600133923

Bloomberg SEF LLC 731 Lexington Avenue Tel +1 212 318 2000

New York, NY 10022 bloombergsef.com

January 30, 2015

Submitted via email

Melissa Jurgens

Office of the Secretariat

U.S. Commodity Futures Trading Commission

Three Lafayette Centre

1155 21st Street, N.W.

Washington, D.C. 20581

via email: submissions@cftc.gov

Re: Bloomberg SEF LLC – Rule Amendment – Amended Rulebook

Dear Sir or Madam:

Pursuant to Section 5c(c) of the Commodity Exchange Act (the “Act”) and Section 40.6(a) of the 

regulations of the Commodity Futures Trading Commission (the “Commission”), Bloomberg 

SEF LLC (“BSEF”) hereby notifies the Commission that it has amended its Rulebook. The 

Rulebook has been amended to (1) include a new trading protocol for Permitted Transactions, (2) 

include an addition to BSEF’s Request for Quote functionality and (3) remove portions of Rule 

533 that will expire on February 16, 2015. The amended Rulebook will become effective on 

February 15, 2015. 

A concise explanation and analysis of the amendments to the Rulebook and their compliance 

with applicable provisions of the Act, including core principles and the Commission’s 

regulations, is attached hereto as Exhibit A. A clean copy of the amended Rulebook is attached 

hereto as Exhibit B, and a copy of the amended Rulebook marked to show changes against the 

version effective as of February 3, 2015, is attached hereto as Exhibit C. 

BSEF hereby certifies that: (i) the amended Rulebook complies with the Act and the 

Commission’s regulations thereunder, and (ii) a notice and copy of this submission is being 

concurrently posted on BSEF’s web site. There were no substantive opposing views to the 

amendments to the Rulebook.

A-1

Exhibit A

Explanation and Analysis

Summary: The Rulebook has been amended to (1) include a new trading protocol for Permitted 

Transactions, (2) include an addition to BSEF’s Request for Quote functionality and (3) remove 

portions of Rule 533 that will expire on February 16, 2015. A clean copy of the amended 

Rulebook is attached hereto as Exhibit B, and a copy of the amended Rulebook marked to show 

changes against the version effective as of February 3, 2015, is attached hereto as Exhibit C. 

Capitalized terms used but not defined herein have the meanings assigned to them in the 

Rulebook.

Amendment and Explanation Reason and/or 

Supporting Rule or Core 

Principle

Table of Contents

Conformed to new page numbers.

Conforming changes 

Chapter 1

Added “Manual Order Ticket” as new defined term. Manual 

Order Ticket is a new trading protocol for Permitted 

Transactions. 

CFTC Rule 37.9

Chapter 1

Renamed the defined term “Recipient Participant” to “MAT 

Recipient Participant.”

Clarification to approve 

readability 

Chapter 1

Revised definition of “Order” to include firm offers to enter into

a Swap to implement the Manual Order Ticket functionality.

CFTC Rule 37.9

Chapter 1

Revised definition of “Request for Quote Functionality” to 

permit the recipient of a request for quote to fill at the Order 

price or better.

CFTC Rule 37.9

Chapter 1

Deleted defined term “Required Number” to reflect the fact that 

the term is no longer used in Rule 522.A(b).

Deletion of unused defined 

term
2

Rule 522.A.

Changed references to “Recipient Participants” to “MAT 

Recipient Participants” to reflect the new defined term.

Revision to reflect new 

defined term

Rule 522.B.

Revised to add Manual Order Ticket functionality as a new 

trading protocol for Permitted Transactions.

CFTC Rule 37.9(c)

Rule 522.C.

Addition of hyphen to the phrase “No-Action Letter.”

Correction of punctuation

Rule 533(d)

Deletion to reflect the expiration of CFTC No-Action Letter 14-

121 on February 16, 2015.

CFTC No-Action Letter 14-

121
B-1

Exhibit B

Rulebook (clean)

[see attached]
600015635.136

BLOOMBERG SEF LLC 

RULEBOOK

FEBRUARY 15, 2015
ii

CHAPTER 1. DEFINITIONS .........................................................................................................1

CHAPTER 2. SEF GOVERNANCE.............................................................................................13

RULE 201. Board......................................................................................................................13

RULE 202. [Reserved]..............................................................................................................14

RULE 203. [Reserved]..............................................................................................................14

RULE 204. Regulatory Oversight Committee ..........................................................................14

RULE 205. Additional Committees and Panels........................................................................15

RULE 206. Power of the Board to Review Decisions..............................................................15

RULE 207. Eligibility ...............................................................................................................15

RULE 208. Officers ..................................................................................................................17

RULE 209. Chief Compliance Officer......................................................................................17

RULE 210. Conflicts of Interest................................................................................................19

RULE 211. Restrictions on Certain Persons who Possess Material, Non-Public 

Information: Improper Use or Disclosure of Material Non-Public 

Information ............................................................................................................20

RULE 212. Emergency Rules...................................................................................................21

RULE 213. Information-Sharing Agreements ..........................................................................22

RULE 214. Regulatory Services Agreement with the Regulatory Services 

Provider..................................................................................................................23

CHAPTER 3. PARTICIPANTS....................................................................................................23

RULE 301. Eligibility Criteria for Becoming a Participant......................................................23

RULE 302. Authorized Traders ................................................................................................25

RULE 303. Participant Application Process; Termination of Participant.................................26

RULE 304. Trading Privileges of a Participant ........................................................................27

RULE 305. Termination or Limitation of Trading Privileges and Trading 

Access....................................................................................................................27

RULE 306. Assessments and Fees............................................................................................28

RULE 307. Authorized Representatives...................................................................................28

RULE 308. Recording of Communications..............................................................................29

RULE 309. Notices to Participants ...........................................................................................29

RULE 310. Communications between BSEF and Participants.................................................29

RULE 311. Application of BSEF Rules and Jurisdiction .........................................................29

RULE 312. Description of Participant’s Status.........................................................................30

RULE 313. Dissolution of Participants.....................................................................................30

RULE 314. Withdrawal of Participant......................................................................................30

RULE 315. Compliance with the Commodity Exchange Act...................................................31

RULE 316. Access....................................................................................................................31

RULE 316.A. ECP Access............................................................................................................31

RULE 316.B. ISV Access.............................................................................................................31

RULE 317. Direct Market Access.............................................................................................31

RULE 318. Legal Certainty for SEF Trades.............................................................................32

RULE 319. Rights and Responsibilities after Suspension or Termination ...............................32
iii

CHAPTER 4. OBLIGATIONS OF PARTICIPANTS, ACCOUNT MANAGERS, 

DMA CUSTOMERS, AUTHORIZED TRADERS AND 

SUPERVISED PERSONS.....................................................................................33

RULE 401. Duties and Responsibilities....................................................................................33

RULE 402. Required Disclosures to BSEF...............................................................................34

RULE 403. Inspections by BSEF..............................................................................................35

RULE 404. Minimum Financial and Related Reporting Requirements ...................................35

RULE 405. Position Liquidation upon Default.........................................................................36

RULE 406. Authority to Impose Restrictions...........................................................................36

RULE 407. Customers and Accounts........................................................................................36

RULE 408. Disclosure Requirements; Know Your Counterparty Requirements.....................36

RULE 409. Books and Records ................................................................................................36

RULE 409.A. Participant Books and Records..............................................................................36

RULE 409.B. BSEF Books and Records......................................................................................37

RULE 410. Responsibility for Mandatory Trading...................................................................38

RULE 411. Eligibility for Clearing Exempt Transactions........................................................38

CHAPTER 5. TRADING PRACTICES, REPORTING, CLEARING AND 

BUSINESS CONDUCT ........................................................................................38

RULE 501. Scope......................................................................................................................38

RULE 502. Procedures..............................................................................................................38

RULE 503. Business Days and Trading Hours.........................................................................39

RULE 504. Rule Violations......................................................................................................39

RULE 505. Fraudulent Acts......................................................................................................39

RULE 506. Fictitious, Wash or Pre-Arranged Transactions.....................................................39

RULE 507. Pre-Execution Communications ............................................................................40

RULE 508. Market Disruption and Market Manipulation........................................................40

RULE 509. Prohibition of Misstatements.................................................................................40

RULE 510. Acts Detrimental to Welfare of SEF......................................................................40

RULE 511. Adherence to Law..................................................................................................41

RULE 512. Use of Trading Privileges ......................................................................................41

RULE 513. Supervision ............................................................................................................41

RULE 514. Misuse of the SEF Platform...................................................................................41

RULE 515. Mishandling of Customer Orders...........................................................................42

RULE 516. Trade Cancellation and Adjustment.......................................................................42

RULE 516.A. Errors......................................................................................................................42

RULE 516.B. Prime Broker Trades..............................................................................................43

RULE 516.C. [Reserved]..............................................................................................................43

RULE 517. Withholding Orders Prohibited..............................................................................43

RULE 518. Priority of Customers’ Orders................................................................................43

RULE 519. Trading Against Customers’ Orders Prohibited ....................................................43

RULE 519.A. General Prohibition................................................................................................43

RULE 519.B. Exceptions..............................................................................................................44

RULE 520. Disclosing Orders Prohibited.................................................................................44
iv

RULE 521. Simultaneous Buy And Sell Orders For Different Beneficial 

Owners...................................................................................................................44

RULE 522. Execution of Orders on the SEF Platform .............................................................44

RULE 522.A. Required Transactions...........................................................................................44

RULE 522.B. Permitted Transactions ..........................................................................................45

RULE 522.C. Package Transactions.............................................................................................45

RULE 522.D. Execution of Swaps Subject to the Clearing Exemption.......................................45

RULE 522.E. Block Trades..........................................................................................................45

RULE 523. Trade Confirmations..............................................................................................46

RULE 524. Order Entry Requirements.....................................................................................47

RULE 524.A. General...................................................................................................................47

RULE 524.B. Customer Type Indicator (CTI) Codes..................................................................48

RULE 524.C. Pre-Arranged Transactions....................................................................................49

RULE 525. Position Limits.......................................................................................................49

RULE 526. Exemptions from Position Limits..........................................................................49

RULE 527. Position Accountability..........................................................................................49

RULE 528. Bunched Orders and Orders Eligible for Post-Execution Allocation ....................50

RULE 529. Orders Entered Prior to SEF Opening ...................................................................51

RULE 530. Identification of Authorized Traders .....................................................................51

RULE 531. Pre-Arranged Transactions ....................................................................................51

RULE 531.A. Block Trades.........................................................................................................51

RULE 531.B. Complex Permitted Transactions..........................................................................52

RULE 532. Reporting to SDR...................................................................................................52

RULE 533. Cleared Swaps........................................................................................................53

RULE 534. Non-Cleared Swaps ...............................................................................................53

RULE 535. Risk Controls .........................................................................................................54

CHAPTER 6. DISCIPLINARY RULES.......................................................................................54

RULE 601. General...................................................................................................................54

RULE 602. Inquiries and Investigation.....................................................................................56

RULE 603. Reports of Investigations .......................................................................................57

RULE 604. Opportunity to Respond to Investigation Report...................................................57

RULE 605. Review of Investigation Reports............................................................................57

RULE 606. Warning Letters .....................................................................................................58

RULE 607. Notice of Charges ..................................................................................................58

RULE 608. Service of Notice of Charges.................................................................................59

RULE 609. Answer to Notice of Charges.................................................................................59

RULE 610. Admission or Failure to Deny................................................................................60

RULE 611. Denial of Charges and Right to a Hearing.............................................................60

RULE 612. Settlements.............................................................................................................60

RULE 613. Hearing Panel.........................................................................................................61

RULE 614. Convening Hearings of Disciplinary Proceedings.................................................61

RULE 615. Respondent Review of Evidence ...........................................................................62

RULE 616. Conducting Hearings of Disciplinary Proceedings................................................62

RULE 617. Decision of Disciplinary Panel ..............................................................................64

RULE 618. Sanctions................................................................................................................65
v

RULE 619. Costs.......................................................................................................................66

RULE 620. Right to Appeal Disciplinary Panel Decision, Summary 

Impositions of Fines and Other Summary Actions................................................66

RULE 621. Summary Imposition of Fines................................................................................68

RULE 622. Hearings Involving BSEF-Affiliated Trading Entities..........................................69

RULE 623. [Reserved]..............................................................................................................70

RULE 624. Notice to the Respondent, the Regulatory Services Provider and 

the Public ...............................................................................................................70

CHAPTER 7. ARBITRATION .....................................................................................................70

RULE 701. General...................................................................................................................70

RULE 702. Forum and Arbitration Rules.................................................................................70

RULE 703. Initiating an Arbitration Claim...............................................................................71

RULE 704. Claims Relating to Trade Cancelations or Price Adjustments...............................71

RULE 705. Penalties.................................................................................................................71

CHAPTER 8. MISCELLANEOUS...............................................................................................71

RULE 801. Anti-Money Laundering and Anti-Terrorism........................................................71

RULE 802. Gifts and Gratuities................................................................................................71

RULE 803. Market Data ...........................................................................................................72

RULE 804. Prohibited Use of Data Collected for Regulatory Purposes...................................72

RULE 805. Confidentiality .......................................................................................................72

RULE 806. Extension or Waiver of BSEF Rules .....................................................................73

RULE 807. Effect of Amendment, Repeal or New Rule ..........................................................73

RULE 808. Swap Contract Specifications................................................................................74

RULE 809. Timely Publication of Trading Information...........................................................74

RULE 810. Governing Law, Jurisdiction and Dispute Resolution ...........................................74

CHAPTER 9. LIMITATION OF LIABILITY, NO WARRANTIES...........................................75

RULE 901. LIMITATION OF LIABILITY, NO WARRANTIES ..........................................75

RULE 902. Indemnification by BSEF ......................................................................................78

Annex A ISDA Dodd Frank Act-Swap Transaction Reporting Party Requirements 
1

CHAPTER 1.

DEFINITIONS

When used in the Bloomberg BSEF Rules the following terms shall have the respective 

meanings as follows:

“Account” means a Person (including a Prime Broker) that (i) granted in 

Writing (standalone or as part of a broader instrument) to an Account 

Manager investment or trading authority to send RFQs, place Orders and 

execute Trades on the SEF on behalf and in the name of such Person; and 

(ii) is a Counterparty to a Trade. The definition of “Account” shall not 

include any investor, shareholder or any other Person with beneficial 

ownership in the Account. 

“Account Manager” means a Person that acts as an agent and attorney-infact to buy or sell Swaps via the SEF operated by BSEF in the name and 

on behalf of another Person. An Account Manager may also be a 

Participant. 

“Act” or “CEA” means the Commodity Exchange Act, as amended from 

time to time.

“Affected Person” means a SEF applicant whose admission application is 

declined or is conditioned or a Person whose status as a Participant is 

terminated as set forth in Rule 303(e).

“Affiliate” means, with respect to any Person, any Person who, directly or 

indirectly, Controls, is Controlled by, or is under common Control with, 

such other Person.

“Appeals Panel” means a panel appointed by the Chief Compliance 

Officer pursuant to Rule 620.

“Applicable Law” means, with respect to any Person, any statute, law, 

regulation, rule or ordinance of any governmental or Self-Regulatory 

Organization applicable to such Person, including the CEA and CFTC 

Regulations.

“Appropriate Minimum Block Size” means the minimum notional or 

principal amount for a category of Swap that qualifies as a Block Trade 

pursuant to CFTC Regulation 43.6.

“Authorized Representative” means any Person who is authorized by a 

Participant to represent the Participant in SEF matters pursuant to Rule

307.
2

“Authorized Trader” means any natural person who (i) has Trading 

Access to the SEF operated by BSEF using a Participant ID and (ii) is 

assigned a valid Trader ID.

“Block Trade” means a single Swap transaction publicly reportable under 

Part 43 of the CFTC Regulations that:

(a) Involves a Swap that is listed on BSEF;

(b) Has a notional or principal amount at or above the Appropriate 

Minimum Block Size applicable to such Swap; and

(c) Is (i) executed in accordance with Rule 522.E; or (ii) reported to 

BSEF as provided in Rule 531.A.

“Board” means the Board of Directors of BSEF constituted from time to 

time in accordance with the Operating Agreement.

“BSEF” means Bloomberg SEF LLC, a Delaware limited liability 

company.

“Bunched Orders” means a single Order placed by an Account Manager 

for two or more of its Accounts on the SEF operated by BSEF pursuant to 

Rule 528.

“Business Day” means a day on which the SEF operated by BSEF is open 

for trading.

“By-Laws” means, with respect to any Person that is not an individual, the 

By-Laws or Operating Agreement of such Person, and, if no other Person 

is specified, means the By-Laws or Operating Agreement of BSEF.

“CFTC” or “Commission” means the Commodity Futures Trading 

Commission or any successor regulatory body.

“CFTC Regulations” means the rules and regulations promulgated by the 

CFTC, as amended.

“Chief Compliance Officer” means the individual appointed by the 

Board as BSEF’s chief compliance officer in accordance with the 

Operating Agreement, with the duties and responsibilities as may be 

prescribed by the Board from time to time as set forth in Rule 208.

“Claim” has the meaning set forth in Rule 902.

“Cleared Swap” means a Swap that is subject to the mandatory clearing 

requirement of Section 2(h)(1)(A) of the CEA or any Swap that is 
3

intended by a Participant to be submitted to a DCO for clearing 

contemporaneously with execution.

“Clearing Exception” means an exception from the clearing requirement 

set forth in Section 2(h)(1) of the Act because one counterparty to the 

transaction is entitled to the exception from the clearing requirement set 

forth in Section 2(h)(7) of the Act, CFTC Regulations or CFTC Staff NoAction Letters.

“Clearing Exception Form” has the meaning set forth in Rule 411.

“Clearing Exempt Transaction” means a Trade exempt from the 

clearing requirement of Section 2(h)(1) of the Act because one 

Counterparty to the Trade is entitled to and has elected to use a Clearing 

Exception.

“Clearing House” means such Derivatives Clearing Organization(s) or 

non-U.S. central clearing counterparty(ies) recognized or approved by the 

CFTC that provide clearing services with respect to any or all of Swaps

traded on the SEF operated by BSEF.

“Clearing House Rules” means the Certificate of Incorporation, the ByLaws and any rule, interpretation, stated policy, or instrument 

corresponding to any of the foregoing, in each case as adopted or amended 

from time to time by the Clearing House relating to any or all of the 

Swaps.

“Clearing Member” means a member of a Clearing House that is 

authorized to clear trades in any or all Swaps for a Participant or its 

Accounts or Customers. Each Clearing Member must sign documentation 

required by BSEF.

“Client” means an Account.

“CLOB” means an Order Book that will match Orders pursuant to pre-determined, nondiscretionary methods. The CLOB supports the following Order types:

(a) Market Order (Fill_Or_Kill; Immediate_or_Cancel)

(b) Limit Order (Fill_Or_Kill; Immediate_Or_Cancel; Good_Til_Date/Time)

“Complex Permitted Transaction” has the meaning set forth in Rule 

531.B.

“Compliance Department” means all SEF Officials and/or agents of 

BSEF (including the Regulatory Services Provider) that assist BSEF with 
4

the implementation, surveillance and enforcement of the BSEF Rules and 

other Obligations.

“Confirmation” has the meaning set forth in Rule 523(a).

“Control” means the possession, direct or indirect, of the power to direct 

or cause the direction of the management and policies of a Person, 

whether through the ownership of securities, by Swap, or otherwise. The 

terms “controlling” or “controlled” shall have meanings correlative to the 

foregoing.

“Counterparty” means a Participant or a Participant’s Account or 

Customer whose Legal Entity Identifier is reported by BSEF to an SDR as 

a counterparty to a Trade.

“CTI” has the meaning set forth in Rule 524.B.

“Customer” means any Person who uses an FCM or Introducing Broker

as agent in connection with trading in any Swap on the SEF operated by 

BSEF. The term “Customer” shall include a DMA Customer.

“Customer Account” means an account carried by a Participant on behalf 

of a Customer.

“Daily Settlement Price” means the settlement price for a Swap 

calculated each Business Day by or on behalf of BSEF. The Daily 

Settlement Price can be expressed in currency, spread, yield or any other 

appropriate measure commonly used in swap markets.

“DCM” means a contract market or designated contract market as defined 

in CFTC Regulation 1.3(h).

“Derivatives Clearing Organization” or “DCO” has the meaning 

attributed to such term by Section 1a(9) of the CEA.

“Direct Market Access” or “DMA” means an arrangement among a 

Sponsoring Broker, its Customer and BSEF that allows one or more 

representatives of that Customer to have Trading Access using the 

Participant ID of the Sponsoring Broker.

“Director” means a member of the Board.

“Disciplinary Panel” means the panel appointed pursuant to Rule 617(a)

to conduct hearings in connection with disciplinary proceedings (other 

than summary impositions of fines pursuant to Rule 601(b)), to make 

findings, render decisions, and impose sanctions pursuant to Chapter 6 of 

the Rules. The Disciplinary Panel must meet the composition 
5

requirements set forth in Part 40 of the CFTC Regulations and the 

composition requirements set forth in Rule 617(a).

“Disclosed Order Book” means a screen on the SEF Platform where 

Participants have the ability to enter multiple bids and offers, observe or 

receive bids and offers entered by other market participants, and transact 

on such bids and offers.

“Dispute” has the meaning set forth in Rule 701.

“DMA Customer” means a Customer of a Sponsoring Broker where 

representatives of the Customer that are natural persons are designated by 

the Sponsoring Broker to have Trading Access to the SEF Platform using 

the Participant ID of the Sponsoring Broker and where such Customer 

signs the DMA Customer Documentation. 

“DMA Customer Documentation” means the agreements (together with 

any applicable schedules, exhibits or appendices thereto required by 

BSEF) in form and substance acceptable to BSEF, that are required to be 

executed and delivered to BSEF before a DMA Customer may access the 

SEF Platform.

“DMA Order” means an Order or RFQ placed by a DMA Customer using 

the Participant ID of the Sponsoring Broker.

“ECP” means an eligible contract participant as defined in Section 1a(18) 

of the CEA. 

“Eligibility Criteria” means the criteria set forth in Rule 301(a).

“Emergency” means any occurrence or circumstance that, in the opinion 

of the Board, or a Person or Persons duly authorized to issue such an 

opinion on behalf of the Board under circumstances and pursuant to 

procedures that are specified, requires immediate action and threatens or 

may threaten such things as the fair and orderly trading in, or the 

liquidation of or delivery pursuant to, any agreements, contracts, swaps or 

transactions or the timely collection and payment of funds in connection 

with clearing and settlement by a derivatives clearing organization, 

including: (a) any manipulative or attempted manipulative activity; (b) any 

actual, attempted or threatened corner, squeeze, congestion or undue 

concentration of positions; (c) any circumstances which may materially 

affect the performance of agreements, contracts, swaps or transactions, 

including failure of the payment system or the bankruptcy or insolvency of 

any participant; (d) any action taken by any governmental body, or any 

other registered entity, board of trade, market or facility which may have a 

direct impact on trading or clearing and settlement; (e) at the request of the 
6

CFTC; and (f) any other circumstance which may have a severe, adverse 

effect upon the functioning of BSEF.

“Emergency Rules” has the meaning set forth in Rule 212(a).

“End of Trading” means such time as BSEF may from time to time

prescribe. The End of Trading is the time as of which such actions as are 

specified in the BSEF Rules or the relevant Swap Specifications as taking 

place at the end of a Business Day, such as determination Daily Settlement 

Prices, will occur. 

