) pursuant

to Rule 513(c) or (d), NEX SEF shall notify the Respondent, applicant, Participant or Customer in writing

stating the reasons for the determination and shall notify the Commission in accordance with the

requirements of Part 9 of the Commission Regulations.

(f) Any fine or other monetary sanction imposed by a Hearing Panel shall be due and

payable on the effective date of the decision imposing such fine or sanction, or on such later date as the

Hearing Panel may specify.

Rule 514 Summary Suspension

(a) General. A Facility Subject Person (as identified by Market Regulation Staff in an

investigation or by a Trading Privilege Holder acting as an Intermediary for such Facility Subject Person)

may be summarily and immediately suspended from trading on the Facility, upon a written determination

based on a reasonable belief, by the Chairman of the Regulatory Oversight Committee that such

immediate action is necessary to protect the best interest of the market place.

(b) Violations of Specified Rules. The Market Regulation Staff shall have the authority to

impose summary suspensions on Participants and Customers without the need for any formal disciplinary

procedures with respect to Violations of any Rule listed in this Rule 514(b). Pursuant to Rule 202(a)(2), a

Participant that is an Intermediary may be held responsible for a Violation by its Customer. Investigations

of possible Violations of such a Rule shall be conducted in accordance with Rule 502, but otherwise

actions taken pursuant to this Rule 514(b) shall be made in accordance with the procedures set forth in

Rule 514 rather than the procedures set forth in the remainder of this Chapter 5. The authority to impose

a summary suspension under this Rule 514(b) does not prevent the Market Regulation Staff from

submitting a Violation of any rule listed in this Rule 514(b) to the Review Panel in accordance with the

formal disciplinary procedures of this Chapter 5. The following schedule lists the permissible actions that

the Market Regulation Staff may impose:

Rule

Violation

Action Taken Per each Violation in a Rolling 12-month period

First

Violation

Second

Violation

Third

Violation

Fourth Violation

Rule

901(i)(4) &

Rule 406, as

interpreted

by a MRAN

Warning

Letter

Two Week

Suspension of

Trading for

the relevant

Currency Pair

Four Week

Suspension of

Trading for

the relevant

Currency Pair

Referral to Review Panel for formal

disciplinary procedures.

(c) Notice and Hearings.

(1) The Facility Subject Person against whom such summary action is taken

pursuant to paragraph (a) or (b) of this Rule 514 shall be served with a notice of the action either

before the action is taken or at the earliest possible opportunity thereafter. The notice shall state

the action taken, the reasons for the action, the effective date and time, and the duration of the

action.

(2) The Facility Subject Person may as soon as practicable, upon written request,

have a hearing as soon as practicable before the Hearing Panel pursuant to the procedures of

Rule 510.

(3) Promptly following the hearing, the Hearing Panel shall render a written decision

based upon the weight of the evidence in the record and shall provide a copy to the Facility

68
Subject Person. The decision shall include a description of the summary action taken, the

reasons for the summary action, a summary of the evidence produced at the hearing, a

statement of findings and conclusions, a determination that the summary action should be

affirmed, modified or reversed, a declaration of any action to be taken pursuant to the

determination, and the effective date and duration of the action.

Rule 515 Extension of Time Limits

Any time limit provided for in Rule 504, Rule 505, Rule 506, Rule 507, Rule 508, or Rule 510 may be

extended by mutual consent of the Respondent and the Market Regulation Staff, or by the Hearing Panel

Chairman.

Rule 516 Summary Fines

(a) Notwithstanding any other provision of this Chapter 5, the Market Regulation Staff shall

have the authority to impose summary fines on Participants and Customers without the need for any

formal disciplinary procedures with respect to Violations of any Rule listed in this Rule 516. Pursuant to

Rule 202(a)(2), a Participant that is an Intermediary may be held responsible for a Violation by its

Customer. Investigations of possible Violations of such a Rule shall be conducted in accordance with

Rule 502, but otherwise actions taken pursuant to this Rule 516 shall be made in accordance with the

procedures set forth in this Rule 516 rather than the procedures set forth in the remainder of this Chapter

5. The authority to impose a summary fine under this Rule 516 does not prevent the Compliance

Function from submitting a Violation of any rule listed in this Rule 516 to the Review Panel in accordance

with the formal disciplinary procedures of this Chapter 5. The following schedule lists the permissible

actions that the Market Regulation Staff may impose:

Rule

Violation

Action Taken Per each Violation in a Rolling 12-month period

First

Violation

Second

Violation

Third

Violation

Fourth Violation

Rule 204(i) Warning

Letter

$2,000 $5,000 Referral to Review Panel for formal

disciplinary procedures.

(b) For purposes of imposing fines pursuant to this Rule 516, the Market Regulation Staff

shall review all the facts and circumstances prior to determining whether a Violation occurred and may

aggregate individual Violations and treat such Violations as a single offense.

