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23-023.05

August 3, 2023

VIA CFTC PORTAL

Commodity Futures Trading Commission

Attention: Chris Kirkpatrick, Secretary

Three Lafayette Centre

1155 21st Street, NW

Washington, DC 20581

Re: CFTC Regulation 40.2(a) Certification: Notification of Product Offered for 

Trading on Nodal Exchange, LLC – Washington Clean Fuels Program Futures

Dear Mr. Kirkpatrick:

Nodal Exchange, LLC (“Nodal Exchange” or “Exchange”) is notifying the Commodity Futures 

Trading Commission (“CFTC” or “Commission”) that pursuant to Commission Regulation 

40.2(a), the Exchange is self-certifying the listing of 5 new environmental futures contracts 

for trading on Nodal Exchange beginning on or after August 11, 2023. The contract 

specifications describing these new Exchange futures contracts are attached to this letter as 

Exhibit A, to be added to the Nodal Exchange Rulebook Appendix A – Contract Specifications. 

The deliverable supply analysis has been segregated as Exhibit B, for which confidential 

treatment is requested. The reporting levels, accountability levels, and position limits for 

these contracts is attached to this letter as Exhibit C, which will be added to the Nodal 

Exchange Rulebook Appendix C - Reporting Levels, Accountability Levels and Position 

Limits.

Exchange management has assessed the Exchange’s contracts’ compliance with applicable 

provisions of the Commodity Exchange Act (“Act”), including the Commissions Regulations 

thereunder and the Core Principles. Regulatory compliance of Nodal Exchange’s futures and 

options contracts is mostly addressed in the Nodal Exchange Rulebook, concisely explained 

as follows:

Core Principle 2 - Compliance with the Rules: Trading in the Exchange’s contracts will be 

subject to the Nodal Exchange Rulebook in Section IV, describing trading procedures, and 

Section VI, which establishes trading codes of conduct, sound trading practices, and 

identifies prohibited trading behavior and abuses. In addition, trading behavior and activity 

will be subject to extensive monitoring and surveillance by the Exchange’s Division of Market 

Administration and Surveillance. The Exchange’s Compliance Department has the authority 
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23-023.05

to address disciplinary matters through investigation and enforcement procedures in 

accordance with Section VII of the Exchange Rulebook.

Core Principle 3 - Contracts not Readily Susceptible to Manipulation: A description of the 

underlying cash markets and deliverable supply analysis for the Exchange’s contracts was 

provided for the futures contracts, which demonstrates compliance that the Exchange’s new 

contracts are not readily susceptible to manipulation.

Core Principle 4 - Prevention of Market Disruption: Trading in the Exchange’s contracts will 

be subject to the Nodal Exchange Rulebook Section VI, which prohibits disruptive trading 

behavior and manipulation, subject to monitoring and surveillance by the Exchange’s 

Division of Market Administration and Surveillance.

Core Principle 5 - Position Limitations or Accountability: The spot-month speculative 

position limits for the Exchange’s contracts are set at less than 25% of the deliverable supply 

in the respective underlying market. In addition, the Exchange monitors and enforces

position accountability rules for individual single-month and all-months combined, which 

are also within 25% of deliverable supply. The new contract reporting levels, accountability 

levels and position limits are provided in attached Exhibit C, to be added to the Nodal 

Exchange Rulebook Appendix C – Reporting Levels, Position Accountability Levels and 

Position Limits.

Core Principle 7 - Availability of General Information: The Exchange will post general 

information, including the contract specifications for the new contracts, Exchange fees, and 

the Nodal Exchange Rulebook, on the Exchange’s website: www.nodalexchange.com.

Core Principle 8 - Daily publication of Trading Information: The Exchange will publish daily 

information on settlement prices, volume, open interest and opening and closing ranges for 

the Exchange’s actively traded contracts on its website.

Core Principle 9 - Execution of Transactions: The Exchange’s new contracts will be available 

on the Exchange’s electronic trading screen that is a central limit order book (“CLOB”). The 

CLOB provides the market with the ability to execute the Exchange’s contracts from the 

interaction of multiple bids and multiple offers within a predetermined, nondiscretionary 

automated trade matching and execution algorithm. 

