NEX SEF LIMITED

Facility Rulebook

Version 3.98

March August 2023

© Copyright 2023 NEX SEF Limited 

All Rights Reserved.
 

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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; Access Denial Actions................................. 27

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

Rule 207 Customers ............................................................................................................................... 31

Rule 208 Recordkeeping ........................................................................................................................ 31

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 ............................................................................................................ 41

Rule 304 Permitted Transactions............................................................................................................ 41

Rule 305 [Reserved] ............................................................................................................................... 42

Rule 306 [Reserved] ............................................................................................................................... 42

Rule 307 Acceptable Bids and Offers..................................................................................................... 42

Rule 308 [Reserved] ............................................................................................................................... 42
 

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Rule 309 Reporting and Data Collection................................................................................................. 42

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 ...................................................................................................................... 46

Rule 315 NEX SEF Authority over Transactions .................................................................................... 46

Rule 316 Reporting Counterparty ........................................................................................................... 52

Rule 317 Direct Electronic Access.......................................................................................................... 53

Rule 318 Post-Trade Anonymity ............................................................................................................. 53

CHAPTER 4 TRADING STANDARDS ....................................................................................................... 54

Rule 401 Fraudulent Statements and Acts ............................................................................................. 54

Rule 402 Abusive Trading Practices....................................................................................................... 54

Rule 403 Good Faith Bids/Offers ............................................................................................................ 54

Rule 404 Pre-Execution Discussions and Pre-Arranged Transactions .................................................. 54

Rule 405 Manipulation and Price Distortion............................................................................................ 54

Rule 406 Disruptive Trading Practices.................................................................................................... 55

Rule 407 General Offences .................................................................................................................... 55

Rule 408 Position Limits and Position Accountability ............................................................................. 56

CHAPTER 5 RULE ENFORCEMENT ........................................................................................................ 58

Rule 501 Jurisdiction............................................................................................................................... 58

Rule 502 Facility Market Regulation Staff Powers and Duties ............................................................... 58

Rule 503 Notice of Charges.................................................................................................................... 59

Rule 504 Answer; Request for Hearing; Failure to Answer or Deny Charges........................................ 60

Rule 505 Selection of Hearing Panel...................................................................................................... 60

Rule 506 Hearing Panel Authority........................................................................................................... 61

Rule 507 Challenge to Members of the Hearing Panel for a Contested Hearing................................... 61

Rule 508 Settlement Prior to Commencement of Hearing.................................................................. 6162

Rule 509 Pre-Hearing and Hearing Procedures ................................................................................. 6263

Rule 510 Written Decision of Hearing Panel ...................................................................................... 6566

Rule 511 Hearing Panel Sanctions ......................................................................................................... 66

Rule 512 Liability for Expenses............................................................................................................... 67

Rule 513 Conflicts of Interest.............................................................................................................. 6768

Rule 514 Summary Suspension ......................................................................................................... 6768

Rule 515 Extension of Time Limits ......................................................................................................... 69

Rule 516 Summary Fines ....................................................................................................................... 69

Rule 517 Effect of Suspension............................................................................................................ 7071

Rule 518 Payments of Disciplinary Fines, Disgorgement Orders and Restitution ................................. 71
 

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CHAPTER 6 CONTRACTS TO BE TRADED............................................................................................. 72

Rule 601 Listing Procedures................................................................................................................... 72

Rule 602 Swaps Not Readily Susceptible to Manipulation..................................................................... 72

CHAPTER 7 GOVERNING LAW, JURISDICTION AND DISPUTE RESOLUTION................................... 73

Rule 701 Choice of Law.......................................................................................................................... 73

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

and Customers............................................................................................................. 73

Rule 703 Complaints to and Disputes With NEX SEF............................................................................ 73

CHAPTER 8 CONTRACT SPECIFICATIONS............................................................................................ 74

Rule 801 NDF Product Descriptions ....................................................................................................... 74

Rule 802 Interest Rate Swaps Products Descriptions ............................................................................ 77

Rule 803 FX Options Products Descriptions .......................................................................................... 99

CHAPTER 9 SYSTEM PROTOCOLS ...................................................................................................... 102

Rule 901 NEX SEF NDF System Protocol............................................................................................ 102

Rule 902 Shield System Protocol ......................................................................................................... 125

Rule 903 Pre-Arranged Crossing System Protocol .............................................................................. 129
 

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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.

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. Subject 

to Rule 318, such verification 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 504.

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 UK law including any provisions of EU law retained in UK law (including, without limitation, MiFID II, 

MiFIR and CRD IV), MAR as retained in UK law under the EUWA, the Act and Commission Regulations.

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. 

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.

Block Trade has the meaning given to it under Part 43 of the Commission Regulations. 

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.
 

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Business Conduct Committee means a designated CME Group body that has been authorized to 

investigate, order sanctions, and determine settlements on the market conduct activity of the participants 

on CME Group owned or controlled designated contract markets, DCOs or SEFs.

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

Chairman of the Board means the chairman of the Board.

Chief Compliance Officer or CCO 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 swap that is intended to be cleared. 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 Mercantile Exchange Inc.

CME Group means CME Group Inc. 

Commission or CFTC 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 SMF16 together.

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.
 

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CRD IV means the implementing legislation for Directive 2013/36/EU as retained in UK law under the 

EUWA.

CRR means Regulation (EU) No. 575/2013 as retained in UK law under the EUWA.

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 authorised in the European Union. 

Customer means any person who uses an FCM or Introducing Broker as agent in connection with trading 

in any Swap on NEX SEF.

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 as defined under the FCA Rules

Director means a member of the Board.

Disorderly Trading Conditions means a situation where the maintenance of fair, orderly and transparent 

execution of trades is compromised.

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

EBS means EBS Dealing Resources Inc., an affiliate of the Facility.

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. 

Eligible Counterparty has the meaning given in the FCA Handbook.

Eligible Contract Participant (“ECP”) has the meaning given in the Act. 

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

EUWA means the European Union (Withdrawal) Act 2018

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).
 

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

Financial Entity has the meaning set forth in the Act.

Futures Commission Merchant or FCM shall have the meaning set forth in the Act.

Globex Firm ID (“GFID”) means the Trading Floor codes for each Participant on Globex.

Globex® means CME Globex, the electronic trading platform provided under licence to NEX SEF.

Globex User ID (“GUS”) means the identifier for EBS participants (persons or algo operators) authorized to 

manage EBS GFID market participant details and submit trades for the GFID and entity.

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 505.

Hearing Panel shall have the meaning set forth in Rule 505 and the Governance Policy. 

Hearing Panel Chairman shall have the meaning set forth in Rule 505.

Hearing Record shall have the meaning set forth in Rule 509Rule Rule 509.

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 (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", as set forth in Annex 1. 

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. 
 

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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 as retained in UK law under the EUWA.

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 NEX SEF's Regulatory Services 

Provider.

MiFID II means the implementing legislation for Directive 2014/65/EU as retained in UK law under the 

EUWA.

MiFIR means Regulation (EU) No.600/2014 as retained in UK law under the EUWA, and amended under 

the Markets in Financial Instruments (Amendment) (EU Exit) Regulations 2018.

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.

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

Notice of Charges shall have the meaning set forth in Rule 503Rule 503.

Operational Parameters Annex or (“OPA”) means the NEX SEF Operational Parameters Annex, setting 

out operational parameters that apply to trading on the Facility, as amended from time to time. The 

Operational Parameters Annex forms part of the Rulebook. 

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.
 

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

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.

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.
 

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Regulatory Oversight Committee means the committee of the Board tasked with oversight of NEX SEF’s 

regulatory responsibilities. . 

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. NEX SEF does not currently offer RFQ functionality. CME Globex offers an RFQ 

feature for Central Limit Order Book trading that is unrelated to NEX SEF and the RFQ as defined by the 

Act

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 503(a).

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).

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

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

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

SMF16 means the person approved by the FCA to perform the SMF16 (Compliance Oversight Function) 

for NEX SEF, or one duly authorised to act with the authority of the SMF16.

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.
 

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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 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).

United States of America

NEX SEF is registered as a SEF with the Commission.

Compliance Oversight

The Chief Compliance Officer and the SMF16, 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 SMF16. To the extent any of the activities concern both the Commission and 

FCA, the Chief Compliance Officer and the SMF16 will cooperate to ensure compliance with the respective 

regulations. 
 

10

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.

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

NOT LIMITED TO WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR 
 

11

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

(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 
 

12

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.

(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 
 

13

undue concentration of positions; any circumstances which may significantly 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; a significant price 

movement in a Contract or, where relevant its underlying; 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 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;
 

14

(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 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 
 

15

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.

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;

(b) suspend or remove from trading any Contract, immediately on any market event, in relation 

to:

(1) that Contract; or

(2) an underlying that the Contract references (including but not limited to price 

volatility, pricing reliability, corporate event or regulatory issue),

which would, in the Board’s sole view, mean that the Contract may be incosinstent with or could 

jeopardize orderly trading; and

(c) 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.

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 
 

16

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.

(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.
 

17

(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 Globex), 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 

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 
 

18

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.
 

19

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), non-assignable 

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

Pre-Arranged Crosses on behalf of Customers; or

(ii) 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, non-discriminatory 

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.

(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 ECP upon initial 

application for Trading Privileges.
 

20

(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: 

(1) be of sufficiently good repute; 

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

(3) have adequate organizational arrangements; and 
 

21

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

Rule 201(b)(1). 

(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 ECP and as an Eligible Counterparty.

(3) A Trading Privilege Holder must periodically verify its Customers’ ECP status and 

pursuant to Rule 210(f) notify NEX SEF of any changes immediately. 

(4) 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 by one or more 

Authorised Trading Firms.

(ii) Each Trading Privilege Holder which is an Intermediary trading on behalf 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 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. 
 

22

(2) Authorised Trading Firms.

(i) Each Authorised Trading Firm which is an Intermediary trading on behalf 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 shall obtain a signed written or electronic 

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

Authorised Trading Firms qualifies as an ECP and provide such 

representation to NEX SEF. Additionally, each Trading Privilege Holder 

shall at least on an annual basis submit a signed written or electronic 

representation that each of its Authorised Trading Firms continues to qualify 

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

qualifies as an ECP.

(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 ECP, 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. 

(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.
 

23

(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.

(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 ECP 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, 
 

24

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 ECP

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

(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 Risk-Based 

Limits, the Trading Privilege Holder or Authorised Trading Firm may not submit such Bid/Offer or 

Pre-Arranged Cross to the Facility.
 

25

(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 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 
 

26

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 Risk-Based 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:

(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.
 

27

(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 of that Participant; 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 may, on a periodic basis, review Affirmations by 

Participants and Customers for compliance with this Rule 204(i). Notwithstanding such 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.

(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 the OPA 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 
 

28

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 or its 

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, or Participant, 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, or Participant, 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, or Participant, 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 Trading Firm, or Participant 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 or Participant, 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, or Participant, 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 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 or its 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, or Participant 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, or Participant;
 

29

(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, or Participant 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. 

(2) NEX SEF shall also provide the written notice to the NFA through the NFA's 

Background Affiliation Status Information Center ("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 Error! Reference source not found.Rule 

513(b).

(4) If NEX SEF denies Trading Privileges or 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 may perform periodic assessments of the compliance by each Participant with 

these Rules. Where necessary, NEX SEF shall undertake additional assessments of compliance by a 

Participant. 

(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 
 

30

revoke or suspend the Participant or its 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 or its 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 (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: 
 

31

(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 OPA. 

NEX SEF shall deliver a report of the results of the conformance testing to the actual or prospective 

Participant.

(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 the OPA 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) 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 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.
 

32

(b) Each Participant shall keep records, which shall include but not be limited to front-end audit 

trail data for order routing systems, including records of all order entries, and order modifications, order 

cancellations submitted to the Facility and trade executions on the Facility or subject to the Rules of the 

Facility.

(c) Each Participant 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 and the Rules of the 

Facility 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 the authorised representatives of the 

foregoing, upon request. 

(d) The following information must be provided to NEX SEF by each Participant prior to a 

Bid/Offer or Pre-Arranged Cross being accepted by 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;

• 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;
 

33

• Any information required by the applicable System Protocol; and

• 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 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 
 

34

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 Participant 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, bankruptcy, 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;

(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 ECP 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 ECP pursuant to Rule 202(e).
 

35

(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
 

36

(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;

(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 
 

37

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.
 

38

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 and Notice to Facility. 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.

(5) Cooperation with the Facility. In the event the Facility is investigating the trading 

activity of a Trading Privilege Holder to which the Prime Broker provided the Prime Broker 

Representation, the Prime Broker shall cooperate promptly and fully with NEX SEF, its agents, its 

Regulatory Services Provider, and/or a Regulatory Agency in any investigation, call for information, 

inquiry, audit, examination, or proceeding, including by providing verbal or other information to NEX 

SEF in connection with the trading activity under review. Such cooperation shall include a duty to 

provide supplemental verbal or other information if the Prime Broker learns that a previous 

response is incomplete or incorrect in any material respect. 
 

39

(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 

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. 
 

40

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 Shortcodes

(1) Each Authorised Trader and each Trading Privilege Holder that is an individual will 

be required to obtain a user identification (“ID”) and shortcode, pursuant to the process specified 

by NEX SEF This identifying information is required to access, enter orders, and execute 

transactions on the Facility.

(2) Each ID shall be registered with NEX SEF pursuant to the process outlined in the 

applicable MRAN and represent an Authorised Trader or a Trading Privilege Holder that is:

(i) a natural person with access to the Order Book through either (A) NEX 

SEF’s web-based portal or (B) a NEX SEF workstation; or

(ii) an ATS Operator of an Automated Trading System accessing with access 

to the Order Book through an API.

(3) Each ID issued and registered:

(i) for a natural person with access to the 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 orders entered by 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) 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. 

(5) Except as otherwise provided in Rule 102: 

(i) 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, 
 

41

authorised or not, using its ID and password or the ID and/or password of 

any of its Authorised Traders; and

(ii) 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) 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. Separately, NEX SEF 

does not currently offer RFQ functionality. 

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 not Intermediated Transactions

must be submitted to the Trading Platform by the seller, unless otherwise agreed to by the parties. For 

Intermediated Transactions, only Participants that are bulk risk mitigation services may submit PreArranged Crosses to the Trading Platform, and in such cases, 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). Participants agree that, to the extent a transaction submitted to the Trading Platform in 

connection with bulk risk mitigation services could qualify as a Block Trade, they do not elect to treat such 

transaction as a Block Trade for purposes of reporting under Part 43 of the Commission Regulations.

(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 
 

42

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.

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) In furtherance of Applicable Law, NEX SEF will conduct reviews of compliance by all 

Participants that are responsible for, or in control of, the creation of audit trail records with its audit trail and 

recordkeeping requirements. The audit trail reviews may include analysis 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.
 

43

(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. 

(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 transaction identifier.

(3) All data required by Part 43 of the Commission Regulations and all 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 

cancellation 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) Each Participant shall provide NEX SEF post-trade allocation information to the 

SEF upon the request of NEX SEF.

(2) During the course of any trade practice surveillance or market surveillance 

investigation into any trading activity involving post-trade allocations, and pursuant CFTC NAL 20-

36, 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.

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. Any portion of a Bid Offer that has 
 

44

been executed may only be modified or canceled pursuant to Rule 315. 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 in the OPA 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 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 OPA.

(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;

(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 
 

45

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. 

(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. Non-discretionary 
 

46

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.

(d) Intermediated Transactions may be canceled for clerical or operations errors pursuant to 

Rule 315(k). 

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), (i), (j) or (k). 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).

(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 8 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.

(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.
 

47

(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)(1) and (d)(2), parties to a transaction that is cancelled or 

that has had its price adjusted may mutually agree to a cash adjustment.

(4) Any proposed cancellation or adjustment made pursuant to sections (d)(1), (d)(2) 

or (d)(3) 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; 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.
 

