SUBMISSION COVER SHEET

IMPORTANT: Check box if Confidential Treatment is requested 

Registered Entity Identifier Code (optional): 23-338

Organization: NEX SEF Limited ("NEX SEF")

Filing as a: DCM SEF DCO SDR 

Please note - only ONE choice allowed.

Filing Date (mm/dd/yy): 10/26/23 Filing Description: Amendments to NEX SEF Rule 901

(“NEX SEF NDF System Protocol”) (Form SEF Exhibit M) and the NEX SEF Fee Schedule 

(Form SEF Exhibit K) in Connection with the Adoption of Tailored Order Book

Functionality.

SPECIFY FILING TYPE 

Please note only ONE choice allowed per Submission.

Organization Rules and Rule Amendments

Certification § 40.6(a)

Approval § 40.5(a)

Notification § 40.6(d)

Advance Notice of SIDCO Rule Change § 40.10(a)

SIDCO Emergency Rule Change § 40.10(h)

Rule Numbers: See filing.

New Product Please note only ONE product per Submission.

Certification § 40.2(a) 

Certification Security Futures § 41.23(a)

Certification Swap Class § 40.2(d)

Approval § 40.3(a)

Approval Security Futures § 41.23(b)

Novel Derivative Product Notification § 40.12(a)

Swap Submission § 39.5

Product Terms and Conditions (product related Rules and Rule Amendments)

Certification § 40.6(a) 

Certification Made Available to Trade Determination § 40.6(a)

Certification Security Futures § 41.24(a)

Delisting (No Open Interest) § 40.6(a) 

Approval § 40.5(a)

Approval Made Available to Trade Determination § 40.5(a)

Approval Security Futures § 41.24(c)

Approval Amendments to enumerated agricultural products § 40.4(a) § 40.5(a)

“Non-Material Agricultural Rule Change” § 40.4(b)(5)

Notification § 40.6(d)

Official Name(s) of Product(s) Affected:

Rule Numbers: 
20 S Wacker Dr Chicago, IL 60606 T 312 466 7478 tim.elliott@cmegroup.com cmegroup.com

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Timothy Elliott

Managing Director and Chief Regulatory Counsel

Legal Department

October 26, 2023

VIA ELECTRONIC PORTAL

Mr. Christopher J. Kirkpatrick

Office of the Secretariat

Commodity Futures Trading Commission

Three Lafayette Centre

1155 21st Street, N.W.

Washington, D.C. 20581

Re: CFTC Regulation 40.6(a) Certification. Amendments to NEX SEF Rule 901

(“NEX SEF NDF System Protocol”) (Form SEF Exhibit M) and the NEX SEF 

Fee Schedule (Form SEF Exhibit K) in Connection with the Adoption of 

Tailored Order Book Functionality.

NEX SEF Submission No. 23-338

Dear Mr. Kirkpatrick:

NEX SEF Limited (“NEX SEF”) is certifying to the Commodity Futures Trading Commission (“CFTC” or 

“Commission”) amendments to: (1) NEX SEF Rule 901 (“NEX SEF NDF System Protocol”) and the NEX 

SEF Fee Schedule and discount program therein to be implemented upon the approval of the UK’s 

Financial Conduct Authority (collectively, the “Rule Amendments”). This submission shall become 

effective on November 10, 2023.

Specifically, the Rule Amendments shall:

1. provide for the adoption of an additional “Tailored Order Book” market segment in Rule 901 by 

amending the Glossary and adding a new subchapter (g), which establishes the eligibility criteria, 

dealing rules, and matching process for Tailored Order Books. The inclusion of a Tailored Order 

Book shall afford participants an opportunity to customize a pool of co-participants, tenors, 

amount increments, price increments, minimum quote life, and market data intervals; and

2. amend the NEX SEF Fee Schedule to: (a) include a specific fee structure for participants utilizing

the new Tailored Order Book; and (b) provide an initial 12-month fee discount program for 

participants utilizing the Tailored Order Book functionality. 

