Crypto.com | Derivatives North America

200 West Jackson Blvd., Suite 1400

Chicago, IL 60606

September 26, 2023

Via CFTC Portal Submissions

Mr. Christopher Kirkpatrick

Secretary of the Commission

Office of the Secretariat

Commodity Futures Trading Commission

3 Lafayette Centre 

1155 21st Street, N.W. 

Washington D.C. 20581

RE: Self-Certification of Product: Bitcoin Cash (BCH) Touch Bracket Contracts – Submission 

Pursuant to Commission Regulation §40.2(a)

Dear Mr. Kirkpatrick:

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

§40.2(a) of the regulations promulgated by the Commodity Futures Trading Commission (the 

“Commission”) under the Act (the “Regulations”), North American Derivatives Exchange, Inc. 

d/b/a Crypto.com | Derivatives North America (“CDNA” or the “Exchange”) hereby self-certifies 

the terms and conditions for a cryptocurrency commodity product (the “BCH Crypto Contract”).

BITCOIN CASH (BCH) CRYPTOCURRENCY TOUCH BRACKET CONTRACTS

The Exchange has self-certified multiple cryptocurrency contracts in the past, including Touch 

Bracket Contracts on Bitcoin (BTC) and Ether (ETH) on October 28, 2022, Touch Bracket 

Contracts Litecoin (LTC) and Dogecoin (DOGE) on June 21, 2023, and BTC and ETH Event 

Contracts on April 10, 2023. In addition, the Exchange has listed both Event Contracts and Call 

Spread Contracts based on the Underlying bitcoin market at various times since 2014.1 Since 

launching the BTC, ETH and LTC Touch Bracket Contracts in 2023, combined trading volumes of 

these contracts totals over 674,000 contracts. Therefore, the Exchange continues to expand its 

cryptocurrency commodity derivative product offerings to meet public demand for diverse and 

regulated products.2 

1 Unless otherwise defined herein, capitalized terms shall have the same definition as set forth in Rule 1.1 of the 

Exchange Rulebook. Touch Bracket Variable Payout Contracts are also referred to as “Knock-out Touch Bracket 

Contracts” or “UpDown Touch Bracket Contracts” or “Knock-outs” or “UpDown Options”.

2 We use the terms “cryptocurrency” and “digital asset” interchangeably in this filing.
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The new BCH Crypto Contracts will be cash-settled and will operate in the same fashion as the 

Exchange’s currently listed Touch Bracket Contracts, including the BTC, ETH, and LTC Touch 

Bracket Contracts. Touch Bracket Contracts are not only quite popular in markets with high 

volatility, such as the cryptocurrency markets, but due to their unique structure, inherently 

minimize the possibility of contract manipulation. 

A Touch Bracket Contract is a type of Variable Payout Contract and is similar to a Call Spread in 

that it contains a predetermined Ceiling and Floor price level. However, unlike a Call Spread 

Contract, if the Underlying market, as reflected in the corresponding Indicative Index, for a Touch 

Bracket Contract equals or moves through (i.e., “touches”) either the Ceiling or Floor level of a 

Touch Bracket at any time prior to the listed Expiration time, the Touch Bracket Contract will 

immediately expire. In the event the Underlying market does not touch the Ceiling or Floor prior 

to its listed Expiration time, the Touch Bracket will expire at the listed Expiration time, which will 

occur on the last trading day of the week. Accordingly, the Exchange categorizes its Touch 

Bracket Contracts as “weekly” Contracts. 

The value of the BCH Crypto Contracts is based upon the pricing characteristics of each 

cryptocurrency commodity3 and will be as $100 for each BCH Crypto Contract. The Expiration 

Value of the BCH Crypto Contracts will be the Indicative Index value calculated by the Exchange 

at the time that Indicative Index Value either equals or is greater than the Contract’s Ceiling, is 

equal to or less than the Contract’s Floor, or at the listed Expiration if the Contract is not knockedout early. Because a Touch Bracket Contract will always expire concurrent with the Indicative 

Index Value that will be used to determine the settlement of the Contract, it is impossible for the 

final Expiration Value to be published prior to the expiration of the Exchange Contract. No trading 

in the listed Contract will occur following expiration of the Contract. Moreover, the Indicative 

Index Value is calculated using Underlying bid/ask midpoint prices leading up to the Contract’s 

expiration. Therefore, no price action in the Underlying markets following expiration of the 

Exchange Contracts will impact the final settlement of the Exchange Contracts. Finally, 

3 Virtual currencies have been broadly identified by the Commission as “commodities” in various filings. See, e.g., CFTC 

v. Changpeng Zhao, Binance Holdings Limited, Binance Holdings (IE) Limited, Binance (Services) Holdings Limited, and 

Samuel Lim (filed Mar. 27, 2023) (N.D. Ill.) at ¶ 24 (stating “Certain digital assets, including BTC, ETH, DOGE, and at 

least two fiat-backed stablecoins, tether (‘USDT’) and the Binance USD (‘BUSD’), as well as other virtual currencies as 

alleged herein, are ‘commodities,’ as defined under Section 1a(9) of the Act, 7 U.S.C. § 1a(9)”). See Also, In re Tether 

Holdings Ltd., et al., CFTC Docket No. 22-04 (Oct. 15, 2021) (stating “Digital assets such as bitcoin, ether, litecoin, and 

tether tokens are commodities.”) and CFTC v HDR Global Trading Ltd., et al. (d/b/a BitMEX), 20-cv-8132, (filed October 

01, 2020) (S.D.N.Y) at ¶ 23 (stating “Bitcoin, ether, Litecoin, and other virtual currencies [emph. added] are distinct from 

‘real’ or ‘fiat’ currencies, which are the coin and paper money of the United States or another country that are designated 

as legal tender, circulate, and are customarily used and accepted as a medium of exchange in the country of issuance. 

