Peter D. Santori

Chief Regulatory Officer and

Chief Compliance Officer

e: peter.santori@thesmallexchange.com

Rule Self-Certification

June 6, 2023

Christopher J. Kirkpatrick

Secretary of the Commission

Commodity Futures Trading Commission

Three Lafayette Center

1155 21st Street, NW

Washington, DC 20581

Re: SMFE 2023-002: Self-Certification Pursuant to CFTC Regulation 40.6 -

Regarding Small Exchange, Inc.’s Market Maker Incentive Program

Dear Mr. Kirkpatrick:

Pursuant to Section 5c(c)(1) of the Commodity Exchange Act, as amended (“Act”), and 

Section 40.6 of the Commission’s regulations thereunder, Small Exchange, Inc. (the “Exchange”) 

submits notice to the Commission that the Exchange is launching a Market Maker Incentive 

Program (“Program”) for various eligible contracts, as set forth on the attached Exhibit A, which 

is attached hereto and incorporated herein by reference. The Program will become effective on

July 1, 2023, and be operative through December 31, 2023.

The purpose of the Program is to promote participation by providing an incentive to the 

Exchange market makers to alleviate some of the costs associated with trading Exchange products.

The Exchange certifies that Program complies with the requirements of the Commodities 

Exchange Act (“Act”) and the rules and regulations promulgated thereunder. Specifically, the 

Exchange has reviewed the core principles as set forth in the Act (“Core Principles”), and believes 

that the Program complies with:

● Core Principle 2, Compliance with Rules: The Program is established pursuant to 

existing Exchange Rule 315. Participants in the Program will be selected by the 

Exchange using criteria as stated in Exhibit A. The Exchange will monitor Program 

Participants’ volume to ensure proper distribution of earned incentive.

● Core Principle 4, Monitoring of Trading: The Program will not impact the 

Exchange’s ability to perform its trade practice and market surveillance obligations 
2

under the CEA, CFTC Regulations, and its Rules. The Exchange will monitor 

trading in the Program to prevent manipulative trading and market abuse.

● Core Principle 7, Availability of General Information: The terms of the Program 

have been disseminated on the Exchange’s website (www.smallexchange.com). 

For further inquiry, Market Participants may contact the Exchange for more 

information regarding the Program.

● Core Principle 9, Execution of Transactions: The products included in this Program 

are listed for trading in the open and competitive market.

● Core Principle 12, Protection of Market Participants: The Program is subject to the 

Rules of the Exchange, which include prohibitions against abusive practices, 

including fraudulent, anti-competitive or unfair activity.

● Core Principle 18, Recordkeeping: All Participants in the Program must execute a 

contractual agreement with the Exchange in which each participant will expressly 

agree to comply with and be subject to applicable regulations and Exchange Rules. 

The Program is subject to the Exchange’s record retention policies, which comply 

with the CEA and CFTC Regulations.

The Program will not incentivize abusive or manipulative trading activity, and it will not 

impact the Exchange’s ability to monitor trading activity and detect aberrant trade or order activity. 

The Exchange rules prohibit fraudulent, manipulative or abuse trading practices, and all Exchange 

Participants are required to comply with Exchange rules and relevant regulation. The Program 

does not impact the Exchange’s order execution processes. Finally, the Exchange has systems 

designed to track Program Participants’ quote and trade activity to ensure distribution of incentives 

properly earned under the Program.

The Exchange certifies the Program complies with the Act and all rules and regulations 

promulgated thereunder. The Exchange is not aware of any opposing views. The Exchange also 

certifies that this submission has been posted on the Exchange’s website at 

www.smallexchange.com.

If you require any additional information regarding this submission, please contact the 

undersigned at peter.santori@thesmallexchange.com.

Regards,

/s/ Peter D. Santori

Chief Regulatory Officer and

Chief Compliance Officer

Enclosed: Exhibit A