48

(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 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 or Participant made a clerical or operating error or 

omission that caused a transaction to be rejected from clearing and void 

ab initio; or

(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 cancellation, 

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 are limited to:
 

49

(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, or a 

Participant (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,or a Participant 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 Participantor Clearing Firm 

believes that a transaction qualifies as a Rejected Transaction or a Rejected Leg, such Participant 

or Clearing Firm shall promptly 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 

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 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-by-case 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 preexecution 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 
 

50

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, or Clearing Firm believes 

that a Cleared Contract is carried on the books of a DCO as a result of an Error, such Participant, 

or Clearing Firm shall promptly 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 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 involved in such transaction, as 

necessary, and the relevant Participant may agree to execute a 

Cleared Contract that offsets the Erroneously Cleared 
 

51

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.

(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)(3).

(4) 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.

(j) 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.

(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(j), 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.

(k) Cancellation of Intermediated Transactions for Errors. Transactions subject to this Rule 

315(k) are those Pre-Arranged Crosses that are not submitted in connection with a bulk risk mitigation 

service and are not Cleared Contracts. The errors that qualify a transaction for cancellation under this rule

are limited to clerical or operational errors including errors in Customer static data, obvious errors in trade 

terms, such as tenor or price, and expressly exclude the trade cancellations and price adjustments for the 

Errors discussed in Rule 315 (h) and (i) . 

(1) An Intermediary may request that the Facility cancel any Intermediated 

Transaction the same business day of the execution of such transaction if such transaction was 

executed with errors described in this Rule 315(k).
 

52

(i) The Intermediary shall communicate the cancellation directly to the Facility 

and indicate the Customers involved in the transaction and which error is 

driving the request; and 

(ii) Immediately following cancellation of the transaction by the Facility, the 

Intermediary shall submit a corrected Pre-Arranged Cross. The Facility 

shall report the cancellation of the old transaction and the execution of the 

new transaction to the SDR using the execution time of the original 

transaction, as well as any other fields necessary to show that the 

cancellation and new Pre-Arranged Cross act to amend the transaction 

executed with an error; or 

(iii) As an alternative to Rule 315(k)(1)(i)-(ii) above, the Intermediary may 

cancel the transaction directly by using API connectivity, provided the trade 

is cancelled the same business day, a corrected Pre-Arranged Cross is 

immediately submitted following such cancellation, and the fields reported 

to the SDR properly reflect that the cancellation and new Pre-Arranged 

Cross act to amend the transaction executed with an error.

(2) For any transaction executed with any errors described in this Rule 315(k) that is 

discovered after the business day on which the transaction was executed, but within 24 hours post 

execution, the Intermediary must submit a request to cancel the transaction to the Facility, which 

the Facility may approve in its discretion. 

(i) The request to the Facility must indicate the errors driving the requested 

cancellation and whether the counterparties to the transaction were notified 

of the request to the Facility. 

(ii) Upon approval by the Facility, the Facility shall cancel the transaction, and 

immediately following cancellation of the transaction by the Facility the 

Intermediary shall submit a new corrected Pre-Arranged Cross to the 

Facility.

(iii) The Facility shall then:

(1) report the cancellation of the transaction and the new Pre-Arranged 

Cross to the SDR using the execution time of the original transaction as 

well as any other fields necessary to show that the cancellation and new 

Pre-Arranged Cross act to amend the transaction executed with an error, 

and

(2) charge the Intermediary $500 USD per each such cancelled 

transaction.

(l) Post-execution amendments to non-Cleared Contracts for reasons other than Errors. 

Nothing in this Rule prohibits Participants from mutually deciding to amend, terminate, assign or novate a 

non-Cleared Contract after execution on NEX SEF. Any such bilateral post-execution amendment, 

termination, assignment, or novation of a non-Cleared Contract that was initially executed on NEX SEF 

must be reported to the same SDR to which NEX SEF reported the original transaction, consistent with 

requirements of CFTC Part 45. Such reporting obligations rest with the reporting counterparty determined 

pursuant to Rule 316.

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 
 

53

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. 

Rule 318 Post-Trade Anonymity

(a) Pursuant to the Commission issuing final rule 37.9(d), neither NEX SEF nor any person 

that is subject to its rules may, directly or indirectly, including through a third-party service provider, disclose 

the identity of a counterparty for swaps that are executed, pre-arranged or pre-negotiated anonymously on 

or pursuant to the rules of NEX SEF and that are intended to be submitted for clearing.

(b) The foregoing prohibition shall not apply to package transactions that include a component 

transaction that is not a swap that is intended to be submitted for clearing. 

(c) The compliance date for this Rule for swaps that are subject to the trade execution 

requirement under section 2(h)(8) of the Act is November 1, 2020. The compliance date for this Rule for 

swaps that are not subject to the trade execution requirement under section 2(h)(8) of the Act is July 5, 

2021. 
 

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CHAPTER 4

TRADING STANDARDS

Rule 401 Fraudulent Statements and Acts

(a) 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 place or accept bids and offers in the same Contract

where the Participant knows or should reasonably know that the purpose of the bid or offer is to avoid taking 

a bonafide market position exposed to market risk (i.e. wash sales). No Participant shall knowingly execute 

or accommodate the execution of such bids and offers directly or indirectly.

(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.

(d) No Participant entering orders on the Facility shall withhold or withdraw from the market 

any order, or any part of an order, for the benefit of any person other than the Participant.

(e) No Participant or Customer shall disclose another person's bid or offer except to a 

designated Facility official or the CFTC, and no Participant or Customer shall solicit or induce another 

person to disclose bid or offer information. No Participant or Customer shall take action or direct another to 

take action based on such non-public information, however acquired. 

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:

(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 
 

55

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) All bids and offers must be entered for the purpose of executing bona fide transactions. 

Additionally, all non-actionable messages must be entered in good faith for legitimate purposes.

(1) No Participant or Customer shall enter or cause to be entered a bid, offer, PreArranged Cross or other message with the intent, at the time of order entry, to cancel or modify the 

bid, offer, Pre-Arranged Cross, or other message before execution or to avoid execution;

(2) No Participant or Customer shall enter or cause to be entered an actionable or 

non-actionable message with internt to mislead other Participants or Customers.

(3) No Participant or Customer shall enter or cause to be entered an actionable or 

non-actionable messgase with intent to overload or delay the sustems of the Facility or other 

Participants or Customer;

(b) No Participant or Customer shall intentionally or recklessly submit or cause to be submitted

an actionable or non-actionable message that has the potential to disrupt the systems of the Facility; 

(c) No Participant or Customer shall enter or cause to be entered an actionable or nonactionale message with intent to disrupt, or with reckless disregard for the adverse impact on, the orderly 

conduct of trading or the fair execution of transactions.

Rule 407 General Offences

It will be an offence for a Participant or Customer to:

(a) to have an interest in, operate or knowingly act on behalf of a bucket-shop, or knowingly 

make any transaction with a bucket-shop;

(b) engage, or attempt to engage, in fraud or bad faith;

(c) engage in conduct of proceedings inconsistent with just and equitable principles of trade;

(d) engage in dishonorable or uncommercial conduct;

(e) create or report a false or ficticious trade;

(f) extort or attempt extortion; 

(g) violate any Rule regarding the conduct or business of a Participant or Customer or any 

agreement made with NEX SEF;
 

56

(h) 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 or to engage ina 

any conduct which tends to impair the dignity or good name of the Facility; 

(i) engage in, or attempt to engage in, the manipulation of prices on the Facility; to intentionally 

or recklessly use or employ, or attempt to use or employ, any manipulative device, scheme, or artifice to 

defraud; or to purchase or sell, or offer to purchase or sell on the Facility for the purpose of upsetting the 

equilibrium of the market or creating a condition in which prices do not or will not reflect fair market values;

(j) make a verbal or written material misstatement to the Board, a committee, or Facility 

employees;

(k) use or disclose, for any purpose other than the performance of an individual's official duties 

as a member of any committee or the Board of Directors, any non-public information obtained by reason of 

participating in any Board of Directors or committee meeting or hearing;

(l) fail to comply with an order of the Board, Facility staff or any hearing committee;

(m) fail to appear before the Board, Facility staff or any investigative or hearing committee at a 

duly convened hearing, scheduled staff interview or in connection with any investigation; 

(n) fail to fully answer all questions or produce all books and records at such hearing or in 

connection with any investigation, or to make false statements; 

(o) fail to produce any books or records requested by duly authorized Facility staff, in the 

format and medium specified in the request, within 10 days after such request is made or such shorter 

period of time as determined by the Market Regulation Department in exigent circumstances; 

(p) use improperly the trading platform of any Designated Contract Market, Derivatives 

Clearing Organization, or Swap Execution Facility owned or controlled by CME Group or permit the 

unauthorized use of such platforms;

(q) to aid or abet the commission of any offense against the Facility or any violation of an 

Facility Rule;

(r) for any party to fail to diligently supervise its employees and agents in the conduct of their business 

relating to the Facility;

(s) 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.
 

57

(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

Rule 501 Jurisdiction

(a) Facility Subject Persons are deemed to know, consent to and be bound by all Facility 

Rules. 

(b) 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.

(c) NEX SEF has contracted Chicago Mercantile Exchange Inc. (“CME”) to act as Regulatory 

Service Provider and to provide certain regulatory services to NEX SEF. NEX SEF retains ultimate decisionmaking authority with respect to any services to be provided by CME. 

(d) 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.

(e) Former Participants shall be subject to continuing jurisdiction of the Facility, including, 

without limitation, the application of Rule 206 and 214 with respect to any conduct that occurred withle while 

a Participant.

Rule 502 Facility Market Regulation Staff Powers and Duties

(a) It shall be the duty of the Compliance Function to enforce Facility Rules. The Compliance 

Function 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, at the time, place and in the manner the Compliance 

Function designates. The Compliance Function shall be authorized to issue charges at Market Regulation 

Staff’s request. The Compliance Function may also delegate such authority to Market Regulation Staff.

(b) The Market Regulation Staff shall conduct investigations of possible Violations, prepare 

written reports respecting such investigations, and furnish such reports to the Compliance Function. In turn, 

the Compliance Function may issue charges for such Violations.

(1) 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. 

(2) Market Regulation Staff is authorized to take recorded interviews. Parties and 

witnesses being interviewed shall have the right to representation, at their own cost, by legal 

counsel or anyone other than a member of any Facility disciplinary committee, a member of the 

Board, a CME or NEX SEF employee, or a Person related to the investigation. The failure to appear 

at a scheduled interview or to answer all of the questions posed during that interview may, in the 

discretion of the Hearing Panel Chair, result in the Person being prohibited from testifying in a 

subsequent hearing on the matter.

(3) Market Regulation Staff shall maintain a file once an investigation is initiated. The 

file shall include any materials in the possession of Market Regulation Staff that are relevant to the 

conduct being investigated.
 

59

(c) The Market Regulation Staff shall escalate instances of potential violations to the 

Compliance Function via an investigation report. Upon receipt of an investigation report, the Compliance 

Function shall promptly review the report and, take one of the following actions:.

(1) Issue charges to the Facility Subject Person alleged to have committed the 

Violation as set forth in Rule 503 if the Compliance Function determines that a reasonable basis 

exists for finding that a Violation may have occurred, and disciplinary action is warranted;

(2) Direct Market Regulation Staff to issue a warning letter to the Facility Subject 

Person if the Compliance Function determines that there may have been a Violation but that no 

disciplinary action is warranted and if the Facility Subject Person had not been issued a warning 

letter for the same violation in the previous 12 months;

(3) Direct Market Regulation Staff to conduct further investigation;

(4) Close the matter administratively

(d) NEX SEF shall have the right with reasonable advance notice (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 Market Regulation Staffthe 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 Notice of Charges

(a) If the Compliance Function issues charges pursuant to Rule 502(c)(1)(ii), the Compliance 

Function shall direct Market Regulation Staff to serve a notice of charges (a "Notice of Charges") on the 

Facility Subject Person alleged to have been responsible for the Violation (the "Respondent"). Such Notice 

of Charges 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 

twenty-one (21) days of service of the Notice of Charges, to a formal hearing on the charges;

(4) that the failure of the Respondent to request a hearing within twenty-one (21) days 

of service of the Notice of Charges, except for good cause shown, shall be deemed a waiver of its 

right to a hearing; and

(5) A Respondent shall have the right to representation, at their own cost, by legal 

counsel or anyone other than a member of any Facility disciplinary committee, a member of the 

Board, a CME or NEX SEF employee, or a Person related to the investigation.

(b) If a Respondent fails to submit a written Answer to the charges pursuant to Rule 504, or 

answers but fails to deny the charges, Market Regulation Staff may serve the respondent with a motion for 

default and a request for sanctions. The motion for default shall request that a Hearing Panel Chair find that 

the respondent is deemed to have admitted the charges, and the request for sanctions shall request that a 
 

60

Hearing Panel impose sanctions on the admitted charges. A copy of the motion for default and request for 

sanctions shall also be filed with the CME Group Legal Department, which serves as counsel to the Hearing 

Panel.

(1) The Respondent shall have twenty-one (21) days from notice to respond to the 

motion for default and request for sanctions. Thereafter, the Respondent will be provided at least 

seven (7) days’ notice of the date of a hearing to consider the motion for default and request for 

sanctions. The Respondent shall have the right to representation, at their own cost, by legal counsel 

or anyone other than a member of any Facility disciplinary committee, a member of the Board, a 

CME or NEX SEF employee, or a Person related to the investigation.

(2) At the hearing, based on the written filings of the parties, except where the Hearing 

Panel Chair determines that oral argument is necessary, the Hearing Panel Chair will first decide if 

the Respondent has failed to answer the charges in accordance with Rule 504, and, if so, the 

Respondent shall be deemed to have admitted the charges. If the Hearing Panel Chair finds that 

the Respondent has admitted the charges, the Respondent will be deemed to have waived his right 

to a hearing on the merits of the charges, the Hearing Panel shall find that the violations alleged in 

the Notice have been committed, and the Hearing Panel will then determine the sanctions, if any, 

to be imposed, after permitting both parties to present arguments and information regarding the 

appropriate nature and amount of any such sanctions.

(3) If the Answer contains both an admission to one or more charges and a denial of 

one or more charges, the Hearing Panel will consider the penalties which may be imposed for the 

admitted charges at the same time that the charges denied by the Respondent are considered.

(4) If the Hearing Panel Chair does not find that the Respondent has failed to answer 

the charges, no further action on the charges will occur at the hearing. 

(5) Decisions on the Motion for Default and the sanctions imposed shall be issued in 

accordance with Rule 510.

Rule 504 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 of Charges and a written request for a hearing on the charges within twenty-one (21) days of 

the date of service of the Notice of Charges. 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 twenty-one (21) days of the Notice of 

Charges shall be deemed an admission of all allegations contained in the Notice of Charges.

(c) The Respondent's failure to expressly deny a particular charge contained in the Notice of 

Charges shall be deemed an admission of such acts, practices or conduct.

(d) The Respondent's failure to request a hearing within twenty-one (21) days of the Notice of 

Charges, absent good cause shown, shall be deemed a waiver of Respondent's right to a hearing.

Rule 505 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 consist of five (5) Panelists. One Panelist shall serve as the chair of the 

Hearing Panel ("Hearing Panel Chairman"). . A quorum of the Hearing Panel shall consist of a majority 

of the Hearing Panel and must include at least the Hearing Panel Chair, one Panelist who is a Facility 

Subject Person, and one Panelist who is not a Facility Subject Person. The Hearing Panel may not include 

any members of the Market Regulation Staff, any person involved in adjudicating any other stage of the 
 

61

same pProceeding, or any person with a history of disciplinary offenses that would be disqualifying under 

CFTC Regulation § 1.63(c). 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, in his or her sole discretion, shall set a date for the hearing 

(the "Hearing Date"). 

(c) For contested hearings, the Hearing Panel Chairman shall notify Compliance, 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.

(d) 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 506 Hearing Panel Authority

(a) The Hearing Panel shall have: 1) jurisdiction over any party subject to the jurisdiction of 

the Facility, including any Participant, with respect to matters relating to business conduct, trading practices, 

sales practices, trading ethics and market manipulations or other actions that threaten the integrity of the 

market; 2) the authority, pursuant to Rule 104, to take emergency actions; 3) the authority to conduct 

hearings, proceedings and appeals on all matters over which it has jurisdiction; 4) the authority to make 

findings on Violations against any Facility Subject Person subject to the jurisdiction of the Facility; and 5) 

the authority to levy sanctions.