(c) The Market Regulation Staff shall set the amount of any fine imposed pursuant to this

Rule 516, with the maximum aggregate fine for Violations of the same Rule, or subsection thereof,

imposed by the Market Regulation Staff not to exceed $7,000 in a rolling 12-month period. If, in any

case, a member of the Market Regulation Staff concludes that there is a reasonable basis for finding an

additional Violation, he or she shall present an investigation report concerning the matter to the Review

Panel in accordance with Rule 502, which shall proceed in accordance with Rule 503.

(d) Notice and Hearings.

(1) The Facility Subject Person against whom such summary action is taken

pursuant to this Rule 516 shall be served with a notice of the action before the action is taken.

The notice shall state the action taken, the reasons for the action, the amount of any fine imposed

for each Violation, and the date by which the action becomes final (and any fine must be paid) or

contested as provided below, which date shall be not less than 30 days after the date the notice

of action was served.

69
(2) The Facility Subject Person may as soon as practicable, upon written request to

the Market Regulation Staff, have a hearing before the Hearing Panel pursuant to the procedures

of Rule 510 in order to contest the action taken. Any such notice of contest must be submitted to

the Market Regulation Staff on or before the date specified in the notice of action that the relevant

action becomes final.

Promptly following the hearing, the Hearing Panel shall render a written decision based upon the weight

of the evidence in the record and shall provide a copy to the Facility Subject Person. The decision shall

include a description of the summary action taken, the reasons for the summary action, a summary of the

evidence produced at the hearing, a statement of findings and conclusions, a determination that the

summary action should be affirmed, modified or reversed, a declaration of any action to be taken

pursuant to the determination, and the effective date and duration of the action.

70
CHAPTER 6

CONTRACTS TO BE TRADED

Rule 601 Listing Procedures

Any Trading Privilege Holder may propose to NEX SEF the listing of a Swap on the Facility by submitting

a listing application to NEX SEF. The Chief Executive Officer shall have authority, subject to complying

with Rule 602 and to objectively justifiable commercial criteria, to submit the contract to the Commission,

either with a request for prior approval, or with a self-certification.

Rule 602 Swaps Not Readily Susceptible to Manipulation

Before the Chief Executive Officer submits a Swap to the Commission for prior approval or with a

self-certification, the Chief Compliance Officer shall determine that the Swap is not readily susceptible to

manipulation, and shall submit to the Commission the following information required by Appendix C to

Part 38 of Commission Regulations to show that the Swap complies with Core Principle 3:

(a) For cash-settled Swaps, documentation demonstrating that the settlement price index is

a reliable indicator of market values and conditions, is highly regarded by industry/market agents, and is

publicly available on a timely basis.

(b) Where an independent, private-sector third party calculates the referenced price index,

verification that the third party utilises business practices that minimise the opportunity or incentive to

manipulate the cash settlement prices included in the index.

(c) Where NEX SEF generates the cash settlement prices included in the index, information

demonstrating that the calculation procedures safeguard against potential attempts to artificially influence

the price, and a description of how the calculation procedures eliminate or reduce the impact of

potentially unrepresentative data.

(d) Appropriate speculative limits to prevent manipulation.

(e) Procedures for intraday market restrictions that pause or halt trading in the event of

extraordinary price moves that may result in distorted prices.

71
CHAPTER 7

GOVERNING LAW, JURISDICTION AND DISPUTE RESOLUTION

Rule 701 Choice of Law

The laws of England and Wales, without regard to its conflict of laws principles, will govern this Rulebook

and all disputes arising out of or related to NEX SEF, the Facility or any transaction on the Facility.

Rule 702 Disputes Among Trading Privilege Holders, Authorised Traders, Authorised Trading

Firms and Customers

All disputes between and among Facility Subject Persons that arise out of or relate to NEX SEF or the

Facility or any transaction that was made or attempted to be made on the Facility shall be resolved

exclusively in the courts of England and Wales, save for in the following circumstance:

(1) if all parties to the dispute are members or associates of the NFA, the dispute will

be resolved in NFA Member Arbitration; or

(2) if all parties separately agree to another forum, the dispute will be resolved in the

other forum.

Rule 703 Complaints to and Disputes With NEX SEF

(a) Any Facility Subject Persons that are dissatisfied with the Facility may make a complaint

in writing to the Head of Compliance EMEA, NEX Group, 2 Broadgate, London EC2M 7UR, United

Kingdom. Details of NEX SEF's complaints management policy can be provided on request.

(b) Subject to Rule 102, all disputes between and among NEX SEF on the one hand, and

Facility Subject Persons on the other hand, that arise out of or relate to the Facility, or any transaction

that was made or attempted to be made on the Facility, shall be resolved exclusively in the courts of

England and Wales. Suit on any such dispute must be brought within one year from the time the cause

of action has accrued.