Digital assets, such as bitcoin, ether, and litecoin are ‘commodities’ as defined under Section 1a(9) of the Act, 7 U.S.C. 

§ 1a(9) (2018)”) (emph. added). Digital assets, such as bitcoin, ether, and litecoin are ‘commodities’ as defined under 

Section 1a(9) of the Act, 7 U.S.C. § 1a(9) (2018)”) (emph. added). Additionally, BCH was created by a fork from BTC, 

therefore, BCH is tethered to, and maintains the characteristics of BTC, which the CFTC has identified as a “commodity,” 

as noted above. BCH has been in existence for over six years and operates as a digital asset or virtual currency 

because, among other reasons, (1) it is used as a transfer of value and (2) because it is used for payments. Indeed, 

the digital asset in this filing is captured under the authority of the CFTC, as well as the broad definition of commodity 

in Section 1a(9) of the Act. Moreover, BCH, in and of itself, has never been categorized as anything other than a 

commodity and no law or regulatory authority in the United States has indicated anything to the contrary.
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consistent with all other Contracts currently traded on the Exchange, the BCH Crypto Contracts 

will be fully collateralized. 

The Indicative Index for the BCH Crypto Contracts will be determined by using the Exchange’s 

standard Indicative Index calculation method (the “the Exchange Calculation Method”).4 The 

Exchange will calculate and produce an Index Value for each cryptocurrency once each second 

throughout the life of the BCH Crypto Contracts. That is, each second the Exchange will calculate 

an Index Value for the respective cryptocurrency by taking all bids/ask midpoint prices in the 

relevant Underlying markets, as reported in the ICE® Crypto Data (as further described below), in 

the sixty (60) seconds leading up to the Calculation Time, provided at least twenty-five (25) 

bids/ask midpoint prices are captured during the sixty (60) second period, removing the highest 

twenty (20) percent of Underlying prices and the lowest twenty (20) percent of Underlying 

bids/ask midpoint prices from the data set5, and using the remaining Underlying bids/ask 

midpoint prices to calculate the relevant cryptocurrency Index Value for that second. The 

calculation used is a simple average of the remaining Underlying bids/ask midpoint prices in the 

data set, rounded to one decimal point past the precision of the Underlying market. In the event 

the time it takes to collect at least twenty-five (25) Underlying bids/ask midpoint prices exceeds 

the sixty (60) second period, the Index Value will be calculated by taking the last twenty-five (25) 

Underlying bids/ask midpoint prices just prior to the Calculation Time, removing the highest five 

(5) Underlying bids/ask midpoint prices and the lowest five (5) Underlying bids/ask midpoint 

prices, and using the remaining fifteen (15) Underlying bids/ask midpoint prices to calculate the 

relevant Index Value. The calculation used is a simple average of all fifteen (15) Underlying 

bids/ask midpoint prices, rounded to one decimal point past the precision of the Underlying 

market. The Exchange uses this calculation method as a means of preventing manipulation in 

the Underlying market to influence the Exchange Expiration Value. In particular, the Exchange 

Calculation Method prevents a single bid/ask midpoint in the Underlying market from “knockingout” a Touch Bracket by virtue of trading a price level design to touch the Floor or the Ceiling.

Each BCH Crypto Contract will be listed with 4 concurrent brackets of the same width, but each 

with its own offset to the Underlying market. This structure allows a participant who wants to 

express the opinion that they believe the market is going down by selling the same positive risk 

to reward composition as a trader who believes the market is going to go higher and therefore 

wants to buy. For example, if the Indicative Index Value of BCH is 230 just before the contract 

creation, and each bracket has a range of 5 points, the following brackets could be generated:

Bracket 1: 238 (Ceiling) - 228 (Floor) (4:15PM)

4 All Touch Bracket Contracts listed and cleared by the Exchange make use of the Indicative Index to determine the 

Expiration Value of the contract. Specifically, these include the BTC, ETH, EUR/USD, GBP/USD, USD/CHF, USD/JPY, 

AUD/USD, USD/CAD, EUR/GBP, AUD/JPY, GBP/JPY, EUR/JPY, Wall Street 30, US 500, US Tech 100, US SmallCap 2000, 

Gold, Silver, Crude Oil, and Natural Gas Touch Bracket Contracts.

5

If 20% of the data set would result in a non-integer number of bid/ask midpoint prices, the number of bid/ask midpoint 

prices to be removed from the set will be rounded down. For example, if the number of bid/ask midpoint prices 

collected during the last 10 seconds prior to the close of trading was 31, 20% of the data set would be 6.2 bid/ask 

midpoint prices. As 6.2 is a non-integer number, the value will be rounded down, and the 6 highest and 6 lowest bid/ask 

midpoint prices will be removed from the data set.
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Bracket 2: 236 (Ceiling) - 226 (Floor) (4:15PM)

Bracket 3: 234 (Ceiling) - 224 (Floor) (4:15PM)

Bracket 4: 232 (Ceiling) - 222 (Floor) (4:15PM)

Additionally, each BCH Crypto Contract will have a tick size equivalent to 0.1 per point, with a tick 

value of $1.00, and a contract value of $100.00. As a type of Variable Payout Contract, the BCH 

Crypto Contract will have a variable payout at settlement. The settlement payout, or Settlement 

Value, is dependent on the difference between the Opening Trade Value and the Closing Trade 

Value or Expiration Value. 

The Exchange plans to list the BCH Crypto Contracts based on the Underlying BCH cryptocurrency 

commodity market and settle the BCH Crypto Contracts using data from the “ICE Cryptocurrency 

Data” feed (“ICE Crypto Data”'), distributed by ICE Data® Connectivity and Feeds, Inc. (“IDCF”). 