(b) All information, records, and documents provided to the Hearing Panel, and all related 

records, materials, deliberation, testimony and documents shall be treated as non-public and confidential 

and shall not be disclosed, except as necessary to further a NEX SEF investigation or as required by 

Applicable Law.

Rule 507 Challenge to Members of the Hearing Panel for a Contested Hearing

Within ten (10) days after service on the Respondent and Market Regulation Staff of notice of the Hearing 

Date and names of the members of the Hearing Panel, the Respondent or Market Regulation Staff may 

challenge, in writing submitted to the Hearing Panel Chair, the inclusion of any Panelist for cause, including 

without limitation, if the member has a direct financial, personal or other interest in the matter under 

consideration. The Hearing Panel Chair may then excuse such Panelist and direct that an alternate Panelist

be appointed. In the sole discretion of the Hearing Panel Chair, the hearing may be conducted with less 

than a full Hearing Panel provided a quorum exists. 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 Settlement Prior to Commencement of Hearing

(a) Prior to the commencement of the Hearing, the Hearing Panel may consider a written offer 

of settlement from the Respondent, whereby the Respondent, without either admitting or denying any 

Violations, may agree to any of the actions listed in Rule 511.

(b) The Respondent must consent to entry of findings by the Hearing Panel regarding the 

conduct and Rule violations at issue, to the penalty to be imposed, and to the effective date of the penalty.

(c) The Respondent may submit the offer only if Market Regulation Staff supports it. The offer 

must be accompanied by a written supporting statement from Market Regulation Staff to be considered by 

the Hearing Panel.

(d) The Hearing Panel Chair shall notify Compliance, Market Regulation Staff, and the 

Respondent of the names of the individuals originally appointed to the Hearing Panel to consider 

respondent’s settlement offer at least seven (7) days in advance of the originally scheduled Hearing Date. 
 

62

Parties to the hearing may request the Hearing Panel Chair to strike any Panelist for good cause shown. 

The Hearing Panel Chair may then excuse such Panelist and direct that an alternate Panelist be appointed. 

In the sole discretion of the Hearing Panel Chair, the hearing may be conducted with less than a full Hearing 

Panel provided a quorum exists.

(e) In the event any Panelist is added, the Hearing Panel Chair shall provide all parties 

reasonable notice regarding the new Panelist. The addition of a new Panelist will not delay the scheduled 

hearing date unless the Panelist is added less than five (5) days in advance of the scheduled hearing and 

a party can demonstrate good cause for the requested delay.

(f) 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. 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. The 

decision shall be final on the date it is signed by the Hearing Panel Chair, and unless otherwise ordered by 

the Panel, it shall become effective two (2) business days after it becomes final.

(g) If the Panel rejects an offer of settlement, the respondent will be notified of the rejection 

and it will be deemed withdrawn.

(h) The Respondent may withdraw an offer of settlement at any time prior to the start of the 

Hearing before 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. No statements 

made or documents exchanged by the parties solely in the context of a withdrawn or rejected offer of 

settlement or during any settlement negotiations shall be admissible in any contested hearing.

(i) Any subsequent offers of settlement shall be heard by the same Hearing Panel; however, 

alternate Panelists may be appointed in the event of scheduling conflicts. Any contested hearing following 

an offer of settlement not accepted by the Hearing Panel will be heard by a new Hearing Panel.

(j) In submitting an offer of settlement, the Respondent waives his right to a contested hearing 

and to appeal the Hearing Panel’s decision if the offer is accepted; the Respondent also waives any claim 

of bias or pre-judgement on the part of the Hearing Panel.

Rule 509 Pre-Hearing and 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, the Respondent will have the opportunity to contest a charge in

a hearing in accordance with the procedures of this Rule.

(1) Any party to a contested heaing may, following the filing of an Answer to the 

charges, request the appointment of a Hearing Panel Chair prior to the hearing for the purpose of 

resolving pre-trial disputes. The matters that may be raised before the Hearing Panel Chairn

include, without limitation:

(i) sScope and timing of fact discovery;

(ii) scope and timing of expert discovery;

(iii) allocation of discovery costs;

(iv) use and disclosure of demonstratives;
 

63

(v) requests to alter timing requirements set forth in these Rules; or

(vi) scheduling of the contested hearing.

(2) The Hearing Panel Chair may hold a pre-trial conference to address these issues 

or may, in his discretion, resolve them on written submissions by the parties.

(3) The Hearing Panel Chair shall have the authority to issue non-monetary sanctions 

against any party or legal counsel or other representative who fails to comply with an order of the 

Chair or who engages in vexatious, frivolous, or bad faith conduct. Such sanctions may include 

drawing adverse inferences or excluding legal argument, evidence or other submissions. Sanctions 

may not include entry of a default judgment. The Hearing Panel Chair must allow both parties to 

make written submissions on the issue prior to imposing any sanction.

(4) The Hearing Panel shall have the authority to decide all procedural and 

evidentiary matters and all pre-hearing motions, and the Hearing Panel Chair’s decision shall be 

final. 

(5) No motions to dismiss any or all of the charges or any other dispositive motion 

may be filed.

(6) Any pre-hearing motion must be submitted in writing to the parties and Hearing 

Panel counsel at least twenty-one (21) days in advance of the scheduled hearing. The opposing 

party shall submit a response, if any, within seven (7) days of receipt of any pre-hearing motion. 

No reply papers are permitted. The Hearing Panel Chair, in his sole discretion, may hold oral 

argument on any motion or may decide any motion on the written submissions of the parties.

(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 Hearing Panel or the Hearing Panel Chair shall have the power to compel any 

party subject to its jurisdiction to attend, testify, and testify, and/or produce evidence in connection 

with the hearing.

(3) The prosecution shall be conducted by Market Regulation Staff.

(4) The Respondent shall be allowed to appear at the hearing, and to be represented 

by legal counsel or any other representative of its choosing other than a member of any Facility 

disciplinary committee, a member of the Board, an employee or NEX SEF or CME or a Person 

related to the investigation and, either personally or through such representative, to present 

witnesses and documentary evidence and to cross-examine witnesses.

(5) 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, at least twenty-eight (28) days prior to the 

Hearing Date or as the Hearing Panel may reasonably specify. 

(i) To the extent expert witnesses are expected to be called by either party, 

such party shall provide to the other, 28 days prior to the date of the hearing, 

a summary of the expert’s opinions to be offered at the hearing and the 

basis and/or methodology underlying such opinions. In addition, the 

expert’s credentials (e.g., a curriculum vitae) and all documents or other 

materials on which the expert relied in forming his opinions shall be 
 

64

produced to the other party at the same time. For purposes of this provision, 

Market Regulation Staff or other NEX SEF or CME employee shall not be 

considered experts. The Panel may decline to consider any expert 

testimony beyond the scope of the submitted summary

(ii) 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, 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 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.

(iii) Market Regulation Staff is not required to produce or obtain any documents 

that are not in its possession. A Respondent who seeks documents that are 

not in the possession of Market Regulation Staff may request the 

documents from the custodian of such documents. Upon a showing of good 

cause, the Respondent may petition the Hearing Panel Chair, in writing, for 

an order compelling the production of documents by a custodian, provided 

that the custodian is subject to the jurisdiction of the Facility, the custodian 

has refused voluntarily to provide the documents and the documents are 

relevant to the charges. Market Regulation Staff or the custodian may 

object, in whole or in part, to any such petition.

(6) 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 appearance 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.

(i) The hearing may proceed in the absence of a Respondent who, after due 

notice, fails to appear. However, the failure to appear is not a default if the 

Respondent has filed a written Answer denying the charges issued. 

Accordingly, Market Regulation Staff still bears the burden of proof and 

must present evidence to meet that burden.

(7) Formal rules of evidence shall not apply. The parties may offer such evidence as 

is relevant to the charges at issue. The Hearing Panel Chair shall determine the admissibility of 

evidence offered and may exclude evidence that he deems irrelevant or cumulative. The Hearing 

Panel Chair has the discretion to vary the structure and presentation of evidence to make the 

hearing as efficient as possible. The parties may submit stipulated facts in order to make the 

hearing more efficient.

(8) 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.

(9) Ex parte contacts by any of the parties with members of the Hearing Panel shall 

not be permitted.
 

65

(10) A recording, or other substantially verbatim record of the hearing, shall be made 

by Market Regulation Staff and become part of the record of the proceeding. If a respondent 

requests a transcript, he shall be solely responsible for the cost of producing the transcript. No 

other means of recording the proceedings will be permitted absent written agreement of the parties 

or pursuant to an order of the Hearing Panel Chair. 

(11) All testimony and documents produced in connection with a disciplinary hearing, 

including but not limited to the Notice, the Answer, and any stenographic transcript of the hearing, 

shall be deemed non-public and confidential and shall not be disclosed except in connection with 

proceedings resulting from that hearing or as required by law. All these documents 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) In a separate sanctioning phase, which shall proceed immediately upon the 

conclusion of the evidence and determination of the Hearing Panel absent any exceptional 

circumstances as determined by the Hearing Panel Chair, the Hearing Panel must allow both 

parties to present arguments and information regarding the appropriate nature and amount of a 

sanction prior to determining such sanction.

(14) 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, 

any sanctions must include full counterparty restitution, except where the amount of restitution or 

to whom it should be provided cannot be reasonably determined.

(15) A Respondent that is found not guilty shall not again be charged with or tried for 

the same underlying conduct.

(16) Hearing Panel decisions shall be final on the date it is signed by the Hearing Panel 

Chair. The decision shall become the final decision of the NEX SEF. 

Rule 510 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 and Market Regulation Staff within thirty (30) days of such 

decision. 

(b) The written decision shall include:

(1) the name of the Respondent;

(2) the Notice of Charges or a summary of the charges alleged in the Notice of 

Charges;

(3) the Answer, if any, or a summary of the Answer;

(4) a brief summary of the evidence produced at the hearing or, where appropriate, 

incorporation by reference of the investigation report;
 

66

(5) a statement of the findings and reasoned conclusions of the Hearing Panel with 

respect to each charge, including the specific Rules which the Respondent is found to have 

violated;

(6) a declaration of any penalty imposed and the effective date of such penalty; and

(7) a statement of the availability, if any, of an appeal of the decision within the Facility 

or to the Commodity Futures Trading Commission.

(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 a summary of the written decision to the NFA through 

BASIC. 

(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 510Rule 510(b).

Rule 511 Hearing Panel Sanctions

(a) If the Hearing Panel finds that a party, including a Participant, has violated a Rule, the 

Hearing Panel may take one or more of the following actions:

(1) Order the party to cease and desist from the conduct found to be in violation of 

these Rules or from conduct which would violate the rules of the Facility, or the Commodity 

Exchange Act;

(2) Order a party to liquidate such portion of the open contracts as the Panel deems 

appropriate to ensure the integrity of contracts listed on the Facility or to ensure an orderly and 

liquid market;

(3) Restrict the ability of the party to have a business affiliation with, be employed by, 

or have a financial or beneficial interest in a Participant;

(4) Restrict, suspend, or terminate the party’s access to the Facility or right to 

supervise the entry of any orders by others on the Facility;

(5) Restrict the party’s ability to trade, place, enter, accept, or solicit orders in any or 

all products of the Facility;

(6) Suspend any or all of the Participant privileges as a Trading Privilege Holder as 

defined in Rules 105 and 514;

(7) Expel the Participant from membership in the Facility;

(8) Impose a fine upon the party not to exceed $5,000,000 per violation;

(9) Order a party to disgorge any monetary benefit resulting from a violation of a 

Facility Rule whether by that party or another party. For purposes of this provision, benefit includes, 

without limitation, profit, whether realized or unrealized, and avoided losses;

(10) Prescribe limitations on positions of the party as may be appropriate, including 

issuing an order that no Clearing Firm accept new positions on behalf of any such party;

(11) Impose advertising restrictions upon the Participant pursuant to these Rules; 
 

67

(12) Order a party to make restitution to the account of anyone damaged by the 

conduct, or to the Clearing Firm who has previously made restitution to the account of such party;

(13) Order such action as is necessary to prevent a threat to the contract or violation 

of the Commodity Exchange Act or Facility Rules; and/or

(14) With the approval of Market Regulation Staff and the party, order any other 

sanction or undertaking to address or deter the underlying violative conduct pursuant to a supported 

offer of settlement.

(b) When determining whether to impose any of the sanctions listed above, the Hearing Panel 

may consider any factors determined by the Hearing Panel to be relevant in the context of a particular case, 

including any of the factors described in the “Sanctioning Guidance to Self-Regulatory Organizations” in 

the CFTC Policy Statement Relating to the Commission’s Authority to Impose Civil Money Penalties and 

Futures Self-Regulatory Organizations’ Authority to Impose Sanctions: Penalty Guidelines (1994).

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 

that may be imposed upon such Respondent by virtue of the Violations found by the Hearing Panel. In 

addition, the Hearing Panel may also levy fees upon legal counsel engaging in vexatious and frivolous 

conduct.

Rule 513 Conflicts of Interest

(a) Abstention Requirements: A member of any charging, or adjudicating committee, or any 

such disciplinary panel, must abstain from participating in any matter where such member:

(1) Is a witness, potential witness, or a party;

(2) Is an employer, employee or co-worker of a witness, potential witness, or a party;

(3) Is associated with a witness, potential witness, or a party through a broker 

association as defined in Facility Rules;

(4) Has any significant personal or business relationship with a witness, potential 

witness, or a party, not including relationships limited to (a) executing futures or options, or 

swaps transactions opposite each other, or (b) clearing futures or options, or swaps 

transactions through the same clearing member; or

(5) Has a familial relationship to a witness, potential witness, or a party.

(b) Disclosure of Relationship:

(1) Prior to the consideration of any matter involving a subject, each member of a 

charging, or adjudicating committee, or any such disciplinary panel, must disclose to the 

appropriate Facility staff whether he or she has one of the relationships listed above.

(2) In its sole discretion, NEX SEF staff shall determine whether any member of the 

committee or panel is required to abstain in any matter.

Rule 514 Summary Suspension

(a) General. Where the Chief Compliance Officer (“CCO”) reasonably believes immediate 

action is necessary to protect the best interest of the market place, after consultation with the Regulatory 
 

68

Oversight Committee (“ROC”), if applicable, may summarily suspend, revoke, limit, condition, restrict, or 

qualify Facility Subject Persons access to the Facility. 

(b) Violations of Specified Rules. The Market Regulation Staff, at the direction of the 

Compliance Function, shall have the authority to impose summary suspensions on Facility Subject Persons

without the need for any formal disciplinary procedures with respect to Violations listed in Table 1 below. 

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 any Rule listed in Table 1 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 Compliance Function or Market Regulation Staff from issuing charges for a Violation of any Rule listed 

in Table 1 in accordance with Rule 502. The following schedule lists the permissible actions that the Market 

Regulation Staff may impose:

Table 1

Rule 

Violation

Action Taken Per each Violation in a Rolling 12-month period

First 

Violation

Second 

Violation

Third 

Violation

Fourth Violation

Rule 

901(j)(7) 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 the Compliance 

Function for consideration of 

charges.

(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. 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, within ten (10) days of receiving this notice, may

request a hearing before the Hearing Panel pursuant to the procedures of Rule 509Rule 510. Such 

a request should be submitted in writing to the Market Regulation Staff and will not stay the CCO’s

decision to deny access.

(3) The Facility Subject Person shall have the right to representation, at their own 

cost, by legal counsel or anyone other than a member of any Facility disciplinary committee, a 

member of the Board, a CME or NEX SEF employee, or a Person related to the investigation.

(4) The Hearing Panel shall conduct a de novo hearing solely on the issue of the 

denial of access in accordance with the procedures in Rule 510.

(5) 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 
 

69

declaration of any action to be taken pursuant to the determination, and the effective date and 

duration of the action.