(c) Any current or former Facility Subject Person who does not substantially prevail in a

lawsuit or any other type of legal proceeding instituted in a court of law or otherwise against NEX SEF or

any of its officers, directors, committee members, volunteers, employees or agents, shall pay to NEX SEF

any and all reasonable expenses and disbursements, including reasonable attorneys' fees, incurred by

NEX SEF to defend such lawsuit or proceeding.

72
CHAPTER 8

CONTRACT SPECIFICATIONS

Rule 801 NDF Product Descriptions

Trading Hours

The trading hours for all Swaps governed by this Rule 801 are as follows:

o Order Book: 24 Hours, beginning at 3:00 a.m. Sydney Time on Monday and ending at 5:00

p.m. New York Time on Friday.

o Voice RFQ: Not Available.

o All Pre-Arranged Crosses: Not Available.

Products — Rule 801:

(1) Non Deliverable Forwards ("NDFs")

Product Specifications

NDFs are synthetic foreign currency forward contracts on non-convertible currencies or are traded on

currencies with very little liquidity in the market place. These derivatives allow corporates and other

investors to hedge or take positions to local currency movements without actually dealing in the

underlying.

A (notional) principle amount, forward exchange rate and forward date are all agreed at the deal's

inception. The difference is that there will be no physical transfer of the principle amount in the

transaction. The deal is agreed on the basis that net settlement will be made in USD, or another fully

convertible currency, to reflect any differential between the agreed forward rate and the actual exchange

rate on the agreed forward date. It is a cash-settled outright forward.

The demand for NDFs arises principally out of regulatory and liquidity issues in the underlying currency,

where overseas players are essentially barred from access to the domestic market.

When an NDF deal is contracted, a fixing methodology is agreed, which includes the following two

methodologies:

1. Outright. Under the standard outright NDF contract a fixing spot rate is determined on the fixing

date, which is normally two working days before settlement, to reflect the spot value.

2. Tomorrow's Fixing ("TOM"). The TOM methodology permits a currency position to be rolled

forward one month on the day before the fixing used to price the contract. The contract is a

back-to-back trade with a near leg closing out the original currency position (the "Original NDF")

and a far leg reestablishing the position the next trading day. The fixing rate applicable to the far

leg is the current market rate for the relevant outright NDF contract at the time the contract is

entered into. The fixing rate for the near leg is the far leg fixing rate minus a number of basis

points agreed upon by the parties (the "Near Leg Rate"). The close out of the Original NDF is

then calculated as the difference between the fixing rate applicable to the Original NDF and the

Near Leg Rate.

In all cases, the fixing spot rate is based on the reference page on either Reuters or Bloomberg.

Settlement is made in the major currency, paid to or by the client, and reflects the differential between the

agreed upon non-deliverable forward rate and the fixing spot rate.

73
The NDF is quoted using foreign exchange forward market convention, with two way prices quoted as

bid/offer pips, at a premium or discount to the prevailing spot market. As with a normal forward

transaction, the market user either buys or sells the NDF, depending on the position to be hedged or

according to the view of the underlying currency of interest rates.

NDFs are a risk management tool used to hedge the risk of forward currency convertibility, which can

result from a number of factors, including credit risk, sovereign risk, regulatory restrictions, or lack of

settlement procedures. NDFs are typically utilized by banks, multinational corporations, investment

managers, and proprietary traders to hedge currency risk. NDFs are also used as a tool to facilitate

locking in the enhance yields of emerging market currencies.

Currencies

CLP KRW USD

PEN INR PHP

COL IDR CNY

ARS MYR AUD

BRL TWD EUR

GBP NZD CAD

HKD JPY MXN

TRY RUB CHF

SEK ZAR SGD

SAR PLN NOK

Holiday Calendar

o USD, KRW, MYR, TWD, IDR, PHP, CNY, INR, CLP, PEN, COP, ARS, BRL

o Value date must be a good USD day

o Fixing date must be a good local day

Components

o Notional

• This is the "face value" of the NDF, which is agreed between the two

counterparties*

o Fixing date

• This is the day and time whereby the comparison between the NDF rate

and the prevailing spot rate is made*

o Settlement date (or delivery date)

• This is the day when the difference is paid or received. It is usually one

or two business days after the fixing date*

o Publish Date

• For CLP only, the mkt refers to the publish date as one day after the

fixing date

o Contracted NDF rate

• The rate agreed on the transaction date, and is essentially the outright

forward rate of the currencies dealt

o Effective date

• The date which the NDF contract takes effect, usually the trade date

Clearing

o NDFs traded on NEX SEF are not cleared.

74
Rule 802 Interest Rate Swaps Products Descriptions

Trading Hours

Unless otherwise indicated in a Swap's specifications, the trading hours for all Swaps governed by this

Rule 802 are as follows:

o Order Book: 24 Hours, beginning at 5:00 am Sydney time Monday and ending at 5:30 p.m.