IDCF is part of the Intercontinental Exchange group of entities. In 2018 IDCF partnered with 

Blockstream Corporation, Inc., a leading provider of blockchain technologies, distributed systems, 

and crypto-financial infrastructure, to launch the ICE Crypto Data. The ICE Crypto Data is an 

aggregation of comprehensive multi-asset data from the most widely and actively traded 

cryptocurrencies from leading trading venues, markets, and exchanges, compiled by Blockstream 

and distributed by IDCF. The ICE Crypto Data currently includes data from thirty-one (31) trading 

venues, with nine (9) venues contributing data pertaining to BCH cryptocurrency commodity. The 

Exchange can customize the data it receives by selecting any number of the contributing venues. 

Of the contributing venues, the Exchange has selected specific venues from which IDCF will 

provide data to be used in the calculation of the Indicative Index for the BCH Crypto Contract (the 

“Underlying Trading Venues”), and ultimately the BCH Crypto Contracts’ Expiration Value. 

The Exchange made its selection of venues based on several factors, including CoinGecko’s Trust 

Score rating, the Underlying Trading Venues’ daily spot volume ranking, AML and KYC policies 

implementation, regulatory requirements, and the venue’s location in order to provide global 

coverage.6 The Exchange will monitor CoinGecko’s Trust Score ratings and may add to or remove 

venues from its data consumption based on these scores. CoinGecko’s rating of the venues the 

Exchange selects are located here. The ICE Crypto Data includes a number of data points to aid 

in the monitoring of the relevant crypto markets such as price discovery, historic data and fulldepth market by price and venue, and a 24-hour market overview. The Exchange will periodically 

review the Underlying Trading Venues it has selected to determine the venues’ continued 

6 CoinGecko has been in operation since 2014 and is a website and mobile app that provides live crypto prices, crypto 

education, and aggregates information regarding the performance of various cryptocurrencies for analysis purposes. 

CoinGecko launched its Trust Score rating in May 2019 in order to combat fake trading volume among cryptocurrency 

exchanges. In determining a rating, CoinGecko considers the crypto exchange’s liquidity/web traffic quality, scale of 

operations, API technical coverage, cybersecurity, team presence (transparency into management team), and past 

negative incidents (such as regulatory issues, hack incidents, account disputes, etc.). Further explanation as to 

CoinGecko’s Trust Score rating methodology can be found here. CoinGecko indicates that it is constantly revising, 

improving and upgrading factors for consideration in its ratings determination, and plans to include trade history 

analysis, API quality analysis, hot and cold wallet analysis, social media analysis, exchange support turnover time, user 

reviews, and licensing and regulations analysis in the future. 
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appropriateness for inclusion in the Indicative Index and may add or remove trading venues as 

appropriate. 

The Exchange Crypto Contracts are fully regulated and benefit the public interest both as a 

hedging tool and as speculative trading instruments. Like all the Exchange Contracts, the BCH 

Crypto Contracts will be fully collateralized at the time the transaction is entered. Additionally, 

the Ceiling and Floor function as a guaranteed stop. Thus, the trader is aware of the maximum 

risk to enter the transaction and the risk is limited by virtue of the predetermined Ceiling and Floor 

prices. Moreover, unlike the Underlying markets, the BCH Crypto Contracts trade on a 1:1 ratio, 

thereby increasing the trader’s potential reward as compared to investing the same dollar amount 

in the Underlying asset itself. However, the advantage of trading a Touch Bracket Contract is the 

built-in guaranteed stops (the Ceiling and the Floor) to protect the trader from losing more than 

his known maximum risk. Additionally, the trader may choose to exit his position as the market 

moves toward the range limits to either take profits or minimize losses.

The Underlying cryptocurrency commodity markets are traded 24 hours per day, 7 days per week. 

The Exchange has selected the specific Underlying Trading Venues from which to obtain prices 

to include in the calculation of the Indicative Index Value that operate from different regions 

globally, in order to mitigate against the possibility of less activity in the Underlying markets at 

any given time due to the time of day. The Exchange will have at least three dedicated Market 

Maker liquidity providers who will quote a two-sided market pursuant to the terms of the Market 

Maker Agreement and subject to the rules of the Exchange. Non-Market Maker Trading Members 

will have a Position Limit of 250 Contracts. In order to provide sufficient liquidity, Market Makers 

will be subject to Alternative Position Limits of one-thousand times the standard 250 lot limit, 

which shall apply on a per strike basis rather to the entire Class of Contracts. Market Makers will 

also be relieved of their quoting obligations once they have acquired a position of 500 Contracts 

but will be required to resume their obligations once their position has fallen below 500 Contracts. 

Regular trading in the BCH Crypto Contracts will begin at 11:00 pm ET on Friday evening, and 

expire at 4:15 pm ET on Friday afternoon, unless knocked-out prior to the stated Expiration time.

DCM CORE PRINCIPLES

The Exchange has identified the following Designated Contract Market (“DCM”) Core Principles 

as potentially being impacted by the addition of the BCH Crypto Contracts: Core Principle 2 

Compliance with Rules; Core Principle 3 Contracts Not Readily Subject to Manipulation; Core 

Principle 4 Prevention of Market Disruption; Core Principle 5 Position Limits or Position 

Accountability; Core Principle 7 Availability of General Information; Core Principle 8 Daily 

Publication of Trading Information; Core Principle 9 Execution of Transactions; Core Principle 10 

Trade Information; Core Principle 11 Financial Integrity of Transactions; Core Principle 12 

Protection of Markets and Market Participants; and Core Principle 18 Recordkeeping. 
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Core Principle 2 Compliance with Rules