(6) The Hearing Panel shall not set aside, modify, or amend the summary action taken 

against a Facility Subject Person unless it determines, by a majority vote, that the summary action 

taken was:

(i) Arbitrary, capricious, or an abuse of CCO’s discretion; or

(ii) In excess of the CCO’s authority or jurisdiction.

Rule 515 Extension of Time Limits

Any time limit provided for in Rule 503Rule 504, and Rule 509Rule 509 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, at the 

direction of the Compliance Function, shall have the authority to impose summary fines on Facility Subject 

Persons 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 any Rule listed in Table 1 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 issuing charges for a Violation of any rule listed in this Rule 516 in 

accordance with Rule 502. Table 2 below lists the permissible actions that the Market Regulation Staff may 

impose:

Table 2

Action Taken Per each Violation in a Rolling 12-month period

Rule 

Violated

First 

Violation

Second 

Violation

Third 

Violation

Fourth Violation

Rule 204(i) Warning 

Letter

$2,000 $5,000 Referral to the Compliance 

Function for consideration of 

charges

Rules 210, 

211

Warning 

Letter or a 

fine of up to 

$1,000.

Fine of up to 

$2,000.

Fine of up to 

$5,000.

Referral to the Compliance 

Function for consideration of 

charges

Action Taken Per each Violation

Rules 

201(b)(3), 

203(a), 

208, 

210(f)(1), 

302

All Violations
 

70

Warning Letter, a fine of up to $7,000, or a Referral to the Compliance Function for 

consideration of charges

(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, the Market 

Regulation Staff suspects that there is an additional Violation, Market Regulation Staff shall present an 

investigation report concerning the matter to the Compliance Function in accordance with Rule 502.

(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. 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).

(2) If the Facility Subject Person desires to contest a fine, it must notify the Market 

Regulation Staff within ten (10) days of notice of the fine and bring forth mitigating evidence which 

demonstrates why the fine should be rescinded or reduced. Market Regulation Staff shall issue a 

notice of its determination consistent with Rule 516(d)(1). 

(3) The Facility Subject Person may contest Market Regulation Staff’s determination 

by submitting a written request to Market Regulation Staff for a hearing before the Hearing Panel.

Any such request must be submitted to the Market Regulation Staff on or before the date specified 

by Market Regulation Staff in its determination. 

(3)(4) The hearing will be held pursuant to the process outlined in Rule 510.

(e) 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.

(f) The Hearing Panel shall not set aside, modify, or amend the summary action taken against 

a Participant unless it determines, by a majority vote, that the summary action taken was:

(1) Arbitrary, capricious, or an abuse of Market Regulation Staff’s discretion; or 

(2) In excess of the Market Regulation Staff’s authority or jurisdiction

Rule 517 Effect of Suspension 

(a) Unless otherwise determined by the Hearing Panel with jurisdiction over such matters, a 

suspended Participant or Customerof NEX SEF shall not be entitled to any Trading Privileges during the 

period of such suspension, including but not limited to, the right to:

1. access any trading floor owned or controlled by CME Group;
 

71

2. have direct and indirect access to any designated contract market, DCO, or SEF 

owned or controlled by CME Group;

3. obtain Participant or Customer rates; and

4. have any additional applicable cross-exchange trading privileges.

(b) For avoidance of doubt, in the event that the Business Conduct Committee of any of the 

CME Group Designated Contract Markets with jurisdiction over such matters determines that any member 

of any CME Group owned or controlled exchange(s) should be suspended of their privileges of 

membership, those suspended members that are also NEX SEF Participants shall be deemed suspended 

from participating on NEX SEF during the period of such suspension.

(c) A Participant or Customer that has been suspended may not authorize another party to 

utilize its Trading Privileges on NEX SEF or on any exchange owned or controlled by CME Group and must 

relinquish its Trading Privileges within 30 days of the date that the suspension becomes the final decision 

of the Hearing Panel.

Rule 518 Payments of Disciplinary Fines, Disgorgement Orders and Restitution

(a) Disciplinary fines, disgorgement, and restitution amounts levied pursuant to Facility Rules 

must be submitted to Market Regulation Staff no later than the date specified in the notice of decision. An 

individual or entity who fails to provide proof of payment within the time prescribed shall not be entitled to 

access the Facility until the payment has been received. Any party that fails to make the required payment 

shall immediately forfeit eligibility for any Facility incentive or rebate program until the amount is paid in full. 

Any party that fails to pay a disciplinary fine, disgorgement order, or restitution amount within the prescribed 

time period may also be subject to sanctions pursuant to Rule 211. 

(b) Facility Subject Persons may, subject to a determination by the Facility, be liable for unpaid 

fines or unpaid disgorgement orders and restitution amounts imposed upon their employees.
 

72

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.
 

73

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 SEF, London Fruit and Wool Exchange, 1 Duval Square, 

London E1 6PW, United Kingdom. Details of NEX SEF's complaints management policy are available 

here.

(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.
 

74

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: 

Product Sunday MondayThursdayFriday Saturday

ON SEF (ON 

MTF) Rolling 

NDFs (Except 

PHP)

+ ON SEF 

Fixed NDFs

All products open Monday 6:00 AM Wellington 

Time (Sunday afternoon US time)

Daily close 

at 5:00:00 

PM ET, 

Reopen at 

5:00:05 

PM ET

Order 

expirations 

at close.

All 

products 

close at 

5:00 PM 

ET

System 

available 

until 

6:00 PM 

ET

Closed

ON SEF (ON 

MTF) PHP 

NDF

All products open Monday 6:00 AM Wellington 

Time (Sunday afternoon US time)

Daily close 

at 10:00 

AM GMT, 

Reopen at 

10:00:05 

AM GMT 

Order 

expirations 

at close.

All 

products 

close at 

5:00 PM 

ET

System 

available 

until 

6:00 PM 

ET

Closed

o Voice RFQ: Not Available. 

o All Pre-Arranged Crosses: Available in accordance with Order Book hours noted above. 

Products — Rule 801:

(1) Non Deliverable Forwards ("NDFs")

Product Specifications

NDFs are forward contracts with no physical delivery of the underlying product pair, often 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 on movements in the underlying products without 

actually dealing in the underlying products.

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 
 

75

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 product, 

where overseas players are essentially barred from access to the domestic market or market participants 

do not wish to transact in the underlying.

When an NDF deal is contracted, a fixing methodology is agreed, which includes the following methodology:

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. 

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 nondeliverable forward rate and the fixing spot rate.

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 product.

NDFs are used for a variety of risk management purposes, including as a tool 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 risk in the underlying products. NDFs 

are also used as a tool to facilitate locking in the enhanced yields of emerging market currencies.

Products

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

NGN ZMW GHS

KES EGP VND

HUF

Holiday Calendar

o USD, KRW, MYR, TWD, IDR, PHP, CNY, INR, CLP, PEN, COP, ARS, BRL, NGN, KES, 

ZMW, GHS, EGP, TRY

o Spot Value date must be a Good USD Day and Good Local Day. If not, it will be the next 

calendar day that is a good day on both calendars. “Good Local Day” is a local 

business day which is not a bank holiday and during which there are no local political 

events that may impact the operations of a fixing source for any of the products in the 
 

76

pair. “Good USD Day” is a US business day which is not a bank holiday and during 

which there are no local political events that may impact the operations of a fixing source 

for any of the products in the pair. For avoidance of doubt, Saturdays and Sundays are 

not considered Good Local Days, Good USD Days or Good UK Days, as defined below.

o Fixing date must be a Good Local Day. Should the Fixing Date fall on a weekend or local 

holiday, it will be the prior Good Local Day. Additionally, for Latin American NDFs (CLP, 

COP, PEN, ARS, and BRL), USD holidays are treated as local holidays for purposes of 

fixing date calculations.

o Settlement Date must be Good Local Day and Good USD Day. Should the Settlement 

Date fall on a weekend, a local holiday or a USD holiday, it will be the next calendar day 

that is a good day on both calendars.

o Transactions in these products offered on the central limit order book are subject to the 

specified Value Date and Fixing date requirements. Transactions in these or other 

products included in the table above that are offered through a risk mitigation service may 

be subject to other Value and Fixing dates outlined by the risk mitigation service.

Components

o Notional

• This is the "face value" of the NDF, which is agreed between the two 

counterparties*

o Spot value date

• This is the day upon which the settlement date for rolling NDFs is 

calculated. It is usually one or two days after the trade date, depending 

on the product convention.

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 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

o Tenor

• The duration of time from the Effective Date to the Fixing Date. Tenors 

can be of any duration greater than 0 years up to 2 years.

Clearing

o NDFs traded on NEX SEF are not submitted for clearing by NEX SEF.
 

77

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 6:00 a.m. Wellington Time on Monday (5:00 p.m. UTC on 

Sunday during NZDT/6:00 p.m. UTC on Sunday during NZST) and ending at 5:00 p.m. New 

York Time on Friday (10:00 p.m. UTC during EST/9:00 p.m. UTC during EDT).

o Voice RFQ: Not Available. 

o All Pre-Arranged Crosses: 24 Hours, beginning at 6:00 a.m. Wellington Time on Monday 

(5:00 p.m. UTC on Sunday during NZDT/6:00 p.m. UTC on Sunday during NZST) and ending 

at 5:00 p.m. New York Time on Friday (10:00 p.m. UTC during EST/9:00 p.m. UTC during 

EDT). 

Products — Rule 802:

(1) Fixed for Floating IRS

(2) Basis Swaps

(3) Forward Rate Agreements (FRA)

(4) Non Deliverables Swaps (NDS)

(5) Inflation Swaps

(6) Single Period Swaps
 

78

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 KRW MYR

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 
 

79

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

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

KRW-CD-KSDA-Bloomberg

AUD-BBSW

CAD-CDOR

HKD-HIBOR

JPY-LIBOR

KRW-CD 91D

MXN-TIIE

MYR-KLIBOR

NZD-BKBM FRA

SGD-SOR

THB-THBFIX

USD-LIBOR

ZAR-JIBAR

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
 

80

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

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
 

81

▪ 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

o Contracts for ZAR are clearable at the election of the counterparties on the Effective Date at 

LCH. Clearnet, CME and ASX. All other Contracts are eligible 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. 
 

82

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 Basis 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 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.

• Floating Rate

o The floating interest rate yield or basis points on Trade 

Date
 

83

▪ Interest Rate Benchmark

• LIBOR, EURIBOR, SOFR, FED FUNDS. The Interest Rate 

Benchmarks are applied as the observed rate for the payment 

frequency of the transaction. In the case where the observed 

rates are shorter than the payment frequency, such as SOFR, 

FED FUNDDS either a weighted average of the observed daily 

rates over the Tenor is used in determining the Floating Rate 

Payment, or a compounding of the rates to make the floating rate 

payment. This is shown by the difference in SOFR as either a 

weighted average over the Tenor (“SOFR-Weighted Average”) or 

as compounded over the Tenor (“SOFR-Compound).

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 SEF will support 

Tenors of any duration greater than 0 years to 50 years.

o Listed Tenors, also referred to as On-the-Run, are whole calendar year Spot Starting or 

Same Day Starting Swaps 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 Floating Reset Dates (other than for Daily Overnight Rates 

(as defined below), which are daily rates). Roll Days define the beginning and end of 

Floating interest accrual periods.

o For On-the-Run swaps, the Roll Day is the same date of the month as the Effective Date. 

For Off-the-Run swaps, 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 (other than for Daily Overnight Rates, which are 

daily rates).

▪ Note: Subject to good local 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 swap. Except in the case of a Stub Period or in the case of any Daily 

Overnight Rate leg, the Reset Date is 2 business days (USD or EUR) prior to the Roll Day for 

that interest accrual period. In the case of any Daily Overnight Rate leg, the Reset Date is 

the day prior to the Roll Day that ends the interest accrual period. 
 

84

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 (other than with respect to Overnight 

Rates), for which the Floating Rates are not ascertainable at such time.

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 (other than with respect to Daily Overnight Rates, for which the Floating 

Rates are not ascertainable at such time).

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. This 

is not applicable to Daily Overnight Rates, which are daily rates.

Daily Overnight Rate Legs:

o Certain swap legs use daily overnight interest rates observed on business days during the 

interest accrual period (“Daily Overnight Rates”). Those interest rates may compounded over 

the interest accrual period (e.g., SOFR-Compound) or use a weighted average of the 

observed rates (e.g., FED FUNDS, SOFR-Weighted Average). As a result, the rate 

applicable to the relevant interest accrual period cannot be determined until the end of that 

period and certain conventions applicable to accruals where the rate is set in advance do not 

apply. 

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).

▪ 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.
 

85

▪ 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 eligible to be cleared at LCH, Clearnet and CME. Please see clearable 

contract definitions at http://www.lchclearnet.com/ and http://www.cmegroup.com/

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

RUB

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
 

86

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

o LIBOR, SOFR, 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
 

87

• 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.

Clearing

o Contracts are eligible 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/,

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.
 

88

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, SOFR). 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 CNY

KRW THB

TWD

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 Weekly, 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
 

89

• Reset Frequency

o Weekly, Monthly or Quarterly

• 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

• Interest Rate Benchmark

o KLIBOR

o SOFR

o CNREPOFIX

o KRW-CD-KSDA-Bloomberg

o THBFIX

o CNY-Fixing Repo Rate

o KRW-CD 91D

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.
 

90

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 generally not cleared; however, Contracts for 

KRW and THB are clearable at the election of the counterparties on the Effective Date.
 

91

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:
 

92

EUR-EXT-CPI

GBP-UKRPI-BBA

GBP-USCPI-BBA

FRC-EXT-CPI

Minimum and Incremental Price

o There is no minimum price

o There is no minimum incremental price

Clearing

o Contracts are eligible to be cleared at LCH. Clearnet. Please see clearable contract 

definitions at http://www.lchclearnet.com/.
 

93

Rule 802(6) — Single Period Swaps

Contract 

Specification

Details

Product 

Description

A Single Period Swap 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 the trade date. 

The interest rate payments are exchanged based on a notional amount.

Currencies

Available Currencies

USD GBP CHF DKK 

EUR NOK SEK CZK 

HUF PLN 

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 Single Period Swaps are based on a number of combinations of 

the criteria below.

▪ Fixed Leg

• Payment Frequency

o Once (annually)

• Day Count Convention

o Money Market Basis (actual/360) for USD, CHF, CZK, 

DKK, EUR, HUF, NOK and SEK; Actual/365(fixed) 

for GBP and PLN

• Holiday Calendar

o Applied in accordance with the country relating to the 

currency of the Contract.

• 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 the 

trade date.

▪ Floating Leg

• Payment Frequency

o Once. Semi-annually (6-month Tenor) or quarterly (3-

month Tenor), or monthly (1-month Tenor)

• Reset Frequency

o Once. Quarterly (6-month Tenor) or monthly (3-month 

Tenor)

• Day Count Convention

• Money Market Basis (actual/360) for USD, CHF, CZK, DKK, 

EUR, HUF, NOK and SEK; Actual/365(fixed) for GBP and 

PLN Holiday Calendar
 

94

o Applied in accordance with the country relating to the 

currency of the Contract.

• 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

The appropriate Interbank Offered Rate for each of the relevant currencies

Effective Date o The fixed and floating interest amounts accrue from the trade date. 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 – The Effective Date of the Contract is the trade date.

o Forward Starting – The Effective Date of the Contract occurs after the trade 

date. 

Maturity Date o The final date until which Fixed and Floating amounts accrue as agreed by the 

parties. 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 3 months or 6 months.

Floating Reset 

Dates

o Dates utilized to determine the Floating Rate amount for the interest accrual 

period during the Tenor of the Contract. Except in the case of a stub period, 

the Reset Date is adjusted business days dependent on the currency prior to 

the roll date (depending on Reset Frequency) for that interest accrual period.

Fixing Date o The Fixed Rate for the interest period is fixed on the Effective Date, and the 

Floating Rate for the first interest period is fixed 2 business days prior to the 

Maturity Date.

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).

Settlement 

Terms

• Bilateral settlement is performed in USD, GBP, CHF, CZK, DKK, EUR, HUF, 

NOK, PLN or SEK. 

Minimum and 

Incremental size

• Minimum notional size is dependent on currency and tenor.