Eastern Time on Friday.

o Voice RFQ: Not Available.

o All Pre-Arranged Crosses: 24 Hours, beginning at 3:00 am Sydney time Monday and ending

at 5:30 p.m. Eastern Time on Friday.

Products — Rule 802:

(1) Fixed for Floating IRS

(2) Basis Swaps

(3) Forward Rate Agreements (FRA)

(4) Non Deliverables Swaps (NDS)

(5) Inflation Swaps
Rule 802(1) — Fixed for Floating IRS

A Fixed for Floating IRS is an Interest Rate Swap for which settlement is in the form of periodic fixed

interest payments and a stream of periodic floating interest payments based on an interest rate over a

term to maturity. The interest rate payments are exchanged for a specified period based on a notional

amount.

Currencies

AUD SGD NZD

ZAR CAD HKD

JPY MXN THB

USD

Specifications

Trading Conventions

• Buyer (Payer) pays fixed interest rate and receives floating interest rate.

• Seller (Receiver) receives fixed interest rate and pays floating interest rate.

Swap Leg Conventions

• The terms of Fixed versus Floating Interest Rate Swaps are based on a number

of combinations of the criteria below.

 Fixed Leg

• Payment Frequency

o Monthly, Quarterly, Semi-Annually, or Annually

• Day Count Convention

o Actual/360, actual/365, 360/360, 30/360, 30E/360,

Actual Fixed/365, actual /366, actual / actual

• Holiday Calendar

o Applied in accordance for the country currency denoted

for the instrument

• Business Day Convention

o Modified following with adjustment to period end dates.

Business days in this convention must be valid business

days for the countries denoted by the currency. If not, it

will be the next day that is a business day on both

calendars.

• Fixed Rate

o The traded interest rate yield or basis points on Trade

Date

 Floating Leg

• Reset Frequency

o Monthly, Quarterly, Semi-Annual

• Day Count Convention

o Actual/360, actual/365, 360/360, 30/360, 30E/360,

Actual Fixed/365, actual /366, actual / actual

• Holiday Calendar

o Applied in accordance for the country currency denoted

for the instrument

• Business Day Convention

o Modified Following with adjustment to period end dates.

Business days in this convention must be valid business

days for the countries denoted by the currency. If not, it

will be the next day that is a business day on both

calendars.

76
• Fixed Rate

o The traded interest rate yield or basis points on Trade

Date

• Interest Rate Benchmark

AUD-BBR-BBSW

SGD-SOR-VWAP

NZD-BBR-FRA

ZAR-JIBAR-SAFEX

CAD-BA-CDOR

HKD-HIBOR-HKAB

JPY-LIBOR-BBA

MXN-TIIE-Banxico

THB-THBFIX-Reuters

MYR-KLIBOR-BNM

USD-LIBOR-BBA

Effective Date

o The first date from which fixed and floating interest amounts accrue. It is also referred to as

the Start Date or the Value Date. The Effective Date of the Swap must be a business day

subject to the appropriate Business Day Convention.

Trade Start Type

o Spot Starting

 A swap whose Effective Date is 2 business days from the Trade Date

(T+2).

o Forward Starting

 A swap whose Effective Date is anything after the Effective Date for a

Spot Starting swap.

Maturity Date

o The final date until which Fixed and Floating amounts accrue

Tenor

o The duration of time from the Effective Date to the Maturity Date. Tenors of any duration

greater than 0 years to 50 years.

 Listed Tenors, also known as On-the-Run, are whole calendar year Spot

Starting Contracts with a Tenor of 1 through 50 years.

 Other Tenors, also known as Off-the-Run, means any partial year Tenor

(Months, Weeks, Days).

Roll Day Convention

o The date used for determining all fixed and floating Reset Dates. Roll Days define the

beginning and end of Fixed and Floating interest accrual periods.

o For On-the-Run Contracts, the Roll Day is the same date of the month as the Effective Date.

For Off-the-Run Contracts, it can be any date of the month, subject to the provisions of the

Business Day Convention. Roll Day marks the start of a new interest accrual period, and is

the date on which a Reset Rate takes effect.

Floating Reset Dates

o Dates utilized to determine the Floating Rate amounts for each interest accrual period during

the Tenor of the contract. Except in the case of a Stub Period, the Reset Date is aligned with

the floating rate frequency as determined.

First Period Fixing Date

77
o For Spot Starting swaps, the Interest Rate for the first interest period is fixed on the Trade

Date, for both Floating and Fixed Rates.

o For Forward Starting swaps, the Fixed Rate for the first interest period is fixed on the Trade

Date, and the Floating Rate for the first interest period is fixed 2 business days prior to the

first floating payment date, taking into account agreed non-working days

Stub Period Rate

o For swaps with partial year Tenors, an interest period that is shorter than the standard

underlying Floating index interest periods may occur between the Effective Date and the first

or last Roll Date (knows as a Stub Period). In these cases, the Interest Rate for such Stub

Period is determined using linear interpolation based on the two index rates that surround the

Stub Period this can be applied either at the start or end of that period: Front or Back.