Core Principle 2 requires the DCM to have the capacity to detect, investigate, and apply 

appropriate sanctions to any person that violates any rule of the contract market. The Exchange 

has a dedicated Compliance/Regulatory staff that monitors the markets, investigates potential 

rule violations, and imposes sanctions against individuals who have been determined to have 

violated the Rules. The Exchange has an automated trade surveillance system, Scila, which is 

capable of detecting potential trade practice violations, and also conducts real-time market 

monitoring of all trading activity in all Contracts, at all hours the Exchange is open. The Exchange 

is able to set the parameters by which the system detects potential issues. Chapter 9 of the 

Exchange Rulebook sets forth the Exchange’s authority to investigate and sanction Members for 

activity that violates the Exchange Rules. The Exchange Rule 2.10 grants the Exchange 

jurisdiction over any Person initiating or executing a transaction on or subject to the Rules of the 

Exchange, either directly or through an intermediary, and any Person for whose benefit such 

transaction has been initiated or executed. The Exchange’s jurisdiction continues 

notwithstanding the termination of the Person’s Exchange Membership. The Exchange Rule 3.3 

requires all Trading Members and Authorized Traders to comply with the Exchange Rules and to 

cooperate with the Exchange promptly and fully in any investigation, call for information, inquiry, 

audit, examination or proceeding. Such cooperation may involve a request for the Member’s or 

Authorized Trader’s activity in the relevant Underlying market. Accordingly, the listing of the BCH 

Crypto Contracts will not negatively impact the Exchange’s ability to comply with this Core 

Principle.

In addition, the Exchange is a member of the Intermarket Surveillance Group (“ISG”). The ISG is 

an international group of exchanges, market centers, and market regulators that perform market 

surveillance in their respective jurisdictions. The ISG provides a framework for the sharing of 

information and the coordination of regulatory efforts among exchanges trading securities and 

related products to address potential intermarket manipulations and trading abuses. The ISG 

was developed specifically to detect, prevent, and, when necessary, support enforcement 

proceedings related to potential fraud and manipulation across members' markets. To that end, 

each member of the ISG has agreed to the exchange of information, upon request from another 

ISG member, relating to transactions in any Financial Instruments, that relate to possible fraud 

and manipulation. Therefore, for this limited purpose, each ISG member “shall provide any 

information or documents...” requested by another ISG member. ISG membership also requires 

each and every ISG member, including other CFTC-regulated entities, provide any requested 

documents that they could obtain for their own reviews for fraud or manipulation, including any 

documentation from spot cryptocurrency markets obtainable by other ISG members in the 

ordinary course of business. Thus, the Exchange believes its ISG membership gives it access to 

a broad swath of data from underlying spot cryptocurrency markets through other ISG members 

who have the direct ability to request such data from spot markets for the limited purpose of 

detecting and preventing fraud and manipulation.
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The Exchange certifies that its surveillance program together with its participation in a key 

industry group for information sharing and regulatory coordination addresses the requirements 

of Core Principle 2.

Core Principle 3 Contracts Not Readily Susceptible to Manipulation and Core Principle 4 

Prevention of Market Disruption

Core Principles 3 and 4 require the DCM to list only contracts that are not readily susceptible to 

manipulation and to prevent market disruption. The Exchange has selected the Underlying 

cryptocurrency commodity markets upon which to base its BCH Crypto Contracts in large part 

due to their active markets in terms of volume and liquidity, and their popularity among 

consumers, institutional investors, and other financial professionals. Moreover, the Exchange 

Calculation Method significantly reduces the potential for manipulation of the Exchange 

Indicative Index by removing a percentage of the upper and lower Underlying bid/ask midpoint 

prices from the data set of ICE Crypto Data leading up to Expiration of the Exchange Contracts, 

with the remaining prices averaged. The ICE Crypto Data consists of numerous data points from 

numerous trading venues, which can be customized by the Exchange. Accordingly, an individual 

trading the BCH Crypto Contracts would not have knowledge of the specific trading venue(s) from 

which the final set of ICE Crypto Data will be used to calculate the Expiration Value, further 

preventing the potential for manipulation of the BCH Crypto Contracts’ settlement by trading in 

the Underlying markets. 

The BCH Crypto Contracts will have a position limit of 250 lots for non-market maker Members, 

which in combination with the composition of the ICE Crypto Data and the Exchange Calculation 

Method would make a manipulation attempt essentially cost-prohibitive. 

The Exchange Calculation Method (described above), which comprises the Exchange Indicative 

Index (described above), is calculated on a second-by-second basis and works in conjunction 

with the previous components to further mitigate any risk of potential manipulation of the 

Underlying market for a positive result in the Underlying market. The Exchange Calculation 

Method for the cryptocurrency commodity is constructed to use bid/ask midpoint prices on the 

constituent exchanges. Using the Exchange’s method, all bid/ask midpoint prices occurring in 

the Underlying market as reported in the ICE Cryptocurrency Data within a 60-second window. 

The highest 20% and lowest 20% of bid/ask midpoint prices are removed from the data set, and 

the remaining data set is averaged, resulting in the Indicative Index Value and likewise, Expiration 

Value. In the event 25 bid/ask midpoint prices are not available within any particular 60 second 

window, the window may be extended until 25 prices are collected (again outliers are removed 

and the remaining data set averaged). Analysis of historical market data indicates the event of

this occurring would be rare. Under the Exchange Calculation Method, even if a participant was 

able to absorb all liquidity across multiple exchanges to create off-market bid/ask midpoint 

prices, those prices would undoubtedly fall into the high/low 20% of the calculation and be 

discarded from the Indicative Index and Expiration Value calculation, thereby negating any 

nefarious activity in which a participant may have engaged. 
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The Exchange has dedicated staff to survey the market and uses the Scila surveillance system to 

assist with market monitoring at all times the Crypto Contracts will be listed. Additionally, the 

Exchange will monitor the ICE Crypto Data feed for anomalies and disproportionate moves in the 

prices making up the Expiration Value. The Exchange will be able to obtain information from the 

ICE Crypto Data to assist in the Exchange’s market surveillance, such as, any relevant BCH trade 

price, bid and ask prices, activity date and time, venue at which any relevant bid/ask occurred, 

size, volume, daily high and low, and a number of other data points. IDCF has agreed that upon 

the Exchange’s request arising as the result of a regulatory investigation or related market data 

inquiry, it will share with the Exchange additional information that may be provided by 

Blockstream, to the extent that it is reasonably practicable, and does not violate applicable laws, 

regulations and/or any of IDCF’s contractual obligations.