• Block Trades – Minimum notional size as stated by the Commission and 

increments are dependent on currency and tenor.

Minimum Price 

Fluctuation/Price 

Tick Size

• The minimum price change is 0.0001

Quoting 

Convention

• Outrights are quoted in interest rate yield is dependent on currency.

• Spreads/Switches will be quoted in basis points dependent in multiples of the 

increments of the underlying Outrights.

Last Trading Day 

/ Time

• Close of business on Trade Date.

Trading Months • Any calendar month. 
 

95

Trading Hours • Order Book: 24 Hours, beginning at 6:00 a.m. Wellington Time on Monday 

(5:00 p.m. UTC on Sunday during NZDT/6:00 p.m. UTC on Sunday during 

NZST) and ending at 5:00 p.m. New York Time on Friday (10:00 p.m. UTC 

during EST/9:00 p.m. UTC during EDT).

• Voice RFQ: Not Available. 

• All Pre-Arranged Crosses: 24 Hours, beginning at 6:00 a.m. Wellington Time 

on Monday (5:00 p.m. UTC on Sunday during NZDT/6:00 p.m. UTC on 

Sunday during NZST) and ending at 5:00 p.m. New York Time on Friday 

(10:00 p.m. UTC during EST/9:00 p.m. UTC during EDT).

Settlement Date • Settlement Date is the Maturity Date.

Contract Size • As agreed by the parties.

Position Limits • Not Applicable.

Reportable 

Levels

• Not Applicable.

Clearing • Single Period Swaps are cleared at LCH.Clearnet. Please see clearable 

contract definitions at http://www.lchclearnet.com. 
 

96

Rule 802 (7) — Overnight Index Swaps

Contract 

Specification

Details

Product 

Description

An Overnight Index Swap is an interest rate swap for which settlement is in the form 

of one fixed interest payment and one floating interest payment based on a measure 

of an overnight index over every day of the payment period. These payments are 

exchanged based on a notional amount.

Currencies

Available Currencies

USD GBP CHF EUR CAD SGP JPY

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 Overnight Index Swaps are based on a number of combinations of 

the criteria below.

▪ Fixed Leg

• Payment Frequency

o Term and Annual 

• Day Count Convention

o Money Market Basis (actual/360) for USD, CHF, and 

EUR; Actual/365(fixed) for GBP, SGP, CAD and JPY

• Holiday Calendar

o Applied in accordance with the country relating to the 

currency of the Contract.

• 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 the 

trade date.

▪ Floating Leg

• Payment Frequency

o Term and Annual

• Reset Frequency

o Daily

• Day Count Convention

o Money Market Basis (actual/360) for USD, CHF, and 

EUR; Actual/365(fixed) for GBP, SGP, CAD and JPY. 

• Holiday Calendar

o Applied in accordance with the country relating to the 

currency of the Contract.

• 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. 
 

97

If not, it will be the next day that is a business day on 

both respective country holiday calendars.

• Interest Rate Benchmark

Index and Currency 

SONIA – GBP

EuroSTR- EUR

FedFunds- USD

SOFR – USD

CORRA – CAD

SARON – CHF

TONA – JPY

SORA - SGP

Effective Date o The date on which accrued obligations are calculated. The Effective Date of the 

Swap must be a business day subject to the appropriate Business Day 

Convention.

Trade Start 

Type

o Spot Starting – The Effective Date of the Contract is the trade date.

o Forward Starting – The Effective Date of the Contract occurs after the trade 

date. 

Maturity Date o The final date until which Fixed and Floating amounts accrue as agreed by the 

parties. 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. 

Floating Reset 

Dates

o Dates utilized to determine the Floating Rate amount for the interest accrual 

period during the Tenor of the Contract. 

Fixing Date o The Fixed Rate for the interest period is fixed on the Effective Date, and the 

Floating Rate for the interest period is determined on the Maturity Date by the 

daily compounded fixing rates from the Effective Date to the Maturity Date. 

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. 

Settlement 

Terms

• Bilateral settlement is performed in USD, GBP, CHF, EUR, SGP, CAD or JPY. 

Minimum and 

Incremental 

size

• Minimum notional size is dependent on currency.

• Block Trades – Minimum notional size as stated by the Commission and 

increments are dependent on currency and tenor.

Minimum Price 

Fluctuation / 

Price Tick Size

• The minimum price change is 0.00001

Quoting 

Convention

• Outrights are quoted in interest rate yield is dependent on currency.

• Spreads/Switches will be quoted in basis points dependent in multiples of the 

increments of the underlying Outrights.
 

98

Last Trading 

Day / Time

• Close of business on Trade Date.

Trading Months • Any calendar month. 

Trading Hours • Order Book: 24 Hours, beginning at 6:00 a.m. Wellington Time on Monday 

(5:00 p.m. UTC on Sunday during NZDT/6:00 p.m. UTC on Sunday during 

NZST) and ending at 5:00 p.m. New York Time on Friday (10:00 p.m. UTC 

during EST/9:00 p.m. UTC during EDT).

• Voice RFQ: Not Available. 

• All Pre-Arranged Crosses: 24 Hours, beginning at 6:00 a.m. Wellington Time 

on Monday (5:00 p.m. UTC on Sunday during NZDT/6:00 p.m. UTC on Sunday 

during NZST) and ending at 5:00 p.m. New York Time on Friday (10:00 p.m. 

UTC during EST/9:00 p.m. UTC during EDT).

Settlement 

Date 

• Settlement Date is the Maturity Date.

Contract Size • As agreed by the parties.

Position Limits • Not Applicable.

Reportable 

Levels

• Not Applicable.

Clearing • Depending on eligibility, Overnight Index Swaps may be cleared at 

LCH.Clearnet, Eurex, CME and JSCC. 
 

99

Rule 803 FX Options Products Descriptions

Trading Hours

The trading hours for all Contracts governed by this Rule 803 are as follows:

o Order Book: 24 Hours, beginning at 6:00 a.m. Wellington Time on Monday (5:00 p.m. UTC on 

Sunday during NZDT/6:00 p.m. UTC on Sunday during NZST) and ending at 5:00 p.m. New 

York Time on Friday (10:00 p.m. UTC during EST/9:00 p.m. UTC during EDT).

o Voice RFQ: Not Available. 

o All Pre-Arranged Crosses: 24 Hours, beginning at 6:00 a.m. Wellington Time on Monday 

(5:00 p.m. UTC on Sunday during NZDT/6:00 p.m. UTC on Sunday during NZST) and ending 

at 5:00 p.m. New York Time on Friday (10:00 p.m. UTC during EST/9:00 p.m. UTC during 

EDT).

Products — Rule 803:

(1) Foreign Exchange Options (FX Options)
 

100

Products — Rule 803:

(1) Foreign Exchange Options (FX Options)

Contract 

Specification

Details

Product 

Description

FX Option: a transaction in which the buyer has the right, but not the obligation, to 

buy (call option) or sell (put option) a fixed amount of foreign exchange at a fixed 

exchange rate agreed by the parties for a specified time period.

Reference & 

Settlement 

Currencies Reference 

Currency

Counter 

Currency

Settlement 

Currency

Units of 

Trading

EUR USD USD EUR

GBP USD USD GBP

EUR GBP GBP EUR

USD JPY USD USD

EUR JPY EUR EUR

USD CHF USD USD

USD CAD CAD USD

AUD USD AUD AUD

USD MXN USD USD

USD CNH USD USD

USD INR USD USD

USD SGD USD USD

NZD USD NZD NZD

USD HKD USD USD

BRL USD USD USD

MXN USD USD USD

USD ZAR USD USD

EUR SEK EUR EUR

EUR CHF EUR EUR

Notional Amount As agreed by the parties

Option Style American and European

Option Premium As agreed by the parties

Premium 

Payment

Spot date relative to option trade date

Trading Hours 24 Hours, beginning at 6:00 a.m. Wellington Time on Monday (5:00 p.m. UTC on 

Sunday during NZDT/6:00 p.m. UTC on Sunday during NZST) and ending at 5:00 

p.m. New York Time on Friday (10:00 p.m. UTC during EST/9:00 p.m. UTC during 

EDT)

Quotation The price quotation is determined as a decimal number with up to five decimal 

places 

Units of Trading See current currency list above. 
 

101

Expiration Date

and Time

As agreed by the parties

Settlement 

Terms

Bilateral settlement performed in Settlement Currency 

Settlement Date Settlement Date – Spot date relative to Expiration Date (if option is exercised)

Minimum Price 

Fluctuation/Price 

Tick Size

The minimum price change is 0.0001

Settlement 

Price

N/A

Strike Prices As agreed by the parties

Contract Size As agreed by the parties

Maturity Date As agreed by the parties

Exercise Manual. Exercise decision is determined by the buyer of the option.

Last Trading 

Day / Time

Not Applicable

Trading 

Conventions

a. Buyer of the option has the right, but not the obligation to buy (call option) 

or sell (put option) the Reference Currency 

b. Seller of the option must sell (call) or buy (put) the Reference Currency if 

exercised by the option buyer

Block Size 1 million notional units of Reference Currency; 2 million units minimum trade size

Position Limits Not Applicable

Reportable 

Levels

All FX Option trades are reported

Clearing FX Options are not cleared
 

102

CHAPTER 9

SYSTEM PROTOCOLS

Rule 901 NEX SEF NDF System Protocol

GLOSSARY

Capitalized terms shall bear the meanings ascribed to them in this Glossary or in the Facility Rulebook 

unless the context otherwise requires. In addition, these terms have the following corresponding meanings:

ACI Model Code means the International Code of Conduct and Practice for Financial 

Markets published by the committee for professionalism of the ACI, which 

can be found at www.aciforex.com/mktpractice/model_code.htm, as 

updated from time to time.

CGW Convenience Gateway, a single point of Order entry for all EBS Market 

Products on Globex (regardless of the Matching region). Orders received 

by a Convenience Gateway are routed to the relevant MSGW.

Cancel on Conclusion is the auto-elimination of all working orders when a session Terminates

and disconnects via a voluntary disconnect performed by the client system 

which executed the full Termination process.

Cancel on Disconnect monitors the iLink system for involuntary lost connections between iLink 

users and the CME Globex platform. If a lost connection is detected, COD 

cancels all resting orders for the disconnected registered iLink user.

Counterparty means a party to a Deal or Transaction.

Central Post Trade or CPT means trade confirmation services.

Credit Limit means the maximum outbound amount of credit allocated to other 

Counterparties with whom a Counterparty is prepared to transact. 

Day Order means an order that can only be executed on the trade date it is entered.

Deal means a contract between a Taker and a Maker that indicates the 

currencies being bought and sold, the amount of currency involved, and 

the exchange rate that the two currencies will be traded at.

Deal Ticket means the document or electronic message(s) setting out the details of a 

Deal.

Dealable Bid/Offer a Bid/Offer is dealable only where both Counterparties have assigned and 

not exhausted sufficient bilateral Credit Limits so that an execution of a 

Transaction of at least the minimum allowable size can take place.

EBS Ai means an order routing protocol to submit orders and receive trades on 

NEX SEF via CME Globex as

EBS Market Participant 

Eligibility Criteria

The document so named setting out the eligibility criteria that Participants 

are required to comply with in order to trade on EBS Market.
 

103

GCC The CME Global Command Center.

GFID Globex Firm ID, the Trading Floor code(s) for each Participant on Globex.

NEX SEF Prime Service means the service operated by the Facility for Trading 

Privilege Holders to conclude Prime Broker Transactions 

on the NEX SEF Dealing Service.

NEX SEF Dealing Service means the dealing service operated by the Facility for 

transactions in Products, as described in this System 

Protocol.

Globex The electronic trading system technology that the EBS 

Market trading platform is provided through.

GUS Globex User Signature, the Trader ID for Authorised 

Employees on Globex.

IFM In-Flight Mitigation, is an optional feature on Globex that 

allows Participants submitting cancel/replace messages 

to prevent overfilling in the event that the original Order 

is filled while the cancel/replace message is "in-flight" 

during processing. iLink’s default setting (configurable by 

the Participant) is that IFM is disabled.

iLink An Order routing protocol to submit Orders and receive 

execution reports on Globex.

Institution The collection of GFIDs that relate to multiple 

Participants in the same corporate group.

Latency Floor Latency Floor is an augmentation to the EBS Market 

Matching process aimed at ensuring that speed as a 

stand-alone strategy is not a pre-requisite for success on 

EBS Market. It is explained in detail on the Client 

Systems Wiki. Latency floor is not applicable to eFix 

Matching

Maker means a Counterparty that places a Bid/Offer which is 

executed through the NEX SEF Dealing Service.

Maximum Order Size a Participant-configured maximum oder size set per 

GUS/GFID combination. The size must be equal to or 

less than the maximum order size default set by the 

Operator.
 

104

Matching Engines Globex components that facilitate the Matching of buy 

and sell Orders of Participants in the Order Book.

Minimum Quote Life or 

MQL

The time, as determined by the Operator on a per 

product basis, that a Quote is held on Globex before it 

can be modified or cancelled by a Participant.

MSGW Market Segment Gateway, a route for order entry to the 

Globex Matching Engine for each local region (New 

York or London for EBS Market on Globex).

Participant A person who meets the Eligibility Criteria outlined in this Rulebook

Participant Communications

means any communications sent to Participants by the Facility relating to the 

NEX SEF Dealing Service.

Price Distribution Interval

is the frequency with which Market View Information is updated.

Prime Bank A Participant who allows Prime Customers to conclude Transactions in its

name through the Prime Dealing Service.

Prime Customer AParticipant who concludes Transactions on an EBS Dealing Service through a 

Prime Bank.

Prime Dealing Service allows for Prime Customers to conclude Transactions in the name of a Prime

Bank on certain EBS Dealing Services.

Prime Master Agreement has the meaning given to it in Protocol Rule (g)(1)(iii).

Product means a product available for trading on the NEX SEF Dealing Service as 

detailed in any Product Appendix.

Product Appendix means an appendix to this System Protocol listing the Products available on the 

NEX SEF Dealing Service as amended from time to time

SBE Simple Binary Encoding.

SMP Self-Match Prevention is an optional functionality that allows a customer to 

prevent the matching of orders with common ownership.
 

105

Taker means, in relation to any Transaction, the Counterparty to a Transaction 

who accepted the Bid/Offer made on the NEX SEF Dealing Service by a 

Counterparty, whether as a buyer or seller.

TFA means Trading Floor Administrator, or a responsible person, as described 

in Protocol Rule (g)(1).

Trader ID means the unique identifier assigned to each Authorised Trader.

Trading Floor with respect to each Trading Privilege Holder or Authorised Trading Firm, 

the site or sites from which the Trading Privilege Holder or Authorised

Trading Firm accesses the NEX SEF Dealing Service. 

Transaction means a Deal or Deals effected as a result of a Bid/Offer. A Transaction 

may consist of a number of Deals.

Taker means, in relation to any Transaction, the Counterparty to a Transaction 

who accepted the Bid/Offer made on the NEX SEF Dealing Service by a 

Counterparty, whether as a buyer or seller. 

TFA means Trading Floor Administrator, or a responsible person, as described in 

Protocol Rule (g)(1).

Trader ID means the unique identifier assigned to each Authorised Trader.

Trading Floor with respect to each Trading Privilege Holder or Authorised Trading Firm, 

the site or sites from which the Trading Privilege Holder or Authorised 

Trading Firm accesses the NEX SEF Dealing Service. 

Transaction means a Deal or Deals effected as a result of a Bid/Offer. A Transaction 

may consist of a number of Deals.

User Guide(s) means the documents which outline the key functionality and features of 

each access method which can be used to interface with the NEX SEF 

Dealing Service.

Value Date has the meaning given to it in Protocol Rule (c)(2).

Value Date Calendar has the meaning given to it in Protocol Rule (c)(2).

Workstation means the hardware supplied by the Facility or its Affiliates and used by the 

Trading Privilege Holder or Authorised Trading Firm to access the NEX SEF 

Dealing Service.
 

106

User Guide(s) means the documents which outline the key functionality and features of 

each access method which can be used to interface with the NEX SEF 

Dealing Service.