Core Principle 10 - Trade Information: The CLOB will maintain all information with respect 

to each order and each consummated trade, as well as all other information relating to the 

trade environment that determines the matching and clearing of trades. As such, any order 

submitted to the CLOB can be tracked from the time it is entered into the system until the 

time that it is matched, canceled or otherwise removed.

Core Principle 11 - Financial Integrity of Transactions: The Exchange has entered into a 

clearing arrangement with Nodal Clear, a derivatives clearing organization subject to Part 
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23-023.05

39 of the Commission Regulations. The new contracts executed on the CLOB or as a block 

trade will be subject to the Exchange Rulebook provisions for submission to Nodal Clear for 

clearing as described in Section V. 

Core Principle 12 - Protection of Markets and Market Participants: Section VI of the Nodal 

Exchange Rulebook protects the market and market participants from abusive, disruptive, 

fraudulent, noncompetitive and unfair conduct and trade practices. The new contracts are 

subject to these rules that apply to all transactions in the Exchange’s contracts.

Core Principle 13 - Disciplinary Procedures: Section VII of the Nodal Exchange Rulebook

describes the disciplinary procedures of the Exchange that authorize the Exchange to 

discipline, suspend, or expel anyone on the Exchange that violates these rules. 

Core Principle 14 - Dispute Resolution: Section VIII of the Nodal Exchange Rulebook

establishes rules concerning alternative dispute resolution, which provide for the resolution 

of disputes between or among Exchange users through the NFA arbitration program. Under 

Section VIII, arbitration is available for all disputes, controversies or claims among all 

Exchange users relating to Exchange activities. 

Pursuant to Section 5c(c) of the Act and the Commission’s Regulation 40.2(a), the Exchange 

certifies that the Exchange’s new futures and options contracts to be listed comply with the 

Act and the Commission’s Regulations thereunder.

Nodal Exchange certifies that this submission has been concurrently posted on the Nodal 

Exchange website at www.nodalexchange.com.

If you have any question or need additional information regarding the above, please 

contact the undersigned at 703-962-9853 or markotic@nodalexchange.com or Anita 

Herrera, Chief Regulatory Officer & General Counsel at 703-962-9835 or 

Herrera@nodalexchange.com.

Sincerely,

/s/ Max Markotic

Managing Director

Attachments:

Exhibit A: August 11, 2023 Addition to Nodal Exchange Appendix A - Contract 

Specifications

Confidential Exhibit B: Deliverable Supply Analysis (Confidential Treatment 

Requested)

Exhibit C: August 11, 2023 Addition to Nodal Exchange Appendix C - Reporting 

Levels, Accountability Levels and Position Limits
23-023.05

Exhibit A – Contract Specifications

(Rulebook Appendix A)
NODAL EXCHANGE CONTRACT SPECIFICATION

23-023.05

Washington Carbon Allowance Specific Vintage 2023 Future

ITEM SPECIFICATION

Contract Description

Physically delivered greenhouse gas emissions allowances where each is an 

allowance issued by Washington State or a linked program (“Washington Carbon 

Allowance”) representing one metric ton of CO2 equivalent under Climate 

Commitment Act and its associated regulations, rules and amendments, all together 

known as the “Washington Cap and Invest Program”.

Contract Code SVG

Settlement Method Physical Delivery

Hours of Trading As defined at http://www.nodalexchange.com

Unit of Trading 1 lot

Lot Size 1,000 Washington Carbon Allowances

Currency US Dollars

Minimum Tick $0.01 per Washington Carbon Allowance

Settlement Price Precision $0.01 per Washington Carbon Allowance

Last Trading Day Three Business Days prior to the last Business Day of the delivery month

Delivery Day Three Business Days after the Last Trading Day (Last Business Day of the delivery 

month)

Contract Series

Monthly contracts for the current year beginning with August 2023, plus an 

additional 3 years. The exchange may list any other calendar month contract off the 

standard listing cycle for up to 10 years.

Deliverable Product

The deliverable instruments are Washington Carbon Allowances equal to the 

contract size delivered through the Washington Compliance Instrument Tracking 

System Services (WCITSS). Washington Carbon Allowances acceptable for delivery 

are those issued as an authorization to emit up to one metric ton of CO2 or CO2 

equivalent in the Washington Cap and Invest Program having a vintage 

corresponding to the specified vintage year only.