Trade Types

o The Platform may support the following trade types:

 Outrights

• An Outright swap is where one party is the payer of the fixed rate

and receiver of the floating rate and the other party is the

receiver of the fixed fate and payer of the floating rate.

 Switches or Spreads

• Is the simultaneous purchase and sale of two different Tenors of

the yield curve (e.g. 2 year by 10 year).

 Butterflies

• Butterflies are a combination of two spreads/switches (e.g.

2 year by 5 year by 10 year).

Contract Size

o Minimum notional size is dependent on currency and tenor

Quoting Convention

o Outrights

 The interest rate yield quoted is dependent on currency

 Spreads and Butterflies will be quoted in basis points dependent in

multiples of the increments of the underlying Outrights

Final Settlement Price

o Multiple payments take place during the term of the swap. Settlement price used for the

periodic exchange of fixed and floating payments is based on the following factors:

 Fixed Leg

• Payment amount on the fixed leg is based on the traded price

and notional amounts of the swap on Trade Date. Payment

timing on the fixed leg is based on the Payment Frequency, Day

Count Convention, Business Day Convention, and Roll Day.

 Floating Leg

• Payment on the floating leg is based on the Interest Rate and

notional amounts of the swap. Payments on the floating leg are

based on the Payment Frequency, Day Count Convention,

Business Day Convention, Roll Day Convention and Floating

Reset Dates.

Clearing

78
o Contracts are elibigle to be cleared at LCH. Clearnet, CME and ASX. Please see clearable

contract definitions at http://www.lchclearnet.com/, http://www.cmegroup.com/, and

http://www.asx.com.au/services/clearing/asx-clear-futures.htm.

Rule 802(2) — Basis Swaps

A Basis Swap is an Interest Rate Swap for which settlement is in the form of periodic floating interest

payments and periodic floating interest payments based on interest rate benchmarks over a term to

maturity. The interest rate payments are exchanged for a specified period based on a notional amount.

Currencies

USD

EUR

Specifications

Trading Conventions

o Buyer (Payer) pays floating interest rate plus/minus a spread and receives floating interest

rate.

o Seller (Receiver) receives floating interest rate plus/minus a spread and pays floating interest

rate.

Swap Leg Conventions

o The terms of Floating vs. Floating Interest Rate Swaps are based on a number of

combinations of the criteria below.

 Floating Leg 1

• Payment Frequency

o Monthly, Quarterly, Semi-Annually, or Annually

• Day Count Convention

o Money Market Basis (actual/360), actual/365,

actual/actual, actual/366, 360/360, 30/360, 30E/360 or

AFI/365

• Holiday Calendar

o Applied in accordance for the country currency denoted

for the instrument

• Business Day Convention

o Modified Following with adjustment to period end dates.

Business days in this convention must be valid business

days on both the calendars. If not, it will be the next day

that is a business day on both calendars.

• Floating Rate

o The floating interest rate yield or basis points on Trade

Date

 Floating Leg 2

• Reset Frequency

o Monthly, Quarterly, Semi-Annual or Annually

• Day Count Convention

o Actual/360, actual/365, 360/360, 30/360, 30E/360,

Actual Fixed/365, actual /366, actual / actual

• Holiday Calendar.

o Applied in accordance for the country currency denoted

for the instrument

• Business Day Convention

o Modified Following with adjustment to period end dates

 Business days in this convention must be valid

business days on both calendars

 If not, it will be the next day that is a business

day on calendars.

• Interest Rate Benchmark

o LIBOR, EURIBOR

79
Effective Date

o The first date from which floating interest amounts accrue. It is also referred to as the Start

Date or the Value Date. The Effective Date of the Swap must be a business day subject to

the appropriate Business Day Convention.

Trade Start Type

o Spot Starting

 A swap whose Effective Date is 2 business days from the Trade Date

(T+2).

o Forward Starting

 A swap whose Effective Date is anything after the Effective Date for a

Spot Starting swap.

Maturity Date

o The final date until which Floating amounts accrue. The Maturity Date may also be referred

to as the Termination Date or End Date.

Tenor

o The duration of time from the Effective Date to the Maturity Date. The Exchange will support

Tenors of any duration greater than 0 years to 50 years.

o Listed Tenors, also referred to as On-the-Run, means whole year Spot Starting or Same Day

Starting Instruments with a Tenor of 1 through 50 years.

o Other Tenors means any whole year Tenors other than the Listed Tenors and any partial

year Tenor.