Value Date has the meaning given to it in Protocol Rule (c)(2).

Value Date Calendar has the meaning given to it in Protocol Rule (c)(2).

Workstation means the hardware supplied by the Facility or its Affiliates and used by 

the Trading Privilege Holder or Authorised Trading Firm to access the NEX 

SEF Dealing Service.
 

107

(a) INTRODUCTION

(1) NEX SEF Limited (the “SEF”, the “Facility” or “NEX SEF”) offers the NEX SEF 

Dealing Service on which Trading Privilege Holders and Authorised Trading Firms are permitted to 

trade, with other Trading Privilege Holders and Authorised Trading Firms Products, identified as 

Facility Products from time to time, in accordance with the terms of the Facility Rulebook and the 

NEX SEF Trading Privilege Holder Agreement. 

(2) This System Protocol is part of the Facility’s Rulebook. Where the terms of the 

Facility’s Rulebook and this System Protocol conflict the terms of this System Protocol shall prevail. 

(3) Trading Privilege Holders and Authorised Trading Firms are permitted to trade 

directly in their own name. Additionally, Trading Privilege Holders may, subject to the Facility 

Rulebook, act as a Prime Broker by permitting another Trading Privilege Holder to execute Prime 

Broker Transactions in such Prime Broker’s name utilizing the NEX SEF Prime Service.

(4) A Participant may only access the Facility through access methods made available 

by the Operator. The Participant shall comply with the Operator’s reasonable requests in relation 

to the establishment of connectivity and installation. Technical system specifications will be notified 

to Participants by the Operator from time to time, including in any Customer Communications and 

User Guides. The software and (where applicable) equipment provided by the Operator must be 

properly installed, have passed all applicable Conformance Tests, be in full working order and be 

in compliance with the relevant technical system requirements in order to access the SEF.

(5) This System Protocol applies to whichever of the access method(s) is adopted by 

the Trading Privilege holder or Authorised Trading Firm. Additional rules may apply in respect of 

certain access methods; where this is the case, this will be clearly indicated in this System Protocol 

or a User Guide. 

(6) The Facility is not party to any Transaction. It provides the NEX SEF Dealing 

Service, a facility for Trading Privilege Holders and Authorised Trading Firms to effect Transactions 

in certain Products, and not for any other reason. The Facility is not subject to any fiduciary duties 

to any Trading Privilege Holder or Authorised Trading Firm.\

(7) Participants on NEX SEF Dealing Service are required to comply with the relevant 

Eligibility Criteria.

(8) Participants are required to connect to the New Release (NR) environment, which 

allows product and new functionality testing prior to release in production, and pass the relevant 

conformance and certification tests as defined by the Operator prior to connecting to the live 

production environment.

(9) Participants on NEX SEF Dealing Service on Globex are also required to use the 

AutoCert+ tool for functional certification of client systems prior to accessing the Globex production 

environment.

(b) AUTHORIZATION TO EXECUTE DEALS ON THE NEX SEF DEALING SERVICE 

(1) Each Trading Privilege Holder or Authorised Trading Firm will have access to the 

NEX SEF Dealing Service to view Market View Information and Dealable Bids/Offers. 
 

108

(2) Each Trading Privilege Holder or Authorised Trading Firm may only execute Deals 

on the NEX SEF Dealing Service with other Trading Privilege Holders or Authorised Trading Firms 

with which it has established Credit Limits. The Facility may, in its discretion, suspend a Trading 

Privilege Holder’s or Authorised Trading Firm’s ability to execute Deals to the NEX SEF Dealing 

Service where the Facility determines that such Trading Privilege Holder or Authorised Trading 

Firm does not have Credit Limits established with at least one other Participant. 

(3) The Trading Privilege Holder or Authorised Trading Firm is responsible for 

controlling access to the NEX SEF Dealing Service and is responsible for ensuring that all 

Authorised Traders change their passwords on a regular basis when accessing the NEX SEF 

Dealing Service. 

(4) Participants are permitted to trade directly in their own name or through a Prime 

Bank utilising the Prime Dealing Service.

(5) The current versions of the ACI Model Code (“Code”) are incorporated by 

reference into these rules, subject to any qualifications set out in these rules. Participants must 

ensure that their Authorized Employees are aware of and shall abide by the relevant provisions of 

the Code.

(c) GENERAL DEALING RULES

(1) When using or attempting to use any functionality in connection with the NEX SEF 

Dealing Service the Trading Privilege Holder or Authorised Trading Firm shall, at all times, do so 

in accordance with the instructions and specifications set out in the Trading Privilege Holder 

Communications and User Guides. 

(2) “Value Date” means the date on which FX Product trades settle, i.e., the date that 

the payments of each currency are made. The value dates for most FX Product trades are "spot", 

which generally means two business days from the trade date (T+2). It is possible to settle trades 

on dates other than the spot date, in which case the rate will be adjusted by forward points to 

compensate for the interest rate differential between the two currencies being traded. The “Value 

Date Calendar” is the calendar available within the NEX SEF Dealing Service that displays Value 

Date information by currency pair and month.

(d) DEALING ON NEX SEF DEALING SERVICE

The NEX SEF Dealing Service is designed to facilitate the matching of Bids/Offers. This 

creates a Transaction that can result in a Deal or multiple Deals.

(1) Transactions. Each Deal consists of a Maker and Taker. Deals may consist of 

two unique Counterparties or may comprise different Trader ID’s of the same Counterparty when 

intrafloor dealing is enabled. Intrafloor dealing is enabled as a default on the NEX SEF Dealing 

Service. A match between the same Trader IDs is not permitted.

(i) Through iLink, Orders submitted using the same GFID and GUS can be 

submitted with different SMP IDs and are able to Match. Orders submitted 

with the same SMP ID will not Match. SMP IDs can be created at a 

Participant level, and a single SMP ID can be assigned to multiple GFIDs. 

SMP applies on a per-Order basis on Globex.
 

109

(2) Bids/Offers

(i) Bids/Offers are a means for Participants to express a limit price (or better) 

at which they are willing to transact. Quotes are limit Orders that reside in the Order Book and may be 

subject to a Minimum Quote Life. Quotes that do not immediately result in a Match are considered passive 

and enter the Order Book.

(ii) EBS Market is designed to facilitate the Matching of Orders on an Order Book. A 

Match creates a Transactionthat can result in a Deal or multiple Deals. Participants are 

legally bound by any Transaction.

(iii) EBS Market on Globex employs two Matching Engines, one each in New York and 

London (each with a CGW and region-specific MSGW), and CGWs in London, New York 

and Tokyo. Each Matching Engine is used for a specific set of Products. The reference for 

which Matching Engine processes the relevant Products is maintained on the Client 

Systems Wiki Client Systems Wiki and on the CME Reference Data API for Currency Pair 

LocationCME Reference Data API, each of which may be updated from time to time.

(iv) Order entry for EBS Market on Globex can be through a CGW or MSGW. Orders 

sent through MSGWs for Products that are not Matched on that relevant Matching Engine 

are rejected. CGWs provide an operationally simpler order entry mechanism. An 

explanation of these components is available on the Client Systems Wiki. 

(v) EBS Ai is a protocol that allows for order entry to a CGW.

(3) Using the SBE protocol, each iLink session is associated with a GFID and multiple 

GUS can be used on that session. MSGW sessions are unique to a market segment (New 

York/London) and CGW are unique to a region (New York/London/Tokyo).

(4) Order types for EBS Market on CME Globex include the following:

GFS (Good For 

Session)

GFS Orders remain active in the Order Book until they are completely executed, expire at the 

end of the session, are cancelled or when the instrument expires (ordinarily, at the end of the 

trading week for Spot FX and the end of the trading day for NDFs).

FAK (Fill And Kill) FAK Orders are immediately executed against resting Orders. If the Order cannot be fully filled, 

the remaining balance is cancelled. A minimum quantity can be specified. If the specified 

minimum quantity cannot be filled, the Order is cancelled.

FOK (Fill Or Kill) FOK Orders must be fully filled immediately or the entire Order is cancelled. An FOK Order is 

created by using the FOK qualifier and setting the minimum quantity to the total Order quantity.

Display Quantity A Display Quantity Order allows an Authorised Employee to set a hidden and shown amount for 

a GFS Order. Display Quantity Orders allow Authorised Employees to minimize their market 

impact by only displaying a portion of their overall Order where only the hidden size sits in the 

Order Book and is subject to being dealt.
 

110

Price Discretion Price Discretion is a 'hidden' Order type that allows Authorised Employees to pre-stage an 

aggressive Order, which will improve their ability to execute on prices they may have previously 

missed. Allows an order to rest and automatically improve its Limit price for matching opportunity 

while maintaining a given visible Limit price

Display Quantity + Price 

Discretion

An Order which combines both the Display Quantity and Price Discretion features.

(5) Bids/Offers that do not result in a match will remain active in the Order 

Book until:

A. interrupted in accordance with Rule (d)(4)(i);

B. interrupted due to ungraceful session disconnect or network 

failure;

C. in the event of a graceful disconnect, Orders will be cancelled in 

accordance with the Cancel on Conclusion functionality for all 

working GFS Orders on session termination or GUI logout;

D. interrupted due to the end of the weekly trading session;

E. interrupted due to the end of the trading session for instruments 

that have a designated open/close;

F. an auto interrupt is triggered;

G. a successive Bid/Offer replaces a prior Bid/Offer (also known as 

cancel and replace);

H. removed by the Facility in accordance with Protocol Rule (i); 

I. cancelled or amended in accordance with Facility Rule 310; or

J. matched in full.

(5) Interrupt Rules

(i) A request by a Counterparty to interrupt a Bid/Offer can be submitted at 

any time during the lifetime of the Bid/Offer. Upon receipt of the interrupt at 

the matching engine, no additional matches will be initiated against the 

outstanding balance of the Bid/Offer. Matches which have been initiated by 

the matching engine prior to the receipt of the interrupt message cannot be 

interrupted. 

(ii) In-Flight Mitigation (IFM) is an optional feature on Globex that allows 

Participants submitting cancel/replace messages to prevent overfilling in 

the event that the original Order is filled while the cancel/replace message 

is "in-flight" during processing. iLink’s default setting (configurable by the 

Participant) is that IFM is disabled.
 

111

(iii) Participants can cancel their own Orders through the GUI, the FirmSoft 

interface or via API, and the GCC may cancel a Participant’s Order.

(iv) The Facility may cancel a Bid/Offer as provided in the Facility Rulebook. 

(e) THE MATCHING PROCESS

(1) Each Trading Privilege Holder or Authorised Trading Firm must establish a 

relationship with its Counterparties, satisfy itself of the creditworthiness of its Counterparties and 

extend credit to them as it sees fit. For a match to be made in the NEX SEF Dealing Service, 

mutual credit must exist between the two Counterparties. If credit has not been established with 

or given by another Counterparty, or when credit given by or to a Counterparty is exhausted, the 

prices submitted by a Counterparty will not be considered a Dealable Bid/Offer for the other.

(2) Once an Order is submitted, EBS Market will immediately attempt to Each match 

attempt is prioritised in shown price, time priority order, the instruction with a Bid/Offer subject to 

Latency Floor (described below). using a matching algorithm assigned to the instrument. The 

available matching algorithms are (each subject to Latency Floor.

(i) Size Priority, with further detail on the matching process on the Client 

Systems Wiki; and

(ii) FIFO, with further detail on the matching process on the Client Systems 

Wiki.

(i)(iii) “Latency Floor” is an augmentation to the EBS Market Matching process 

aimed at ensuring that speed as a stand-alone strategy is not a prerequisite for success on EBS Market. It is explained in detail on the Client 

Systems Wiki Client Systems Wiki. 

(3) Once hits and Bids/Offers have been matched, any successful Deal will depend 

on the available Credit Limits remaining for each GFID. If there is insufficient mutual credit to 

complete the Deal for the full size of the Deal, the size of the Deal will be reduced to the amount of 

mutual credit available. In order for a Deal to complete the size of the Deal must not be greater 

than the amount of available credit given by the Counterparty who has the lower amount of credit 

available for the other. The minimum Deal amount also depends on the relevant instrument’s 

minimum Deal amount and/or minimum Deal increment. Accordingly, the reduced amount of mutual 

credit available between Counterparties must be greater than the instrument’s minimum Deal 

amount, otherwise the Deal will not complete.

(4) When a Match or multiple Matches occur NEX SEF Dealing Service initiates 

processing to complete each Deal, including verification that sufficient credit exists between the 

two Counterparties.

(5) Once a Deal takes place, credit is reduced for each Counterparty with the other for 

the size of the Deal. If there is no successful Deal, then the credit of the two Counterparties is 

unaffected.

(6) The Participant may reduce the amount of outbound credit consumed by Deals 

using the discount factor. Using the discount factor a Participant can assign a percentage anywhere 

between 0-100 thus enabling a reduction of credit line consumption by a given amount. It is the 

sole responsibility of the Participant to set and monitor this percentage.

(7) Deal Status
 

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(i) A Deal is done when the Deal confirmation is processed in the Matching 

Engine and is recorded by the system. If for any reason NEX SEF Dealing 

Service fails to process all Deal messages or fails to process all Deal 

messages in a timely fashion as defined by NEX SEF Dealing Service that 

Deal shall be determined as being in an unverified state. In such cases 

GCC will contact all Counterparties to the trade and notify them of the status 

of the trade – “Done” or “Not Done”.

(f) Where a Deal is in doubt or unverified due to EBS Market disruption, the Participant must 

contact GCC as the first point of contact for all questions related to issues of Deal status. The Operator is 

responsible for determining whether such a Deal was completed or not. The determination of the GCC team 

is final and will supersede any previous or subsequent system statusPOST TRADE

(1) Error Trade

(i) The price review and error trade process is described in the relevant MRAN.

(2) Deal Tickets

(i) After each Transaction a Deal Ticket is produced by the NEX SEF Dealing 

Service and sent to the Trading Privilege Holder or Authorised Trading 

Firm. 

A. The Facility may provide an automated feed, the “EBS Deal Feed 

Client”, notifying a Trading Privilege Holder or Authorised Trading 

Firm of the Deals to which the Trading Privilege Holder or 

Authorised Trading Firm is a party, if the Trading Privilege Holder 

or Authorised Trading Firm chooses. It is the Trading Privilege 

Holder’s or Authorised Trading Firm’s responsibility to ensure that 

the Trading Privilege Holder’s or Authorised Trading Firm’s 

software is able to receive the EBS Deal Feed Client and that the 

interface is properly installed, tested and working. 

(3) Confirmations

(i) In accordance with Facility Rule 312, each Deal executed on the NEX SEF 

Dealing Service shall be deemed to incorporate the following wording 

which, together with the information contained within Central Post 

Trade(CPT) (to the extent that a Trading Privilege Holder or Authorised

Trading Firm has elected to receive the ticket), will be deemed to be the 

Confirmation of such Deal:

ANY PREEXISTING AGREEMENTS BETWEEN THE COUNTERPARTIES THAT 

ARE NOT INCONSISTENT WITH THIS CONFIRMATION, THE INFORMATION 

CONTAINED IN THE EBS DEAL FEED CLIENT OR THE NEX SEF RULEBOOK, 

ARE HEREBY DEEMED INCORPORATED BY REFERENCE.

THE TRANSACTION SHALL BE GOVERNED BY NEW YORK LAW, EXCEPT 

THAT GOVERNING LAW FOR PREEXISTING AGREEMENTS BETWEEN THE 

COUNTERPARTIES IS AS MAY BE OTHERWISE AGREED BETWEEN THE 

PARTIES.

COUNTERPARTIES MUST INFORM THE FACILITY IMMEDIATELY OF ANY 

QUERY OR DISCREPANCY ON THE EBS CLIENT DEAL FEED. ANY REQUEST 

FOR REVIEW MUST BE MADE TO THE FACILITY WITHIN 15 MINUTES OF THE 

FACILITY’S EXECUTION OF THE TRANSACTION. 
 