The Exchange trading system has a cap-check feature that ensures a trader has sufficient funds 

in their account to fully collateralize their Order if executed before the Order is accepted by the 

Exchange. The Exchange also has the ability to block new Orders and/or cancel working Orders 

if necessary to prevent market disruption. 

Therefore, the Exchange has determined that the BCH Crypto Contracts will not be readily 

susceptible to manipulation and the protections the Exchange has in place will minimize 

disruption in the BCH Crypto Contract market.

Core Principle 5 Position Limits

Core Principle 5 requires the DCM set position limits or position accountability to reduce the 

potential threat of market manipulation or congestion. The Exchange has set the initial position 

limit for Trading Members at 250 Contracts, thereby reducing the motivation for an individual to 

manipulate the Underlying market in order to affect the Exchange settlement, explained in detail 

above. Contracted Market Makers will not be subject to the 250 Contract position limit in order 

to provide sufficient liquidity to the market. Market Makers will instead be subject to an 

Alternative Position Limit of 1000 times the 250 lot limit (thus, 250,000) for non-Market Maker 

Trading Members. Additionally, such Alternative Position Limits shall apply not to the entire Class 

of Touch Bracket Contracts, but to each Touch Bracket Contract in that Class (i.e., per strike). A 

Market Maker taking advantage of the Alternative Position Limits must, within 1 business day 

following a request by the Exchange’s Compliance Department, provide the Exchange 

Compliance Department with a trade register detailing all trading activity in any account owned 

or controlled by the Market Maker in the relevant Underlying market during the 15 minutes 

immediately before and after any Expiration time identified by the Exchange’s Compliance 

Department in the request. 

Core Principle 7 Availability of General Information and Core Principle 8 Daily Publication of 

Information

Core Principles 7 and 8 require the DCM to make available to the public accurate information 

regarding the contract terms and conditions, as well as daily information on contracts such as 
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expiration value, settlement payout, volume, open interest, and opening and closing ranges. The 

Exchange makes available on its website the Exchange Rulebook, which will include the contract 

specifications for the BCH Crypto Contracts. In addition to the Rulebook, contract specifications 

will be detailed on the Exchange website itself. The Exchange publishes its Daily Bulletin which 

contains the preceding contract and transaction information on the website’s “Market Data” page. 

Also published on the Market Data page are Time and Sales, which are updated every 15 minutes, 

and Results which reports the Expiration Value and Settlement Value for all the Exchange 

Contracts settled throughout the day. Therefore, the listing of the BCH Crypto Contracts will not 

negatively impact the Exchange’s ability to comply with these Core Principles.

Core Principle 9 Execution of Transactions

Core Principle 9 requires the DCM to provide a competitive, open, and efficient market and 

mechanism for executing transactions that protects the price discovery process. The Exchange 

has [three] dedicated Market Makers that have committed to pricing a two-sided market. Market 

participants are able to view the orderbook up to five layers deep (depending on the market 

activity at any particular time) on the platform. The Exchange displays the Time and Sales of all 

Contracts traded on the Exchange on the Exchange website which is updated every 15 minutes. 

Therefore, the addition of the BCH Crypto Contracts will not negatively impact the Exchange’s 

ability to comply with this Core Principle.

Core Principle 10 Trade Information

Core Principle 10 requires the DCM to maintain rules and procedures to provide for the recording 

and safe storage of all identifying trade information in a manger that enables the contract market 

to use the information to assist in the prevention of customer and market abuses and to evidence 

any violations of the Exchange Rules. The Exchange maintains an electronic audit trail as 

required by the Commission Regulations which enables the Exchange to review all activity on the 

Exchange.

Core Principle 11 Financial Integrity of Transactions

Core Principle 11 requires the DCM to establish and enforce rules and procedures for ensuring 

the financial integrity of transactions entered on the contract market. As with all Contracts 

offered on the Exchange, the BCH Crypto Contracts will be fully collateralized and Members 

entering a transaction will have knowledge of their maximum risk prior to executing a transaction. 

All transactions will be cleared by the Exchange DCO. 

Core Principle 12 Protection of Markets and Market Participants

Core Principle 12 requires a DCM to protect markets and market participants from abusive 

practices committed by any party and to promote fair and equitable trading on the contract 

market. Chapter 5 of the Exchange Rulebook establishes Rules to protect the market and market 

participants from abusive, disruptive, fraudulent, noncompetitive, and unfair conduct and trade 
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practices. The Rules apply to all market participants and transactions on the Exchange, and 

participants will need to comply with the Rules when trading the new BCH Crypto Contracts.