Registry Washington Compliance Instrument Tracking System Services (WCITSS)

Daily Settlement Price Determined by the Exchange based on exchange activity, other market data, and 

extrapolation to traded contracts, as appropriate

Final Settlement Price The Daily Settlement Price on the Last Trading Day

Delivery

On the Last Trading Day, the Exchange will provide the Clearing House with 

information identifying the Participants with delivery obligations for the purpose of 

issuing Tender and invoice notices in accordance with Section IX (Physical Delivery 

and Settlement) of the Nodal Clear Rulebook.

Final Settlement (Payment) 

Date

Three or four Business Days after the Last Trading Day on the successful delivery of 

the underlying instruments (if the delivery confirmation is available by 11:30am on 

the third Business Day after the Last Trading Day, the payment will be made on the 

same day during the Midday Margin Cycle; if it is available after 11:30am, the 

payment will be made on the next Margin Cycle which will be the next Business Day)

Position Limit https://www.nodalexchange.com/files/autogenerated/Nodal_Rulebook_Appendix_

C-Limits_and_Levels.PDF
NODAL EXCHANGE CONTRACT SPECIFICATION

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Washington Carbon Allowance Specific Vintage 2024 Future

ITEM SPECIFICATION

Contract Description

Physically delivered greenhouse gas emissions allowances where each is an 

allowance issued by Washington State or a linked program (“Washington Carbon 

Allowance”) representing one metric ton of CO2 equivalent under Climate 

Commitment Act and its associated regulations, rules and amendments, all together 

known as the “Washington Cap and Invest Program”.

Contract Code SVH

Settlement Method Physical Delivery

Hours of Trading As defined at http://www.nodalexchange.com

Unit of Trading 1 lot

Lot Size 1,000 Washington Carbon Allowances

Currency US Dollars

Minimum Tick $0.01 per Washington Carbon Allowance

Settlement Price Precision $0.01 per Washington Carbon Allowance

Last Trading Day Three Business Days prior to the last Business Day of the delivery month

Delivery Day Three Business Days after the Last Trading Day (Last Business Day of the delivery 

month)

Contract Series

Monthly contracts for the current year beginning with April 2024, plus an additional 

3 years. The exchange may list any other calendar month contract off the standard 

listing for up to 10 years.

Deliverable Product

The deliverable instruments are Washington Carbon Allowances equal to the 

contract size delivered through the Washington Compliance Instrument Tracking 

System Services (WCITSS). Washington Carbon Allowances acceptable for delivery 

are those issued as an authorization to emit up to one metric ton of CO2 or CO2 

equivalent in the Washington Cap and Invest Program having a vintage 

corresponding to the specified vintage year only.

Registry Washington Compliance Instrument Tracking System Services (WCITSS)

Daily Settlement Price Determined by the Exchange based on exchange activity, other market data, and 

extrapolation to traded contracts, as appropriate

Final Settlement Price The Daily Settlement Price on the Last Trading Day

Delivery

On the Last Trading Day, the Exchange will provide the Clearing House with 

information identifying the Participants with delivery obligations for the purpose of 

issuing Tender and invoice notices in accordance with Section IX (Physical Delivery 

and Settlement) of the Nodal Clear Rulebook.

Final Settlement (Payment) 

Date

Three or four Business Days after the Last Trading Day on the successful delivery of 

the underlying instruments (if the delivery confirmation is available by 11:30am on 

the third Business Day after the Last Trading Day, the payment will be made on the 

same day during the Midday Margin Cycle; if it is available after 11:30am, the 

payment will be made on the next Margin Cycle which will be the next Business Day)

Position Limit https://www.nodalexchange.com/files/autogenerated/Nodal_Rulebook_Appendix_

C-Limits_and_Levels.PDF
NODAL EXCHANGE CONTRACT SPECIFICATION

23-023.05

Washington Carbon Allowance Specific Vintage 2025 Future

ITEM SPECIFICATION

Contract Description

Physically delivered greenhouse gas emissions allowances where each is an 

allowance issued by Washington State or a linked program (“Washington Carbon 

Allowance”) representing one metric ton of CO2 equivalent under Climate 

Commitment Act and its associated regulations, rules and amendments, all together 

known as the “Washington Cap and Invest Program”.

