Submitted via: CFTC Portal

2022.08.12

August 12, 2022

Christopher Kirkpatrick

Office of the Secretariat 

U.S. Commodity Futures Trading Commission

Three Lafayette Centre

1155 21st Street NW

Washington, DC 20581

RE: Clear Markets North America, Inc.: Physically Settled Cross-Currency Swaps

Dear Mr. Kirkpatrick: 

Pursuant to Commodity Futures Trading Commission (“CFTC” or “Commission”) Regulation 40.6(a),

Clear Markets North America, Inc. (“CMSEF”) hereby notifies the Commission pursuant to Commission 

Regulation 40.2, of its product listing of CMSEF Physically Settled Cross-Currency Swaps (“CMSEF 

CCS”) on CMSEF beginning August 24, 2022 (the “Submission”). 

The Submission contains the following: 

1. A summary of the terms of the CMSEF CCS specifications;

2. The listing date of the CMSEF CCS;

3. An explanation and analysis of the CMSEF CCS’ compliance with the relevant Core Principles 

for Swap Execution Facilities (“SEF Core Principles”) as set forth by section 5h of the 

Commodity Exchange Act; 

4. A certification that, concurrent with the filing of the Submission, CMSEF posted on its website a 

notice of pending certification of the CMSEF CCS with the Commission. 

I. Summary of Terms of the CMSEF Cross Currency Swap

Physically Settled Cross-Currency Swaps

Currency One (fiat) USD

Currency Two (crypto) BTC or ETH

Physically-Settled USD / BTC or ETH 

Maturity / Tenor Determined by the Participants

Day Count Conventions – Currency One 30/360; ACT/360; ACT/365.FIXED

Day Count Conventions – Currency Two 30/360; ACT/360; ACT/365.FIXED

Payment Frequency Determined	by	Participants

Business Day Convention Determined	by	Participants

Holiday Calendar New York, Tokyo, London, None
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Cleared No, Uncleared

Settlement Determined	by	Participants

Settlement Method Determined by Participants in conformity with 

CMSEF Rulebook Rule 303A, which requires all 

Participants to represent to CMSEF in writing 

that they have entered into the necessary 

documentation in their trading and credit support 

bilateral agreements to address:

a) liabilities caused by an event that delays 

settlement of the Swap;

b) settlement of a Swap where the settlement 

occurs in a Cryptocurrency that has been subject

to a Hard Fork; and

c) when Settlement Finality occurs.

Contract Size Determined by Participants

Trading Hours M-F (9AM – 5PM) New York (may be extended 

upon request at discretion of CMSEF)

Block Trades Yes (minimum 5 BTC, 5 ETH)

Position Limits Set by: Part 151 of CFTC Regulations; CMSEF 

Rule 413A

Position Accountability and Reporting Set by: Part 15 of CFTC Regulations; CMSEF 

Rule 413B

II. Listing Date

The intended listing date of the CMSEF Physically Settled CCS is August 12, 2022.

III. Analysis of Compliance with Core Principles

We have reviewed the SEF Core Principles and have identified that the listing of CMSEF CCS may have 

bearing on SEF Core Principle 3: Swaps Not Readily Susceptible to Manipulation. For the reasons stated 

below we believe that the listing of CMSEF CCS complies with the Commodity Exchange Act and SEF 

Core Principle 3. 

A. The Underlying Crypto Markets are not Readily Susceptible to Manipulation 

Bitcoin was created by Satoshi Nakamoto, a pseudonymous person or team who outlined the technology 

Bitcoin was created by Satoshi Nakamoto, a pseudonymous person or team who outlined the technology 

in a 2008 white paper. The Bitcoin network went live in 2009. 

The network’s native cryptocurrency token is bitcoin. According to Coinmarketcap.com 

(https://coinmarketcap.com/), the market cap for all digital assets is over $921 BN. Bitcoin is the largest 

cryptocurrency by market capitalization, estimated to be $389 BN as of July 7, 2022. The 24-hour trading 

volume in bitcoin for July 7, 2022, was $21.6 BN. Bitcoin is traded against many other crypto pairs (e.g., 

Ether) and in a number of fiat currency pairs. 
2022.08.12

Ethereum was conceived in 2013 by Vitalik Buterin and the network went live on July 30, 2015. Ethereum 

allows anyone to deploy permanent and immutable decentralized application onto it, with which users can 

interact. A series of upgrades called Ethereum 20 includes a transaction to a proof of stake and aims to 

increase transaction throughput by using sharding. 

The network’s native cryptocurrency token is Ether. Ether is the second largest cryptocurrency by market 

capitalization, estimated to be $143.9 BN as of July 7, 2022. The 24-hour trading volume in bitcoin for 

July 7, 2022, was $13 BN. Ether is traded against many other crypto pairs (e.g., Bitcoin) and in a number 

of fiat currency pairs. 

Every transaction involving Bitcoin or Ethereum is tracked on their respective network ledgers which are 

public and permissionless. Unlike a bank’s ledger, the Bitcoin and Ethereum blockchains are distributed 

across their entire network. No company, country, or third party is in control of them; and anyone can 

become part of their networks. 

Several Bitcoin and Ether futures and options have already been listed on various designated contract 

markets (DCMs) and SEFs. Further, while bitcoin is not a currency, in many ways it is traded and used 

like a currency. Therefore, physically settled crypto cross currency swaps would share many features with 

USD cross-currency swaps.

B. Conditions that Prevent the CMSEF CCS from Being Readily Susceptible to Manipulation 

Clear Markets has established rules and an enforcement infrastructure to prevent the manipulation of the 

Contract. The contract specifications for the CMSEF CCS were drafted to conform with the guidance 

and/or acceptable practices in appendix B of Part 37 of the CFTC Regulations and appendix C to part 38 

of the CFTC Regulations. 

C. Settlement Procedure 

The settlement of CMSEF CCS occurs off-SEF in accordance with the terms of the trading relationship 

between the parties. CMSEF may use its records request authority to ensure that the proper settlement of 

CMSEF CCS occurs, particularly in the first six months of operation. This additional layer of protection 

is warranted due to the novelty of the CMSEF CCS contract, settlement of which requires the transfer of 

a digital asset, and CMSEF’s obligation to ensure the financial integrity of transactions on its platform. 

IV. Position Limits or Accountability

Clear Markets has established the following large trader reporting for CMSEF Cross Currency Swaps:

Reportable at 25,000 BTC or 20,000 ETH across all tenors, consistent with market practice. 
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V. Certification 

CMSEF hereby certifies that: 

The CMSEF CCS comply with the Commodity Exchange Act, 7 U.S.C. §1 et seq. and the regulations 

thereunder. 

This Submission has been concurrently posted on CMSEF’s website at http://www.clear-markets.com/.

* * * * *

If you have any questions regarding the above, please contact me at shawn@clear-markets.com or 704-

906-8277.

Respectfully submitted,

Shawn A Dorsch

Chief Executive Officer

Clear Markets North America, Inc.