Core Principle 18 Recordkeeping

Finally, Core Principle 18 requires a DCM to maintain records in accordance with part 45, Swap 

Data Recordkeeping and Reporting Requirements. In early 2013, the Exchange and CFTC staff 

engaged in discussions regarding the classification of its Event Contracts and Variable Payout 

Contracts following the Dodd-Frank amendments to the Act. The review resulted in the 

determination that the Exchange Event Contracts and Variable Payout Contracts were deemed to 

be “swaps” under Section 1a(47) of the Act. On June 30, 2017, the Exchange was granted relief 

in CFTC Letter No. 17-31 (the “Letter”) from Commission Regulations 38.8(b), 38.10, 38.951 (in 

part), 39.20(b)(2) and Parts 43 and 45. Pursuant to the Letter, the Exchange is not required to 

report its Variable Payout Contracts, which include Touch Bracket Contracts, to a swap data 

repository. The Exchange will continue to meet the requirements for which it has not been 

granted relief, as well as the conditional requirements set forth in the Letter. Accordingly, the 

addition of the BCH Crypto Contracts will not negatively impact the Exchange’s ability to comply 

with this Core Principle. 

DCO CORE PRINCIPLES

The Exchange has identified the following Derivatives Clearing Organization (“DCO”) Core 

Principles as potentially being impacted by the addition of the BCH Crypto Contracts: Core 

Principle C Participant and Product Eligibility; Core Principle D Risk Management; Core Principle 

E Settlement Procedures; Core Principle G Default Rules and Procedures; Core Principle L Public 

Information. 

Core Principle C Participant and Product Eligibility

Core Principle C requires the DCO to establish appropriate standards for determining the eligibility 

of transactions submitted to it for clearing. The Exchange has found that transactions in the fullycollateralized BCH Crypto Contracts are eligible for clearing and not readily susceptible to 

manipulation. The BCH Crypto Contracts will be based on the relevant Underlying cryptocurrency 

commodity values, the two most popular cryptocurrencies among crypto traders. The ICE Crypto 

Data is comprised of various order and trade information from numerous trading venues, and 

may opt for additional venues in the future, thereby reducing the potential for manipulative trading 

activity in order to impact the Expiration Value and Contract settlement. The Exchange has at 

least [three] designated Market Makers dedicated to making a two-sided market to provide 

sufficient liquidity in the new BCH Crypto Contracts. Additionally, the Exchange is operationally 

able to accept the transactions for clearing. Finally, all trading in the BCH Crypto Contracts, like 

all the Exchange products, will be conducted on a fully-collateralized basis, thereby mitigating any 

credit risk of a particular Member to the Exchange or other market participant. The Exchange has 

therefore determined that these Contracts are appropriate to accept for clearing. 
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Core Principle D Risk Management

Core Principle D requires the DCO to ensure it possesses the ability to manage the risks 

associated with discharging its responsibilities through the use of appropriate tools and 

procedures. Pursuant to the Exchange’s DCO Orders of Designation, all Contracts cleared 

through the Exchange are fully-collateralized. No Contracts are traded on margin, thereby 

minimizing the Exchange’s risk if a Member becomes insolvent. Likewise, the Exchange 

Members face no credit risk from the Exchange because the Exchange’s obligation to those 

Members is limited to the amounts those Members deposit with the Exchange for trading 

purposes, and those funds are kept in a segregated Member Property account at the settlement 

bank and may not be used to satisfy the obligations of the Exchange.

Core Principle E Settlement Procedures

Core Principle E requires the DCO to complete money settlements on a timely basis but not less 

frequently than once each day, employ an arrangement to eliminate or limit exposure to 

settlement bank risks, ensure that money settlement is final when effected, and maintain an 

accurate record of the flow of funds. Like all the Exchange Contracts, the new BCH Crypto 

Contracts will be settled intraday within minutes of the Contract’s Expiration. Also, like all the 

Exchange Contracts, the BCH Crypto Contracts will be fully collateralized, thereby limiting the 

Exchange’s financial exposure. The Exchange Rule 6.3, Settling Contracts at Expiration, requires 

any Person who believes there has been an error in settlement to report the potential error to the 

Exchange immediately, and in any event within 24 hours of the settlement. The Rule states that 

if the Exchange does not receive notice of a potential error in settlement within 24 hours of the 

settlement (excluding non-Trading Days), then settlement will be final. The Exchange tracks the 

flow of funds throughout the entirety of the transaction, from the submission of an order through 

settlement. The Exchange does not have netting or offset arrangements with any other clearing 

organization, and no Contracts are physically settled. Accordingly, the Exchange’s current 

practices will continue to comply with this Core Principle following the addition of the BCH Crypto 

Contracts.

Core Principle G Default Rules and Procedures

Core Principle G requires the DCO to have rules and procedures designed to allow for the efficient, 

fair, and safe management of events during which Members become insolvent or otherwise 

default on the obligations to other Members or the DCO. The Exchange does not allow Members 

to trade if their transactions are not fully collateralized. The Exchange cap-check system will 

check the Member’s account when an Order is placed, and if the account lacks sufficient funds 

to collateralize the trade, the Order is not accepted by the Exchange. Due to this system check, 

Members cannot default on their obligations to the Exchange as it relates to trade 

collateralization. As a backup provision, the Exchange also has the authority under the Exchange 

Rules 5.3 and 5.4 to cancel any Orders if the Member account lacks sufficient funds to fully 

collateralize the trade. The Exchange Rule 3.3(d) requires each Member to immediately notify 

the Exchange in writing upon becoming aware that he/she/it becomes the subject of a bankruptcy 
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petition, receivership proceeding, or the equivalent, or being unable to meet any financial 

obligation as it becomes due. The Exchange may also sanction Members under Rule 5.19 for 

failure to retain sufficient collateral in his/her/its account to meet his/her/its financial 

obligations. These system checks and applicable Rules will continue to apply following the 

addition of the BCH Crypto Contracts. 

Core Principle L Public Information

Core Principle L requires the DCO to make available to the public the terms and conditions of 

each contract, as well as the daily settlement prices, volume, and open interest of the contract. 

As stated previously, the Rulebook is made available to the public on the Exchange website. 