Roll Day Convention

o The date used for determining all fixed and floating Reset Dates. Roll Days define the

beginning and end of Floating interest accrual periods.

o For On-the-Run Instruments, the Roll Day is the same date of the month as the Effective

Date. For Off-the-Run Instruments, it can be any date of the month, subject to the provisions

of the Business Day Convention. Roll Day marks the start of a new interest accrual period,

and is the date on which a Reset Rate takes effect.

 Note: Subject to good business days – as with all instruments, will never

roll forward to the following month.

Floating Reset Dates

o Dates utilized to determine the Floating Rate amounts for each interest accrual period during

the Tenor of the Instrument. Except in the case of a Stub Period, the Reset Date is 2

business days (USD or EUR) prior to the Roll Date for that interest accrual period.

First Period Fixing Date

o For Spot Starting and Same Day Starting swaps, the Interest Rate for the first interest period

is fixed on the Trade Date, for both Floating Rates.

o For Forward Starting swaps, the Floating Rate for the first interest period is fixed on the

Trade Date, and the Floating Rate for the first interest period is fixed 2 business days prior to

the Effective Date.

Stub Period Rate

o For swaps with partial year Tenors, an interest period that is shorter than the standard

underlying Floating index interest periods may occur between the Effective Date and the first

or last Roll Date (knows as a Stub Period). In these cases, the Interest Rate for such Stub

Period is determined using linear interpolation based on the two index rates that surround the

Stub Period this can be applied either at the start or end of that period: Front or Back.

Trade Types

o The Platform may support the following trade types:

 Outrights

• An Outright swap is where one party is the payer of the floating

rate 1 plus/minus a spread and receiver of the floating rate 2 and

the other party is the receiver of the floating rate 1 plus/minus a

spread and payer of the floating rate 2.

 Switches

• Switches are the simultaneous purchase and sale of two

different Tenors of the yield curve (e.g. 2 year by 10 year).

80
 Butterflies

• Butterflies are the simultaneous purchase(s) and sale(s) of three

different tenors of the yield curve (e.g. 2 year by 5 year by

10 year).

Instrument minimum and incremental Size.

o Minimum notional size is dependent on currency and tenor

o Block Trades

 Minimum notional size as stated by the Commission and increments

dependent on currency and tenor.

Quoting Convention

o Outrights are quoted in interest rate yield is dependent on currency.

o Spreads and Butterflies are quoted in interest rate yield differential in minimum 1/10th basis

point increments.

 Spot Starting

• Close of business on Trade Date.

 Forward Starting

• Close of business three business days prior to the Effective Date

of the swap.

 Block Trades must occur outside the Order Book and in a quantity that

meets or exceeds Appropriate Minimum Block Sizes set by the

Commission.

Clearing

o Contracts are elibigle to be cleared at LCH. Clearnet and CME. Please see

clearable contract definitions at http://www.lchclearnet.com/ and

http://www.cmegroup.com/

81
Rule 802(3) — Forward Rate Agreement (FRA)

A Forward Rate Agreement is an Interest Rate Swap for which settlement is in the form of one fixed

interest payment and one floating interest payment based on an interest rate benchmark to be paid or

received on an obligation beginning at a future start date. The interest rate payments are exchanged

based on a notional amount.

Currencies

USD DKK

EUR NOK

GBP PLN

CHF CZK

SEK HUF

Specifications

Trading Conventions

o Buyer (Payer) pays fixed interest rate and receives floating interest rate.

o Seller (Receiver) receives fixed interest rate and pays floating interest rate.

Swap Leg Conventions

o The terms of FRAs are based on a number of combinations of the criteria below.

 Fixed Leg

• Payment Frequency

o Once

• Day Count Convention

o Money Market Basis (actual/360), or actual/365, 30/360,

30E/360, AFI/360, 360/360

• Holiday Calendar

o Applied in accordance with the country relating to the

currency of the instrument

• Business Day Convention

o Modified Following with adjustment to period end dates.

Business days in this convention must be valid business

days on both the holiday calendars of that country. If

not, it will be the next day that is a business day on both

calendars.

• Fixed Rate

o The traded interest rate yield or basis points on Trade

Date

 Floating Leg

• Reset Frequency

o Once

• Day Count Convention

o Money Market Basis (actual/360), or actual/365, 30/360,

30E/360, AFI/360, 360/360

• Holiday Calendar

o Applied in accordance with the country relating to the

currency of the instrument

• Business Day Convention

o Modified Following with adjustment to period end dates.

Business days in this convention must be valid business

days on both the calendars for each country. If not, it

will be the next day that is a business day on both

respective country holiday calendars.

• Interest Rate Benchmark

82
o LIBOR, EURIBOR, PRIBOR, CIBOR2, BUBOR, NIBOR,

WIBOR, STIBOR

Effective Date

o The first date from which fixed and floating interest amounts accrue. It is also referred to as

the Start Date or the Value Date. The Effective Date of the Swap must be a business day

subject to the appropriate Business Day Convention.