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NEX SEF AND ITS AFFILIATES PROVIDING SERVICES TO THE FACILITY 

ACCEPT NO LIABILITY FOR THE COMMERCIAL ADVISABILITY OF THIS 

TRANSACTION. THIS CONFIRMATION SUPERSEDES ANY PREVIOUS 

AGREEMENTS BETWEEN THE COUNTERPARTIES REGARDING THE TERMS 

OF THE TRANSACTION OTHER THAN AS MAY BE INCORPORATED HEREIN. 

IF A CONFIRMATION RELATING TO THE TRANSACTION SPECIFIED HEREIN 

IS DELIVERED TO YOU BOTH VIA A THIRD PARTY OR THIRD-PARTY 

SERVICE (SUCH AS MARKITWIRE, RTNS, ECONFIRM OR CONFIRMHUB) 

(EACH, A “THIRD-PARTY CONFIRMATION”) OR DIRECTLY AS A BILATERAL 

CONFIRMATION FROM YOUR COUNTERPARTY, AS WELL AS SEPARATELY 

FROM NEX SEF (WHETHER DIRECTLY OR VIA ANY TRADING PRIVILEGE 

HOLDER OR AUTHORISED TRADING FIRM), THEN THE INFORMATION IN 

THE EBS DEAL FEED CLIENT TOGETHER WITH THE WORDING IN THIS 

PROTOCOL RULE (f)(2)(i) SHALL BE DEEMED TO BE THE LEGALLY BINDING 

CONFIRMATION OF NEX SEF RELATING TO SUCH TRANSACTION, AND NOT 

THE THIRD-PARTY CONFIRMATION. TRANSACTIONS EXECUTED AS 

CLEARED TRANSACTIONS ARE VOID AB INITIO AND WILL BE CANCELED 

BY NEX SEF IF NOT ACCEPTED FOR CLEARING IN ACCORDANCE WITH THE 

FACILITY RULEBOOK.

NEX SEF IS NOT A PRINCIPAL TO THE TRANSACTION AND IS NEITHER 

LIABLE NOR RESPONSIBLE FOR THE DUE PERFORMANCE OF ANY OF THE 

TERMS SET OUT ABOVE. IN THE EVENT OF A DISPUTE, THE 

COUNTERPARTIES SHALL HOLD NEX SEF AND ITS AFFILIATES PROVIDING 

SERVICES TO THE FACILITY HARMLESS FROM ANY LIABILITY ARISING OUT 

OF THEIR OPERATION OF THE FACILITY AND/OR PROVISION OF SERVICES 

TO THE FACILITY.

(4) Settlement

(i) The Trading Privilege Holder or Authorised Trading Firm is entirely 

responsible for all aspects of Transaction settlement, including but not 

limited to: all payments; any procedures supplemented to (but consistent 

with) the provisions of this System Protocol and any liability for default by 

such Trading Privilege Holder or Authorised Trading Firm.

A. The Trading Privilege Holder or Authorised Trading Firm is 

responsible to set currency pair permissions.

(ii) 17:00 EST (22:00 UTC)/17:00 EDT (21:00 UTC) is the point at which the 

trade date moves to the next day. For Transactions involving PHP, this time 

is 10:00 GMT (10:00 UTC)/10:00 BST (9:00 UTC).

(iii) The Facility uses recognized industry sources to update the Value Date 

Calendar on the Workstation. In the event of a Value Date dispute, Trading 

Privilege Holders and Authorised Trading Firms shall make their own 

bilateral determination of the applicable Value Date in accordance with 

standard market convention. 

(iv) NEX SEF Dealing Service allows Participants to create and assign credit to 

groups of GFIDs that those Participants consider to be an Institution. Once 

credit is applied to that group, it applies to trading with all Trading Floors 

cumulatively within the Credit Group. Credit is also assigned by grantor 

groups, allowing outbound credit at an Institutional level.
 

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(v) Each Participant must use reasonable endeavours to maintain Credit Limits 

with other Participants of the NEX SEF Dealing Service. The Operator may, 

at its discretion, suspend access to the NEX SEF Dealing Service where it 

determines that minimum mutual Counterparty credit access is not 

sufficient. 

A. In the case of the Prime Dealing Service, in accordance with the 

Prime Bank Master Agreement, each Prime Bank must use 

reasonable endeavours to maintain Credit Limits with Participants 

of the NEX SEF Dealing Service.

(vi) NEX SEF Dealing Service provides warning messages indicating when the 

credit used for a Counterparty or group of Counterparties has reached a 

certain percentage of the Credit Limit for that Counterparty or group of 

Counterparties. This percentage is set by the Trading Floor Administrator

(“TFA”) of each Participant. NEX SEF Dealing Service will provide a 

message when the Credit Limit allocated to a Counterparty or group of 

Counterparties has been exhausted or is insufficient to allow a Deal to take 

place for the Minimum Deal Size.

(g) TRADING FLOOR ADMINISTRATOR

(1) TFA General

(i) Each Trading Privilege Holder and Authorised Trading Firm must appoint 

at least one TFA. At least one TFA must be available to communicate with 

and be accessible to the Facility and Trading Privilege Holders or 

Authorised Trading Firms at all times while the NEX SEF Dealing Service 

is in use. A TFA or other Authorised Trader must also be present when 

maintenance of the NEX SEF Dealing Service is taking place.

(ii) The TFA is responsible for the supervision of operations of the NEX SEF 

Dealing Service with a view to ensuring the smooth running of the NEX SEF 

Dealing Service. Any issues arising in relation to the NEX SEF Dealing 

Service shall be handled in accordance with the Facility Rulebook and 

relevant User Guides. These operational responsibilities include trading 

activities and system support of all hardware used for dealing on the NEX 

SEF Dealing Service, setting currency pair permissions, maintaining credit 

limits and reviewing each prospective and existing Counterparty’s credit 

status as outlined below. 

(iii) In the case of the NEX SEF Prime Service there will be a master agreement 

between the Prime Broker and the relevant NEX SEF Prime Service 

Trading Privilege Holder (the “Prime Master Agreement”). The Trading 

Privilege Holder must ensure that responsible persons are identified in 

respect of the minimum requirements with which it must comply under the 

Prime Master Agreement. 

(2) Security

(i) It is the responsibility of each Trading Privilege Holder and Authorised

Trading Firm to determine and implement adequate security systems and 

procedures.
 

115

(ii) It is the responsibility of the TFA to notify the Facility immediately where 

access to the NEX SEF Dealing Service of an Authorised Trader has been 

terminated or otherwise invalidated. 

(3) Credit 

(i) It is the responsibility of the TFA to maintain Credit Limits with each 

Counterparty with whom the Trading Privilege Holder or Authorised Trading 

Firm wishes to deal. 

(ii) In the case of the NEX SEF Prime Service the TFA must also maintain 

Credit Limits between the Prime Broker and the relevant NEX SEF Prime 

Service Trading Privilege Holder in accordance with Facility Rule 215. An 

Authorised Trader can deal with a Counterparty if there is sufficient mutual 

credit to deal in the Minimum Deal Size in any Product. The “Minimum 

Deal Size” is defined by the NEX SEF Dealing Service for each Product. 

The “Minimum Credit Threshold” is the minimum amount of credit 

necessary for a successful Deal of the Minimum Deal Size for the 

instrument with the highest value on the NEX SEF Dealing Service. 

(iii) Where new Trading Privilege Holders or Authorised Trading Firms are 

granted access to the NEX SEF Dealing Service, it is the responsibility of 

the TFA to review the status of these prospective Counterparties for credit 

purposes and for the Trading Privilege Holder or Authorised Trading Firm 

to consider allocating Credit Limits to each such Counterparty or group of 

Counterparties. It is also the responsibility of the TFA to review from time 

to time the credit status of existing Counterparties.

(iv) The NEX SEF Dealing Service provides warning messages indicating when 

the credit used for a Counterparty or group of Counterparties has reached 

a certain percentage of the Credit Limit for that Counterparty. This 

percentage is set by the TFA. The NEX SEF Dealing Service will provide 

a message when the Credit Limit allocated to a Counterparty or group of 

Counterparties has been exhausted or is insufficient to allow a Deal to take 

place for the Minimum Deal Size.

(4) User Maintenance and Access

(i) See the relevant MRAN outlining the user access criteria and how the 

information is maintained.

(h) TRADING PRIVILEGE HOLDER OR AUTHORISED TRADING FIRM SUPPORT

Facility Customer Support is available during Facility Hours to assist Trading Privilege 

Holders or Authorised Trading Firms with all issues pertaining to the NEX SEF Dealing 

Service.

(1) Counterparty Support Obligations

If a Trading Privilege Holder or Authorised Trading Firm suspects a problem with 

the NEX SEF Dealing Service which it considers may affect its use of the NEX 

SEF Dealing Service, an Authorised Trader must immediately:

(i) remove all of that Trading Privilege Holder’s or Authorised Trading Firm’s 

Bids/Offers from the NEX SEF Dealing Service and
 

116

(ii) contact GCC.

GCC may require, at its sole discretion that:

(i) all Bids/Offers submitted by that Trading Floor be removed; 

(ii) all Authorised Traders of that Trading Floor stop using the NEX SEF 

Dealing Service; and/or

(iii) the Trading Privilege Holder or Authorised Trading Firm provide information 

in connection with the issue to GCC.

(2) Matching/Deal Disputes

(i) Deal Queries

A. In the event of a query as to the terms of a Deal, the Trading 

Privilege Holder or Authorised Trading Firm may contact GCC

which will, where possible, consistent with Rule 318, provide the 

Trading Privilege Holder or Authorised Trading Firm with contact 

details for the Counterparty to facilitate direct resolution between 

the two Counterparties. Except as otherwise provided for in the 

Facility Rulebook, GCC will not amend the Deal status or rate 

details, which remains the preserve of the two Counterparties 

concerned.

(ii) NEX SEF Prime Service and Globex Deal Queries

A. A Counterparty’s deal code may appear to other counterparties as 

a result of Deals originating from any or all of the following:

1. Workstation dealer; Globex/iLink; or 

4. NEX SEF Prime Service Trading Privilege Holders and 

Authorised Trading Firms, in which case the deal code of 

the Prime Broker is supplied.

B. All Prime Brokers and other Counterparties must ensure that all 

potential Counterparties know how to contact a representative of 

the relevant Trading Privilege Holder or Authorised Trading Firm 

(such as via conversational direct dealing or telephone). In the 

event of a disputed Deal, each Trading Privilege Holder or 

Authorised Trading Firm must ensure that its representative is 

authorized to make immediate decisions to resolve such trade 

disputes on behalf of the Trading Privilege Holder or Authorised

Trading Firm, including, if appropriate (within the context of the 

ACI Model Code and other applicable dealing conventions), the 

execution of an offsetting Deal. 

C. In order to facilitate timely resolution of Deal queries, each Trading 

Privilege Holder or Authorised Trading Firm must:

1. establish an Authorised Trader naming convention which 

guarantees uniqueness across all of its Authorised

Traders associated with the same four-letter EBS deal 
 

117

code ascribed to such Trading Privilege Holder or 

Authorised Trading Firm;

2. communicate this Authorised Trader ID naming 

convention to its Authorised Traders, and ensure that 

such Authorised Traders are aware of its internal 

escalation procedures so that queries related to this Deal 

code can be forwarded to the appropriate contacts at all 

times of the trading day; and

3. provide GCC with primary and secondary contact details 

for each of its relevant business areas using the NEX SEF 

Dealing Service. The designated contacts must be 

authorized to make immediate decisions to resolve any 

Deal disputes on behalf of the organization. The Facility 

must also be authorized to disclose such contact details 

to Counterparties on request in order to facilitate 

resolution of issues. 

(i) ADDITIONAL RULES FOR iLink TRADING

(1) iLink is a means of accessing NEX SEF Dealing Service. iLink is a message-based 

interface that supports a two-way message exchange between the Facility and the Participant’s

application.

(2) iLink limits the application messages and cancellation requests that can be 

submitted within a rolling time window (throughput limit) defined by the Operator. See details on 

Messaging Controls here.

(j) MARKET CONDUCT TRADING RULES

(1) Messaging Controls

(i) Orders can be rejected if more than a predefined number of messages are 

sent during a rolling window. If a Participant reaches an initial threshold,

new messages are rejected. After a second threshold, the customer's 

connection is terminated. This protects NEX SEF Dealing Service

technology and against a Participant’s potential algorithmic trading issues. 

Messaging thresholds are explained and set out in the Client Systems Wiki.

(2) MSGW Safeguards

(i) Globex includes certain MSGW safeguards relating to iLink messages that 

are not sent completely in a single network packet or are received out-oforder. These are set out in the Client Systems Wiki.

(3) Order Size

(i) NEX SEF Dealing Service on Globex has restrictions on the maximum and 

minimum quantity Order size for a given Product. Orders above/below 

these thresholds are rejected. Participants are able to configure lower 

maximum Order sizes for themselves.

(4) Kill Switch
 

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(i) Prime Banks can make use of the kill switch functionality to stop Order 

entry. The Participant’s connection is maintained but all Orders are 

cancelled and new Order entry is blocked.

(5) Emergency Halt

(i) The Operator has the ability to pause or halt EBS Market, or specific 

Products on EBS Market, on a per-Participant or whole of market basis. In 

the event of a trading halt, day Orders are cancelled. Participants should 

maintain connectivity, but Orders will stop Matching. New Orders will be 

rejected from the Matching Engine. In the pause state, Order cancellations 

are permitted.

(6) Price Banding

(i) The Operator maintains an allowable price range for a given Order based 

on the most recent reference price. This mitigates against Authorised 

Employees from submitting Orders with erroneous prices. On the EBS 

Workstation, these values are set by the Participant and can be clickedthrough if necessary.

(7) Maintenance of Orderly Markets

(i) In order to maintain an orderly market, the Facility may enforce each of the 

following protocols on selected NEX SEF NDF currency pairs upon a 

determination by the Market Regulation Staff or Compliance, that one or 

more Participants may be engaging in trading in such currency pairs in 

violation of Chapter 4:

A. Quote Fill Ratio (“QFR”). The QFR is a minimum percent of 

passive Bid/Offer submissions. The Operator monitors and 

enforces the QFR as set out in the EBS Quote Fill Ratio MRAN. 

B. Minimum Quote Life (“MQL”). The MQL represents the amount of 

time a Participant’s Bids/Offers must rest in the Order Book before 

they can be interrupted by the Participant.The Operator 

systemically enforces an MQL on selected currency pains. The 

MQL applies to all Quotes submitted via iLink. The MQL timer 

starts once the Order has been released by the Latency Floor 

batch. If multiple cancel requests are submitted before the 

minimum time period elapses, they will be held until after the 

Latency Floor batch until the MQL has expired. Where applicable 

the MQL for other currency pairs can be found in the Client 

Systems Wiki and on the CME Reference Data API Referential 

Data API. The introduction or recalibration of an MQL in a 

currency paoir shall be communicated by the Operator with not 

less than 24 hours’ notice.

(ii) Any QFR: 

A. shall, for all Bids/Offers other than those covered by paragraph 

(B) below, be calculated by the GCC based on historical analysis 

of fill patterns on completed Deals - measured daily, weekly (5-

day rolling average) and monthly; 
 

119

B. shall be based on the total notional value of Deals divided by the 

number of Bids/Offers submitted by a Participant or Trading Floor, 

as applicable;

C. may vary by time zone and/or time of day; 

D. may be calculated (i) with respect to each Participant, (ii) with 

respect to each Trading Floor of each Participant, or (iii) on an 

aggregate basis taking into account the Bids/Offers submitted by 

each Participant and the Participant’s Affiliates (regardless of 

access method), as the Market Regulation Staff and Compliance

may determine in its discretion;

E. may be applied either to each Participant or to each Trading Floor 

of each Participant, as the Market Regulation Staff and 

Compliance may determine in its discretion; and 

F. may be subject to such thresholds, including minimum number of 

Bids/Offers submitted by a Participant or Trading Floor, as 

applicable, as the Market Regulation Staff and Compliance may 

determine to apply. 