Expiration and Settlement Values for the BCH Crypto Contracts will be listed on the Exchange 

website on the Market Data page under the Results tab, as well as the Daily Bulletin which also 

shows volume and open interest. Therefore, the addition of the BCH Crypto Contracts will not 

negatively impact the Exchange’s ability to comply with this Core Principle.

* * * * *

In accordance with §40.2(a)(2) of the Commission’s Regulations, the Exchange plans to begin 

listing the BCH Crypto Contracts for the start of business on or after the trade date September 

29, 2023.

A complete index of the DCM and DCO Core Principles that indicates whether the Core Principle 

is applicable and addressed in the text of this submission is attached in Exhibit A. The contract 

specifications as they will appear in the Rulebook are set forth in Exhibit B. 

The Exchange hereby certifies that the additions contained herein comply with the Act, as 

amended, and the Commission Regulations adopted thereunder. No substantive opposing views 

were expressed to the Exchange with respect to any of these actions. 

The Exchange hereby certifies that a copy of these additions was posted on its website at the 

time of this filing.

Should you have any questions regarding the above, please do not hesitate to contact me by 

telephone at (312) 884-0161 or by email at Kevin.Dan@nadex.com.

Sincerely,

Kevin Dan

Chief Compliance Officer
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EXHIBIT A

Designated Contract Market (“DCM”) Core Principles

Core Principle 

Number

Core Principle Name Addressed in or Not 

Applicable to SelfCertification

1 Designation as Contract Market Not applicable (designation 

granted)

2 Compliance with Rules Addressed

3 Contracts Not Readily Subject to 

Manipulation

Addressed

4 Prevention of Market Disruption Addressed

5 Position Limitations or Accountability Addressed

6 Emergency Authority Not applicable (the Exchange 

Rulebook, 2.4 Emergency 

Rules)

7 Availability of General Information Addressed

8 Daily Publication of Trading Information Addressed

9 Execution of Transactions Addressed

10 Trade Information Addressed

11 Financial Integrity of Transactions Addressed

12 Protection of Markets and Market 

Participants

Addressed

13 Disciplinary Procedures Not applicable (the Exchange 

Rulebook, Chapter 9 Rule 

Enforcement)

14 Dispute Resolution Not applicable (the Exchange 

Rulebook, 10.2 – 10.4 

Arbitration)

15 Governance Fitness Standards Not applicable (the Exchange 

Rulebook, 2.2 Service 
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Restrictions, 11.2 Service and 

Disciplinary History)

16 Conflicts of Interest Not applicable (the Exchange 

Rulebook, 2.6 Voting, 2.9 

Trading Limitations, 11.1 

Non-Public Information, 11.3 

Voting)

17 Composition of Governing Boards of 

Contract Markets

Not applicable (internal 

review and appointment of 

directors) 

18 Recordkeeping Addressed

19 Antitrust Considerations Not applicable

20 System Safeguards Not applicable (internal 

controls and policies in 

place)

21 Financial Resources Not applicable (capital 

requirements and quarterly 

reporting compliant)

22 Diversity of Boards of Directors Not applicable (not public 

company, internal review and 

appointment of directors)

23 Securities and Exchange Commission Not applicable
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Derivatives Clearing Organization (“DCO”) Core Principles

Core Principle 

Number

Core Principle Name Addressed in or Not 

Applicable to SelfCertification

A Compliance Not applicable

B Financial Resources Not applicable (capital 

requirement and quarterly 

reporting compliant)

C Participant and Product Eligibility Addressed

D Risk Management Addressed 

E Settlement Procedures Addressed

F Treatment of Funds Not applicable (the Exchange 

Rulebook Chapter 8 Member 

Funds)

G Default Rules and Procedures Addressed

H Rule Enforcement Not applicable (the Exchange 

Rulebook, Chapter 9 Rule 

Enforcement, 10.2 – 10.4 

Arbitration)

I System Safeguards Not applicable (internal 

controls and policies in 

place)

J Reporting Not applicable

K Recordkeeping Not applicable (the Exchange 

maintains all required 

records for at least 5 years)

L Public Information Addressed

M Information Sharing Not applicable (member of 

Joint Audit Committee, Joint 

Compliance Committee, 

Intermarket Surveillance 

Group, and signatory to the 
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International Information 

Sharing Memorandum of 

Understanding and 

Agreement)

N Antitrust Considerations Not applicable 

O Governance Fitness Standards Not applicable (the Exchange 

Rulebook, 2.2 Service 

Restrictions, 11.2 Service and 

Disciplinary History, internal 

review and appointment of 

directors)

P Conflicts of Interest Not applicable (the Exchange 

Rulebook, 2.6 Voting, 2.9 

Trading Limitations, 11.1 

Non-Public Information, 11.3 

Voting)

Q Composition of Governing Boards Not applicable (internal 

review and appointment of 

directors) 

R Legal Risk Not applicable (the Exchange 

Rulebook Chapter 6)
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EXHIBIT B

The Contract Specifications set forth below will appear in the Rulebook as 12.94

12.94 Bitcoin Cash (BCH) CRYPTOCURRENCY “TOUCH BRACKET” VARIABLE PAYOUT 

CONTRACTS

(a) SCOPE – These Rules shall apply to the Class of Contracts referred 

to as the Bitcoin Cash (BCH) Cryptocurrency “Touch Bracket” Variable Payout Contracts, referred 

to as a ‘Touch Bracket”, issued by the Exchange. 

(b) UNDERLYING – The Underlying for this Class of Contracts is the spot 

BCH cryptocurrency as reported in the ICE® Cryptocurrency Data aggregated by Blockstream® 

Corporation and distributed by ICE Data® Connectivity and Feeds, Inc., herein referred to as “IDCF 

BCH”, quoted in US dollars.