Trade Start Type

o Spot Starting

 A swap whose Effective Date is 2 business days from the Trade Date

(T+2).

o Forward Starting

 A swap whose Effective Date is anything after the Effective Date for a

Spot Starting swap.

Maturity Date

o The final date until which Fixed and Floating amounts accrue. The Maturity Date may also

be referred to as the Termination Date or End Date.

Tenor

o The duration of time from the Effective Date to the Maturity Date Tenors will be support for

any duration greater than 0 month to 12 months.

o Listed Tenors, also referred to as On-the-Run, means whole year Spot Starting or Same Day

Starting Instruments with a Tenor of an integer number of months.

o Other Tenors means any Tenors other than the Listed Tenors.

Floating Reset Dates

o Dates utilized to determine the Floating Rate amount for the interest accrual period during the

Tenor of the Instrument. Except in the case of a Stub Period, the Reset Date is adjusted

business days dependent on the currency prior to the Roll Date for that interest accrual

period.

First Period Fixing Date

o The Fixed Rate for the first interest period is fixed on the Trade Date, and the Floating Rate

for the first interest period is fixed 2 business days prior to the Effective Date

Trade Types

o The Platform may support the following trade types:

 Outrights

• An Outright swap is where one party is the payer of the fixed rate

and receiver of the floating rate and the other party is the

receiver of the fixed rate and payer of the floating rate.

 Switches also known as Spreads

• These are the simultaneous purchase and sale of two different

Tenors of the yield curve (e.g.3x6 by 9x12).

Instrument minimum and incremental Size.

o Minimum notional size is dependent on currency and tenor

o Block Trades. Minimum notional size as stated by the Commission and increments

Dependent on currency and tenor

Quoting Convention

o Outrights are quoted in interest rate yield is dependent on currency.

o Spreads/Switches will be quoted in basis points dependent in multiples of the increments of

the underlying Outrights

Last Trading Day

o Spot Starting

 Close of business on Trade Date.

o Forward Starting

 Close of business three business days prior to the Effective Date of the

swap.

83
Clearing

o Contracts are elibigle to be cleared at LCH. Clearnet and ASX. Contracts in certain

currencies, as indicated by the Facility, are eligible to be cleared at Eurex. Please see

clearable contract definitions at http://www.lchclearnet.com/ and,

http://www.asx.com.au/services/clearing/asx-clear-futures.htm and

https://www.eurexclearing.com/clearing-en/resources/rules-and-regulations.

o Eurex does not provide express or implied warranties or representations to swap

counterparties executing Swaps on the Facility’s platform relating to any of the services or

facilities provided by the Facility, including but not limited to, the warranties of merchantability

and fitness for a particular purpose or use. Eurex shall not have any liability or obligation to

any swap counterparty using the Facility’s platform.

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Rule 802(4) — Non Deliverable Swaps

An ND IRS trade has many trade terms. For example, notional amount, fixed interest rate, floating rate,

reference rate, holiday convention, etc. The deal is agreed on the basis that net settlement will be made

in USD, or another fully convertible currency, to reflect any differential between the agreed fixed rate and

the actual floating rate on the settlement dates. ND IRS are quoted as Offer/Bid. For ND IRS the fixed

leg is quoted, hence it is Fixed Income Swap.

ND IRS

o An agreement between two parties (known as counterparties) where one stream of future

interest payments is exchanged for another based on a specified principal amount. Interest

rate swaps often exchange a fixed payment for a floating payment that is linked to an interest

rate (most often the LIBOR). The interest rate cash flows are net settled in a major currency

on fixing date. A company will typically use interest rate swaps to limit or manage exposure

to fluctuations in interest rates, or to obtain a marginally lower interest rate than it would have

been able to get without the swap.

o Interest rate swaps are simply the exchange of one set of cash flows (based on interest rate

specifications) for another. Because they trade OTC, they are really just contracts set up

between two or more parties, and thus can be customized in any number of ways.

Currencies

MYR

Specifications

Trading Conventions

o Buyer (Payer) pays fixed interest rate and receives floating interest rate.

o Seller (Receiver) receives fixed interest rate and pays floating interest rate.

Swap Leg Conventions

o The terms of Non Deliverable Swaps are based on a number of combinations of the criteria

below.

 Fixed Leg

• Payment Frequency

o Monthly, Quarterly, Semi-Annually, or Annually

• Day Count Convention

o Actual/360, actual/365, 360/360, 30/360, 30E/360,

Actual Fixed/365, actual /366, actual / actual

• Holiday Calendar

o Applied in accordance for the country currency denoted

for the instrument

• Business Day Convention

o Modified following with adjustment to period end dates.

Business days in this convention must be valid business

days for the countries denoted by the currency. If not, it

will be the next day that is a business day on both

calendars.