Contract Code SVI

Settlement Method Physical Delivery

Hours of Trading As defined at http://www.nodalexchange.com

Unit of Trading 1 lot

Lot Size 1,000 Washington Carbon Allowances

Currency US Dollars

Minimum Tick $0.01 per Washington Carbon Allowance

Settlement Price Precision $0.01 per Washington Carbon Allowance

Last Trading Day Three Business Days prior to the last Business Day of the delivery month

Delivery Day Three Business Days after the Last Trading Day (Last Business Day of the delivery 

month)

Contract Series

Monthly contracts for the current year beginning with April 2025, plus an additional 

3 years. The exchange may list any other calendar month contract off the standard 

listing cycle for up to 10 years.

Deliverable Product

The deliverable instruments are Washington Carbon Allowances equal to the 

contract size delivered through the Washington Compliance Instrument Tracking 

System Services (WCITSS). Washington Carbon Allowances acceptable for delivery 

are those issued as an authorization to emit up to one metric ton of CO2 or CO2 

equivalent in the Washington Cap and Invest Program having a vintage 

corresponding to the specified vintage year only.

Registry Washington Compliance Instrument Tracking System Services (WCITSS)

Daily Settlement Price Determined by the Exchange based on exchange activity, other market data, and 

extrapolation to traded contracts, as appropriate

Final Settlement Price The Daily Settlement Price on the Last Trading Day

Delivery

On the Last Trading Day, the Exchange will provide the Clearing House with 

information identifying the Participants with delivery obligations for the purpose of 

issuing Tender and invoice notices in accordance with Section IX (Physical Delivery 

and Settlement) of the Nodal Clear Rulebook.

Final Settlement (Payment) 

Date

Three or four Business Days after the Last Trading Day on the successful delivery of 

the underlying instruments (if the delivery confirmation is available by 11:30am on 

the third Business Day after the Last Trading Day, the payment will be made on the 

same day during the Midday Margin Cycle; if it is available after 11:30am, the 

payment will be made on the next Margin Cycle which will be the next Business Day)

Position Limit https://www.nodalexchange.com/files/autogenerated/Nodal_Rulebook_Appendix_

C-Limits_and_Levels.PDF
NODAL EXCHANGE CONTRACT SPECIFICATION

23-023.05

Washington Carbon Allowance Specific Vintage 2026 Future

ITEM SPECIFICATION

Contract Description

Physically delivered greenhouse gas emissions allowances where each is an 

allowance issued by Washington State or a linked program (“Washington Carbon 

Allowance”) representing one metric ton of CO2 equivalent under Climate 

Commitment Act and its associated regulations, rules and amendments, all together 

known as the “Washington Cap and Invest Program”.

Contract Code SVJ

Settlement Method Physical Delivery

Hours of Trading As defined at http://www.nodalexchange.com

Unit of Trading 1 lot

Lot Size 1,000 Washington Carbon Allowances

Currency US Dollars

Minimum Tick $0.01 per Washington Carbon Allowance

Settlement Price Precision $0.01 per Washington Carbon Allowance

Last Trading Day Three Business Days prior to the last Business Day of the delivery month

Delivery Day Three Business Days after the Last Trading Day (Last Business Day of the delivery 

month)

Contract Series

Monthly contracts for the current year beginning with August 2023, plus an 

additional 3 years. The exchange may list any other calendar month contract off the 

standard listing cycle for up to 10 years.

Deliverable Product

The deliverable instruments are Washington Carbon Allowances equal to the 

contract size delivered through the Washington Compliance Instrument Tracking 

System Services (WCITSS). Washington Carbon Allowances acceptable for delivery 

are those issued as an authorization to emit up to one metric ton of CO2 or CO2 

equivalent in the Washington Cap and Invest Program having a vintage 

corresponding to the specified vintage year only.

Registry Washington Compliance Instrument Tracking System Services (WCITSS)

Daily Settlement Price Determined by the Exchange based on exchange activity, other market data, and 

extrapolation to traded contracts, as appropriate

Final Settlement Price The Daily Settlement Price on the Last Trading Day

Delivery

On the Last Trading Day, the Exchange will provide the Clearing House with 

information identifying the Participants with delivery obligations for the purpose of 

issuing Tender and invoice notices in accordance with Section IX (Physical Delivery 

and Settlement) of the Nodal Clear Rulebook.