“Fill-Or-Kill” means that the Order must be immediately filled 

completely or canceled.

“Financial Entity” has the meaning set forth in CEA Section 2(h)(7)(C).

“Futures Commission Merchant” or “FCM” has the meaning set forth 

in Section 1a(28) of the CEA.

“Good-til-Date/Time” means that the Order has an expiration time and

date.

“Governmental Body” means (a) any U.S. or non-U.S. federal, national, 

state or local court or (b) any U.S. or non-U.S. federal, national, state or 

local entity that is (i) a governmental authority, (ii) a regulatory body or 

(iii) a self-regulatory body.

“Hearing Panel” means a panel responsible for adjudicating disciplinary 

cases pursuant to a Notice of Charges authorized by a Review Panel. 

“Immediate-Or-Cancel” means that the Order may be filled partially, but 

the Order must be actioned immediately, or else canceled. Any remaining 

portion will be canceled.

“Interested Person” has the meaning attributed to such term in Rule 

210(a).

“Introducing Broker” has the meaning set forth in CFTC Regulation 

1.3(mm).

“ISDA” means the International Swaps and Derivatives Association, Inc.

“ISV” means an independent software vendor.

“Legal Entity Identifier” has the meaning set forth in Part 45 of the 

CFTC Regulations.
7

“Local Law” has the meaning attributed to such term in Rule 810(a).

“Major Swap Participant” has the meaning set forth in Section 1a(33)

of the CEA.

“Manual Order Ticket” means a function provided by BSEF that allows

a Participant to send an Order to another Participant. 

“MAT Recipient Participant” shall have the meaning set forth in Rule 

522.A(b).

“NFA” means the National Futures Association.

“No-Bust Range” shall have the meaning set forth in Rule 535(c).

“Non-Cleared Swap” means a Swap that is not a Cleared Swap.

“Non-Cleared Swap Agreement” means an agreement that governs the 

performance and settlement of a Non-Cleared Swap including any 

applicable credit support and default provisions.

“Notice of Charges” means a notice sent by the Compliance Department 

pursuant to Rule 607.

“Notice to Participants” means a communication sent by or on behalf of 

BSEF to all Participants as described in Rule 310.

“Obligation” means each BSEF Rule, order or procedure issued by BSEF, 

including Notice to Participants, and other requirement implemented by 

BSEF under the BSEF Rules.

“Officer” has the meaning attributed to such term in Rule 208.

“Operating Agreement” means the operating agreement of BSEF.

“Order” means (i) a response to a Request For Quote, (ii) a response to a

Resting Quote, (iii) the display of a quote on an Order Book or (iv) a firm 

offer to enter into a Swap.

“Order Book” means the trading system or platform operated by BSEF in which all 

market participants in the trading system or platform have the ability to enter multiple

bids and offers, observe or receive bids and offers entered by other market participants, 

and transact on such bids and offers. A Participant must indicate if a bid or offer posted 

on an Order Book is firm or indicative. 

“Package Transaction” means a transaction involving two or more 

instruments:
8

(1) that is executed between two or more Counterparties;

(2) that is priced or quoted as one economic transaction with 

simultaneous or near simultaneous execution of all components;

(3) that has at least one component that is a Required Transaction and 

other components are one or more of the following

a. an agency mortgage-backed security

b. a new issue bond

c. a future

d. an uncleared swap (as defined in Section 1a(47) of the 

CEA) 

e. a non-swap (as defined in Section 1a(47) of the CEA) 

Treasury bond; or

f. a security-based swap (as defined in Section 1a(42) of the 

CEA); and

(4) where the execution of each component is contingent upon the 

execution of all other components.

“Participant” means any Person that has signed the Participant 

Documentation and has been granted, and continues to have, Trading 

Privileges under the BSEF Rules. Subject to Applicable Law, a 

Participant may trade for its own proprietary account or for or on behalf of 

a Customer or Account. An ISV cannot be a Participant. 

“Participant Documentation” means the agreements (together with any 

applicable schedules, exhibits or appendices thereto required by BSEF) in 

form and substance acceptable to BSEF, that are required to be executed 

and delivered to BSEF before a Person may access the SEF operated by 

BSEF as a Participant.

“Participant ID” means each unique identifier assigned to a Participant 

by BSEF for access to the SEF operated by BSEF.

“Permitted Transaction” means any transaction involving a Swap that is 

not a Required Transaction or a Required Transaction that is a component 

of a Package Transaction. 

“Person” means a natural person or an entity.
9

“Pre-Execution Communication” means a communication between two 

Persons for the purpose of discerning interest in the execution of a Swap 

prior to execution of the Swap on the SEF operated by BSEF, including 

any communication that involves discussion of the size, side of market, or 

price of an Order or a potentially forthcoming Order; provided that any 

communication between two Persons that involves an agreement between 

the parties to a Swap that legally binds the parties to such Swap shall not 

be considered a Pre-Execution Communication.

“President” means the individual appointed by the Board as BSEF’s chief 

executive officer in accordance with the Operating Agreement, with the 

duties and responsibilities as may be prescribed by the Board from time to 

time as set forth in Rule 208.

“Prime Broker” means a Person that provides prime brokerage services 

and that has authorized a Participant to send RFQs, place Orders or enter 

into Trades in the name and on behalf of such Person. Each Prime Broker 

must sign documentation required by BSEF.

“Prime Broker Trade” means a Trade in a Non-Cleared Swap where one 

Counterparty is a Prime Broker and the other is a Participant with which the 

Prime Broker has a Non-Cleared Swap Agreement. Only a Permitted Transaction

can be a Prime Broker Trade.

“Proprietary Account” has the meaning set forth in

CFTC Regulation 1.3(y).

“Public Director” means a Person that meets the qualifications described 

in Rule 207(e).

“Qualified Account Manager” means any Person with more than $25,000,000 in 

total assets under management that is either: (A) a commodity trading advisor 

registered pursuant to Section 4n of the Act, or exempt from registration under the 

Act, or a principal thereof, who has discretionary trading authority or directs 

client accounts; (B) an investment adviser who has discretionary trading authority 

or directs client accounts and satisfies the criteria of § 4.7(a)(2)(v) of Part 43 of 

the CFTC Regulations; or (C) a foreign person who performs a similar role or 

function as the persons described in paragraphs (h)(6)(i)(A) or (h)(6)(i)(B) of 

CFTC Regulation 43.6 and is subject as such to foreign regulation.

“Regulatory Oversight Committee” means the committee of the Board 

constituted in accordance with Rule 204.

“Regulatory Services Agreement” means the agreement between BSEF 

and the Regulatory Services Provider whereby the Regulatory Services

Provider provides market surveillance and trade practice surveillance 
10

functions as well as other compliance related services to the SEF operated 

by BSEF. 

“Regulatory Services Provider” means the organization which provides 

regulatory services to BSEF pursuant to a Regulatory Services Agreement. 

“Reporting Counterparty” has the meaning set forth in Part 45 of the CFTC 

Regulations.

“Request for Quote” or “RFQ” means an electronic message 

disseminated on the SEF Platform for the purposes of soliciting bids or 

offers for a specific Swap.

“Request for Quote Functionality” means a functionality of the SEF 

Platform that allows a Requesting Participant to send an RFQ to buy or 

sell a Swap to any Participant, to which all such Participants may respond 

with a firm or indicative quote. An RFQ can be sent as a request for quote 

or as a request for streaming quote. All RFQs and responses to RFQs will 

disclose the name of the Person with which the Authorized Trader who 

placed an Order or sent an RFQ is associated in BSEF records. The 

recipient Participant of a request for quote may fill at the Order price or 

better.

“Requesting Participant” means a Participant initiating an RFQ.

“Required Transaction” means any transaction involving a Swap that is 

subject to the trade execution requirement of Section 2(h)(8) of the Act.

“Resting Quote” means any firm or indicative bid or offer displayed on 

an Order Book. 

“Review Panel” means a panel responsible for determining whether a 

reasonable basis exists for finding a violation of BSEF Rules, and for 

authorizing the issuance of notices of chargers against Persons alleged to 

have committed violations if the Review Panel believes that the matter 

should be adjudicated. 

“Rules” means, with respect to any Person, the rules of such Person and 

the interpretations, resolutions, orders, directives and procedures of the 

Person thereunder as in effect from time to time, and if no other Person is 

specified, means the Rules of the SEF operated by BSEF and the 

interpretations, resolutions, orders and directives and procedures of the 

SEF operated by BSEF thereunder as in effect from time to time. 

“SDR” means a swap data repository, as defined in Section 1a(48) of the 

CEA.
11

“SEC” means the U.S. Securities and Exchange Commission.

“SEF” means a swap execution facility as defined in Section 1a(50) of the 

CEA.

“SEF Action” and “SEF Actions” have the meanings attributed to such 

terms in Rule 210(a).

“SEF Data” has meaning set forth in Rule 803(a). 

“SEF Activity” means business for which a Participant is subject to the

BSEF Rules, which is purportedly conducted subject to the BSEF Rules, 

or which should have been conducted subject to the BSEF Rules including

Permitted Transactions and Block Trades.

“SEF Official” means any Director or Officer of, or individual employed 

directly by, BSEF, the Regulatory Services Provider or any individual 

rendering similar services to BSEF under an administrative or similar

agreement.

“SEF Platform” means the electronic trading system of the SEF 

established and operated by BSEF, or any successor thereto, that is made 

available by BSEF to Participants for trading in Swaps.

“SEF Proceeding” has the meaning attributed to such term in Rule 

210(a).

“Self-Regulatory Organization” or “SRO” shall, unless otherwise 

provided, have the meaning attributed to such term in CFTC Regulation 

1.33(ee) and, in addition, shall include a Derivatives Clearing 

Organization, and a registered futures association. BSEF is a selfregulatory organization.

“Sponsoring Broker” means a Participant that allows its designated 

Customers to access the SEF Platform using the Participant ID of the 

Participant and (i) with respect to Cleared Swaps, is a Clearing Member; 

and (ii) with respect to Non-Cleared Swaps, is (x) an FCM or Introducing 

Broker; or (y) non-U.S. Person acting in a similar capacity that is not 

required to register as an FCM or Introducing Broker under the Act and 

that is appropriately licensed in a jurisdiction where its DMA Customer is

located.

“Supervised Persons” means any directors, officers, employees or agents 

of any Participant.

“Swap” means any agreement, contract or transaction that is a swap as 

defined in Section 1a(47) of the CEA and as further defined by the CFTC, 
12

which is listed on the SEF operated by BSEF in accordance with CFTC 

Regulation 37.4.

“Swap Dealer” has the meaning set form in Section 1a(49) of the CEA.

“Swap Specification” means, with respect to any Swap, the Rules or other 

trading protocols containing specifications for such Swap, as adopted, 

amended, supplemented or otherwise modified from time to time by 

BSEF.

“Terms Incorporated by Reference” has the meaning set forth in Rule 

523(c).

“Trade” means any purchase or sale of any Swap made on the SEF

Platform or subject to BSEF Rules.

“Trade Communication” has meaning set forth in Rule 523(c).

“Trader ID” means a unique identifier issued to each Authorized Trader

which enables BSEF to identify the individual entering RFQs or Orders 

into the SEF operated by BSEF. 

“Trading Access” means the right granted to an Authorized Trader to 

send RFQs or place Orders and/or enter into transactions for certain or all 

Swaps to the SEF Platform or execute Swaps subject to the BSEF Rules.

“Trading Account” means, with respect to each Participant, Account or 

Customer, each account established and maintained by such Participant at 

BSEF through which the Participant will trade Swaps and through which 

BSEF will monitor the open Swap positions and closed Swap positions of 

such Participants, Accounts or Customers. 

“Trading Hours” means, for any Business Day, the hours as may be 

published by BSEF in a Notice to Participants from time to time.

“Trading Privileges” means the right granted to a Participant to use, 

directly or indirectly, the SEF operated by BSEF for execution of Swaps. 

No Person may exercise Trading Privileges on behalf of a Participant 

during any suspension of such Participant’s Trading Privileges.

“Written” or “Writing” means printing, lithography, photography, and 

other modes of representing or reproducing words or data in a visible 

form, including electronic transmissions.

* * * * * *
13

The following rules of construction shall apply to the BSEF Rules:

(i) the headings in the BSEF Rules are for convenience only and do not affect the 

construction of the BSEF Rules;

(ii) all references to time in the BSEF Rules are to local time in New York, New York, 

except where expressly provided otherwise;

(iii) in the BSEF Rules, words denoting a singular number include the plural number where 

the context permits and vice versa;

(iv) where the context permits or requires, any pronoun shall include the corresponding 

masculine, feminine and neuter forms;

(v) forms of the word “include” mean that the inclusion is not limited to the items listed; 

(vi) “or” is disjunctive but not exclusive; 

(vii) references in the BSEF Rules to statutory provisions include those provisions as 

amended, and any rules or regulations promulgated thereunder.

CHAPTER 2.

SEF GOVERNANCE

RULE 201. Board

(a) The Board shall manage the business and affairs of BSEF in accordance with the 

Operating Agreement. At all times the Board must be composed of at least 35%, but no less than 

two, Public Directors. The Board has the power and authority to call for review, and to affirm, 

modify, suspend or overrule, any and all decisions and actions of standing committees or special 

committees of the Board or any panel of the Officers.

(b) The Board may act (including to appoint Public Directors, to the extent provided 

in the Operating Agreement) only by the decision of an absolute majority in number of the 

members of the Board, either by vote at a meeting or by Written consent without a meeting.

(c) Each Director (including Public Directors) shall be appointed in accordance with 

the Operating Agreement and the procedures included therein and shall serve until his or her 

successor is duly appointed, or until his or her earlier resignation or removal, with or without 

cause. 

(d) The members of the Board, including Public Directors, shall be of sufficiently 

good repute and, where applicable, have sufficient expertise in financial services. 

(e) The percentage of Public Directors required to serve on the Board or any 

committee thereof pursuant to this Chapter 2 shall be deemed to be modified to comply with the 

CEA and CFTC Regulations, in each case, as in effect from time to time.
14

(f) Without limitation of any other provisions of this Rule 201, the provisions of 

Article III of the Operating Agreement shall be deemed to be part of the BSEF Rules, and shall 

be deemed to be incorporated herein, to the same extent and with the same force and effect as if 

set forth herein in their entirety.

RULE 202. [Reserved]

RULE 203. [Reserved]

RULE 204. Regulatory Oversight Committee

(a) The Regulatory Oversight Committee of the Board shall consist only of Public 

Directors, appointed by the Board. Each member of the Regulatory Oversight Committee shall 

serve until the due appointment of his or her successor, or until his or her earlier resignation or 

removal, with or without cause, as a member of the Regulatory Oversight Committee or as a 

Director. A member of the Regulatory Oversight Committee may serve for multiple terms. The 

Regulatory Oversight Committee shall report to the Board. 

(b) The Regulatory Oversight Committee shall oversee BSEF’s regulatory program 

on behalf of the Board. It shall make such recommendations to the Board as will, in its 

judgment, best promote the interests of the SEF operated by BSEF. The Regulatory Oversight 

Committee shall also have such other powers and perform such other duties as set forth in the

BSEF Rules, the Operating Agreement and as the Board may delegate to it from time to time. 

(c) Without limiting the generality of the foregoing, the Regulatory Oversight 

Committee shall have authority to:

(i) Monitor the compliance program of the SEF operated by BSEF for 

sufficiency and effectiveness;

(ii) Oversee all facets of the compliance program, including trade practice and 

market surveillance, audits, examinations conducted by the Regulatory Services Provider

and other regulatory responsibilities with respect to Participants, Customers and 

Accounts (including ensuring compliance with any financial integrity, financial reporting, 

sales practice, recordkeeping and other requirements), and overseeing the conduct of 

investigations by the Regulatory Services Provider;

(iii) Review the size and allocation of the regulatory budget and resources and 

the number, hiring and termination, and compensation of compliance personnel;

(iv) Assist BSEF in minimizing actual and potential conflicts of interest;

(v) Recommend changes that would ensure fair, vigorous, and effective 

compliance; and

(vi) Review compliance proposals and advise the Board as to whether and how 

such changes may impact compliance.
15

(d) The Regulatory Oversight Committee shall oversee the regulatory program of the 

SEF operated by BSEF on behalf of the Board. The Board shall delegate sufficient authority, 

dedicate sufficient resources, and allow sufficient time for the Regulatory Oversight Committee 

to fulfill its mandate. 

RULE 205. Additional Committees and Panels

(a) The Board may create such additional standing committees of the Board as it may 

from time to time deem necessary or advisable.

(b) In addition to the standing committees, the Board may from time to time 

constitute and appoint, by Rule or resolution, special committees of the Board and designate their 

composition, responsibilities and powers.

(c) BSEF may create additional committees of BSEF, or panels, for such purposes as 

may from time to time be necessary or advisable. Members of each such committee may be 

members of the Board, Supervised Persons of Participants or such other individuals as may be 

qualified to serve on such committee. 

RULE 206. Power of the Board to Review Decisions

The Board has the power and authority to call for review, and to affirm, modify, suspend or 

overrule, any and all decisions and actions of standing committees or special committees of the 

Board.

RULE 207. Eligibility

(a) A Director must meet the qualifications set forth from time to time in the 

Operating Agreement.

(b) An individual may not serve as a Director or serve on a committee established by 

the Board, a Disciplinary Panel or an Appeals Panel if the individual:

(i) within the prior three (3) years has been found, by a final decision in any 

action or proceeding brought in a court of competent jurisdiction, the CFTC or any SelfRegulatory Organization, to have committed a disciplinary offense;

(ii) within the prior three (3) years has entered into a settlement agreement in 

which any of the findings or, in the absence of such findings, any of the acts charged, 

included a disciplinary offense; 

(iii) has been suspended or expelled from membership in a Self-Regulatory 

Organization, is serving any sentence or probation, or owes any portion of a fine or 

penalty related to either;
16

1. a finding of a disciplinary offense by a final decision in any action 

or proceeding brought in a court of competent jurisdiction, the CFTC, or any SelfRegulatory Organization; or

2. a settlement agreement in which any of the findings or, in the 

absence of such findings, any of the acts charged included a disciplinary offense. 

(iv) is currently subject to an agreement with the CFTC or Self-Regulatory 

Organization not to apply for registration with the CFTC or for membership in the SelfRegulatory Organization; 

(v) is currently, or within the past three (3) years has been, subject to a 

revocation or suspension of registration by the CFTC; 

(vi) has been convicted of a felony listed in Section 8a(2)(D)(ii) through (iv) of 

the CEA; or

(vii) is currently subject to a denial, suspension or disqualification from serving 

on a disciplinary committee, arbitration or appeals panel or governing board of any SelfRegulatory Organization.

(c) Any Director, member of a committee established by the Board or any member of 

a Disciplinary Panel, an Appeals Panel, any individual nominated to serve in any such role, or 

any individual authorized by the Regulatory Oversight Committee to take summary action shall 

immediately notify the President if such individual meets one or more of the criteria in Rule 

207(b). 

(d) For purposes of this Rule, the terms “disciplinary offense,” “final decision,” and 

“settlement agreement” have the meanings set forth in CFTC Regulation 1.63(a).

(e) To qualify as a Public Director, a Director must be found, by the Board on the 

record, to have no material relationship with BSEF or any of its Affiliates. A “material 

relationship” is one that reasonably could affect the independent judgment or decision making of 

such individual as a Public Director. In addition, an individual shall not be considered a “Public 

Director” if any of the following circumstances exist: 

(i) such Director is an Officer or an employee of BSEF, or an officer or an 

employee of an Affiliate of BSEF;

(ii) such Director is a Participant, or a director, an officer or an employee of a 

Participant; or

(iii) such Director, or an entity with which the Director is a partner, an officer,

or a director, receives more than $100,000 in combined annual payments for legal, 

accounting, or consulting services from BSEF or any Affiliate of BSEF. Compensation 

for services as a director of BSEF or as a director of an Affiliate of BSEF does not count 

toward the $100,000 payment limit, nor does deferred compensation for services 
17

rendered prior to becoming a Director of BSEF, so long as such compensation is in no 

way contingent, conditioned or revocable.

(f) Any of the relationships set forth in sub-paragraphs (e)(i) through (iii) of this Rule 

apply to the “immediate family” of such Director, i.e., spouse, parents, children and siblings.

(g) A Public Director may also serve as a director of an Affiliate of BSEF if he or she 

otherwise meets the requirements in paragraphs (e) and (f) of this Rule. 

RULE 208. Officers

The Board shall appoint a President, a Chief Compliance Officer, one or more vice 

presidents, a secretary, a treasurer, and such other officers of BSEF (all of the foregoing, 

collectively, the “Officers”) as it may deem necessary or appropriate from time to time, in 

accordance with the Operating Agreement. The Officers shall have such powers and duties in 

the management of BSEF as the Board may prescribe from time to time in accordance with the 

Operating Agreement. Each Director and Officer is entitled to indemnification pursuant to the 

Operating Agreement with respect to matters relating to BSEF.

RULE 209. Chief Compliance Officer

(a) The Board shall appoint and approve the Chief Compliance Officer. The Board 

shall approve the compensation of the Chief Compliance Officer. Removal of the Chief 

Compliance Officer shall require the approval of a majority of the Board. BSEF shall notify the 

CFTC of the removal of the Chief Compliance Officer and the appointment of any new Chief 

Compliance Officer, whether interim or permanent, within two Business Days of such 

appointment. 

(b) The individual designated to serve as Chief Compliance Officer shall have the 

background and skills appropriate for fulfilling the responsibilities of the position. No individual 

disqualified from registration pursuant to Sections 8a(2) or 8a(3) of the CEA may serve as a 

Chief Compliance Officer. The Chief Compliance Officer may not be a member of BSEF’s legal 

department and may not serve as its general counsel.

(c) The Chief Compliance Officer shall report directly to the Board. The Chief 

Compliance Officer shall meet with the Board at least annually. The Chief Compliance Officer 

shall also meet with the Regulatory Oversight Committee at least quarterly. Each such meeting 

may occur in person or by means of conference telephone. The Chief Compliance Officer shall 

provide any information regarding the regulatory program of the SEF operated by BSEF that is 

requested by the Board or the Regulatory Oversight Committee.