(iii) If the Compliance determines to enforce a QFR, prior notice will be provided 

to all Participants in an MRAN indicating (i) the affected NEX SEF NDF 

currency pair(s); (ii) the relevant QFR percentage; (iii) the calculation 

methodology used to establish such percentage; (iii) any relevant 

thresholds applicable to the relevant QFR percentage and whether such 

thresholds would be aggregated across IDs and deal codes or on a perTrading Floor basis; (iv) whether the QFR will be applied at the Participant 

level or at the Trading Floor level; and (v) the time and date the QFR will 

be put into effect. The QFR will apply to all Bids/Offers submitted to the 

Order Book (regardless of Participant access method) by each Participant 

for the relevant NEX SEF NDF currency pair. 

(iv) If a Participant fails to meet the applicable QFR then in effect, Compliance

may deem such failure a Violation of Rule 406 and may take any of the 

following actions in its sole discretion at any time:

A. impose on that particular Participant a MQL on selected NEX SEF 

NDF currency pairs. If enforced, MQL will apply to all Bids/Offers 

submitted to the Order Book by the affected Participants for the 

relevant NEX SEF NDF currency pair; 

B. impose on that particular Participant, for Bids/Offers submitted 

(other than end-of-month products), a requirement to maintain a 

minimum top of book MQL of 90% > 1s;

C. prohibit the Participant from quoting or streaming passive 

Bids/Offers and the Participant will accordingly be limited to 

submitting aggressive Bids/Offers; 

D. summarily suspend the Participant in accordance with Facility 

Rule 514; and
 

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E. submit such deemed Violation of Rule 406 to the Hearing Panel 

in accordance with the formal disciplinary procedures of Chapter 

5. 

(v) If a Participant continues to fail to meet the QFR after the Facility has taken 

any of the foregoing actions, the Facility may suspend the Participant from 

EBS or the Facility in its entirety in accordance with Facility Rule 206 

following completion of the disciplinary procedures set forth in Chapter 5. 

(vi) Sample MQL and QFR ranges for NEX SEF NDF pairs are included, for 

reference, in the attached Product Appendix.

(vii) The Facility may exempt a Participant, who is part of a Market Maker 

program, from the MQL and QFR parameters. Such exemption would only 

be for currency pairs covered by the Market Maker program, might not 

include all currency pairs in the market maker program, and would apply 

equally to all Participants that are part of such Market Maker program.

(viii) Self Match / Painting the Tape.

A. Self matching, if considered disruptive by the Market Regulation 

Staff, is also prohibited and may be systemically prevented.

“Painting the tape”, whereby apparently unrelated parties collude to buy and sell a particular currency pair 

among themselves to create artificial trading activity at one or more price levels, is prohibited trading 

activity.
 

121

PRODUCT APPENDIX: 

The following Products are available to trade on NEX SEF Dealing Service:

1. Non-Deliverable Forwards identified on the NEX SEF Dealing Service as Facility NDFs and listed 

in the EBS Guide to Currency Pair Parameters.
 

122

EBS GUIDE TO CURRENCY PAIR PARAMETERS APPENDIX:

Exhibit A
 

123
 

124
 

125

Rule 902 Shield System Protocol

Glossary 

Access Details The non-transferable, confidential personal 

user identifiers and all passwords issued by 

the Facility to each Authorised Trader. 

Authorised Trader Desk A group of Authorised Traders belonging to a 

single desk and sharing a common set of 

Contracts trading permissions. Orders are 

received at the common desk and serviced 

by the Authorised Traders belonging to such 

desk. Authorised Traders can only belong to 

one desk. 

Erroneous Bids/Offers Any Bid/Offer which does not meet the 

requirements set out in this System Protocol. 

Shield Order Book An Order Book offered by the Facility for 

trading certain Swaps.

System The Shield-based automated system 

supporting the Shield Order Book.

System Supervisor The market support team of Shield Order 

Book.

Trading Engine The System matching engine.

(a) General Rules 

(1) This System Protocol is part of the Facility Rulebook. In the event of a conflict 

between this System Protocol and the Facility Rulebook, this System Protocol shall take 

precedence. All capitalized terms not otherwise defined in this System Protocol shall have the 

meanings ascribed to them in the Facility Rulebook.

(2) The System offers an electronic central limit order book for certain Swaps listed by 

the Facility, as specified in Appendix 1 hereto. The Facility may at any time expand or alter the 

Swaps offered for trading on the System pursuant to Commission Regulations.

(3) The System shall disclose the identities of the Participant to the counterparty after 

the trade has been executed. 

(b) Participation 

(1) In addition to the requirements set forth in the Facility Rulebook, Participants must 

also have in place adequate measures and arrangements to prevent the submission of Erroneous 

Bids/Offers to the System.

(2) A Participant’s Authorised Traders will be deemed eligible to trade all Swaps 

offered for trading on the System unless the Participant specifies otherwise. 

(c) Access Method

(1) Participant shall call or email NEX SEF operations to access the System at the 

following.

(i) Calls should be addressed to + 65 6831 0950
 

126

(d) Trading Calendar and Hours of Operation

(1) Participant shall not enter Bids/Offers into the System outside of the hours of 

operation of the System as stated by the Facility. Any such Bids/Offers will be invalid and any 

resultant trades treated as Error trades.

(2) The trading hours for the System are Sunday 3:00 PM ET to Friday 5:30 PM ET. 

The System is closed for trading on holidays determined and notified by the Facility.

(e) Orders – Registration of Orders

(1) Each Bid/Offer must specify the Bid/Offer duration.

(2) Participants may enter Bids/Offers by emailing the SEF. The SEF shall enter any 

Bid/Offer into the System as soon as reasonably practicable after the Bid/Offer is received.

(3) . 

(4) Once a Participant is admitted to the Facility to trade Contracts, all Bids/Offers in 

respect of Contracts available to trade via the System will be made visible to the Participant, subject 

to the restrictions outlined in Appendix 2. However, Participants may customize their screen to limit 

the Bids/Offers they view to only those Contracts they have selected. All Bids/Offers that are visible 

to the Participant will be displayed on an anonymous basis to other Participants. 

(5) If a Bid/Offer is resting at the System’s close, the System will automatically cancel 

the Bid/Offer.

(6) Participants must provide their existing counterparty credit relationships to a NEX 

SEF customer service representative for an uncleared instrument prior to registration of a Bid/Offer. 

(f) System Functionality

(1) Bids/Offers

(i) All Bids/Offers are automatically matched according to price-time priority. 

(ii) Bids/Offers are always matched at the price limit of the submitted Bid/Offer, 

or better. 

(iii) All Bids/Offers are firm. Incoming Bids/Offers are always matched at the 

best available price. 

(2) Bid/Offer Types & Conditions

(i) The System supports limit Bids/Offers only. 

(ii) Details of Bid/Offer types, conditions, duration and management are found 

in Appendix 2 to this System Protocol.
 

127

Appendix 1

Contracts Offered for Trading on the Shield Order Book:

1. All Contracts listed by NEX SEF except Non-Deliverable Forwards are offered for 

trading on the EBS Order Book.
 

128

Appendix 2 

Bid/Offer Types and Shield Order Book Configuration

(a) Stacked Order Book:

(1) The System supports a stacked Order Book. If there are multiple Bids/Offers at the same 

price point on one side (e.g., 5 orders for 100m each) then when aggressed for the full 

amount (e.g., 500), each Bid/Offer on the passive side will trade. 

(b) Other Bid/Offer Type

(1) Time attributes: Good Till Canceled 
 

129

Rule 903 Pre-Arranged Crossing System Protocol

Glossary 

Access Details The non-transferable, confidential personal 

user identifiers and all passwords issued by 

the Facility to each Authorised Trader. 

Erroneous Bids/Offers Any Bid/Offer which does not meet the 

requirements set out in this System Protocol. 

System API The application programing interface 

authorized by NEX SEF for accessing the 

System.

System The Shield-based Pre-Arranged Crossing 

Platform.

System Supervisor The market support team of the System.

(a) General Rules

(1) This System Protocol is part of the Facility Rulebook. In the event of a conflict between this 

System Protocol and the Facility Rulebook, this System Protocol shall take precedence. 

All capitalized terms not otherwise defined in this System Protocol shall have the meanings 

ascribed to them in the Facility Rulebook.

(2) The System offers a Pre-Arranged Cross platform for all Swaps that are listed by the 

Facility. The Facility may at any time expand or alter the Swaps offered for trading on the 

System pursuant to Commission Regulations.

(b) Participation 

(1) In addition to the requirements set forth in the Facility Rulebook, Participants must have in 

place adequate measures and arrangements to prevent the submission of Erroneous 

Bids/Offers to the System.

(2) A Participant’s Authorised Traders will be deemed eligible to trade all Swaps offered for 

trading on the System unless the Participant specifies otherwise. 

(c) Access Method

(1) Participants may access the System through the System API.

(2) Participants may request assistance with the System API via email or phone from NEX 

SEF customer service representatives.

(d) Trading Calendar and Hours of Operation

(1) Participant shall not enter Bids/Offers into the System outside of the hours of operation of 

the System as stated by the Facility. Any such Bids/Offers will be invalid and any resultant 

trades treated as Error trades.

(2) The trading hours for the System are Sunday 3:00 PM EST to Friday 5:30 PM EST. The 

System is closed for trading on holidays determined and notified by the Facility. 

(e) Orders – Registration of Orders

(1) Participants shall enter Bids/Offers by entering Bids/Offers directly through the System API.
 

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(f) System Functionality

(1) All Bids/Offers are matched once both orders have been inputted into the System. 
 

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ANNEX 1 Reporting Counterparty Rules

Relevant Portions of Reporting Counterparty Rules

(a) The ISDA Reporting Party Rules are set forth below by asset class: 

(1) Credit: 

(i) Where both parties are the same hierarchy level (e.g., Major Swap Participant vs. 

Major Swap Participant, Swap Dealer vs. Swap Dealer, or non‐Swap Dealer/Major 

Swap Participant vs. non‐Swap Dealer/Major Swap Participant), the reporting 

counterparty is the floating rate payer (a/k/a ‘seller’). For swaptions, the reporting 

counterparty is the floating rate payer of the underlying swap. 

(ii) For real time reporting of step‐in novations, the reporting counterparty should be 

determined between the transferor and transferee based on the above and the 

position of the transferee. So, if both parties are of the same classification and the 

transferee is the seller (floating rate payer) in the novated transaction, the 

transferee is the reporting counterparty. If the transferee is the buyer (fixed rate 

payer), then the transferor is the reporting counterparty.

(iii) For novated transactions, the reporting counterparty should be reassessed 

between the transferee and remaining party based on the above.

(2) Rates: 

(i) Product Attribute Determination 

Reporting Counterparty Tiebreaker Logic ‐ Rates

Trade Type Explanation Reporting Counterparty

Cap/ Floor When a single Fixed Rate Payer 

exists

Fixed Rate Payer. Otherwise, Reverse ASCII sort, first LEI/pre-LEI

Debt Option All Option Buyer

Exotic1 All Reverse ASCII sort, first LEI/pre-LEI

FRA All Fixed Rate Payer

IRS Basis All Reverse ASCII sort, first LEI/pre-LEI

IRS Fix‐Fix All Reverse ASCII sort, first LEI/pre-LEI

IRS Fix‐Float All Fixed Rate Payer

IRSwap: Inflation When a single Fixed Rate Payer 

exists

Fixed Rate Payer. Otherwise, Reverse ASCII sort, first LEI/pre-LEI

IRSwap: OIS All Fixed Rate Payer

Swaption All Option Buyer

XCCY Basis All Reverse ASCII sort, first LEI/pre-LEI

XCCY Fix‐Fix All Reverse ASCII sort, first LEI/pre-LEI

XCCY Fix‐Float All Fixed Rate Payer

1 Cancellable Swaps are categorized as “Exotic” in line with the work completed in partnership with

several supervisory authorities in March 2010 - G14 firms committed to drive a high level of product,

processing and legal standardization in each asset class with a goal of securing operational efficiency,

and mitigating operational risk. The resulting standardization documents are located on ISDA’s website 

at http://www2.isda.org/attachment/Mzk3Mg==/Standardization%20Legend%20for%20Rates.
 

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(i) (ii) Tiebreaker Logic: When the LEI/pre-LEI tiebreaker is invoked the 

following processes will be used:

A. Identifier Tiebreaker Logic Scenarios

(aa) When only one firm has an LEI/pre-LEI then the party with the 

LEI/pre-LEI is the reporting counterparty.

(bb) When both firms have an LEI/pre-LEI then determine based on 

comparison of the two LEI/pre-LEIs in accordance with the below.

B. Determining sort order of identifiers

(aa) LEI/pre-LEI are comprised of characters from the following set {0-

9, A-Z}.

(bb) For avoidance of doubt, before comparing IDs convert all IDs to 

UPPER CASE only.

(cc) For comparison basis the sort order will be reverse ASCII sort 

order. For avoidance of doubt the following are sort order of 

precedence:

i. Z, Y, X, W, V, U, T, S, R, Q, P, O, N, M, L, K, J, I, H, G, F, 

E, D, C, B, A, 9, 8, 7, 6, 5, 4, 3, 2, 1, 0.

C. When comparing two IDs the reporting counterparty will be the firm with 

the first ID in the list when sorted in reverse ASCII sort order.

(2) Equity: When both parties are of the same hierarchy level, the reporting counterparty will 

be the:

(i) Seller of performance on any product in the current version of the OTC Derivatives 

Products Taxonomies published by ISDA, which is attached as Attachment 1 to 

this Annex 1 (the “Taxonomy”).

(ii) Seller of product on all other (exotic) products in the Taxonomy.

(iii) If seller cannot be identified the fall back would be for the parties to agree amongst 

themselves.

(iv) For portfolio swaps agreements (PSA’s) the seller will remain the seller regardless 

of the underlying’s performance.

For the avoidance of doubt, if the trade is confirmed via negative affirmation, the provider 

of the negative affirmation agreement is the reporting counterparty.

(3) Commodities

(i) A seller convention applies if the executed trade is one of the trade types 

enumerated in the table below. Otherwise, the LEIs of the parties should be 

compared in standard ASCII order and the party with the first ID in the list will be 

the reporting counterparty.
 

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reporting counterparty Tiebreaker Logic –Commodities

Trade Type Explanation Reporting Party

Fixed Floating 

Swap

Seller of the Fixed leg = Reporting Party Fixed leg seller (Receiver of Cash on the fixed leg)

Option Receiver of premium payment or Option 

writer

Seller

Swaption Receiver of premium payment or swaption

writer

Seller

Option Strategies 

(Collars, 

Corridors, 

Multi-leg)

Premium receiver is the Seller = Reporting 

Party

Premium Receiver

If no premium, go to alpha convention Go to alpha convention

For trade types not listed above

Seller convention 

with

Alpha

Any trade that falls outside of that list will have the alphanumer ic ASCII convent ion applied based on the 

LEI. The LEI selected as the reporting counterparty will be the LEI at the top of that sort order. As an 

example, ASCII is the same sort logic that MS Excel applies.

(4) FX

(i) When asset class tie‐breaker logic needs to be applied:

A. For cash trades: The reporting counterparty is the counterparty selling the 

currency that occurs first in the 26‐letter English alphabet.

B. For options: The reporting counterparty is the seller of the option.

Reporting counterparty Tie Breaker Logic – FX

Taxonomy Rule Comment

Forward FX Cash Rule For FX Swaps, the Reporting Party of both legs of the swap would

be determined by applying the Cash Rule to the far-leg of the Swap

NDF FX Cash Rule n/a

Option Option Seller Rule n/a

NDO Option Seller Rule n/a

Simple Exotic Option Seller Rule n/a

Complex Exotic See comment For a complex exotic product where there is an unambiguous seller 

of the product, then Option Seller Rule would apply. The seller 

determination would be driven by the seller as agreed in the 

standard FpML representation of the product. IF there is no clear 

seller, then the FX Cash Rule would apply.

For more information see:

http://www.gfma.org/uploadedfiles/initiatives/foreign_exchange_(fx)/determiningreportingpartyunderdoddfrank.pdf
 

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Attachment 1

See ISDA OTC Derivatives Products Taxonomies (UPI) (Updated September 2019) for 

specifications.
 

ACTIVE 213366248v.89