(c) SOURCE AGENCY – The Source Agency is the Exchange.

(d) TYPE – The Type of Contract is a Variable Payout Contract.

(e) PAYOUT CRITERION – The Payout Criterion for each Contract will be 

set by the Exchange at the time the Variable Payout Contracts are initially issued. For the BCH 

Touch Brackets, the Payout Criteria for the Contracts will be set as follows: 

(i) WEEKLY BCH TOUCH BRACKET VARIABLE PAYOUT CONTRACTS, Expiration is 

the earlier of (a) 4:15 PM ET on the Last Trade Day of the contract listing, or (b) 

when the BCH Index Value is equal to or greater than the Ceiling, or equal to or less

than the Floor. the Exchange shall list a set of four (4) Touch Bracket Variable 

Payout Contracts, each referred to as a ‘Touch Bracket’, that open at 11:00 PM ET 

on the first Trade Day of the week, with overlapping ranges, which conform to the 

Payout Criteria listed below.

(i) CONTRACT 1: The Ceiling shall be X + 8; The Floor 

shall be X – 2.

(ii) CONTRACT 2: The Ceiling shall be X + 6; The Floor 

shall be X – 4.

(iii) CONTRACT 3: The Ceiling shall be X + 4; The Floor 

shall be X – 6.

(iv) CONTRACT 4: The Ceiling shall be X + 2; The Floor 

shall be X – 8

(v) DOLLAR MULTIPLIER – The Dollar Multiplier shall be 

1.
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(vi) In each case, “X” equals the last IDCF BCH value, as 

reported by the Source Agency, rounded to the nearest 1.

(vii) (ii) Upon the early Expiration of a Touch Bracket, the Exchange may list a 

new Touch Bracket with a Ceiling of X + 8 (or 2) and a Floor of X – 2 (or 8) where 

X equals the Ceiling (or Floor) of the Touch Bracket that expired early. The newly 

listed Touch Bracket will have the same Last Trade Day as originally established 

for the expired Touch Bracket and the same Dollar Multiplier as the expired Touch 

Bracket. 

(f) MINIMUM TICK –The Minimum Tick size for the BCH Touch Bracket 

Variable Payout Contracts shall be 0.1 and the Tick Value shall be 1.00. 

(g) POSITION LIMIT –The Position Limit for the BCH Touch Bracket 

Variable Payout Contracts shall be 250 Contracts.

(h) MARKET MAKER ALTERNATIVE POSITION LIMIT – The Position 

Limit for the BCH Touch Bracket Variable Payout Contracts for contracted Market Makers shall 

be 250,000 Contracts per strike level. 

(i) LAST TRADING DATE – The Last Trading Date in a Series is the same 

date as the Settlement Date. 

(j) SETTLEMENT DATE – The Settlement Date of the Contract shall be 

the same date as the Expiration Date. 

(k) EXPIRATION DATE – The Expiration Date of the Contract shall be the 

date on which the BCH Touch Bracket Expiration Value is released by the Source Agency.

(l) SETTLEMENT VALUE – The Settlement Value is the amount paid to the holder of 

either a Short or Long Variable Payout Contract on Settlement Date. The Settlement Value of a 

Variable Payout Contract is determined as described in the definition for Long and Short Variable 

Payout Contracts.

(m) BCH INDEX VALUE – The Source Agency shall calculate and produce a BCH Index 

Value once each second throughout the life of the BCH Touch Bracket Contracts. That is, each 

second the Source Agency will calculate a BCH Index Value by taking by taking all IDCF BCH 

bid/ask midpoint prices occurring in the sixty (60) seconds leading up to the Calculation Time, 

provided at least twenty-five (25) bid/ask midpoint prices are captured during the sixty (60) 

second period, removing the highest twenty (20) percent of IDCF BCH bid/ask midpoint prices 

and the lowest twenty (20) percent of IDCF BCH bid/ask midpoint prices from the data set7, and 

using the remaining IDCF BCH bid/ask midpoint prices to calculate the BCH Index Value for that 

second. The calculation used is a simple average of the remaining IDCF BCH bid/ask midpoint 

7

If 20% of the data set would result in a non-integer number of bid/ask midpoint prices, the number of bid/ask midpoint

prices to be removed from the set will be rounded down. For example, if the number of bid/ask midpoint prices 

collected during the last 10 seconds prior to the close of trading was 31, 20% of the data set would be 6.2 bid/ask 

midpoint prices prices. As 6.2 is a non-integer number, the value will be rounded down, and the 6 highest and 6 lowest 

bid/ask midpoint prices will be removed from the data set.
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prices in the data set, rounded to one decimal point past the precision of the Underlying market. 

In the event the time it takes to collect at least twenty-five (25) IDCF BCH bid/ask midpoint prices 

exceeds the sixty (60) second period, the BCH Index Value will be calculated by the Source 

Agency by taking the last twenty-five (25) IDCF BCH bid/ask midpoint prices just prior to the 

Calculation Time, removing the highest five (5) IDCF BCH bid/ask midpoint prices and the lowest 

five (5) IDCF BCH bid/ask midpoint prices, and using the remaining fifteen (15) IDCF BCH bid/ask 

midpoint prices to calculate the BCH Index Value. The calculation used is a simple average of 

all fifteen (15) IDCF BCH bid/ask midpoint prices, rounded to one decimal point past the 

precision of the Underlying market.

(n) EXPIRATION VALUE – The Expiration Value is the BCH Index Value 

released by the Source Agency at Expiration on the Expiration Date. 

(o) CONTINGENCIES – If no level is actually announced on the Expiration Date due to 

a delay, postponement or otherwise in such release announcement by the Source Agency, the 

Settlement Date will be delayed until the Underlying number is released for that Series.