(d) The position of Chief Compliance Officer shall carry with it the authority and 

resources to develop and enforce policies and procedures necessary to fulfill the duties set forth 

for chief compliance officers in the Act and the CFTC Regulations. The Chief Compliance 

Officer shall have supervisory authority over all staff acting in furtherance of the Chief 

Compliance Officer’s obligations. 
18

(e) The Chief Compliance Officer’s duties shall include, but are not limited to, the 

following:

(i) Overseeing and reviewing the compliance of the SEF operated by BSEF

with Section 5h of the Act and any CFTC Regulations;

(ii) In consultation with the Board or the senior Officer of BSEF, resolving 

any conflicts of interest that may arise, including: (1) conflicts between business 

considerations and compliance requirements; (2) conflicts between business 

considerations and the requirement that the SEF operated by BSEF provide fair, open, 

and impartial access as set forth in CFTC Regulation 37.202; and (3) conflicts between

BSEF’s management and members of the Board;

(iii) Establishing and administering Written policies and procedures reasonably 

designed to prevent violation of the Act and any Rules adopted by the Commission;

(iv) Taking reasonable steps to ensure compliance with the Act and CFTC 

Regulations relating to agreements, contracts, or transactions, and with CFTC 

Regulations under Section 5h of the CEA;

(v) Establishing procedures for the remediation of noncompliance issues 

identified by the Chief Compliance Officer through a compliance office review, lookback, internal or external audit finding, self-reported error, or validated complaint;

(vi) Establishing and following appropriate procedures for the handling, 

management response, remediation, retesting, and closing of noncompliance issues;

(vii) Establishing and administering a compliance manual designed to promote 

compliance with the applicable laws, Rules, and regulations and administering a Written 

code of ethics designed to prevent ethical violations and to promote honesty and ethical 

conduct;

(viii) Supervising the SEF’s compliance program with respect to trade practice 

surveillance; market surveillance; real-time market monitoring; compliance with audit 

trail requirements; enforcement, disciplinary and appeals proceedings; audits, 

examinations conducted by the Regulatory Services Provider, and other regulatory 

responsibilities with respect to Participants, Accounts and Customers (including ensuring 

compliance with, if applicable, financial integrity, financial reporting, sales practice, 

recordkeeping, and other requirements);

(ix) Supervising the effectiveness and sufficiency of any regulatory services 

provided to BSEF by the Regulatory Services Provider; and 

(x) Preparing and filing the annual compliance report of BSEF.
19

RULE 210. Conflicts of Interest

(a) A Director, Officer, panel member or other Person authorized to exercise BSEF’s 

authority concerning any inquiry, investigation or any disciplinary or appeals proceeding, 

summary suspension, or other summary actions (any such action, a “SEF Action” and, 

collectively, “SEF Actions”), or Emergency actions taken pursuant to Rule 212 (each such SEF 

Action or Emergency Action, a “SEF Proceeding”) who knowingly has a “material conflict of 

interest” between his or her position as a Director, Officer, panel member or exercise of authority 

concerning any SEF Proceeding and his or her personal interests (each, an “Interested Person”) 

may not participate in any deliberations or vote of the Board committee, panel or exercise any 

authority in any SEF Proceeding involving his or her personal interest, except as described in 

Rule 210(d).

(b) For purposes of Rule 210(a), a “material conflict of interest” includes a 

Director’s, Officer’s, or other Person’s:

(i) being named as a respondent or potential respondent in a SEF Proceeding;

(ii) being an employer, employee, fellow employee or an Affiliate of a 

respondent or potential respondent in a SEF Proceeding;

(iii) having any significant, ongoing business relationship with a respondent or

potential respondent in a SEF Proceeding;

(iv) having a family relationship with a respondent or potential respondent in a

SEF Proceeding (including the individual’s spouse, co-habitator, former spouse, parent, 

step-parent, child, step-child, sibling, step-brother, step-sister, grandparent, grandchild, 

uncle, aunt, nephew, niece, father-in-law, mother-in-law, son-in-law, daughter-in-law, 

brother-in-law or sister-in-law); and/or

(v) having a direct and substantial financial interest in the result of the 

deliberations or vote based upon either SEF or non-SEF positions. A direct and 

substantial financial interest includes positions held in Swaps in the accounts of, 

Controlled by, or affiliated with the Interested Person or any other types of direct and 

substantial financial positions of the Interested Person that are reasonably expected to 

be affected by the deliberations or vote.

(c) Before considering any SEF Proceeding, an Interested Person must disclose in 

Writing to the Board the material facts concerning his or her relationship or interest in the matter.

(d) Any Interested Person who would be required otherwise to abstain from 

deliberations and voting pursuant to Rule 210(a) as a result of having a direct and substantial 

financial interest in the result of the deliberations and vote may participate in deliberations, prior 

to a vote on the matter, if:

(i) the material facts about the Interested Person’s financial interest in the 

matter are disclosed or known to the Board;
20

(ii) the Board determines that the participation by the Interested Person would 

be consistent with the public interest; and

(iii) a majority of the Directors (excluding any Interested Persons) vote to 

allow the Interested Person to participate in deliberations on the matter.

(e) If a determination is made pursuant to Rule 210(d) that an Interested Person may 

participate in deliberations prior to a vote, then the minutes of the meeting of the Board or 

committee thereof will reflect the determination and the reasons for the determination.

(f) If a determination is made pursuant to Rule 210(a) that all Directors are Interested

Persons with respect to a matter subject to a vote by the Board, the President will appoint a panel 

of individuals who are not Interested Persons with respect to such matter, which will have the 

same authority and powers over such matter that the Board would have if the Directors were not 

Interested Persons with respect to such matter.

(g) No Director, Officer or member of any committee or panel established by the

Board shall use or disclose for any purpose other than the performance of his or her official 

duties and responsibilities as a Director, Officer or committee or panel member any material, 

non-public information obtained as a result of the individual’s duties and responsibilities as a 

Director, Officer or committee or panel member. No Director, Officer or committee or panel 

member shall, directly or indirectly, disclose or use at any time, either during his or her 

association with BSEF or thereafter, any confidential information of which the Board member or 

committee or panel member becomes aware. Each Director, Officer or committee or panel 

member in possession of confidential information shall take all appropriate steps to safeguard the 

information and to protect it against disclosure, misuse, espionage, loss and theft.

(h) Notwithstanding Rule 210(g), a Director, Officer or committee or panel member 

may disclose confidential information if required by Applicable Law or a court order to be 

revealed to the United States Department of Justice or the CFTC.

(i) For the purposes of Rule 210(g), the term “material, non-public information” shall 

mean “material information” that is “nonpublic information,” as such terms are defined in CFTC 

Regulation 1.59(a).

RULE 211. Restrictions on Certain Persons who Possess Material, Non-Public 

Information: Improper Use or Disclosure of Material Non-Public Information

No member of the Board or of any Board committee, no member of any other committee of 

BSEF, no Officer of BSEF, no employee of BSEF and no consultant to BSEF shall:

(a) trade for such Person’s own account, or for or on behalf of any other account, in 

any commodity interest on the basis of any material, non-public information obtained through 

the performance of such Person’s official duties; 

(b) use or disclose, for any purpose other than the performance of such Person’s 

official duties, any material, non-public information obtained by such Person as a result of such 
21

Person’s official duties, provided, however, that this Section shall not prohibit disclosures made 

by such Person in the course of his or her official duties or disclosures made to the CFTC, any 

Self-Regulatory Organization, a court of competent jurisdiction or any agency or department of 

the federal or state government; or

(c) trade, directly or indirectly, in any Swap traded on the SEF operated by BSEF; in 

any related commodity interest; or in any commodity interest traded on any DCM or SEF or 

cleared by any Clearing House if such Person has access to material non-public information 

concerning such Swap or commodity interest.

RULE 212. Emergency Rules

(a) In the event of an Emergency, BSEF may implement temporary emergency 

procedures and rules (“Emergency Rules”), subject to the applicable provisions of the CEA and 

CFTC Regulations. Implementation of Emergency Rules shall be done in consultation with the 

CFTC. Emergency Rules may require or authorize BSEF, the Board, any committee of the 

Board, the President, or any other Officer to take actions necessary or appropriate to respond to 

the Emergency, including the following actions:

(i) suspending or curtailing trading or limiting trading to liquidation only (in 

whole or in part);

(ii) extending or shortening the last trading date for Swaps;

(iii) ordering the fixing of a settlement price;

(iv) ordering the liquidation or transfer of an open position in any Swap, or the 

reduction of positions;

(v) extending, limiting or changing the Trading Hours;

(vi) imposing or modifying intraday market restrictions;

(vii) transferring customer contracts and the margin in an emergency;

(viii) imposing special margin requirements;

(ix) extending or shortening the expiration date of a Swap;

(x) altering any Swap’s settlement terms and conditions;

(xi) imposing or modifying price limits; 

(xii) imposing, modifying or reducing position limits; and/or

(xiii) temporarily modifying or suspending any provision of the BSEF Rules or 

Obligations.
22

(b) Before any Emergency Rule may be adopted and enforced, a required vote of the 

Board must approve the implementation of such Emergency Rule at a duly convened meeting

requested by the President or any other Officer. Directors may attend such a meeting by 

teleconference. Each Director participating in such meeting shall be subject to Rule 210. If the 

President determines that Emergency Rules must be implemented with respect to an Emergency 

before a meeting of the Board can reasonably be convened, then the President shall have the 

authority, without Board action, to implement any Emergency Rules with respect to such 

Emergency that he or she deems necessary or appropriate to respond to such Emergency.

(c) Whenever BSEF, the Board, any committee of the Board, or the President takes 

actions necessary or appropriate to respond to an Emergency (including the actions set forth in 

paragraph (a) above), an Authorized Representative of BSEF will post a Notice to Participants

regarding such Emergency, as soon as practicable. When the Board, any committee of the Board 

or the President determines that the Emergency is no longer in effect, permitting the SEF 

operated by BSEF to resume normal functioning; any such actions responding to an Emergency 

will be terminated.

(d) BSEF will use reasonable efforts to notify the CFTC prior to implementing, 

modifying or terminating an Emergency Rule. If such prior notification is not possible or 

practicable, BSEF will notify the CFTC as soon as possible or reasonably practicable, but in all 

circumstances within twenty-four (24) hours of the implementation, modification or termination 

of such Emergency Rule.

(e) Upon taking any action in response to an Emergency, BSEF will document the 

decision-making process related to such action. Such documentation will be kept for at least five 

years following the date on which the Emergency ceases to exist or to affect the SEF operated by 

BSEF, and all such documentation will be provided to the CFTC upon request.

RULE 213. Information-Sharing Agreements

(a) BSEF shall enter into information-sharing agreements or other arrangements or 

procedures necessary to allow BSEF to obtain any necessary information to perform any 

monitoring of trading and Trade processing, provide information to other markets, the CFTC or 

any other Governmental Body with jurisdiction over BSEF upon request and which allow BSEF 

to carry out such international information-sharing agreements as the CFTC may require. As 

part of any information-sharing agreements or other arrangements or procedures adopted 

pursuant to this Rule, BSEF may:

(i) provide market surveillance reports to the CFTC, any Governmental Body 

with jurisdiction over BSEF, or, as necessary for BSEF to comply with its SRO 

obligations, to other markets;

(ii) share information and documents concerning current and former 

Participants to the CFTC, any Governmental Body with jurisdiction over BSEF, or, as 

necessary for BSEF to comply with its SRO obligations, to other markets;
23

(iii) share information and documents concerning ongoing and completed

investigations to the CFTC, any Governmental Body with jurisdiction over BSEF, or, as 

necessary for BSEF to comply with its SRO obligations, to other markets; and/or

(iv) require its current or former Participants to provide information and 

documents to BSEF at the request of the CFTC, any Governmental Body with 

jurisdiction over BSEF, or, as necessary for BSEF to comply with its SRO obligations, to 

other markets.

(b) BSEF may enter into any information-sharing arrangement with any Person or 

body (including the CFTC, the NFA, any Self-Regulatory Organization, any SEF, DCM, market, 

or clearing organization, or any Governmental Body) if BSEF (i) believes that such entity 

exercises a legal or regulatory function under any law or regulation, or a function comprising or 

associated with the enforcement of a legal or regulatory function, or (ii) considers such 

arrangement to be in furtherance of the purpose or duties of BSEF and the SEF operated by 

BSEF under Applicable Law. 

(c) BSEF may disclose any information provided by or relating to Participant, 

Account Managers, Authorized Traders, Supervised Persons, Customers or Accounts or their 

agents, or Trades of Participant or of its Customers or Accounts, including the content of this 

Agreement, to any Governmental Body, to the Regulatory Services Provider, to an SDR where 

BSEF reports Trades, to any other person or entity as required by Applicable Law or as 

necessary to conclude Participant’s Trades, submit Participant’s Trades for clearance or perform 

services requested by a Participant, and to any Person providing services to BSEF with respect to 

the SEF operated by BSEF. BSEF will not disclose any proprietary data or personal information 

of any Participant, Account Manager, Authorized Trader, Supervised Person, Customer or 

Account without a corresponding confidentiality agreement between such Person and BSEF, 

unless the Person requesting such information is a Governmental Body.

RULE 214. Regulatory Services Agreement with the Regulatory Services Provider

BSEF has contracted with the Regulatory Services Provider to provide certain regulatory 

services to BSEF pursuant to a Regulatory Services Agreement. In accordance with the 

Regulatory Services Agreement, the Regulatory Services Provider may perform certain 

surveillance, investigative, and regulatory functions under the BSEF Rules and BSEF may 

provide information to the Regulatory Services Provider in connection with the performance by 

the Regulatory Services Provider of those functions. BSEF shall retain ultimate decision-making 

authority with respect to any functions that are contracted to the Regulatory Services Provider.

CHAPTER 3.

PARTICIPANTS

RULE 301. Eligibility Criteria for Becoming a Participant

(a) To be eligible for admission as a Participant, an applicant must demonstrate to the 

satisfaction of BSEF that it:
24

(i) is an ECP, and each Account or Customer on whose behalf it wishes to 

trade on the SEF operated by BSEF is an ECP, in each case eligible to enter into the 

asset classes of Swaps it wishes to trade on the SEF operated by BSEF;

(ii) is of good reputation and business integrity;

(iii) maintains adequate financial resources and credit;

(iv) is validly organized, in good standing, and authorized by its governing

body and, if relevant, documents of organization, to trade Swaps;

(v) has not filed for bankruptcy;

(vi) is not a SEF Official, agent or affiliate of BSEF;

(vii) is not prohibited from using the services of BSEF for any reason 

whatsoever;

(viii) holds all registrations required under Applicable Law, if any;

(ix) is not subject to statutory disqualification under Section 8a(2) of the CEA; 

(x) satisfies any other criteria that BSEF may require from a Participant to 

perform its SRO responsibilities, comply with Applicable Law or provide SEF services;

and

(xi) is not an ISV or an automated trading system.

(b) Once admitted, the Participant shall continue to comply with all applicable 

Eligibility Criteria in this Rule 301.

(c) With respect to Cleared Swaps, each Participant that is an Account Manager, 

FCM or Introducing Broker must ensure that each of its, as applicable, Accounts or Customers 

has a clearing account with a Clearing Member that is a member of the Clearing House accepting 

for clearance Cleared Swaps traded on the SEF operated by BSEF and provide BSEF with 

evidence of such relationship. With respect to Non-Cleared Swaps, each Participant that is an 

Account Manager or Introducing Broker must ensure that each of its, as applicable, Accounts or 

Customers complies with Rule 534, if applicable. A DMA Customer that is an Account 

Manager must ensure that each of its Accounts complies with Rule 534, if applicable. Each 

Participant or DMA Customer that is an Account Manager must provide BSEF upon BSEF’s 

prior Written request with Written representation or proof of authority to place RFQs or Orders 

and execute Trades on the SEF operated by BSEF on behalf or in the name of each Account. 

(d) With respect to Cleared Swaps, each Participant that is not an Account Manager 

must either be a Clearing Member of a Clearing House where the Cleared Swaps are cleared or 

have a clearing account with a Clearing Member with respect to such Cleared Swap and provide 
25

SEF with evidence of such relationship. With respect to Non-Cleared Swaps, each Participant 

that is not an Account Manager must comply with Rule 534, if applicable. 

(e) Each Participant must provide BSEF with all information necessary for BSEF to 

establish Trading Accounts, and keep such information current and up-to-date.

(f) Participants that do not have a relationship with a Clearing Member as set forth in 

subsection (c) or (d) of this Rule 301 are prohibited from entering RFQs or Orders in Cleared 

Swaps on the SEF operated by BSEF.

(g) BSEF shall monitor its Participants to ensure that each Participant continues to 

qualify as an ECP.

(h) Upon request of BSEF, a Participant shall promptly provide to BSEF or its 

Regulatory Services Provider information about its Customers, Accounts and Authorized Traders 

as BSEF requests related to or in connection with the SEF Activity of such Customers, Accounts 

and Authorized Traders. 

RULE 302. Authorized Traders

(a) Each Participant shall nominate or designate one or more Authorized Traders,

who will conduct SEF Activity on behalf of the Participant. 

(b) Each Authorized Trader:

(i) must be a natural person;

(ii) must satisfy any other requirements as may be prescribed by BSEF from 

time to time; and

(iii) must have a Trader ID.

A Participant that authorizes a third party to trade for its Trading Account on a 

discretionary basis pursuant to a power of attorney or other instrument must identify or 

approve a specific natural person as its Authorized Trader with respect to such Trading 

Account.

(c) Without limiting the foregoing, each Authorized Trader will abide by applicable

BSEF Rules and Applicable Law, and each Participant or DMA Customer, as applicable, will 

ensure on an ongoing basis that:

(i) none of its Authorized Traders is subject to a disqualification pursuant to 

any Applicable Law (unless an appropriate exemption has been obtained with respect 

thereto);

(ii) each of its Authorized Traders will be technically proficient; 
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(iii) each of its Authorized Traders will conduct its business in a fair and 

equitable manner; and 

(iv) each of its Authorized Traders will conduct its business in accordance 

with the BSEF Rules.

(d) By agreeing to become an Authorized Trader, an individual agrees to be bound by 

the duties and responsibilities of an Authorized Trader under these Rules and to be subject to, 

and comply with, the BSEF Rules and Obligations. Among other duties and responsibilities that 

BSEF may impose, an Authorized Trader must:

(i) have the authority, at BSEF’s request, to adjust or withdraw any Order 

submitted under any Trader ID assigned to him or her; and

(ii) ensure that any SEF Activity conducted under any Trader ID assigned to 

him or her complies with all BSEF Rules and Obligations.

(e) To nominate or designate an Authorized Trader, a Participant must follow the 

procedures established by BSEF. BSEF may establish criteria that individuals must fulfill to 

become an Authorized Trader. Any such criteria will be set out in the BSEF Rules. BSEF will 

not accept the registration as an Authorized Trader of any individual who is a SEF Official.

(f) BSEF will promptly notify a Participant in Writing of the approval of nominated 

or designated Authorized Traders or if BSEF declines to approve the nomination or designation.

(g) BSEF will maintain a list of all appointed Authorized Traders for each 

Participant.

(h) BSEF may, in its sole discretion terminate, revoke or suspend an Authorized 

Trader and shall promptly notify the Participant in Writing of such action. Upon such 

termination, revocation or suspension, BSEF will disable access of such Authorized Trader to the 

SEF operated by BSEF. 

(i) To request the termination of the designation of an Authorized Trader, the 

Participant or the Authorized Trader must notify BSEF following the procedures established by

BSEF. BSEF will terminate access of such Authorized Trader to the SEF operated by BSEF 

immediately upon receipt of such notice from Participant. 

RULE 303. Participant Application Process; Termination of Participant

(a) Any Person who desires to become a Participant shall (i) submit signed

Participant Documentation; (ii) agree in Writing to abide by the BSEF Rules and Applicable 

Law; (iii) provide such information and documentation as may be requested by BSEF; and (iv) 

follow the application procedures established by BSEF. Additionally, any Participant organized 

or located outside of the United States shall, pursuant to CFTC Regulation 15.05, enter into a 

Written agreement appointing a third party as its U.S. agent for service of process, and shall 

provide BSEF with a copy of the agreement.
27

(b) In considering an application from a potential Participant, BSEF may require 

additional information from the applicant, or conduct an investigation to verify information 

submitted by the applicant, or both.

(c) If BSEF decides to admit an applicant as a Participant, it shall promptly notify the 

applicant and state in such notice the date on which the applicant shall become a Participant.

(d) If BSEF decides to decline or condition an application for admission as a 

Participant, or terminate a Person’s status as a Participant, BSEF shall promptly notify such 

Affected Person thereof in a Writing sent to the address provided by the applicant or maintained 

in BSEF registry of Participants. Such Affected Person may, within seven (7) calendar days, 

request in Writing that BSEF provide the reasons for the denial, conditioning or termination of 

Participant status. Within fourteen (14) calendar days after receiving such Written request, 

BSEF shall send in Writing to the Affected Person the reasons for the denial, conditioning or 

termination. Within fourteen (14) calendar days of receiving the BSEF’s Written response, the 

Affected Person may request in Writing that BSEF reconsider its determination, and may provide 

any relevant representations or other information that such Affected Person believes to be 

relevant to the reconsideration.

(e) BSEF may deny, condition or terminate Participant status of any Person if: 

(i) such Person is unable to satisfactorily demonstrate its ability to satisfy the Eligibility Criteria 

as set forth in Rule 301(a) to become or remain a Participant; (ii) such Person is unable to 

satisfactorily demonstrate its capacity to adhere to all applicable BSEF Rules; (iii) such Person 

would bring BSEF into disrepute as determined by BSEF in its sole discretion; or (iv) for such 

other cause as BSEF may reasonably determine.

RULE 304. Trading Privileges of a Participant

(a) Upon admission as a Participant, the Participant must execute such Participant 

Documentation as required from time to time by BSEF, and such Participant Documentation 

must remain in effect for the Participant to access the SEF operated by BSEF. 

(b) Admission as a Participant entitles the Participant only to Trading Privileges and 

does not confer any right of ownership in, or right to attend or vote at meetings of, BSEF, or 

right to share in the profits, of BSEF. A Participant may not transfer or assign its status as a

Participant.

RULE 305. Termination or Limitation of Trading Privileges and Trading Access

(a) Notwithstanding anything in the BSEF Rules to the contrary, the Chief 

Compliance Officer may, after consultation with the Regulatory Oversight Committee, if 

practicable, summarily suspend, revoke, limit, condition, restrict or qualify the Trading 

Privileges of a Participant or the Trading Access of an Authorized Trader, and may take other 

summary action against any Participant or any of its Supervised Persons or any Authorized 

Trader in accordance with the BSEF Rules; provided, however, that the Chief Compliance 

Officer must reasonably believe that the business, conduct or activities of the Participant, 
28

Authorized Trader or Supervised Person in question is not in the best interests of BSEF or the 

marketplace, including based on any of the following: (i) statutory disqualification from 

registration as provided in CEA Section 8a(2) or (3); (ii) non-payment of fees, costs, charges, 

fines or arbitration awards; or (iii) the reasonable belief that immediate action is necessary to 

protect the public or the best interests of BSEF and the SEF operated by BSEF. BSEF may deny 

or limit Trading Privileges of a Participant or Trading Access of any Authorized Trader upon 

default of the Participant, Customer or Account, as applicable, on any Swap with respect to such 

Participant, Customer or Account.

(b) Whenever practicable, the Compliance Department, acting on behalf of the Chief 

Compliance Officer, shall provide prior Written notice to the party against whom any action in 

accordance with paragraph (a) shall be taken. If prior notice is not practicable, BSEF will give 

notice at the earliest possible opportunity to the respondent against whom the action is brought. 

The Compliance Department, acting on behalf of the Chief Compliance Officer, will prepare a 

notice of summary action (which will state the action, the reasons for the action, and the effective 

time, date and duration of the action) and serve the notice on such party.

(c) The summary action will become final upon the expiration of 20 days after the 

notice of action is served on the respondent.

(d) At the request of BSEF, a respondent against whom a summary action is brought 

pursuant to this Rule 305 must provide books and records over which the respondent has access 

or control and must furnish information to, or appear or testify before, BSEF or the in connection 

with the enforcement of any BSEF Rule.

(e) BSEF may review an appeal by any applicant of BSEF’s decision to deny or 

otherwise limit Trading Privileges or Trading Access of such applicant pursuant to the BSEF 

Rules; provided, however, that any such decision by BSEF to deny or otherwise limit applicant’s 

Trading Privileges or Trading Access shall continue in effect during such review. 