• Fixed Rate

o The traded interest rate yield or basis points on Trade

Date

 Floating Leg

• Reset Frequency

o Monthly or Quarterly

• Day Count Convention

85
o Actual/360, actual/365, 360/360, 30/360, 30E/360,

Actual Fixed/365, actual /366, actual / actual

• Holiday Calendar

o Applied in accordance for the country currency denoted

for the instrument

• Business Day Convention

o Modified Following with adjustment to period end dates.

Business days in this convention must be valid business

days for the countries denoted by the currency. If not, it

will be the next day that is a business day on both

calendars.

• Fixed Rate

o The traded interest rate yield or basis points on Trade

Date

• Interest Rate Benchmark

 KLIBOR

Effective Date

o The first date from which fixed and floating interest amounts accrue. It is also referred to as

the Start Date or the Value Date. The Effective Date of the Swap must be a business day

subject to the appropriate Business Day Convention.

Trade Start Type

o Spot Starting.

 A swap whose Effective Date is 2 business days from the Trade Date

(T+2).

o Forward Starting

 A swap whose Effective Date is anything after the Effective Date for a

Spot Starting swap.

Maturity Date

o The final date until which Fixed and Floating amounts accrue

Tenor

o The duration of time from the Effective Date to the Maturity Date. Tenors of any duration,

greater than 0 months to 3 months.

Roll Day Convention

o The date used for determining all fixed and floating Reset Dates. Roll Days define the

beginning and end of Fixed and Floating interest accrual periods.

 For On-the-Run Contracts, the Roll Day is the same date of the month

as the Effective Date.

 For Off-the-Run Contracts, it can be any date of the month, subject to the

provisions of the Business Day Convention

o Roll Day marks the start of a new interest accrual period, and is the date on which a Reset

Rate takes effect.

Trade Types

o The Platform may support the following trade types:

 Outrights

• An Outright swap is where one party is the payer of the fixed rate

and receiver of the floating rate and the other party is the

receiver of the fixed fate and payer of the floating rate.

Clearing

o Non Deliverable Swaps traded on NEX SEF are not cleared.

86
Rule 802(5) — Inflation Swaps

The buyer of an inflation swap pays a fixed interest rate and receives the agreed floating inflation rate:

• Tenor

• Fixed Rate (Traded Price)

• Inflation Rate benchmark – this can be any inflation benchmark that settles in the listed

currencies

• Optional forward start

Currencies

GBP

EUR

USD

Specifications

Payment Frequency

o The payment frequency will be an agreed, valid, calendar integer

Day Count Convention

o ACT/360

o ACT/365

o 360/360

o 30/360

o 30E/360

o AFI/365

o ACT/361

o ACT/ACT

Holiday Calendar Conventions

o NEW YORK

o LONDON

o EUROPE

Business Day Conventions

o Modified

o Modified Following

Effective Date

o The effective date will be a valid business day

Maturity Date

o Effective date + tenor of swap

Tenors

o 0 – 10 years inclusive

Roll Dates

o 0 – 10 years inclusive

Fixing Dates

o The fixing date(s) will be a valid calendar day

Settlement

o Are cash settled in line with the payment frequency

Contract Size

o Minimum and Incremental Sizes

 The minimum size for an instrument in this category is 1,000 units of the

currency of the underlying index of the trade

 There is no minimum incremental size for instruments in this category

Quoting Convention

o Inflation Swaps are all quoted in basis points

Benchmark Interest Rates

o Inflation Swaps will be limited to all or a subset of the following underlying benchmark

indices:

87
EUR-HICPXT-Telerate

GBP-UKRPI-BBA

GBP-USCPI-BBA

EUR-FRCPI-Telerate

Minimum and Incremental Price

o There is no minimum price

o There is no minimum incremental price

Clearing

o Contracts are elibigle to be cleared at LCH. Clearnet. Please see clearable contract

definitions at http://www.lchclearnet.com/.

88
89

The following information has been submitted to the Commission subject to a request for confidential

treatment in accordance with Commission Regulation 145.9 in order to prevent disclosure of NEX SEF's

confidential commercial information upon a request under the Freedom of Information Act. NEX SEF

requests that the recipient limit distribution to those individuals with a need to know.

ACTIVE 213366248
Summary report:

Litéra® Change-Pro TDC 10.1.0.300 Document comparison done on

4/17/2018 1:49:49 PM

Style name: Sidley Default

Intelligent Table Comparison: Active

Original DMS: iw://SIDLEYDMS/ACTIVE/213366248/55

Description: NEX SEF - Exhibit M-1 - Facility Rulebook (v1.7) (Filed 12-15-

17)

Modified DMS: iw://SIDLEYDMS/ACTIVE/213366248/61

Description: NEX SEF - Exhibit M-1 - Facility Rulebook (v1.8) (Filed 4-17-18)

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