NEX SEF reviewed the swap execution facility core principles (“Core Principles”) as set forth in the 

Commodity Exchange Act (“CEA” or “Act”) and identified that the Rule Amendments may have some 

bearing on the following Core Principles:

Core Principle 2 – Compliance with Rules: CEA Section 5h(f)(2)(A) requires a swap execution 

facility to establish and enforce compliance with its rules. The CFTC has implemented this statutory 

requirement by adopting CFTC Regulation 37.203(a), which requires a swap execution facility to 

prohibit manipulative or disruptive trading practices prohibited by the CEA or by the Commission 

pursuant to Commission regulation. The Rule Amendments are subject to all NEX SEF Rules, 

including the rules on trading procedures set forth in Chapter 3 of its rulebook, the prohibitions 

against fraudulent, noncompetitive, unfair and abusive practices as outlined in Chapter 4 of its 

rulebook, and the dispute resolution and arbitration procedures of Chapter 5 of its rulebook. As with 

all products listed for trading on NEX SEF, trading activity in the Contracts will be subject to 

monitoring and surveillance by NEX SEF’s market regulation staff, which has the authority to 

exercise its investigatory and enforcement power where potential rule violations are identified. 
20 S Wacker Dr Chicago, IL 60606 T 312 466 7478 tim.elliott@cmegroup.com cmegroup.com

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Additionally, the Fee Schedule com0plies with the requirements of impartial access in Core

Principle 2 and Commission Regulation 37.202 because all fees and any discounts will be applied 

in an impartial, fair, and non-discriminatory manner and will be made transparent to all participants. 

In compliance with Core Principle 2 and Commission Regulation 37.200, the Fee Schedule does 

not incentivize manipulative trading or market abuse or impact NEX SEF’s ability to perform its 

trade practice and market surveillance obligations under the Act, and Market Regulation staff will 

continue to monitor trading to prevent manipulative trading and market abuse. 

Core Principle 4 – Monitoring of Trading and Trade Processing: CEA Section 5h(f)(4)(A) 

requires swap execution facility to establish trading procedures to be used in entering and 

executing orders traded on or through the facilities of the swap execution facility. The Rule 

Amendments are subject to the NEX SEF rules which include prohibitions on manipulation and 

price distortion. The fee discount program also complies with the requirements for monitoring and 

trade processing.

Core Principle 9 – Timely Publication of Trading Information: NEX SEF will continue to 

publish contract trading volumes and price information daily on its website.

Core Principle 10 - Recordkeeping and Reporting: All required trade information is included in 

the audit trail and is sufficient for the Market Regulation Department to monitor for market abuse. 

The fee discount program also complies with the requirements of recordkeeping and reporting. 

NEX SEF has implemented systems to track the program participants’ transactions to ensure 

proper fee discounts are applied.

Exhibit A, provided under separate cover, provide amendments to the Rule 901 in blackline and format, 

respectively. Exhibit B, provided under separate cover, provide amendments to the NEX SEF Fee Schedule 

in blackline and clean format, respectively. NEX SEF is requesting confidential treatment of the Fee 

Schedule and discount program therein which is being simultaneously submitted to the Commission with 

this submission.

Pursuant to Section 5c(c) of the CEA and Regulations 37.3(b)(3) and 40.6(a), NEX SEF hereby certifies 

that the Rule Amendments comply with the Act, as amended, and the Commission’s regulations thereunder. 

There were no substantive opposing views to this proposal.

NEX SEF certifies that this submission has been concurrently posted on the CME Group website at 

http://www.cmegroup.com/market-regulation/rule-filings.html.

If you require any additional information regarding this submission, please contact the undersigned at (312) 

466-7478 or via email at CMEGSubmissionInquiry@cmegroup.com.

Sincerely,

/s/ Timothy Elliott

Managing Director and Chief Regulatory Counsel

Attachments: Exhibit A – NEX SEF Rule 901 (blackline format) 

Exhibit B – NEX SEF Fee Schedule (blackline format) (confidential treatment 

requested)
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Exhibit A

NEX SEF Rulebook

Amendments to Rule 901 (“NEX SEF NDF System Protocol”)

(blackline format)

(provided under a separate cover)

Exhibit B

NEX SEF Fee Schedule

(blackline format)

(provided under a separate cover)

(CONFIDENTIAL TREATMENT REQUESTED)