RULE 306. Assessments and Fees

BSEF shall set the times and amounts of any assessments or fees to be paid by Participants, 

which assessments or fees shall be paid to BSEF when due. If a Participant fails to pay when 

due any such assessments or fees levied on such Participant, and such payment obligation 

remains unsatisfied for thirty days after its due date, BSEF may suspend, revoke, limit, 

condition, restrict or qualify the Trading Privileges of such Participant as it deems necessary or 

appropriate.

RULE 307. Authorized Representatives

Each Participant shall designate one or more Authorized Representatives who will represent the 

Participant before BSEF and its committees and receive notices on behalf of the Participant. The 

Authorized Representative shall be empowered by the Participant to act on its behalf and BSEF 

shall be entitled to rely on the actions of the Authorized Representative as binding on the 

Participant. Each Participant must provide BSEF with current contact and other requested 
29

information for each of its Authorized Representatives so that BSEF is able to immediately 

contact the Authorized Representatives.

RULE 308. Recording of Communications

BSEF may record conversations and retain copies of electronic communications between SEF 

Officials, on one hand, and Participants, their Account Managers, Authorized Traders, 

Supervised Persons or other agents, on the other hand, to the extent required by Applicable Law. 

Any such recordings may be retained by BSEF or the Regulatory Services Provider in such 

manner and for such periods of time as BSEF may deem necessary or appropriate. 

RULE 309. Notices to Participants

BSEF shall publish a notice with respect to each addition to, modification of, or clarification of, 

the BSEF Rules or of any action to implement any BSEF Rules, in a form and manner that is 

reasonably designed to enable each Participant to become aware of and familiar with, and to 

implement any necessary preparatory measures to be taken by it with respect to, such addition or 

modification, prior to the effective date thereof (each a “Notice to Participants”). For purposes 

of publication in accordance with the first sentence of this Rule, it shall be sufficient (without 

limiting the discretion of BSEF as to any other reasonable means of communication) if a Notice 

to Participants is published on BSEF’s website and posted on BSEF’s internal notification 

system. Any Notice to Participants shall also be deemed to have been made to all Account 

Managers, Authorized Traders and Supervised Persons.

RULE 310. Communications between BSEF and Participants

Each Participant must provide BSEF with its current electronic mail address and telephone 

number and the electronic mail address and telephone number of any of its Authorized Traders 

and immediately (and in any event within 24 hours) update this information whenever it changes. 

All communications between BSEF and the Participant will be transmitted by electronic mail 

and/or posted on BSEF’s website, except as otherwise specified by BSEF. The Participant shall 

be responsible for conveying such communications to its Authorized Traders and/or to its 

Account Managers. Each Participant will be responsible for promptly reviewing and, if 

necessary, responding to all electronic communications from BSEF to the Participant or any of 

its Account Managers, Authorized Traders, Supervised Persons or any Person to whom it has 

given Trader ID(s). All communications made to a Participant shall also be deemed to have been 

made to all Account Managers, Authorized Traders and Supervised Persons of such Participant. 

RULE 311. Application of BSEF Rules and Jurisdiction

(a) ANY MARKET PARTICIPANT THAT DIRECTLY OR INDIRECTLY 

EFFECTS A TRANSACTION ON THE SEF OPERATED BY BSEF, OR ANY 

PARTICIPANT, AUTHORIZED TRADER OR OTHER PERSON ACCESSING OR 

ENTERING ANY RFQ OR ORDER OR SUBMITTING ANY SWAP INTO THE SEF 

OPERATED BY BSEF OR EXECUTING ANY TRADE PURSUANT TO THE RULES 

(i) IS BOUND BY, AND SHALL COMPLY WITH, THE BSEF RULES AND 
30

OBLIGATIONS, THE CLEARING HOUSE RULES, SWAP SPECIFICATIONS AND 

APPLICABLE LAW, IN EACH CASE TO THE EXTENT APPLICABLE TO IT, (ii) 

SUBMITS TO THE JURISDICTION OF BSEF WITH RESPECT TO ANY AND ALL 

MATTERS ARISING FROM, RELATED TO, OR IN CONNECTION WITH, THE 

STATUS, ACTIONS OR OMISSIONS OF SUCH PARTICIPANT, AUTHORIZED 

TRADER OR OTHER PERSON, AND (iii) AGREES TO ASSIST BSEF IN 

COMPLYING WITH ITS LEGAL AND REGULATORY OBLIGATIONS, 

COOPERATE WITH BSEF, THE CFTC AND ANY GOVERNMENTAL BODY WITH 

JURISDICTION OVER BSEF OR THE SEF OPERATED BY BSEF IN ANY INQUIRY, 

INVESTIGATION, AUDIT, EXAMINATION OR PROCEEDING.

(b) Any Person whose access to the SEF operated by BSEF is suspended for any 

period remains subject to the BSEF Rules, the Obligations and BSEF’s jurisdiction throughout 

the period of suspension. Any Person whose access to the SEF operated by BSEF is revoked or 

terminated shall remain bound by the BSEF Rules and Applicable Law, in each case to the 

extent applicable to it, and subject to the jurisdiction of BSEF with respect to any and all 

matters arising from, related to, or in connection with, the status, actions or omissions of such 

Participant prior to such revocation or termination.

RULE 312. Description of Participant’s Status

A Participant shall ensure that the form, content and context of any description of the 

Participant’s status on the SEF operated by BSEF is not inconsistent with, and does not 

misrepresent, the Participant’s capacity on the SEF operated by BSEF under the BSEF Rules or 

the Participant’s registration, if any, under the CEA, or under any other Applicable Law.

RULE 313. Dissolution of Participants

All rights and privileges of a Participant terminate upon, and all obligations of a Participant shall 

survive the dissolution of the Participant.

RULE 314. Withdrawal of Participant

(a) To withdraw from the SEF operated by BSEF, a Participant must notify BSEF of 

its withdrawal. Such withdrawal shall be accepted and effective immediately upon receipt of 

such notice by BSEF. 

(b) When BSEF accepts the withdrawal of a Participant, all rights and privileges of 

such Participant terminate (including the Trading Privileges). The accepted withdrawal of a 

Participant shall not affect the rights of BSEF under the BSEF Rules or relieve the former 

Participant of such Participant’s obligations under the BSEF Rules before such withdrawal. 

Notwithstanding the accepted withdrawal of a Participant, the withdrawn Participant remains 

subject to the BSEF Rules, the Obligations and the jurisdiction of BSEF for acts done and 

omissions made while a Participant, and must cooperate in any SEF Proceeding under Chapter 6

as if the withdrawn Participant were still a Participant.
31

RULE 315. Compliance with the Commodity Exchange Act

All SEF Participants shall comply with all relevant provisions of the CEA and the Rules and 

regulations duly issued pursuant thereto by the CFTC, including the filing of reports, 

maintenance of books and records, and permitting inspection and visitation by Authorized 

Representatives of the CFTC or Department of Justice.

RULE 316. Access

RULE 316.A. ECP Access

BSEF will provide its services to any ECP with access to its markets and BSEF services that is 

impartial, transparent and applied in a fair and non-discriminatory manner; provided, however, 

that each ECP complies with BSEF’s documentation and the eligibility requirements set forth in 

this Rulebook.

RULE 316.B. ISV Access

BSEF will provide ISVs with access to its trading platform and its data in a fair and nondiscriminatory manner; provided, however, that each ISV shall comply with BSEF’s criteria

governing such access. Such access criteria shall be impartial and transparent.

RULE 317. Direct Market Access

(a) DMA may be sponsored only by a Sponsoring Broker.

(b) All trades in Cleared Swaps executed via DMA connection must be guaranteed by 

a Sponsoring Broker that assumes financial responsibility for all activity through the DMA

connection. 

(c) Each DMA Customer must execute the DMA Customer Documentation as a 

condition of being granted access to the SEF operated by BSEF.

(d) A Sponsoring Broker shall assist BSEF in any investigation into potential 

violations of the BSEF Rules, CFTC Regulations or the Act which occur through or with respect 

to a DMA connection guaranteed by such Sponsoring Broker. Such assistance must be timely 

and may include requiring any DMA Customer to produce documents, to answer questions from 

BSEF, and/or to appear in connection with an investigation.

(e) A Sponsoring Broker shall suspend or terminate the Trading Access of a DMA 

Customer or any Authorized Trader associated with such DMA Customer if BSEF determines 

that the actions of the DMA Customer or any of its Authorized Traders threaten the integrity of 

the SEF operated by BSEF or liquidity of any Swap or violate any BSEF Rule or if the DMA 

Customer or any of its Authorized Traders fails to cooperate in an investigation.

(f) If a Sponsoring Broker has actual or constructive notice of a violation of the 

BSEF Rules in connection with Direct Market Access by its DMA Customer and the Sponsoring 
32

Broker fails to take appropriate action, BSEF may consider that the Sponsoring Broker has 

committed an act detrimental to the interest or welfare of BSEF.

RULE 318. Legal Certainty for SEF Trades

A transaction entered into on or pursuant to the BSEF Rules shall not be void, voidable, subject 

to rescission, otherwise invalidated, or rendered unenforceable as a result of:

(a) a violation by BSEF of the provisions of section 5h of the Act or CFTC 

Regulations;

(b) any CFTC proceeding to alter or supplement a Rule, term, or condition under 

section 8a(7) of the Act or to declare an emergency under section 8a(9) of the Act; or

(c) any other proceeding the effect of which is to:

(i) alter or supplement a specific term or condition or trading rule or 

procedure; or

(ii) require BSEF to adopt a specific term or condition, trading rule or 

procedure, or to take or refrain from taking a specific action.

RULE 319. Rights and Responsibilities after Suspension or Termination

(a) When the Trading Privileges of a Participant or the Trading Access of any 

Authorized Trader are suspended, none of its rights and Trading Privileges (including the right to 

hold oneself out to the public as a Participant, enter RFQs or Orders into the SEF operated by 

BSEF and receive Participant rates for fees, costs, and charges at Participant levels) will apply 

during the period of the suspension, except for the right of the Participant in question to assert 

claims against others as provided in the BSEF Rules or the right to Trading Access. Any such 

suspension will not affect the rights of creditors under the BSEF Rules or relieve the Participant 

in question of its, his or her obligations under the BSEF Rules to perform any Swaps entered into 

before the suspension, or for any SEF fees, costs, or charges incurred during the suspension. 

(b) When the Trading Privileges of a Participant or the Trading Access of any 

Authorized Trader are terminated, all of a Participant’s rights and Trading Privileges or an 

Authorized Trader’s right to Trading Access will terminate, except for the right of the Participant 

in question to assert claims against others, as provided in the BSEF Rules. Any such termination 

will not affect the rights of creditors under the BSEF Rules. A terminated Participant may only 

seek to reinstate its Trading Privileges by applying for Trading Privileges pursuant to Rule 304. 

BSEF will not consider the application of a terminated Participant if such Participant continues 

to fail to appear at disciplinary or appeals proceedings without good cause or continues to 

impede the progress of disciplinary or appeals proceedings.

(c) A suspended or terminated Participant, Authorized Trader or Supervised Person

remains subject to the BSEF Rules and the jurisdiction of BSEF for acts and omissions prior to 

the suspension or termination, and must cooperate in any inquiry, investigation, disciplinary or 
33

appeals proceeding, summary suspension or other summary action as if the suspended or 

terminated Participant still had Trading Privileges or the terminated Authorized Trader still had 

Trading Access. BSEF may discipline a suspended Participant or Authorized Trader under this 

Chapter 6 for any violation of a BSEF Rule or provision of Applicable Law committed by the 

Participant or Authorized Trader before, during or after the suspension.

(d) Upon the request of a Customer, in the event of the suspension or revocation of 

the Trading Privileges of a Participant, BSEF shall seek to facilitate the transfer of any Customer 

accounts held by such Participant to other Participants with Trading Privileges. 

CHAPTER 4.

OBLIGATIONS OF PARTICIPANTS, ACCOUNT MANAGERS, DMA CUSTOMERS, 

AUTHORIZED TRADERS AND SUPERVISED PERSONS

RULE 401. Duties and Responsibilities

(a) Each Participant, Account Manager, DMA Customer, Authorized Trader and 

Supervised Person shall:

(i) ensure that BSEF’s facilities are used in a responsible manner and are not 

used for any improper purpose;

(ii) ensure that BSEF’s facilities are used only to conduct SEF Activity;

(iii) ensure that all SEF Activity conducted by the Participant, Account 

Managers, Authorized Traders and Supervised Persons is performed in a manner 

consistent with applicable BSEF Rules and their respective Obligations;

(iv) comply with all BSEF Rules and Obligations and act in a manner 

consistent with each BSEF Rule and Obligation;

(v) observe high standards of integrity, market conduct, commercial honor, 

fair dealing, and just and equitable principles of trade while conducting or attempting to 

conduct any SEF Activity, or any aspect of any business connected with or concerning 

the SEF operated by BSEF;

(vi) not mislead or conceal any material fact or matter in any dealings or 

filings with BSEF or in response to any SEF Proceeding; and

(vii) keep the Authorized Trader’s Trader IDs, account numbers and passwords 

confidential.
34

(b) Each Participant shall be responsible for promptly informing BSEF of any 

material changes to Eligibility Criteria information provided to BSEF by the Participant.

RULE 402. Required Disclosures to BSEF

Each Participant shall immediately notify the Compliance Department upon becoming aware of 

any of the following events:

(a) any material change to the contact information provided to BSEF by the

Participant;

(b) any damage to, or failure or inadequacy of, the systems, facilities or equipment of 

the Participant to effect transactions pursuant to the BSEF Rules or to timely perform the

Participant’s financial obligations under or in connection with Swaps of such Participant or 

Swaps of any Customer or Account of such Participant;

(c) any refusal of admission of the Participant for membership in, any SelfRegulatory Organization, SEF, DCM, or Derivatives Clearing Organization;

(d) any expulsion, suspension or fine in excess of $25,000 (whether through an 

adverse determination, voluntary settlement or otherwise) imposed on the Participant by any 

Self-Regulatory Organization, SEF, DCM, Derivatives Clearing Organization or, with respect to 

SEF Activity, any relevant Governmental Body;

(e) any revocation, suspension or conditioning of any registration or license of a 

Participant necessary to conduct SEF Activity granted by any relevant Governmental Body;

(f) (A) the commencement of any judicial or administrative proceeding against the

Participant or any Authorized Trader or Supervised Person or (B) the imposition of any fine in 

excess of $25,000, cease and desist order, denial of trading privileges, censure or other sanction 

or remedy (whether through an adverse determination, voluntary settlement or otherwise) 

imposed, in each case of (A) and (B), by any Self-Regulatory Organization, SEF, DCM, 

Derivatives Clearing Organization or, with respect to SEF Activity, any relevant Governmental 

Body;

(g) any indictment or conviction of, or any confession of guilt or plea of guilty or

nolo contendere by, any principals or senior officers of the Participant or any Authorized Trader

for any felony or misdemeanor involving, arising from, or related to, the purchase or sale of any 

commodity, futures contract, swap, option, security, securities futures product or other financial 

instrument, or involving or arising from fraud or moral turpitude; and

(h) the Participant’s or a 10% or greater owner of the Participant becoming the 

subject of a petition for bankruptcy;

(i) the appointment of a receiver, trustee or administrator for the Participant or a 10% 

or greater owner of the Participant;
35

(j) the presentment of a petition, or the passing of a resolution, for the Participant’s 

or a 10% or greater owner of the Participant winding-up;

(k) the commencement of proceedings for the Participant’s or the 10% or greater 

owner’s of the Participant dissolution; or

(l) the occurrence of an event of insolvency with respect to the Participant or the 

10% owner or greater owner of the Participant.

RULE 403. Inspections by BSEF

(a) BSEF or the Regulatory Services Provider (or their respective authorized 

representatives), shall have the right with such prior reasonable advance notice as is practicable 

under the circumstances, in connection with determining whether all BSEF Rules are being, will 

be, or have been complied with by the Participant, to:

(i) inspect the books and records of the Participants relating to SEF Activity;

(ii) inspect systems, equipment and software of any kind operated by the 

Participant in connection with SEF Activity and any data stored in any of the systems 

or equipment related to SEF Activity; and/or

(iii) copy or reproduce any data to which BSEF has access under this Rule.

(b) Such books and records, systems, equipment, software and data shall be made 

available to BSEF and the Regulatory Services Provider and their respective authorized 

representatives during regular business hours and BSEF and the Regulatory Services Provider 

and their respective authorized representatives agree to adhere to Participant’s reasonable logical 

and physical access and security procedures.

(c) Each Participant, DMA Customer and Authorized Trader shall provide the 

Regulatory Services Provider with the same access to their books and records as they are 

required to provide to BSEF under the BSEF Rules and Applicable Law.

(d) The Compliance Department may require a Participant to furnish (periodically or 

on a particular occasion) information concerning the Participant’s SEF Activity.

RULE 404. Minimum Financial and Related Reporting Requirements

Each Participant that is registered with any Self-Regulatory Organization shall comply with the 

provisions of Applicable Law relating to minimum financial and related reporting and 

recordkeeping requirements.
36

RULE 405. Position Liquidation upon Default

Upon default of any Swap by a Participant, Customer or Client, BSEF shall have the right to 

arrange the liquidation of all or some Swap positions of such Participant, Customer or Client, as 

applicable, opened via the SEF operated by BSEF.

RULE 406. Authority to Impose Restrictions

Whenever a Participant is subject to the early warning requirements set forth in the CFTC

Regulations, including CFTC Regulation 1.12, the President, or his or her designee, may impose 

such conditions or restrictions on the business and operations of such Participant as the 

President, or his or her designee, may deem necessary or appropriate for the protection of 

Customers, other Participants or the SEF operated by BSEF.

RULE 407. Customers and Accounts

(a) No Participant shall carry an account for a Customer or enter an RFQ or Order in 

the name of a Account unless the Participant has entered into a Written agreement with the 

Customer or Account that is in compliance with Applicable Law and the BSEF Rules.

(b) Each Participant must: (1) ensure that the Customer or Account is an ECP at the 

time of execution of any Swap; (2) subject every Swap executed for the Customer or Account to

the terms of the BSEF Rules insofar as they are applicable to that Swap; (3) in relation to any 

Swap executed for the Customer or Account, be able to comply with all requirements of the 

BSEF Rules and any other arrangements, provisions and directions given by BSEF; and (4) 

provide BSEF and its agents, including its Regulatory Services Provider, access to all 

information in connection with or related to its SEF Activity necessary for monitoring and 

enforcement of BSEF Rules. 

RULE 408. Disclosure Requirements; Know Your Counterparty Requirements

(a) With respect to Non-Cleared Swaps, Participants that are Swap Dealers or Major 

Swap Participants shall verify the status of each Counterparty as an ECP with respect to each 

Trade as provided in Part 23 of the CFTC Regulations applicable to business conduct standards 

for Swap Dealers and Major Swap Participants in their dealing with counterparties.

(b) Each Participant must comply with the disclosure requirements imposed by the 

BSEF Rules. 

RULE 409. Books and Records

RULE 409.A. Participant Books and Records

(a) Each Participant shall prepare and keep current all books, ledgers and other 

similar records relating to its SEF Activity required to be kept by it pursuant to the Act, CFTC 

Regulations and these Rules and shall prepare and keep current such other books and records 

relating to its SEF Activity and adopt such forms as BSEF may from time to time prescribe. 
37

Such books and records shall be made available, upon request, to BSEF, the CFTC, the 

Department of Justice or any Governmental Body, regulator or Self-Regulatory Organization

with jurisdiction over BSEF, and their respective Authorized Representatives. 

(b) In addition to information required by subsection (a) of this Rule 409, each 

Participant must comply with all applicable requirements of CFTC Regulation 1.35. 

(c) If a Participant cannot enter an Order or Request for Quote received from its 

Customer into the SEF Platform, the Participant must immediately create an electronic record 

that includes the account identifier that relates to the Customer Account, time of receipt, and 

terms of the Order or Request for Quote.

(d) As required by CFTC Regulation 37.404, each Participant must keep records of 

their trading on the SEF operated by BSEF (including records of its activity in the index or 

instrument used as a reference price, the underlying commodity and related derivatives markets)

and make such records available, upon request, to BSEF, the CFTC or any Governmental Body, 

regulator or Self-Regulatory Organization with jurisdiction over BSEF, and their respective 

Authorized Representatives.

(e) Each Participant shall keep all books and records required to be kept by it 

pursuant to these Rules for a period of five years from the date on which they are first prepared 

unless otherwise provided in these Rules or required by Applicable Law. Such books and records 

shall be readily accessible during the first two years of such five-year period. During such fiveyear period, all such books and records shall be made available for inspection by, and copies 

thereof shall be delivered to, BSEF and its Authorized Representatives upon request. 

(f) Each Participant and Authorized Trader shall provide the NFA with the same 

access to its books and records and offices as it is required to provide BSEF under these Rules 

and Applicable Law. 

(g) BSEF may require a Participant to furnish such information concerning the 

Participant’s business that is subject to these Rules as BSEF deems necessary to enable it to 

perform its obligations under Applicable Law, including information relating to (i) Swaps 

executed on the SEF operated by BSEF and in related derivatives markets, including in the 

products underlying those Swaps, and (ii) information requested by a government agency 

relating to the SEF and/or BSEF’s compliance with Applicable Law that BSEF believes is 

maintained by, or otherwise in the possession of, a Participant.

(h) All data and information provided to or obtained by BSEF pursuant to this Rule 

409 shall be subject to the provisions of Rule 805.

RULE 409.B. BSEF Books and Records

BSEF shall keep, or cause to be kept, complete and accurate books and records, including all 

books and records required to be maintained pursuant to the CEA, the CFTC Regulations or the 

BSEF Rules as required by CFTC Regulation 1.31.
38

RULE 410. Responsibility for Mandatory Trading

Each Participant that is a Swap Dealer or Major Swap Participant shall be responsible for 

compliance with the mandatory trading requirement under Section 2(h)(8) of the CEA and shall 

not enter into any Required Transaction outside a SEF that lists a Swap related to such Required 

Transaction.

RULE 411. Eligibility for Clearing Exempt Transactions

Each Participant wishing to execute any Clearing Exempt Transaction on the SEF operated by 

BSEF must submit to BSEF the documentation required by Part 50 of the CFTC Regulations or 

CFTC Staff No-Action Letter 13-22 (each a “Clearing Exception Form”) prior to sending an 

RFQ or placing an Order subject to the Clearing Exception. A Participant shall submit to BSEF 

all documentation supporting its eligibility (or the eligibility of its relevant Client or Customer, if 

applicable) for the Clearing Exception.

CHAPTER 5.

TRADING PRACTICES, REPORTING, CLEARING AND BUSINESS CONDUCT

RULE 501. Scope

This Chapter 5 prescribes Rules concerning trading practices and business conduct on the SEF 

operated by BSEF and applies to all RFQs, Orders and Trades in Swaps as defined in Chapter 1.

RULE 502. Procedures

(a) With respect to trading on or though the SEF Platform or subject to BSEF Rules, 

BSEF may adopt, without limitation, procedures relating to transactions in Swaps and trading on 

the SEF Platform or subject to BSEF Rules, including procedures to:

(i) disseminate the prices of bids and offers on, and trades in, Swaps;

(ii) record, and account for, Swaps and SEF Activity and regulate 

administrative matters affecting Swaps and SEF Activity;

(iii) establish limits on the number and/or size of RFQs or Orders that may be 

submitted by a Participant through the SEF Platform or subject to BSEF Rules;

(iv) establish limits on the aggregate notional amount of Swaps that may be 

held by a Participant;

(v) establish a limit on the maximum daily price fluctuations for any Swap 

and provide for any related restriction or suspension of trading in the Swap; and

(vi) establish minimum price quoting increments for each Swap.
39

(b) BSEF may, in its discretion and at any time, amend any procedures adopted 

pursuant to Rule 502(a), and will publish the amendments in a Notice to Participant or in any 

other manner determined appropriate by BSEF.