Final Settlement (Payment)

Date

Three or four Business Days after the Last Trading Day on the successful delivery of 

the underlying instruments (if the delivery confirmation is available by 11:30am on 

the third Business Day after the Last Trading Day, the payment will be made on the 

same day during the Midday Margin Cycle; if it is available after 11:30am, the 

payment will be made on the next Margin Cycle which will be the next Business Day)

Position Limit https://www.nodalexchange.com/files/autogenerated/Nodal_Rulebook_Appendix_

C-Limits_and_Levels.PDF
NODAL EXCHANGE CONTRACT SPECIFICATION

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Washington Clean Fuels Program Futures

ITEM SPECIFICATION

Contract Description Physically delivered futures contract on Clean Fuels Program (“CFP”) Credits issued 

by the Washington Department of Ecology.

Contract Code WFS

Settlement Method Physical Delivery

Hours of Trading As defined at http://www.nodalexchange.com

Unit of Trading 1 lot

Lot Size 100 CFP Credits

Currency US Dollars

Minimum Tick $0.25 per CFP Credit

Settlement Price Precision $0.25 per CFP Credit

Last Trading Day Three Business Days prior to the last Business Day of the delivery month

Delivery Day Three Business Days after the Last Trading Day (Last Business Day of the delivery 

month)

Contract Series

Monthly contract sets for the current and coming calendar year, plus December 

contracts for up to 10 consecutive years. The exchange may list any other calendar 

month contract set off the standard listing cycle.

Deliverable Product CFP Credits eligible for delivery are those specified under Washington Administrative 

Code Title 173 Chapter 173-424 and delivered through the WFRS-CBTS.

Eligible Deliverer

To engage in physical delivery of this contract, Participants must be deemed an 

eligible deliverer by the Exchange. Participants must meet the eligibility criteria set 

forth in the Nodal Exchange Rulebook as well as the criteria provided in the 

Participant Application to Physically Deliver Washington CFP Futures to become an 

eligible deliverer. A Participant seller not eligible to deliver this contract must ensure 

all its expiration month positions in Washington CFP futures contracts have been 

closed at the latest on the fifth business day before the first delivery day of the 

expiring contract. If a Participant does not close all its expiration month positions in 

Washington CFP futures contracts five business days before the first delivery day, 

the Exchange may use any and all measures to close the positions, which are 

ineligible for delivery. This would occur without prior notification and at the expense 

of the Participant

Registry WFRS-CBTS

Daily Settlement Price Determined by the Exchange based on exchange activity, other market data, and 

extrapolation to traded contracts, as appropriate

Final Settlement Price The Daily Settlement Price on the Last Trading Day

Delivery

On the Last Trading Day, the Exchange will provide the Clearing House with 

information identifying the Participants with delivery obligations for the purpose of 

issuing Tender and invoice notices in accordance with Section IX (Physical Delivery 

and Settlement) of the Nodal Clear Rulebook.

Final Settlement (Payment) 

Date

Three or four Business Days after the Last Trading Day on the successful delivery of 

the underlying instruments (if the delivery confirmation is available by 11:30am on 

the third Business Day after the Last Trading Day, the payment will be made on the 
NODAL EXCHANGE CONTRACT SPECIFICATION

23-023.05

ITEM SPECIFICATION

same day during the Midday Margin Cycle; if it is available after 11:30am, the 

payment will be made on the next Margin Cycle which will be the next Business Day)

Position Limit https://www.nodalexchange.com/files/autogenerated/Nodal_Rulebook_Appendix_

C-Limits_and_Levels.PDF
NODAL EXCHANGE CONTRACT SPECIFICATION

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Exhibit C

Nodal Exchange, LLC Rulebook Appendix C: Reporting Levels, 

Accountability Levels and Position Limits

Physical 

Commodity 

Code

Contract Name

Reporting 

Level

Spot Month 

Position Limit 

(lots)

Single Month 

Accountability 

Level (lots)

All Month 

Accountability 

Level (lots)

Aggregation 

Group*

CFTC 

Referenced 

Contract

SVG WCA Specific V23 Future 25 15300 15300 15300 0

SVH WCA Specific V24 Future 25 14100 14100 14100 0

SVI WCA Specific V25 Future 25 13000 13000 13000 0

SVJ WCA Specific V26 Future 25 11800 11800 11800 0

WFS WA CFP Future 25 2500 2500 2500 0