RULE 503. Business Days and Trading Hours

Except as provided in Rule 212 with respect to Emergencies, BSEF shall determine and publish a 

Notice to Participants listing the Business Days of the SEF operated by BSEF and the Trading 

Hours for each Swap.

RULE 504. Rule Violations

(a) It shall be an offense for a Participant, Account Manager, DMA Customer,

Authorized Trader or Supervised Person to violate any BSEF Rule regulating the conduct or 

business of a Participant or its Account Managers, Authorized Traders or Supervised Persons, 

or any agreement made with BSEF, or to engage in fraud, dishonorable or dishonest conduct, or 

in conduct which is inconsistent with just and equitable principles of trade.

(b) Participants shall assist BSEF in any investigation into potential violations of the 

BSEF Rules or, with respect to the SEF Activity, the CEA. Such assistance must be timely and 

may include, but not be limited to, producing documents, answering questions from BSEF or its 

designee, and/or appearing in connection with an investigation. 

(c) If a Participant has actual or constructive notice of a violation of BSEF Rules in 

connection with the use of the SEF operated by BSEF by a Participant, Customer, Account or

Authorized Trader and the Participant fails to take appropriate action, the Participant may be 

found to have committed an act detrimental to the interest or welfare of the SEF operated by 

BSEF.

RULE 505. Fraudulent Acts

No Participant, Account Manager, DMA Customer, Authorized Trader, Supervised Person or 

any market participant that directly or indirectly effects a transaction on the SEF operated by 

BSEF shall engage in any fraudulent act or engage in any scheme to defraud, deceive, trick or 

mislead in connection with or related to any SEF Activity. Specifically, no Participant, Account 

Manager, DMA Customer, Authorized Trader or Supervised Person shall engage in front 

running, fraudulent trading, money passes, trading ahead of Customers, trading against 

Customers or accommodation trading. 

RULE 506. Fictitious, Wash or Pre-Arranged Transactions

(a) No Participant, Account Manager, DMA Customer, Authorized Trader,

Supervised Person or any market participant that directly or indirectly effects a transaction on the 

SEF operated by BSEF shall create fictitious transactions or wash transactions or execute any

Order with knowledge of its nature. No Person shall place or accept Orders in the same Swap 

where the Person knows or reasonably should know that the purpose of the Orders is to avoid 

taking a bona fide market position exposed to market risk (transactions commonly known or 
40

referred to as wash sales). Orders for different accounts with common beneficial ownership that 

are entered with the intent to negate market risk or price competition shall also be deemed to 

violate the prohibition on wash trades. Additionally, no Person shall knowingly execute or 

accommodate the execution of such Orders by direct or indirect means.

(b) No Participant, Account Manager, DMA Customer or Authorized Trader shall 

engage in a pre-arranged transaction except as permitted by Rule 521 and Rule 531, or Rule 533 

in the case of New Trades (as defined in Rule 533(d)).

RULE 507. Pre-Execution Communications

(a) Pre-Execution Communications with respect to Swaps executed through the 

Order Book shall be prohibited except in the case of Trades executed in accordance with Rule

521.

(b) Pre-Execution Communications are permitted with respect to Swaps executed 

through the Request for Quote Functionality in accordance with Rule 522.A(b).

RULE 508. Market Disruption and Market Manipulation

(a) Orders or RFQs entered into the SEF operated by BSEF for the purpose of 

upsetting the equilibrium of the market in any Swap without the intent to reflect fair market 

values or creating a condition in which prices do not or will not reflect fair market values are 

prohibited, and any Participant, Account Manager, DMA Customer, Authorized Trader or 

Supervised Person who makes or assists in entering any such Order or RFQ with knowledge of 

the purpose thereof or who, with such knowledge, in any way assists in carrying out any plan or 

scheme for the entering of any such Order or RFQ, will be deemed to have engaged in an act 

detrimental to the SEF operated by BSEF.

(b) Any intentional attempted or completed manipulation of the market in any Swap 

is prohibited.

(c) A Participant may not post on an Order Book and submit an RFQ to the SEF 

Platform in the same Swap at the same time using the same Participant ID.

RULE 509. Prohibition of Misstatements

It shall be an offense to make any knowing misstatement of a material fact to BSEF, any SEF 

Official, any Board committee or SEF panel, the Compliance Department and/or agents of BSEF 

(including the Regulatory Services Provider) or any Participant or any of its Account Managers, 

Authorized Traders or Supervised Persons.

RULE 510. Acts Detrimental to Welfare of SEF

It shall be an offense to engage in any act that is detrimental to the interest or welfare of the SEF

operated by BSEF.
41

RULE 511. Adherence to Law

(a) No Participant, Account Manager, Customer, Authorized Trader or Supervised 

Person shall engage in conduct in violation of the BSEF Rules, the Act, CFTC Regulations, the 

Rules of any SEF, or the rules of any DCM, DCO or SRO that has jurisdiction over such 

Participant, Account Manager, Customer, Authorized Trader or Supervised Person or, with 

respect to SEF Activity, the laws, rules or regulations of any relevant Governmental Body. 

(b) Without limiting subsection (a) of this Rule, 

(i) each Participant that is an FCM or a Clearing Member must comply with 

all requirements of Applicable Law regarding the treatment of Customer funds and 

Customer Orders; and

(ii) each Participant, Customer or Account must comply with all margin 

requirements established by each relevant Clearing House and by each relevant 

Clearing Member, if applicable, as well as any margin requirements set forth by the 

CFTC or Applicable Law. 

RULE 512. Use of Trading Privileges

No Participant, Account Manager, DMA Customer, Authorized Trader or Supervised Person

may use such Participant’s Trading Privileges in any way that could be expected to bring 

disrepute upon such Participant, Account Manager, DMA Customer, Authorized Trader or 

Supervised Person.

RULE 513. Supervision

Each Participant, DMA Customer and Account Manager shall be responsible for establishing, 

maintaining and administering reasonable supervisory procedures to ensure that its Authorized 

Traders and Supervised Persons, as applicable, comply with the BSEF Rules, the Act, CFTC 

Regulations, the Rules of any SEF, or the rules of any DCM, DCO or SRO that has jurisdiction 

over such Participant, Account Manager, DMA Customer, Authorized Traders or Supervised 

Persons or, with respect to SEF Activity, the laws, rules or regulations of any relevant 

Governmental Body, and such Participant may be held accountable for the actions of such 

Account Managers, Authorized Traders or Supervised Persons.

RULE 514. Misuse of the SEF Platform

Misuse of the SEF Platform is strictly prohibited. Only Swaps can be traded on the SEF 

operated by BSEF. It shall be deemed an act detrimental to the interest and welfare of the SEF 

operated by BSEF to willfully or negligently engage in unauthorized use of the SEF Platform, to 

assist any Person in obtaining unauthorized access to the SEF Platform, to trade on the SEF 

Platform without an agreement and an established account with a Derivatives Clearing 

Organization or a Clearing Member, to alter the equipment associated with the SEF Platform, to 

interfere with the operation of the SEF Platform, to intercept or interfere with information 
42

provided thereby, or in any way to use the SEF Platform in a manner contrary to the BSEF 

Rules.

RULE 515. Mishandling of Customer Orders 

Any Participant that mishandles any Customer Order is responsible for all remedial actions with 

respect to such Order.

RULE 516. Trade Cancellation and Adjustment 

RULE 516.A. Errors 

(a) If an Order was incorrectly executed or rejected by the SEF operated by BSEF, a 

Participant or its Authorized Trader may, within one Business Day thereafter, request review of 

the Order or the Trade by providing the confirmation number for the Order or the Trade and 

stating the nature of the alleged error.

(b) Upon receipt by BSEF of a request for review of an Order and the accompanying 

confirmation number, BSEF will review its electronic audit trail to determine if the SEF operated 

by BSEF correctly executed the Order. Such review will be completed (i) on the same Business 

Day if BSEF received such request for review prior to 12:00 noon on any Business Day or (ii) by 

the end of the following Business Day if such request was received (x) on or after 12:00 noon on 

any Business Day or (y) on any day that is not a Business Day.

(c) If the review described in this Rule reveals that the Order was incorrectly 

executed or rejected, then the Order or the resulting Trade, as applicable, shall be canceled or 

adjusted.

(d) If the review described in this Rule reveals that the Order was correctly executed 

or rejected by the SEF operated by BSEF, then no adjustment shall be made in the Trading 

Accounts of any Participants or Accounts. 

(e) Notwithstanding anything to the contrary in this Rule, if BSEF determines in its 

sole discretion that the execution of any Trade was the result of Orders being incorrectly 

processed by the SEF Platform, or any other cause beyond the control of any Participant, then 

BSEF may cancel such Trade in the Trading Accounts of all affected Participants.

(f) BSEF may adjust Trade prices to mitigate market disrupting events caused solely 

by improper conduct such as market manipulation or clearly erroneous trading behavior (e.g., fat 

finger). If BSEF takes action pursuant to this Rule 516.A(f), it will give prompt notice and in 

any event will use good faith, commercially reasonable efforts to provide the affected 

Participants with reasonable prior notice and to obtain such Participants’ consent to such 

adjustment. For purposes of this Rule 516.A, Participants acting as Account Managers, 

Introducing Brokers or FCMs involved in a Trade subject to a price adjustment shall have the 

authority to consent to the adjustment of the price of such Trade on behalf of the Counterparties 

involved in the Trade.
43

RULE 516.B. Prime Broker Trades

(a) A Participant that is a Counterparty to a Prime Broker Trade may request the 

cancellation of a Prime Broker Trade by sending a cancellation message to BSEF. The 

cancellation message must state the name and contact information of the Prime Broker for the 

Prime Broker Trade and the reason for cancellation. If the Prime Broker confirms the 

cancellation, BSEF will cancel the Prime Broker Trade.

(b) A Prime Broker shall have the right to cancel any Prime Broker Trade (i) that is

executed in excess of the limit established by the Prime Broker with respect to the Prime Broker 

Trade, (ii) because the Prime Broker Trade was executed by a Person that was not authorized by 

the Prime Broker, or (iii) because the Prime Broker Trade was executed for an unauthorized 

product. The Prime Broker shall communicate the cancellation directly to BSEF within 48 hours 

after the execution of the Prime Broker Trade and indicate the reason for the cancellation.

RULE 516.C. [Reserved]

RULE 517. Withholding Orders Prohibited

(a) Any Participant entering RFQs or Orders on the SEF operated by BSEF for its 

Customers shall not withhold or withdraw from the market any RFQ or Order, or any part of an 

RFQ or Order, for the benefit of any Person other than the Customers.

(b) A Participant must enter immediately into the SEF operated by BSEF all Orders 

or Requests for Quotes received from its Customers that are executable immediately. If a 

Participant cannot immediately enter into the SEF Platform an Order or Request for Quote 

received from its Customer, the Participant must enter the Order or Request for Quote into the 

SEF operated by BSEF as soon as practicable, and must immediately create an electronic record 

as provided in Rule 409.

RULE 518. Priority of Customers’ Orders

No Participant that is an FCM or Introducing Broker shall enter an Order into the SEF operated 

by BSEF for his own account, an account in which he has a direct or indirect financial interest or 

an account over which he has discretionary trading authority, including an Order allowing 

discretion as to time and price, when such Person is in possession of any Order in the same Swap 

for its Customer that the SEF operated by BSEF is capable of accepting.

RULE 519. Trading Against Customers’ Orders Prohibited

RULE 519.A. General Prohibition

No Person in possession of a Customer’s Order shall knowingly take, directly or indirectly, the 

opposite side of such Order for its own account, an account in which it has a direct or indirect 

financial interest, or an account over which it has discretionary trading authority.
44

RULE 519.B. Exceptions

The foregoing restriction shall not apply to transactions executed pursuant to Rule 531.A or Rule 

531.B.

RULE 520. Disclosing Orders Prohibited

No Person shall disclose another Person’s RFQ or Order to buy or sell except to a designated 

SEF Official or the CFTC, and no Person shall solicit or induce another Person to disclose RFQ 

or Order information. No Person shall take action or direct another to take action based on nonpublic RFQ or Order information, however acquired. 

RULE 521. Simultaneous Buy And Sell Orders For Different Beneficial Owners

(a) A Participant that is a broker or a dealer which seeks either to execute against a 

Customer’s Order or to execute two Customers against each other through an Order Book 

following some form of pre-arrangement or pre-negotiating of such Orders must expose one side 

of the transaction for a minimum of 15 seconds to the other Participants before the second side of 

the transaction (whether for the Participant’s own account or for a second Customer) can be 

submitted for execution.

(b) Notwithstanding the foregoing clause (a), this Rule shall not apply to any DMA 

Order.

RULE 522. Execution of Orders on the SEF Platform

RULE 522.A. Required Transactions

(a) No Participant shall execute a Required Transaction in a Swap listed on the SEF 

operated by BSEF other than as described in this Rule 522.A unless it is a Block Trade. 

(b) Request for Quote Functionality 

(i) An RFQ for a specific Swap must be sent to at least three MAT Recipient 

Participants. A Participant is prohibited from sending an RFQ to less than three MAT 

Recipient Participants. 

(ii) Together with the first response from any MAT Recipient Participant, the 

SEF Platform will display to a Requesting Participant any firm Resting Quotes for the 

Swap indicated in the RFQ that are posted on an Order Book together with any responses 

to the RFQ from the MAT Recipient Participants, and such Resting Quotes will remain 

displayed until all responses to the RFQ are received or the time for response has lapsed. 

The SEF Platform will permit the Requesting Participant to execute against such firm 

Resting Quotes along with any responsive Order from a MAT Recipient Participant.

“MAT Recipient Participant” means, with respect to any Requesting Participant 

sending any RFQ via the Request for Quote functionality of the SEF Platform, a 
45

Participant other than the Requesting Participant that (x) is not an Affiliate of or 

Controlled by the Requesting Participant and (y) is not an Affiliate of or Controlled by 

any other MAT Recipient Participant receiving the same RFQ of the Requesting 

Participant. 

(c) CLOB

Only firm bids and offers can be posted on the CLOB. Firm bids or offers may be 

posted on the CLOB only by a Participant that is a member of the applicable Clearing 

House, by a Participant that has a clearing account with a Clearing Member as set forth in

Rule 533(b), or by a Participant in the name of an Account or Customer that has a 

clearing account with a Clearing Member as set forth in Rule 533(b). Bids and offers 

posted on the CLOB are anonymous and will be matched on a price/time priority basis.

RULE 522.B. Permitted Transactions

The following execution methods are available for Permitted Transactions

(a) Order Book;

(b) Request For Quote Functionality

(c) Manual Order Ticket

RULE 522.C. Package Transactions 

A Package Transaction or a component of a Package Transaction that is a Required 

Transaction may be executed by any means of execution for Permitted Transactions in 

accordance with CFTC No-Action Letter 14-137.

RULE 522.D. Execution of Swaps Subject to the Clearing Exemption

No Participant shall enter into a Clearing Exempt Transaction unless it (or its Account or 

Customer) or its Counterparty can claim a Clearing Exception with respect to such Clearing 

Exempt Transaction. An Order for a Clearing Exempt Transaction will be rejected if an 

applicable Clearing Exception Form is not on file with BSEF. 

RULE 522.E. Block Trades

(a) In accordance with CFTC No-Action Letter 14-118, which expires December 15, 

2015 at 12:00 a.m. EST, until December 15, 2015 Block Trades in Cleared Swaps may be 

executed using the Request for Quote Functionality and reported to an SDR as set forth in BSEF 

Rule 532(d).

(b) Each Counterparty to a Block Trade must be an ECP.
46

(c) The aggregation of Orders for different accounts in order to satisfy the Minimum 

Block Trade size is permissible only by a Person who is a Qualified Account Manager.

(d) A Qualified Account Manager transacting an aggregated Block Trade on behalf of 

any other Person must receive prior Written instruction or consent from each such other Person 

to do so. Such instruction or consent may be provided in the power of attorney or similar 

document by which the other Person provides the Person with discretionary trading authority or 

the authority to direct the trading in its account.

RULE 523. Trade Confirmations

(a) BSEF will confirm each Trade at the same time as execution of the Trade. BSEF 

will provide each Counterparty to a Trade that is entered into on or pursuant to the BSEF Rules

with a Written record of all of the terms of the Trade which shall legally supersede any previous 

agreement and serve as a confirmation of the transaction (a “Confirmation”) as soon as 

technologically practicable after the execution of a Trade. Such terms shall legally supersede 

any previous agreement and serve as a confirmation of the Trade. BSEF will not include specific 

customer identifiers for accounts included in Bunched Orders if the applicable requirements of 

CFTC Regulation 1.35(b)(5) are met.

(b) On the Confirmation BSEF will:

(i) provide USI for the Trade and the name of the SDR where the Trade is 

reported;

(ii) identify the Counterparty that is a Reporting Counterparty pursuant to 

CFTC Regulation 45.8, and notify each Counterparty or its agent if the 

Counterparty is a Reporting Counterparty, using the information provided 

by a Participant pursuant to Rule 524.A or 524.C; and

(iii) if each Counterparty has equal reporting status under CFTC Regulation 

45.8 BSEF will designate the Reporting Counterparty using the following 

rules:

• For rates asset class, the Reporting Counterparty will be 

determined in accordance with the ISDA Dodd-Frank Act – Swap 

Transaction Reporting Party Requirements, the relevant portion of 

which is attached to this Rulebook as Annex A;

• For credit asset class, the Reporting Counterparty is the seller of 

protection;

• For foreign exchange, commodity and equity asset class: the 

Reporting Counterparty is the liquidity provider. A “liquidity 

provider” is a Person that: (i) for RFQ, provided the responses to 

an RFQ that led to the reported Trade; or (ii) for an Order Book, 

provided the first quote that led to the reported Trade. 
47

(c) With respect to any Swap that is not a Cleared Swap, a Confirmation shall for 

purposes of Commission Regulation 37.6(b) consist of the Trade Communication and the Terms 

Incorporated by Reference. In the event of any conflict between (x) the Trade Communication 

and (y) the Terms Incorporated by Reference, the Trade Communication shall prevail to the 

extent of any inconsistency.

“Trade Communication” shall mean a Written communication provided by 

BSEF to each Participant involved in a Trade containing the economic terms of 

the Trade agreed by the Participants on the SEF operated by BSEF. 

“Terms Incorporated by Reference” shall mean the documents and agreements 

(including, without limitation, ISDA master agreements, other master agreements, 

terms supplements, master confirmation agreements, and incorporated industry 

definitions) governing such Trade memorialized in the Trade Communication and 

existing at the time of execution of the Trade. 

RULE 524. Order Entry Requirements

RULE 524.A. General

Each Authorized Trader entering an RFQ or Order with respect to any Swap traded on the SEF 

operated by BSEF must include with the Order, as applicable:

(a) the Trader ID; 

(b) the Participant ID;

(c) the Legal Entity Identifier of the Participant or Account Manager placing 

the RFQ or Order, if available;

(d) the Counterparty’s Legal Entity Identifier;

(e) the Swap description or code;

(f) the price or yield, quantity, maturity or expiration date of the Swap;

(g) side of the Order;

(h) the CTI code;

(i) Trading Accounts and other relevant account(s);

(j) a yes/no indication of whether the Counterparty is a Swap Dealer with 

respect to the Swap with respect to which the Order is placed;
48

(k) a yes/no indication of whether the Counterparty is a Major Swap 

Participant with respect to the Swap with respect to which the Order is 

placed;

(l) a yes/no indication of whether the Counterparty is a Financial Entity;

(m) a yes/no indication of whether the Counterparty is a U.S. person; 

(n) a yes/no indication that a Swap is an inter-affiliate Swap that should not be 

subject to the real-time reporting requirements; 

(o) a yes/no indication of the Clearing Exception;

(p) an indication of whether the Swap is a leg of a Package Transaction that is 

a Swap subject to (i) the trade execution requirement of Section 2(h)(8) of 

the Act and (ii) relief granted by CFTC No-Action Letter 14-137;

(q) if applicable, other terms of a Swap that is not a Cleared Swap required by 

BSEF (e.g., type of Clearing Exception, collaterization); or

(r) if the Swap will be allocated:

(i) an indication that the Swap will be allocated; and

(ii) the Legal Entity Identifier of the Account Manager.

RULE 524.B. Customer Type Indicator (CTI) Codes

Each Participant must identify each transaction submitted to the SEF operated by BSEF with the 

correct customer type indicator code (a “CTI” code). The CTI codes are as follows:

CTI 1- Transactions executed by a Participant for its own account, for an account it

controls, or for an account in which it has an ownership or financial interest. 

Applies to Trades placed by Account Managers and proprietary traders other than 

FCMs and Introducing Brokers.

CTI 2- Transactions executed for the Proprietary Account of a Participant. Applies to 

FCMs and Introducing Brokers trading for their Proprietary Accounts.

CTI 3- Orders that a Participant executes on behalf of another Participant, or for an 

account such other Participant controls or in which such other Participant has an 

ownership or financial interest. Applies to Trades placed by a DMA Customer 

using the Participant ID of the Sponsoring Broker.

CTI 4- Any transaction not meeting the definition of CTIs 1, 2 or 3. Applies to Trades 

placed by FCMs and Introducing Brokers for their Customers and anything else.
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RULE 524.C. Pre-Arranged Transactions

All Trades executed in accordance with Rule 531, unless otherwise exempted by a Rule, must be 

in the form of a Written or electronic record and include in the Order ticket all information 

required by Rule 524.A.

RULE 525. Position Limits

(a) BSEF shall have the authority to establish position limits for any Swap as it may 

determine necessary and appropriate, in accordance with CFTC Regulations. Where the CFTC 

has established a position limit for any Swap, BSEF’s position limit for that Swap shall not be 

higher than such limit established by the CFTC. Such limits will apply only with respect to 

trading on the SEF operated by BSEF.

(b) Except as otherwise provided by the BSEF Rules, no Person, including a 

Participant, may hold or control a position in excess of such position limits and a Participant may 

not maintain a position in excess of such position limits for an Account or Customer if such 

Participant knows, or with reasonable care should know, that such position will cause such 

Account or Customer to exceed the applicable position limits.

(c) Position limits shall apply to (i) all positions in accounts for which any Person, by 

power of attorney or otherwise, directly or indirectly holds positions or controls trading, and (ii) 

positions held by two or more Persons acting pursuant to an expressed or implied agreement or 

understanding, as if the positions were held by, or the trading of the positions were done by, a 

single Person.

(d) For Required Transactions, BSEF will enforce position limits only for Trades 

executed on the SEF operated by BSEF. For Permitted Transactions, BSEF will demonstrate 

compliance with CFTC Regulation 37.600 by sending the CFTC a list of Permitted Transactions 

traded on the SEF operated by BSEF.

RULE 526. Exemptions from Position Limits 

Any Person seeking an exemption from the position limits referred to in Rule 525 must file an 

application with BSEF. BSEF shall notify the applicant whether the exemption has been 

approved and whether BSEF has imposed any limitations or conditions on the exemption. The 

decision of BSEF shall be final.

RULE 527. Position Accountability 

(a) BSEF may establish a position accountability level for any Swap as it determines 

necessary and appropriate, in accordance with CFTC Regulations. Any Person, including a 

Participant, who owns or controls Swaps in excess of the applicable position accountability level 

shall provide to BSEF at its request any information regarding the nature of the position, trading 

strategy or hedging activities, if applicable, and if ordered by BSEF, shall not increase the size of 

any such position. 
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(b) For purposes of this Rule, all positions in accounts for which a Person, by power 

of attorney or otherwise, directly or indirectly controls trading shall be included with the 

positions held by such Person. The provisions of this Rule shall apply to positions held by two 

or more Persons acting pursuant to an expressed or implied agreement or understanding, as if the 

positions were held by a single Person.

RULE 528. Bunched Orders and Orders Eligible for Post-Execution Allocation

(a) Only the following categories of Persons may place a Bunched Order to be 

allocated post-execution on the SEF Platform or that is subject to BSEF Rules:

(i) a commodity trading advisor registered with the Commission pursuant to 

the Act or excluded or exempt from registration under the Act or the CFTC Regulations, 

except for entities exempt under CFTC Regulation 4.14(a)(3);

(ii) an investment adviser registered with the SEC pursuant to the Investment 

Advisers Act of 1940 or with a state pursuant to applicable state law or excluded or 

exempt from registration under the Investment Advisers Act of 1940 or applicable state 

law or rule;

(iii) a bank, insurance company, trust company, or savings and loan 

association subject to federal or state regulation;

(iv) a foreign adviser that exercises discretionary trading authority solely over 

the accounts of non-U.S. persons, as defined in CFTC Regulation 4.7(a)(1)(iv);

(v) a Futures Commission Merchant registered with the Commission pursuant 

to the Act; or

(vi) an Introducing Broker registered with the Commission pursuant to the 

Act.

(b) Bunched Orders must be allocated and recorded in accordance with CFTC 

Regulation 1.35(b)(5) and the NFA’s Interpretative Notice related to Compliance Rule 2-10. 

(c) Bunched Orders may be entered using an Account Series Designation or suspense 

account number; provided, however that:

(i) the Order is being placed by an Account Manager for multiple accounts 

eligible for post-execution allocation; or

(ii) a Written, pre-determined allocation scheme that defines the series has 

been provided to the FCM accepting or clearing the Order prior to the time that such 

Order is entered. In the latter case, if such information has not been provided to the FCM 

prior to the time of Order enter, each specific account number must be provided to BSEF. 

Additionally, for all such Bunched Orders executed on the SEF Platform or subject to 
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BSEF Rules, the final account-specific allocations must be provided to BSEF no later 

than the End of Trading.

RULE 529. Orders Entered Prior to SEF Opening

Participants are prohibited from sending any Request for Quote or Order or using an Order Book 

or any other facility of BSEF prior to the opening of the trading session.

RULE 530. Identification of Authorized Traders

Each Authorized Trader shall be identified to BSEF and shall be subject to the BSEF Rules. It is 

the duty of the Participant to ensure that Authorized Trader (and Trader ID) registration is 

current and accurate at all times. Each individual must use a Trader ID to access the SEF

operated by BSEF. In no event may a Person enter an RFQ or Order or permit the entry of an 

RFQ or Order by an individual using a user Trader ID other than the individual’s own Trader ID.

RULE 531. Pre-Arranged Transactions

RULE 531.A. Block Trades

(a) Each buy or sell Order underlying a Block Trade must (1) state explicitly that it is 

to be, or may be, executed by means of a Block Trade and (2) comply with any other applicable 

CFTC Regulations governing Block Trades.

(b) Each Person transacting a Block Trade shall be a Participant and shall comply 

with all applicable BSEF Rules other than those which by their terms only apply to trading 

through the SEF Platform.

(c) Each Counterparty to a Block Trade must be an ECP.

(d) A Block Trade must be reported to the SEF operated by BSEF. A Block Trade

must be reported to the SEF operated by BSEF by one Counterparty (or a Participant acting on 

behalf of such Counterparty) and confirmed by the other Counterparty (or a Participant acting on 

behalf of such Counterparty) as soon as practicable after its execution, but may not be submitted 

any later than 10 minutes after the execution of the Block Trade. Each Block Trade must state 

the time of execution to the nearest millisecond.

(e) BSEF will review the information submitted by the Participant(s) for the Block 

Trade and will report the Block Trade as required by Part 43 and Part 45 of the CFTC 

Regulations if the details are complete and accurate in accordance with this Rule. A Participant 

that executes a Bunched Order as a Block Trade must comply with Rule 524.C. A Participant 

that executes a Bunched Order as a Block Trade must provide BSEF with the allocation 

information as soon as practicable. 

(f) Block Trades shall not trigger unexecuted Orders.
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(g) Each Participant or Account Manager that is a party to a Block Trade or executes 

a Block Trade on behalf of its Accounts or Customers must comply with the recordkeeping 

requirements set forth in Rule 409.A(c). Upon request by BSEF, such Participant shall produce 

satisfactory evidence, including the order ticket referred to in the preceding sentence, that the 

Block Trade meets the requirements set forth in this Rule 531.A.

(h) Any Block Trade in violation of these requirements shall constitute conduct 

which is inconsistent with just and equitable principles of trade. 

(i) The aggregation of Orders for different accounts in order to satisfy the Minimum 

Block Trade size is permissible only by a Person who is a Qualified Account Manager.

(j) A Qualified Account Manager transacting an aggregated Block Trade on behalf of 

any other Person must receive prior Written instruction or consent from each such other Person 

to do so. Such instruction or consent may be provided in the power of attorney or similar 

document by which the other Person provides the Person with discretionary trading authority or 

the authority to direct the trading in its account.

RULE 531.B. Complex Permitted Transactions

(a) Two Participants may arrange bilaterally a Complex Permitted Transaction 

subject to BSEF Rules outside the SEF Platform. 

(b) A Complex Permitted Transaction shall comply with all applicable BSEF Rules 

other than those which by their terms apply only to execution through the SEF Platform. 

(c) A Complex Permitted Transaction must be reported to BSEF as soon as 

technologically practicable but no later than 10 minutes after the arrangement is made.

(d) A Complex Permitted Transaction shall not be executed and binding on the 

Counterparties until received by BSEF and confirmed by BSEF in accordance with Rule 523.

A “Complex Permitted Transaction” means a complex multi-legged transaction for which 

electronic methods of execution on the SEF Platform have not yet been developed. Such 

transactions must be composed of Swaps listed on the SEF operated by BSEF and each leg must 

be a Permitted Transaction.

RULE 532. Reporting to SDR

(a) BSEF will report each Trade to an SDR of BSEF’s choice as soon as 

technologically practicable after the execution of such Trade. BSEF will report all real-time data

required by Part 43 of the CFTC Regulations and all creation data required by Part 45 of the 

CFTC Regulations. 

(b) The Reporting Counterparty designated in accordance with subsection (b) of Rule 

523 shall comply with all reporting obligations set forth in Part 45 of the CFTC Regulations 

applicable to a Reporting Counterparty including reporting Trade allocations.
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(c) BSEF will report the actual notional or principal amount of a Block Trade to the 

appropriate SDR as set forth in Part 43 and Part 45 of the CFTC Regulation.

(d) A Participant that is a Reporting Counterparty or the Account Manager or broker 

for a Reporting Counterparty may instruct BSEF to report a Trade executed pursuant to BSEF 

Rules 522.E or 531.A as a “block trade” for purposes of Part 43 of CFTC Regulations.

(e) Each Participant that is the Reporting Counterparty, or an Account Manager or 

broker for a Reporting Counterparty shall review the Trade details as soon as soon as 

technologically practicable upon transmission of the Trade details to the Participant. The nonreporting counterparty shall report any errors in such Trade details to the Reporting Counterparty 

as soon as technologically practicable. The Reporting Counterparty shall report all errors in such 

Trade details to BSEF as soon as technologically practicable after finding or being made aware 

of any error or omission in the data as reported and/or maintained by the relevant SDR. BSEF 

shall then submit the corrected data to the relevant SDR. 

(f) No Person, including BSEF, shall submit or agree to submit a cancellation or 

correction for the purpose of re-reporting Swap transaction and pricing data in order to gain or 

extend a delay in public dissemination of accurate Swap transaction or pricing data or to 

otherwise evade the reporting requirements in Part 43 of the CFTC Regulations.

RULE 533. Cleared Swaps

(a) Each Cleared Swap shall be cleared through the Clearing House indicated in the 

Swap Specification in accordance with the CEA and the CFTC Regulations.

(b) For each Cleared Swap a Participant expects to enter into via the SEF Platform or 

subject to BSEF Rules, the Participant or an Account or Customer of the Participant must 

establish a clearing account with the Clearing House or with a Clearing Member of the Clearing 

House, in each case, designated in the Swap Specification for such Cleared Swap. 

(c) All Trades in Cleared Swaps by a Participant or its Account or Customer must be 

guaranteed to the Clearing House by a Clearing Member following the Clearing Member’s 

acceptance of such Trade for clearing.

(d) BSEF shall submit each Trade to the Clearing House specified in the Swap 

Specifications. If BSEF receives a notice from the Clearing House rejecting a Trade for clearing, 

such Trade is void ab initio. 

RULE 534. Non-Cleared Swaps

(a) Any Participant that is a Swap Dealer or Major Swap Participant, or if neither 

Counterparty is a Swap Dealer or Major Swap Participant, the Participant that is the Reporting 

Counterparty, that places an Order or sends or responds to an RFQ with respect to a Non-Cleared 

Swap shall ensure that there is a Non-Cleared Swap Agreement between the Participant or its 

Account, as applicable, and the prospective Counterparty to such Swap prior to placing such 

Order or sending or responding to such RFQ. Both Participants involved in execution of a Non-
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Cleared Swap (whether in a principal capacity or in their capacity as agents on behalf of their 

respective Accounts or Customers) shall, upon the request of BSEF, make available to BSEF any 

terms of such Non-Cleared Swap that are not reflected in the applicable Swap Specification and 

shall comply with Order entry requirements for Non-Cleared Swaps that BSEF shall establish 

from time to time.

(b) Each Participant involved in a Prime Broker Trade must notify the Prime Broker 

as soon as technologically possible of each Prime Broker Trade executed pursuant to the Rules 

of BSEF to which the Prime Broker is a Counterparty, and provide to the Prime Broker the 

Confirmation for the Prime Broker Trade issued by BSEF.

RULE 535. Risk Controls

(a) BSEF may, in its sole discretion, reject any RFQ or Order or Block Trade placed 

or reported on the SEF Platform if such RFQ or Order or Block Trade is in violation of any 

BSEF Rule or Applicable Law.

(b) BSEF shall have the right to take any action to reduce the potential of market 

disruption, including market restrictions that pause or halt trading in market conditions 

prescribed by BSEF if such action is in the best interest of the swap markets. 

(c) BSEF shall have the right in its sole discretion to cancel Trades executed at prices 

outside the No-Bust Range but not submitted to the Clearing House. “No-Bust Range” shall 

mean the price of a Swap that is no more than 30% higher or lower than the prior Business Day’s 

Daily Settlement Price for such Swap. 

(d) If a Swap affected by any action of BSEF under this Rule 535 is fungible with, 

linked to, or a substitute for, other Swaps on the SEF operated by BSEF, BSEF may apply the 

same action to any such other Swaps.

(e) If a Swap is fungible with, linked to or a substitute for a financial instrument 

trading on another trading venue, including any trading venue regulated by the SEC (a “Linked 

Swap”), and such other trading venue placed risk controls on such financial instrument, BSEF

shall have the right to place similar risk controls on the Linked Swap. 

CHAPTER 6. DISCIPLINARY RULES

RULE 601. General

(a) Any Person is subject to this Chapter 6 if it is alleged to have violated, to have 

aided and abetted a violation, to be violating, or to be about to violate, any BSEF Rule or any 

provision of Applicable Law for which BSEF possesses disciplinary jurisdiction.

(b) BSEF, through the Compliance Department, the Disciplinary Panels and the 

Appeals Panels, will conduct inquiries, investigations, disciplinary and appeals proceedings, 

summary impositions of fines, summary suspensions or other summary actions in accordance 

with this Chapter 6.
55

(c) No SEF Official will interfere with or attempt to influence the process or 

resolution of any inquiry, investigation, disciplinary or appeals proceeding, summary imposition 

of fines, summary suspension or other summary action. No Director will interfere with or 

attempt to influence the process or resolution of any inquiry, investigation, disciplinary or 

appeals proceeding and summary imposition of fines, summary suspension or other summary 

action, except to the extent provided under the BSEF Rules with respect to a proceeding in which 

the Director is a member of the relevant panel. 

(d) Any Participant, Account Manager, Authorized Trader, Account, Customer,

Supervised Person or any market participant that directly or indirectly effects a transaction on the 

SEF operated by BSEF may be represented by counsel during any inquiry, investigation, 

disciplinary or appeals proceeding, summary imposition of fines, summary suspension or other 

summary actions pursuant to this Chapter 6.

(e) Pursuant to this Chapter 6, BSEF may hold a Participant liable for, and impose 

sanctions against such Participant, for such Participant’s own acts and omissions that constitute a 

violation as well as for the acts and omissions of each (A) Authorized Trader of such Participant, 

(B) Supervised Person of such Participant, (C) other Person using the Trader ID or login 

credentials linked to the Participant or Participant ID, or (D) other agent or representative of such 

Participant, in each case, that constitute a violation as if such violation were that of the 

Participant.

(f) Pursuant to this Chapter 6, BSEF may hold an Authorized Trader liable for, and 

impose sanctions against him or her, for such Authorized Trader’s own acts and omissions that 

constitute a violation as well as or for the acts and omissions of any other agent or representative 

of such Authorized Trader that constitute a violation as if such violation were that of the 

Authorized Trader.

(g) A Person subject to a disciplinary or appeals proceeding (and any counsel or 

representative of such Person) and the Compliance Department and/or the Review Panel (and 

any counsel or representative of the Compliance Department including any Regulatory Services

Provider and Review Panel) shall not knowingly make or cause to be made an ex parte 

communication relevant to the merits of a disciplinary or appeals proceeding to any member of 

the Hearing Panel hearing such proceeding. Members of a Hearing Panel shall not knowingly 

make or cause to be made an ex parte communication relevant to the merits of a disciplinary or 

appeals proceeding to any Person subject to such proceeding (and any counsel or representative 

of such Person) and the Compliance Department (and any counsel or representative of the 

Compliance Department) or the Review Panel (and any counsel or representative of the Review 

Panel). Any Person who receives, makes or learns of any communication which is prohibited by 

this Rule shall promptly give notice of such communication and any response thereto to the 

Compliance Department and all parties to the proceeding to which the communication relates. A 

Person shall not be deemed to have violated this Rule if the Person refuses an attempted 

communication concerning the merits of a proceeding as soon as it becomes apparent the 

communication concerns the merits.
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RULE 602. Inquiries and Investigation 

(a) The Compliance Department will investigate any matter within the BSEF’s 

disciplinary jurisdiction of which it becomes aware. The Compliance Department will determine 

the nature and scope of its inquiries and investigations within its sole discretion and will function 

independently of any commercial interests of BSEF. The Compliance Department’s

investigation must be completed within 12 months of the date when the Compliance Department 

commenced its investigation unless there are mitigating factors that may reasonably justify an 

investigation taking longer than 12 months, including the complexity of the investigation, the 

number of Participants or individuals involved as potential wrongdoers, the number of potential 

violations to be investigated, and the volume of documents and data to be examined and 

analyzed by the Compliance Department.

(b) The Compliance Department has the authority to:

(i) initiate and conduct inquiries and investigations;

(ii) prepare investigation reports and make recommendations concerning initiating 

disciplinary proceedings;

(iii) prosecute alleged violations within BSEF’s disciplinary jurisdiction; and

(iv) represent BSEF on summary imposition of fines, summary suspension or 

other summary action.

(c) Each Participant, Account Manager, Authorized Trader and Supervised Person:

(i) is obligated to appear and testify and respond in Writing to interrogatories 

within the time period required by the Compliance Department in connection with: (A) 

any BSEF Rule; (B) any inquiry or investigation; or (C) any preparation by and 

presentation during a disciplinary or appeals proceeding, summary imposition of fines, 

summary suspension or other summary action by BSEF;

(ii) is obligated to produce books, records, papers, documents or other 

tangible evidence in its, his or her possession, custody or control within the time period 

required by the Compliance Department in connection with: (A) any BSEF Rule; (B) 

any inquiry or investigation; or (C) any preparation by and presentation during a 

disciplinary or appeals proceeding, summary imposition of fines, summary suspension 

or other summary action by BSEF; and

(iii) may not impede or delay any inquiry, investigation, disciplinary or appeals 

proceeding, summary imposition of fines, summary suspension or other summary 

action.
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RULE 603. Reports of Investigations

(a) The Compliance Department will maintain a log of all investigations and their 

disposition. The Compliance Department will prepare a Written report of each investigation, 

regardless of whether the evidence gathered during any inquiry or investigation forms a 

reasonable basis to believe that a violation within BSEF’s jurisdiction has occurred or is about to 

occur or whether the evidence gathered results in closing the matter without further action or 

through summary action.

(b) Any Written report of investigation will include the reasons for initiating the 

investigation (including a summary of the complaint, if any), all relevant facts and evidence 

gathered, staff analysis, conclusions and the recommendation of the Compliance Department. 

The report must also include the Participant’s disciplinary history at BSEF. For each potential 

respondent, the Compliance Department will recommend either (i) closing the investigation 

without further action, (ii) summary action, (iii) resolving the investigation through an informal 

disposition, including the issuance of a warning letter or (iv) initiating disciplinary proceedings. 

An informal disposition (including the issuance of a warning letter) will not constitute a finding 

of a violation or a sanction.

RULE 604. Opportunity to Respond to Investigation Report

(a) After completing its investigation report, the Compliance Department may, upon 

approval of the Chief Compliance Officer, notify each potential respondent that the Compliance 

Department has recommended formal disciplinary charges against the potential respondent.

(b) The Compliance Department may allow a potential respondent to propose a 

settlement of the matter or to submit a Written statement explaining why a disciplinary 

proceeding should not be instituted or one or more of the potential charges should not be 

brought. The potential respondent shall submit such Written statement within the time limit 

established by the Compliance Department.

RULE 605. Review of Investigation Reports

The Review Panel will review promptly each completed investigation report and any Written 

statement provided by the potential respondent pursuant to Rule 604 to determine whether a 

reasonable basis exists for finding that a violation of BSEF Rules within BSEF’s jurisdiction has 

occurred or is about to occur. Within 30 days of receipt of the investigation report the Review 

Panel must take one of the following actions:

(a) If the Review Panel determines that additional investigation or evidence is needed 

to decide whether a reasonable basis exists to find that a violation of BSEF Rules within the 

BSEF’s jurisdiction has occurred or is about to occur, the Review Panel will promptly direct the 

Compliance Department to conduct further investigation.

(b) After receiving completion of an investigation, the Review Panel will determine 

for each potential respondent whether to authorize: 
58

(i) the commencement of disciplinary proceedings because a reasonable basis 

exists to believe that a violation BSEF Rules within the BSEF’s jurisdiction has 

occurred or is about to occur and adjudication is warranted;

(ii) the informal disposition of the investigation (by issuing a warning letter as 

more fully discussed in Rule 606) because disciplinary proceedings are unwarranted, in 

which case the Review Panel shall provide a Written explanation which must set forth 

the facts and analysis supporting the decision; or

(iii) the closing of the investigation without any action because no reasonable 

basis exists to believe that a violation of BSEF Rules within the BSEF’s jurisdiction has 

occurred or is about to occur in which case the Review Panel shall provide a Written 

explanation including the facts and analysis supporting the decision to the Compliance 

Department. 

RULE 606. Warning Letters

BSEF authorizes compliance staff to issue a warning letter to a Person or entity under 

investigation or to recommend that a disciplinary committee take such an action. A copy of a 

warning letter issued by compliance staff must be included in the investigation report. After 

August 4, 2014, no more than one warning letter may be issued to the same Person for the same 

Rule violation within a rolling 12-month period.

RULE 607. Notice of Charges

(a) If the Review Panel authorizes disciplinary proceedings pursuant to Rule 

605(b)(i), the Review Panel will prepare, and serve in accordance with Rule 608, a Notice of 

Charges.

(b) A Notice of Charges will:

(i) state the acts, practices or conduct that the respondent is alleged to have 

engaged in;

(ii) state the BSEF Rule or provision of Applicable Law alleged to have been 

violated or about to be violated;

(iii) state the proposed sanctions;

(iv) advise the respondent of its right to a hearing;

(v) state the period of time within which the respondent can request a hearing 

on the Notice of Charges, which will not be less than 20 days after service of the Notice 

of Charges;
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(vi) advise the respondent that any failure to request a hearing within the 

period stated, except for good cause, will be deemed to constitute a waiver of the right 

to a hearing; 

(vii) advise the respondent that any allegation in the Notice of Charges that is 

not expressly denied will be deemed to be admitted; and

(viii) advise the respondent of its right to be represented by legal counsel or any 

other representative of its choosing in all succeeding sages of the disciplinary process.

RULE 608. Service of Notice of Charges

Any Notice of Charges or other documents contemplated to be served pursuant to this Chapter 6 

may be served (and service shall be deemed complete) upon the respondent either personally or 

by leaving the same at his or her place of business, or by tracked delivery via reputable overnight 

courier, or by deposit in the United States mail, postage prepaid, via registered or certified mail 

addressed to the respondent at the address as it appears on the books and records of BSEF.

RULE 609. Answer to Notice of Charges

(a) If the respondent determines to answer a Notice of Charges, the respondent must 

file answers within 20 days after being served with such notice, or within such other time period 

determined appropriate by the Review Panel.

(b) To answer a Notice of Charges, the respondent must in Writing:

(i) specify the allegations that the respondent denies or admits;

(ii) specify the allegations that the respondent does not have sufficient 

information to either deny or admit;

(iii) specify any specific facts that contradict the Notice of Charges;

(iv) specify any affirmative defenses to the Notice of Charges; and

(v) sign and serve the answer on the Review Panel.

(c) Any failure by the respondent to timely serve an answer to a Notice of Charges 

will be deemed to be an admission to the allegations in such notice. Any failure by the 

respondent to answer one or more allegations in a Notice of Charges will be deemed to be an 

admission of that allegation or those allegations. Any allegation in a Notice of Charges that the 

respondent fails to expressly deny will be deemed to be admitted. A statement of a lack of 

sufficient information shall have the effect of a denial of an allegation. A general denial by the 

respondent, without more, will not satisfy the requirements of paragraph (b) above.
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RULE 610. Admission or Failure to Deny

If respondent admits or fails to deny any of the charges, a Hearing Panel may find that the 

violations alleged in the Notice of Charges for which the respondent admitted or failed to deny 

any of the charges have been committed. The Hearing Panel then must take the following 

action:

(a) impose a sanction for each violation found to have been committed; and

(b) notify the respondent in Writing of any sanction to be imposed and advise the respondent 

that it may request a hearing on such sanction within a specified period of time.

If a respondent fails to request a hearing within 20 days as specified in the notice, the respondent 

will be deemed to have accepted the sanction.

RULE 611. Denial of Charges and Right to a Hearing

In every instance where a respondent has denied a charge, the respondent shall have a right to

request a hearing. Except for good cause, the hearing must concern only with those charges 

denied for which a hearing has been requested.

RULE 612. Settlements

(a) A respondent or potential respondent may at any time after the investigation 

report is complete propose in Writing an offer of settlement to anticipated or instituted 

disciplinary proceedings. Any offer of settlement should contain proposed findings and 

sanctions and be signed by the respondent or potential respondent and submitted to the Review 

Panel. A respondent or potential respondent may offer to settle disciplinary proceedings without 

admitting or denying the findings contained in the order of the disciplinary proceedings but must 

accept the jurisdiction of BSEF over it and over the subject matter of the proceedings and 

consent to the entry of the findings and sanctions imposed.

(b) If a respondent or potential respondent submits an offer of settlement in 

accordance with paragraph (a) above, the Compliance Department will forward the offer to the 

Chief Compliance Officer with a recommendation on whether to accept or reject the offer. Any 

preliminary determination by the Chief Compliance Officer to accept the offer shall be submitted 

for review by the Review Panel. If the Review Panel agrees, then the Chief Compliance Officer 

shall conditionally accept an offer of settlement, without alteration unless the respondent agrees, 

and that the settlement will become final upon the expiration of 20 days after an order of the 

disciplinary proceedings consistent with the terms of the offer of settlement is served on the 

respondent.

(c) If an offer of settlement is accepted, the Review Panel must issue a Written 

decision specifying the Rule violations it has reason to believe were committed, including the 

basis or reasons for the panel’s conclusions, and any sanction to be imposed, which must include 

full Customer restitution where Customer harm is demonstrated. If an offer of settlement is

accepted without the agreement of the Compliance Department, the decision must adequately 
61

support the Hearing Panel’s acceptance of the settlement. Where applicable, the decision must 

also include a statement that the respondent has accepted the sanctions imposed without either 

admitting or denying the Rule violations. Further, the settlement is accepted the related order of 

disciplinary proceedings becomes final, the respondent’s submission of the offer will be deemed 

to constitute a waiver of the right to notice, opportunity for a hearing and review under the BSEF 

Rules.

(d) If the offer of settlement of a respondent or potential respondent is not accepted 

by agreement between the Chief Compliance Officer and the Review Panel, fails to become final 

or is withdrawn by the respondent or potential respondent, the matter will proceed as if the offer 

had not been made and the offer and all documents relating to it will not become part of the 

record. Neither a respondent or potential respondent nor the Compliance Department may use an 

unaccepted offer of settlement as an admission or in any other manner at a hearing of 

disciplinary proceedings.

RULE 613. Hearing Panel

The Hearing Panel is responsible for adjudicating disciplinary cases pursuant to a Notice of 

Charges authorized by a Review Panel.

A respondent may seek to disqualify any individual on the Hearing Panel for the reasons 

identified in the BSEF Rules or for any other reasonable grounds, by serving Written notice on 

the Chief Compliance Officer. By not timely filing a request for disqualification, the respondent 

will be deemed to have waived any objection to the composition of a Hearing Panel. The Chief 

Compliance Officer of BSEF will decide the merits of any request for disqualification within his 

or her sole discretion. Any such decision will be final and not subject to appeal.

RULE 614. Convening Hearings of Disciplinary Proceedings

(a) All disciplinary proceedings (except for summary impositions of fines pursuant to 

Rule 621) will be conducted at a hearing before the Hearing Panel. A hearing will be conducted 

privately and confidentially. Notwithstanding the confidentiality of hearings, the Hearing Panel 

may appoint an expert to attend any hearing and assist in deliberations if such expert agrees to be 

subject to an appropriate confidentiality agreement. 

(b) After reasonable notice to each respondent, the Hearing Panel will promptly 

convene a hearing to conduct the disciplinary proceedings with respect to such respondent. 

Parties to a disciplinary proceeding include each respondent and the Compliance Department 

including the Enforcement Staff. 

(c) The chairperson of the Hearing Panel may continue, adjourn or otherwise conduct 

the hearing, as he or she may deem appropriate. The chairperson of the Hearing Panel will 

determine all procedural and evidentiary matters, including the admissibility and relevance of 

any evidence proffered. In determining procedural and evidentiary matters, the chairperson of 

the Hearing Panel will not be bound by any evidentiary or procedural rules or law. Once 

admitted during the hearing, the Hearing Panel may consider, and attach the weight it believes 
62

appropriate to, evidence or other materials. The Chief Compliance Officer of BSEF, or its 

designee, will provide guidance to the chairperson of the Hearing Panel on the conduct of the 

hearing.

(d) Except for procedural and evidentiary matters decided by the chairperson of the 

Hearing Panel pursuant to paragraph (c) above and Rule 616, unless each respondent otherwise 

consents, the entire Hearing Panel must be present during the entire hearing and any related 

deliberations.

RULE 615. Respondent Review of Evidence

(a) Prior to the commencement of a hearing, each respondent will be given the 

opportunity to review all books, records, documents, papers, transcripts of testimony and other 

tangible evidence in the possession or under the control of BSEF that the Compliance 

Department will use to support the allegations and proposed sanctions in the Notice of Charges 

or which the chairperson of the Hearing Panel deems relevant to the disciplinary proceedings. 

Notwithstanding the foregoing, no respondent will have the right to review, and BSEF will have 

no obligation to disclose, any information protected by attorney-client privilege.

(b) If any books, records, documents, papers, transcripts of testimony, or other 

tangible evidence contain information that could adversely affect the competitive position of the 

Person providing the information or if such information might compromise other investigations 

being conducted by the Compliance Department, the Compliance Department may redact, edit or 

code such information before furnishing it to the respondent.

(c) Notwithstanding anything in paragraph (b) above to the contrary, the Compliance 

Department:

(i) will not redact, edit or code competitive or investigative information

contained in documents in a manner that would impair the respondent’s ability to 

defend against the allegations or proposed sanctions in the notices of charges, and

(ii) will provide the respondent with access to the information and portions of 

the documents that the Compliance Department intends to rely on to support the 

allegations or proposed sanctions in the Notice of Charges.

(d) For purposes of this Rule 615, information that could adversely affect competitive 

positions include positions in Swaps currently held, trading strategies employed in establishing 

or liquidating positions, the identity of any Participant or Authorized Trader and the personal 

finances of the Person providing the information.

RULE 616. Conducting Hearings of Disciplinary Proceedings

(a) At a hearing conducted in connection with any disciplinary proceedings, the 

Compliance Department will present its case supporting the allegations and proposed sanctions 

in the Notice of Charges to the Hearing Panel. If a respondent has timely filed an answer to the 
63

Notice of Charges in accordance with Rule 609, the respondent is entitled to attend and 

participate in the hearing.

(b) At a hearing conducted in connection with any disciplinary proceedings, the 

Hearing Panel or the Compliance Department and each respondent may:

(i) present evidence and facts determined relevant and admissible by the 

chairperson of the Hearing Panel;

(ii) call and examine witnesses; and

(iii) cross-examine witnesses called by other parties.

(c) Any Person within its jurisdiction who is called as a witness must participate in 

the hearing and produce evidence. BSEF will make reasonable efforts to secure the presence of 

all other Persons called as witnesses whose testimony would be relevant.

(d) If the respondent fails to file an answer, has filed a general denial, or if any or all 

of the allegations in the Notice of Charges are not expressly denied in the respondent’s answer, 

the chairperson of the Hearing Panel may limit evidence concerning any allegations not 

expressly denied in determining the sanctions to impose. If a respondent fails to file an answer 

but appears at the hearing, the respondent may not participate in the hearing (by calling or cross 

examining witnesses, testifying in defense, presenting evidence concerning the Notice of 

Charges, or otherwise) unless the Hearing Panel determines that the respondent had a compelling 

reason for failing to timely file an answer. If the Hearing Panel determines that the respondent 

had a compelling reason for failing to timely file an answer, the Hearing Panel will adjourn the 

hearing and direct the respondent to promptly file a Written answer in accordance with Rule 609.

(e) Any Person entitled, or required or called upon, to attend a hearing before a

Hearing Panel pursuant to paragraph (b)(ii) above will be given reasonable notice, confirmed in 

Writing, specifying the date, time and place of the hearing, and the caption of the disciplinary 

proceedings. BSEF will require all Participants (that are individuals), Customers, Account 

Managers, Authorized Traders and Supervised Persons that are called as witnesses to appear at 

the hearing and produce evidence. BSEF will make reasonable efforts to secure the presence of 

all other Persons called as witnesses whose testimony would be relevant.

(f) If during any disciplinary proceedings the Hearing Panel determines that a 

reasonable basis exists to believe that the respondent violated or is about to violate a BSEF Rule

or a provision of Applicable Law other than the violations alleged in the Notice of Charges, the 

Hearing Panel may consider those apparent violations after providing the respondent with an 

opportunity to answer the additional allegations in accordance with Rule 609. In connection 

with considering apparent violations pursuant to this paragraph (e), the Hearing Panel may 

request that the Compliance Department provide the Hearing Panel with any additional 

information
64

(g) The Hearing Panel may summarily impose sanctions on any Participant, Account 

Manager, Authorized Trader or Supervised Person that impedes or delays the progress of a 

hearing

(h) BSEF will arrange for any hearing conducted in connection with disciplinary 

proceedings to be recorded hearing verbatim, or substantially verbatim, in a manner capable of 

accurate transcription. If the respondent requests a copy of all or portions of the recording of a 

hearing, the chairperson of the Disciplinary Panel may within his or her sole discretion order the 

respondent to pay the costs for transcribing the recording of the hearing.

(i) As promptly as reasonable following a hearing, the Hearing Panel will issue an 

order rendering its decision based on the weight of the evidence contained in the record of the 

disciplinary proceedings. A decision by a majority of the Hearing Panel will constitute the 

decision of the Hearing Panel.

(j) No interlocutory appeals of rulings of any Hearing Panel or chairperson of the 

Hearing Panel are permitted.

(k) If the respondent has requested a hearing, a copy of the hearing shall be made and 

shall become a part of the record of the proceeding. The record shall not be required to be 

transcribed unless:

(i) the transcript is requested by Commission staff or the respondent;

(ii) the decision is appealed pursuant to the BSEF Rules; or

(iii) the decision is reviewed by the Commission pursuant to section 8c of the 

Act or Part 9 of CFTC Regulations. In all other instances, a summary record of a 

hearing is permitted.

RULE 617. Decision of Disciplinary Panel

(a) Each Disciplinary Panel shall be composed of three individuals selected by the 

Chief Compliance Officer. Except in cases concerning the timely submission of accurate 

records, each Disciplinary Panel shall consist of at least one individual who would not be 

disqualified from serving as a Public Director, who shall chair the Disciplinary Panel. No Person 

involved in adjudicating any other stage of a proceeding shall participate in a Disciplinary Panel 

for such proceeding. 

(b) Promptly following a hearing conducted in accordance with Rule 616, the 

Disciplinary Panel shall render a Written decision.

(c) The Written decision must be based upon the weight of the evidence contained in 

the record of the proceeding and shall provide a copy to the respondent. The decision shall 

include:

(i) the Notice of Charges or a summary of the charges;
65

(ii) the answer, if any, or a summary of the answer;

(iii) a summary of the evidence produced at the hearing or, where appropriate, 

incorporation by reference of the investigation report;

(iv) a statement of findings and conclusions with respect to each charge, and a 

complete explanation of the evidentiary and other basis for such findings and 

conclusions with respect to each charge;

(v) an indication of each specific Rule that the respondent was found to have 

violated; and

(vi) a declaration of all sanctions imposed against the respondent, including 

the basis for such sanctions and the effective date of such sanctions.

(d) The order of the disciplinary proceedings will become final upon the expiration of 

20 days after the order is served on the respondent and a copy thereof is provided to the 

Compliance Department.

RULE 618. Sanctions 

(a) After notice and opportunity for hearing in accordance with the BSEF Rules, 

BSEF will impose sanctions if any Participant, Account Manager, Authorized Trader, Supervised 

Person or other Person using any Trader ID or login credentials linked to the Participant is found 

to have violated or to have attempted to violate a BSEF Rule or provision of Applicable Law for 

which BSEF possesses disciplinary jurisdiction. Subject to the limitations set forth in Rule 

618(b), BSEF may impose one or more of the following sanctions or remedies: (i) censure; (ii) 

limitation on Trading Privileges, Trading Access or other activities, functions or operations; (iii) 

suspension of Trading Privileges or Trading Access; (iv) fine (subject to paragraph (b) below); 

(v) disgorgement; (vi) termination of Trading Privileges or Trading Access; (vii) in the event of a

customer harm, full customer restitution, except where the amount of restitution or to whom it 

should be provided cannot reasonably be determined; or (viii) any other sanction or remedy 

deemed to be appropriate. All sanctions, including those imposed pursuant to an accepted 

settlement offer, shall take into account respondent’s disciplinary history.

For purposes of Rule 618(a)(vii), “customer” shall have the meaning set forth in CFTC 

Regulation 1.3(k).

(b) BSEF may impose a fine of up to $100,000 for each violation of a BSEF Rule. If 

a fine or other amount is not paid within 30 days of the date that it becomes payable, then interest 

will accrue on the sum from the date that it became payable at the quoted prime rate plus three 

percent. BSEF has sole discretion to select the bank on whose quotations to base the prime rate. 

Each Participant will be responsible for paying any fine or other amount imposed on, but not 

paid by, any of its Authorized Traders, Account Managers or Supervised Persons. The following

schedule lists the recommended fines that BSEF may impose:
66

Type of Violation Fine Per Occurrence1

First

Violation

Second

Violation

Third

Violation

Violation of Order entry requirements pursuant to Rule 

524

$1250 $1500 $1750

Violation of Trade reporting requirements $1250 $1500 $1750

RULE 619. Costs

(a) Regardless of the outcome of any disciplinary proceeding, the Disciplinary Panel 

may order a respondent to pay some or all of the costs associated with the disciplinary 

proceedings that the Disciplinary Panel believes were unnecessarily caused by the respondent. 

Costs may include costs associated with the inquiry or investigation, the prosecution by the 

Compliance Department, legal and professional assistance, the hearing and administrative and 

other expenses incurred by the Disciplinary Panel.

(b) The Disciplinary Panel may only award costs against BSEF if the Panel concludes 

that BSEF has behaved in a manifestly unreasonable manner in the commencement or conduct of 

the disciplinary proceedings in question. The Disciplinary Panel must limit any award of costs 

against BSEF to an amount that the Panel concludes is reasonable and appropriate, but does not 

exceed the respondent’s costs for external legal or other external professional assistance.

(c) The Disciplinary Panel may determine the amounts and allocation of costs in any 

manner it may deem appropriate. BSEF or the respondent will pay any costs ordered to be paid 

by it by the Disciplinary Panel within 30 days of Written notice of the amount imposed by the 

Disciplinary Panel.

RULE 620. Right to Appeal Disciplinary Panel Decision, Summary Impositions of Fines 

and Other Summary Actions

(a) Each respondent found by the Disciplinary Panel to have violated (or, in the case 

of a Participant, whose Authorized Trader, Supervised Person or other Person using its 

Participant ID was found to have violated) a Rule or who is subject to any summary fine

imposed pursuant to Rule 621 or any summary action imposed pursuant to Rule 622 may appeal 

the decision within 20 days of receiving the order of the Disciplinary Panel or the notice of 

summary action, as the case may be, by filing a notice of appeal with the Chief Compliance 

Officer. 

(b) BSEF may appeal all or any part of a decision of the Disciplinary Panel, including 

any sanctions that may or may not have been imposed by the Disciplinary Panel, within 20 days 

of receiving the order of the Disciplinary Panel, by filing a notice of appeal with the Chief 

Compliance Officer. 

 1 Within a “rolling” 12-month period.
67

(c) While an appeal is pending, the effect of the order of the Disciplinary Panel or the 

summary action (including any sanctions, remedies or costs imposed thereby) shall be 

suspended. 

(d) The notice of appeal must state in writing the grounds for appeal, including the 

findings of fact, conclusions or sanctions to which the appellant objects. An appellant may 

appeal the order of the Disciplinary Panel or any summary action on the grounds that:

(i) the order or summary action was arbitrary, capricious, an abuse of 

discretion, or not in accordance with these Rules; 

(ii) the order or summary action exceeded the authority or jurisdiction of the 

Disciplinary Panel, the Chief Compliance Officer or BSEF; 

(iii) the order or summary action failed to observe required procedures; 

(iv) the order or summary action was unsupported by the facts or evidence; or 

(v) the sanctions, remedies or costs which were imposed were inappropriate 

or unsupported by the record. 

(e) The Chief Compliance Officer will forward copies of any notice of appeal 

received by it to all parties to the disciplinary proceeding or summary action, as the case may be, 

except the appellant. On or before the 20th day after filing a notice of appeal, the appellant must 

file with the Chief Compliance Officer and serve on BSEF a brief supporting the notice of appeal 

and documents supporting the brief. On or before the 20th day after the date on which the 

appellant serves its supporting brief, the appellee must file and serve its brief in opposition. On 

or before the 10th day after the date on which the appellee serves its brief in opposition, the 

appellant must file and serve on BSEF a brief in reply. 

(f) In connection with any appeal, BSEF will furnish to the Chief Compliance 

Officer and to the respondent/appellant a transcript of the hearing, any exhibits introduced at the 

hearing, the notice of appeal and briefs filed to support and oppose the appeal. 

(g) No later than 30 days after the last submission filed pursuant to paragraph (e) of 

this Rule 620, the Chief Compliance Officer will appoint an Appeals Panel to consider and 

determine the appeal. An Appeals Panel shall be comprised of three individuals, none of whom 

shall be a member of the Compliance Department or have been a member of any Disciplinary 

Panel involved in the matters on appeal. The chairperson of the Appeals Panel shall be an 

individual who would not be disqualified from serving as a Public Director. 

(h) Within 10 days of being notified of the appointment of the Appeals Panel, an 

appellant or appellee may seek to disqualify any individual named to the Appeals Panel for the 

reasons identified in these Rules, by serving written notice on the Chief Compliance Officer. By 

not timely filing a request for disqualification, the appellant or appellee will be deemed to have 

waived any objection to the composition of the Appeals Panel. The Chief Compliance Officer 
68

will decide the merits of any request for disqualification within his or her sole discretion. Any 

such decision will be final and not subject to appeal. 

(i) The Appeals Panel may hold a hearing to allow parties to present oral arguments. 

Any hearing will be conducted privately and confidentially. Notwithstanding the confidentiality 

of hearings, the Appeals Panel may appoint an expert to attend any hearing and assist in the 

deliberations if such individual(s) agree to be subject to appropriate confidentiality agreements. 

In determining procedural and evidentiary matters, the Appeals Panel will not be bound by 

evidentiary or procedural rules or law.

(j) The Appeals Panel will only consider on appeal the record before the Disciplinary 

Panel or, in the case of a summary action, the record considered by the Chief Compliance 

Officer, the notice of appeal, the briefs filed in support and opposition of the appeal, and any oral 

arguments of the parties. The Appeals Panel may only consider new evidence when the Appeals 

Panel is satisfied that good cause exists for why the evidence was not introduced during the 

disciplinary proceeding or when imposing the summary action. 

(k) After completing its review, the Appeals Panel may affirm, modify or reverse any 

order of the Disciplinary Panel or summary action under appeal, in whole or in part, including 

increasing, decreasing or eliminating any sanction or remedy imposed, imposing any other 

sanction or remedy authorized by these Rules, or remanding the matter to the same or a different 

Disciplinary Panel for further disciplinary proceedings or for reconsideration by the Chief 

Compliance Officer in the case of summary action. The Appeals Panel may order a new hearing 

for good cause or if the Appeals Panel deems it appropriate. 

(l) As promptly as reasonably possible following its review, the Appeals Panel will 

issue a written decision on appeal rendering its decision based on the preponderance of the 

evidence before the Appeals Panel. The decision of the Appeals Panel will include a statement 

of findings of fact and conclusions for each finding, sanction, remedy and cost reviewed on

appeal, including each specific Rule and provision of Applicable Law that the respondent is 

found to have violated, if any, and the imposition of sanctions, remedies and costs, if any, and 

the effective date of each sanction, remedy or cost. 

(m) The Appeals Panel’s written order on appeal (including findings of fact and 

conclusions and the imposition of sanctions, remedies and costs, and the effective date of any 

sanction, remedy cost) will be the final action of BSEF and will not be subject to appeal within 

BSEF. 

RULE 621. Summary Imposition of Fines

(a) The Chief Compliance Officer may summarily impose a fine against a Participant 

(on behalf of the Participant or any of its Authorized Traders, Account Managers, Supervised 

Persons or other Persons using any Trader IDs) for failing:

(i) to make timely payments of fees, cost, charges or fines to BSEF;
69

(ii) to make timely and accurate submissions to BSEF of notices, reports or 

other information required by the BSEF Rules; or

(iii) to keep any books and records required by the BSEF Rules.

(b) The Compliance Department, acting on behalf of the Chief Compliance Officer, 

will give notice of any fine imposed pursuant to this Rule 621 to each Participant subject thereto. 

The notice will specify (i) the violations of the BSEF Rules for which the fine is being imposed, 

(ii) the date of the violation for which the fine is being imposed and (iii) the amount of the fine. 

Within 20 days of serving the notice of fine, the Participant must either pay or cause the payment 

of the fine. The fine will become final upon the expiration of 20 days after the notice of fine is 

served on the Participant.

(c) BSEF will set the amount of any fines imposed pursuant to this Rule 621, with the 

maximum fine for each violation not to exceed $5,000. Summary imposition of fines pursuant to 

this Rule 621 will not preclude BSEF from bringing any other action against the Participant (or 

any of its Account Managers, Authorized Traders or Supervised Persons) or Authorized Trader, 

as the case may be. The following schedule lists the recommended summary fines that BSEF or 

the Chief Compliance Officer may impose:

Type of Violation Fine Per Occurrence2

First

Violation

Second

Violation

Third

Violation

Failure to maintain complete and accurate books and 

records as required by BSEF Rule 409.B

$1000 $1500 $2500

Failure to provide information to BSEF as required by 

the BSEF Rules

$1000 $1500 $2500

Impeding or delaying a BSEF examination, inquiry or 

investigation undertaken pursuant to the BSEF Rules

$1000 $1500 $2500

Failure to provide any disclosure required by BSEF Rule 

402

$1000 $1250 $1500

Failure to identify and maintain a current list of 

Authorized Traders as required by BSEF Rule 530

$1000 $1250 $1500

RULE 622. Hearings Involving BSEF-Affiliated Trading Entities

(a) No BSEF employee that is also an employee of an affiliate of BSEF that engages 

in trading activity shall perform an investigation of such affiliated trading entity.

(b) In the event that a Disciplinary Panel is convened for a hearing involving an 

affiliated trading entity, no Person associated with BSEF or such affiliated trading entity shall be 

a member of such Disciplinary Panel.

 2 Within a “rolling” 12-month period.
70

(c) The Board must approve the issuance of disciplinary charges and acceptance of 

settlement offers involving an affiliated trading entity.

RULE 623. [Reserved]

RULE 624. Notice to the Respondent, the Regulatory Services Provider and the Public

BSEF will provide Written notice of disciplinary proceedings to the parties consistent with 

applicable CFTC Regulations. Whenever BSEF suspends, expels, fines or otherwise disciplines, 

or denies any Person access, to BSEF, BSEF will make the disclosures required by CFTC 

Regulations.

CHAPTER 7.

ARBITRATION

RULE 701. General

(a) Except as otherwise provided in these Rules, Participants, Authorized Traders and

any market participant that directly or indirectly effects a transaction on the SEF operated by 

BSEF shall submit to the NFA for arbitration all disputes, controversies and claims between or 

among themselves arising out of a Swap or the use of the systems or services of BSEF or the 

services, equipment, or facilities used to support such systems or services, including the SEF 

Platform and the SEF operated by BSEF (each, a “Dispute”). Any such claim against a 

Participant shall be brought within two years from the time that a cause of action has accrued. 

This Rule 701 shall in no way be construed to create a cause of action and shall not authorize an 

action that would otherwise be prohibited by these Rules or Applicable Law. In the event that 

this Rule 701 is held to be unenforceable in connection with any Dispute or a claim is deemed by 

a court of competent jurisdiction to be not arbitrable, (i) exclusive jurisdiction for any such 

Dispute will reside in any state or federal court sitting in New York County, New York, (ii) the 

Participants involved in the Dispute will be presumed to have submitted to the personal 

jurisdiction of any such court, and (iii) an action to enforce any judgment or decision of such 

court may be brought in the same court or in any other court with jurisdiction or venue. Finally, 

all Participants unconditionally and irrevocably waive any and all right to trial by jury in 

connection with any such Dispute.

(b) Notwithstanding the foregoing, this Rule 701 does not apply to Disputes between 

Participants, Authorized Traders or any market participant that directly or indirectly effects a 

transaction on the SEF operated by BSEF that: (i) such Persons are required by the Rules of a 

Self-Regulatory Organization to submit to the Dispute resolution procedures of that SelfRegulatory Organization; or (ii) such Persons have, by valid and binding agreement, committed 

to negotiate or litigate in a forum other than the forum set out in Rule 702.

RULE 702. Forum and Arbitration Rules

NFA will conduct any and all arbitrations of a type described in Rule 701 pursuant to NFA’s 

Member Arbitration Rules, as if each Participant or Authorized Trader to such arbitration was an 

“NFA Member”.
71

RULE 703. Initiating an Arbitration Claim

(a) A Participant or Authorized Trader may initiate an arbitration claim by submitting 

the required documents and fees to NFA. 

(b) A Participant or Authorized Trader submitting an arbitration claim shall provide 

notice of such claim to BSEF.

RULE 704. Claims Relating to Trade Cancelations or Price Adjustments

All claims relating to Trade cancelations pursuant to Rule 516 shall be arbitrated in accordance 

with this Chapter 7.

RULE 705. Penalties 

(a) Any failure on the part of any Participant or Authorized Trader to arbitrate a case 

subject to arbitration, or the commencement by any such Participant or its Person of a suit in any 

court prior to arbitrating a case subject to arbitration, violates these Rules and subjects such 

Person to disciplinary proceedings pursuant to Chapter 6. 

(b) BSEF may summarily suspend, pursuant to Chapter 6, a Participant or Authorized 

Trader that fails to satisfy an arbitration award rendered in any arbitration conducted pursuant to 

this Chapter 7.

CHAPTER 8. MISCELLANEOUS

RULE 801. Anti-Money Laundering and Anti-Terrorism

(a) It is SEF policy: (1) Not to engage in or knowingly assist any money laundering 

or other illicit business, and (2) Not to engage in or knowingly assist, or be a conduit for, terrorist 

financing.

(b) Participants will be required to provide sufficient information for Participants and 

their Accounts, if applicable, for SEF to complete “know your customer” checks and to conduct 

restricted list searches, including searches against the Specially Designated Nationals and 

Blocked Persons list maintained by the Office of Foreign Assets Control of the U.S. Department 

of the Treasury.

RULE 802. Gifts and Gratuities

Except as permitted in Writing by the Chief Compliance Officer, no Participant or Authorized 

Trader shall, directly or indirectly, give or permit to be given anything of value (including 

gratuities) to a SEF Official or BSEF, including any agents or independent contractors of BSEF. 

A gift of any kind is considered a gratuity. 
72

RULE 803. Market Data

(a) Subject to each Participant's rights in Participant’s own data (and the data of its 

Accounts and Customers) as set forth in the Participant Documentation, BSEF shall own all 

rights, title and interest, database rights and trade secret rights in and to all data and other 

information contained in, displayed on, generated by or derived from the SEF Platform or the 

SEF operated by BSEF or Trades entered into pursuant to the BSEF Rules, including Orders, 

prices and volumes (“SEF Data”).

(b) Participants and Authorized Traders shall not, and shall cause their Affiliates, 

Accounts and Customers not to, distribute, sell or retransmit SEF Data or other information 

obtained via the SEF operated by BSEF, provided that any such restrictions shall not apply to 

Participant’s own data (and the data of its Accounts and Customers).

(c) BSEF may at any time restrict or establish utilization fees in respect of SEF Data 

and/or the format and presentation thereof with respect to Participants, Customers or Accounts, 

provided that any such fees shall not apply to Participants’ use of Participant's own data (and the 

data of its Accounts and Customers). 

(d) Subject to Rule 805, BSEF may make SEF Data and other information it may 

deem appropriate available to Participants and other Persons at such times and in such manner 

(whether through the SEF Platform, a ticker, financial information services or otherwise) as it 

may consider necessary or advisable from time to time. Each Participant or other Person 

receiving any such information through the SEF operated by BSEF may redistribute such 

information only to such extent and in such manner as may be permitted by BSEF from time to 

time.

RULE 804. Prohibited Use of Data Collected for Regulatory Purposes

BSEF shall not use for business or marketing purposes any proprietary data or personal 

information it collects or receives, from or on behalf of any person, for the purpose of fulfilling 

its regulatory obligations; provided, however, that BSEF may use such data or information for 

business or marketing purposes if the Person from whom it collects or receives such data or 

information clearly consents in Writing to BSEF’s use of such data or information in such 

manner. BSEF shall not condition access to its market(s) or market services on a Person’s 

consent to BSEF’s use of proprietary data or personal information for business or marketing 

purposes. BSEF, where necessary for regulatory purposes, may share such data or information 

with one or more SEFs or DCMs registered with the CFTC.

RULE 805. Confidentiality

(a) All non-public information provided by a Participant or Authorized Trader to 

BSEF shall be held in confidence and shall not be made known to any other Person except as 

follows: 

(i) with the consent of the Participant or Authorized Trader providing such 

information; 
73

(ii) to a Governmental Body if BSEF is requested or legally required to do so 

by such Governmental Body; 

(iii) pursuant to a lawful discovery request; 

(iv) to a Derivatives Clearing Organization of which such Participant is a 

member or in connection with the clearing of a Swap; 

(v) to a Swap Data Repository; 

(vi) subject to appropriate confidentiality requirements, to any Person 

providing services to BSEF, including the Regulatory Services Provider;

(vii) pursuant to an information sharing agreement or other arrangement or 

procedures in accordance with Rule 213; 

(viii) subject to appropriate confidentiality requirements, to BSEF employees, 

the Board, Board committees, Disciplinary Panels, Appeals Panels, BSEF Officers, 

attorneys, auditors, and agents, independent contractors or other Persons that have been 

engaged by BSEF, in each case, who require such information in connection with the 

discharge of their duties to BSEF; and

(ix) as otherwise permitted under these Rules.

(b) All information and data obtained or received by BSEF from inspections of 

accounting and other records will be treated as confidential by BSEF; however, this Rule does 

not supplant Rule 212 (Emergency Rules) and the Rules in Chapter 6 (Disciplinary Rules), or 

any other requirement of legal process or law.

RULE 806. Extension or Waiver of BSEF Rules

If necessary and expedient, the Chief Compliance Officer may, in its sole discretion, waive, or 

extend the time period for performing, any act or acts designated by the BSEF Rules, but only to 

the extent such waiver or extension is not inconsistent with the CEA or the CFTC Regulations or 

other applicable regulations.

RULE 807. Effect of Amendment, Repeal or New Rule 

(a) If an amendment or repeal of a BSEF Rule or adoption of a new BSEF Rule does 

not materially change the terms or conditions of a Swap and does not affect the value of open 

Swaps, then the effective date of any amendment or repeal of a Rule or adoption of a new Rule 

relating to Swaps is binding on all Swaps entered into before and after the effective date of such 

amendment, repeal or adoption and, to the extent applicable, before the effective date of such 

amendment, repeal or adoption.

(b) If an amendment or repeal of a BSEF Rule or adoption of a new Rule materially 

changes the terms or conditions of an open Swap or affects the value of open Swaps, then the 
74

amendment, repeal or new BSEF Rule shall not affect any open Swaps and shall be binding only 

on new Swaps listed for trading after the effective date of such amendment, repeal or adoption, 

and Swaps listed as of the effective date of such amendment, repeal or adoption with no open 

positions then in existence, unless otherwise specifically provided by the Board.

RULE 808. Swap Contract Specifications

(a) BSEF shall permit trading only in Swaps that are not readily susceptible to 

manipulation. To demonstrate to the CFTC compliance with the requirements of this Rule 

808(a), BSEF shall, at the time it submits a new Swap in advance to the CFTC pursuant to Part 

40 of the CFTC Regulations, provide the applicable information as set forth in Appendix C to 

Part 38 of the CFTC Regulations – Demonstration of Compliance That a Contract is not Readily 

Susceptible to Manipulation.

(b) Notwithstanding any provision of the BSEF Rules to the contrary, the Swap 

Specification with respect to a particular Swap shall govern the applicability of the BSEF Rules 

to trading in such Swap and, in the event of any conflict between the BSEF Rules and the Swap 

Specification, the Swap Specification shall govern with respect to trading in the relevant Swap.

(c) The Swap Specification for each individual Swap may specify:

(i) different classes of Participants eligible to trade such Swaps. Each such 

class of Participants shall have the rights and obligations specified by the 

Swap Specification for each such Swap; 

(ii) whether such Swap may be settled via cash settlement, physical delivery 

of the underlying commodity, or by any other means, as applicable; and

(iii) the method for determining settlement prices.

(d) Each Swap contract will be published by BSEF on its website.

(e) Swap Specifications are incorporated into the Rulebook by reference and each 

Swap Specification shall constitute a BSEF Rule. 

RULE 809. Timely Publication of Trading Information

BSEF will publish trading information as required by Core Principle 9 of Part 37, and by Part 16, 

of the CFTC Regulations.

RULE 810. Governing Law, Jurisdiction and Dispute Resolution

(a) Unless preempted by the Act, the law of the State of New York governs the BSEF 

Rules and any Participant Documentation regardless of the laws that would otherwise apply 

under choice-of-law principles. If a Participant provides an opinion of a counsel (i) stating that 

the Participant cannot be subject to the law of the State of New York and must be subject to the 

law of the jurisdiction of the location where the Participant is organized (the “Local Law”) and 
75

(ii) enumerating specific provisions of these Rules or the Participant Documentation that must be 

subject to the Local Law, BSEF will specify the application of the Local Law to the enumerated 

specific provisions of these Rules and the Participant Documentation; provided, however, that in 

no event shall Local Law supersede any provision of the Act. 

(b) Any dispute between BSEF and a Participant or any market participant that 

directly or indirectly effects a transaction on the SEF operated by BSEF arising from or in 

connection with the BSEF Rules or use of the SEF operated by BSEF must be brought to 

arbitration pursuant to subsection (c) of this Rule 810 within one (1) year from the occurrence of 

the event giving rise to the dispute. This Rule 810 shall in no way create a cause of action nor 

authorize an action that would otherwise be prohibited by the BSEF Rules.

(c) Any dispute between BSEF and a Participant or any market participant that 

directly or indirectly effects a transaction on the SEF operated by BSEF arising from or in 

connection with the BSEF Rules will be settled by arbitration administered in New York County, 

New York by the American Arbitration Association (the “AAA”) under its Commercial 

Arbitration Rules. The dispute will be submitted to one arbitrator who will be appointed by the 

AAA. Any arbitrator appointed for purposes of this Rule 810 will have experience with and 

knowledge of commodities, derivatives and Swaps as listed on the National Roster of Arbitrators 

kept in the AAA’s records. Judgment on the award rendered by the arbitrator will be binding on 

the parties and may be entered in any state or federal court sitting in New York County, New 

York, and BSEF and each Participant shall be deemed to have consented to the personal 

jurisdiction of any such court. Each party to the dispute will bear its own costs and expenses in 

connection with any arbitration hereunder, as well as an equal share of the administrative fees 

and the fees of the arbitrator; provided, however, that the arbitrator will be entitled to include in 

any award a full reimbursement for the prevailing party’s costs and expenses, such party’s share 

of the administrative fees and the fees of the arbitrator, or any combination of any or all of the 

above. In the event that this Rule 810 is held to be unenforceable in connection with any dispute

or a claim is deemed by a court of competent jurisdiction to be not arbitrable, (i) exclusive 

jurisdiction for any such dispute will reside in any state or federal court sitting in New York

County, New York, (ii) BSEF and the Participant involved in the dispute will be presumed to 

have submitted to the personal jurisdiction of any such court, and (iii) an action to enforce any 

judgment or decision of such court may be brought in the same court or in any other court with 

jurisdiction or venue. Finally, all Participants unconditionally and irrevocably waive any and all 

right to trial by jury in connection with any such dispute.

CHAPTER 9. LIMITATION OF LIABILITY, NO WARRANTIES

RULE 901. LIMITATION OF LIABILITY, NO WARRANTIES

(a) NONE OF BSEF, ITS AFFILIATES OR ANY CONTRACTORS AND SUBCONTRACTORS PROVIDING SERVICES RELATED TO BSEF OR THE SEF OPERATED 

BY BSEF, NOR ANY OF THEIR RESPECTIVE SUCCESSORS OR ASSIGNS, DIRECTORS, 

OFFICERS, EMPLOYEES, AGENTS, PARTNERS, CONSULTANTS, OR LICENSORS 

(EACH, A “DISCLAIMING PARTY”) SHALL BE LIABLE TO ANY PERSON 

(INCLUDING ANY PARTICIPANT, AUTHORIZED TRADER, SUPERVISED PERSON, 
76

ACCOUNT, CUSTOMER OR ANY MARKET PARTICIPANT THAT DIRECTLY OR 

INDIRECTLY EFFECTS A TRANSACTION ON THE SEF OPERATED BY BSEF) FOR 

ANY LOSSES, DAMAGES, COSTS OR EXPENSES (INCLUDING LOSS OF PROFITS, 

LOSS OF USE, AND DIRECT, INDIRECT, SPECIAL, INCIDENTAL, CONSEQUENTIAL 

OR PUNITIVE DAMAGES), ARISING FROM:

(i) ANY FAILURE, MALFUNCTION, FAULT IN DELIVERY, DELAY, 

OMISSION, SUSPENSION, INACCURACY, INTERRUPTION, TERMINATION, OR 

ANY OTHER EVENT, IN CONNECTION WITH THE FURNISHING, 

PERFORMANCE, OPERATION, MAINTENANCE, USE OF OR INABILITY TO USE 

ALL OR ANY PART OF ANY OF THE SEF OPERATED BY BSEF, SEF 

PLATFORM OR SERVICES OF THE DISCLAIMING PARTY, OR SERVICES, 

EQUIPMENT OR FACILITIES USED TO SUPPORT SUCH SEF OPERATED BY 

BSEF, SEF PLATFORM OR SERVICES, INCLUDING ELECTRONIC ORDER 

ENTRY/DELIVERY, TRADING THROUGH ANY ELECTRONIC MEANS, 

ELECTRONIC COMMUNICATION OF MARKET DATA, SEF DATA OR 

INFORMATION, WORKSTATIONS USED BY PARTICIPANTS, AUTHORIZED 

TRADERS, SUPERVISED PERSONS, ACCOUNTS OR CUSTOMERS, PRICE 

REPORTING SYSTEMS AND ANY AND ALL COMMUNICATIONS NETWORKS,

SOFTWARE AND HARDWARE RELATING THERETO;

(ii) ANY FAILURE, MALFUNCTION, FAULT IN DELIVERY, DELAY, 

OMISSION, SUSPENSION, INACCURACY, INTERRUPTION OR TERMINATION, 

OR ANY OTHER EVENT, OF THE SEF PLATFORM OR ANY SERVICES OF A 

DISCLAIMING PARTY, OR SERVICES, EQUIPMENT OR FACILITIES USED TO 

SUPPORT SUCH TRADING SYSTEMS OR SERVICES, CAUSED BY ANY THIRD 

PARTIES INCLUDING INDEPENDENT SOFTWARE VENDORS OR NETWORK 

PROVIDERS;

(iii) ANY ERRORS OR INACCURACIES IN INFORMATION PROVIDED 

BY THE DISCLAIMING PARTY OR IN ANY OF THE DISCLAIMING PARTY’S 

SYSTEMS, SERVICES, EQUIPMENT OR FACILITIES;

(iv) ANY UNAUTHORIZED ACCESS TO OR UNAUTHORIZED USE OF 

ANY OF THE DISCLAIMING PARTY’S SYSTEMS, SERVICES, EQUIPMENT OR 

FACILITIES BY ANY PERSON.

THE FOREGOING LIMITATION OF LIABILITY SHALL APPLY WHETHER 

A CLAIM ARISES IN CONTRACT, TORT, NEGLIGENCE, STRICT LIABILITY, 

CONTRIBUTION OR OTHERWISE AND WHETHER THE CLAIM IS BROUGHT 

DIRECTLY OR AS A THIRD PARTY CLAIM. 

(b) NOTWITHSTANDING SUBSECTION (a), (c) or (f) OF THIS RULE 901, IN 

NO EVENT SHALL ANY AFFILIATE OF BSEF ACTING AS SEF PLATFORM 

TECHNOLOGY SERVICES PROVIDER BE LIABLE TO ANY PERSON NOR SHALL ANY 

PERSON BRING ANY LEGAL ACTION (WHETHER IN TORT, NEGLIGENCE, OR 
77

BREACH OF CONTRACT) FOR ANY LOSSES, DAMAGES, COSTS OR EXPENSES 

INCLUDING LOSS OF PROFITS, LOSS OF USE, DIRECT, SPECIAL, PUNITIVE, 

INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES, ARISING FROM THE USE 

OF THE SEF OPERATED BY BSEF OR SEF PLATFORM. 

(c) WITHOUT LIMITING BSEF’S INDEMNIFICATION OBLIGATION UNDER 

RULE 902, THERE ARE NO EXPRESS OR IMPLIED WARRANTIES OR 

REPRESENTATIONS (INCLUDING WARRANTIES OF MERCHANTABILITY AND 

FITNESS FOR A PARTICULAR PURPOSE OR USE) PROVIDED BY ANY DISCLAIMING 

PARTY RELATING TO ANY SYSTEMS OR SERVICES OF ANY DISCLAIMING PARTY 

OR SERVICES, EQUIPMENT OR FACILITIES USED TO SUPPORT SUCH SYSTEMS OR 

SERVICES. 

(d) ANY DISPUTE ARISING OUT OF THE USE OF SYSTEMS OR SERVICES 

OF ANY DISCLAIMING PARTY OR SERVICES, EQUIPMENT, OR FACILITIES USED TO 

SUPPORT SUCH SYSTEMS OR SERVICES IN WHICH THE DISCLAIMING PARTY OR 

DISCLAIMING PARTIES IS A PARTY SHALL BE SUBJECT TO ARBITRATION AS 

PROVIDED IN RULE 810(c) AS IF THE DISCLAIMING PARTY WERE BSEF AND THE 

OPPOSITE PARTY OR PARTIES WERE A PARTICIPANT. ANY ACTIONS, SUITS OR 

PROCEEDINGS BROUGHT AGAINST ANY DISCLAIMING PARTY MUST BE 

BROUGHT WITHIN ONE YEAR FROM THE TIME THAT A CAUSE OF ACTION HAS 

ACCRUED. THIS PARAGRAPH (d) SHALL IN NO WAY BE CONSTRUED TO LIMIT A 

PARTY’S OBLIGATION TO ARBITRATE ITS CLAIM OR TO CREATE A CAUSE OF 

ACTION (OR MODIFY THE LIMITATION ON ACTIONS PROVIDED IN RULE 901(a)) 

AND SHALL NOT AUTHORIZE AN ACTION THAT WOULD OTHERWISE BE 

PROHIBITED BY THE BSEF RULES. IF FOR ANY REASON, A COURT OF COMPETENT 

JURISDICTION FINDS THAT A DISPUTE IS NOT ARBITRABLE, SUCH DISPUTE 

SHALL BE SUBJECT TO THE JURISDICTION OF EACH OF THE FEDERAL AND STATE 

COURTS LOCATED IN NEW YORK COUNTY, NEW YORK IN CONNECTION WITH 

ANY MATTERS ARISING OUT OF THIS RULEBOOK AND NO PARTY TO SUCH 

DISPUTE MAY ASSERT A DEFENSE OF FORUM NON CONVENIENS, SOVEREIGN 

IMMUNITY, ACT OF STATE OR ANALOGOUS DOCTRINES IN CONNECTION WITH 

ANY ACTION. 

(e) TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE TOTAL 

COMBINED AGGREGATE LIABILITY OF BSEF SHALL NOT EXCEED (i) $20,000 FOR 

ALL LOSSES AND CLAIMS FROM ALL CAUSES SUFFERED ON A SINGLE DAY, (ii) 

$100,000 FOR ALL LOSSES AND CLAIMS FROM ALL CAUSES SUFFERED IN A 

SINGLE CALENDAR MONTH; AND (iii) $1,000,000 FOR ALL LOSSES AND CLAIMS 

FROM ALL CAUSES SUFFERED IN A SINGLE CALENDAR YEAR. ANY DISPUTED 

CLAIM PURSUANT TO THIS PARAGRAPH (e) SHALL BE SUBJECT TO ARBITRATION 

TO THE EXTENT PROVIDED IN RULE 810(c).

IN NO EVENT SHALL TOTAL COMBINED AGGREGATE LIABILITY OF BSEF FOR ALL 

CLAIMS AND CLAIMS AGAINST DISCLAIMING PARTIES ARISING OUT OF ANY 

FAILURES, MALFUNCTIONS, FAULTS IN DELIVERY, DELAYS, OMISSIONS, 
78

SUSPENSIONS, INACCURACIES, INTERRUPTIONS, TERMINATIONS, OR ANY OTHER 

CAUSES, IN CONNECTION WITH THE FURNISHING, PERFORMANCE, OPERATION, 

MAINTENANCE, USE OF OR INABILITY TO USE ALL OR ANY PART OF ANY OF THE 

SEF OPERATED BY BSEF OR SEF PLATFORM, OR SERVICES, EQUIPMENT OR 

FACILITIES USED TO SUPPORT BSEF, THE SEF OPERATED BY BSEF OR SEF 

PLATFORM, OR THE NEGLIGENCE OR GROSS NEGLIGENCE OF BSEF EMPLOYEES, 

AGENTS OR SUBAGENTS EXCEED $1,000,000 IN ANY GIVEN CALENDAR YEAR. 

IF THE NUMBER OF ALLOWED CLAIMS ARISING OUT OF ANY FAILURES OR 

MALFUNCTIONS ON A SINGLE DAY, SINGLE MONTH OR SINGLE YEAR CANNOT 

BE FULLY SATISFIED BECAUSE OF THE ABOVE DOLLAR LIMITATIONS, ALL SUCH 

CLAIMS SHALL BE LIMITED TO A PRO RATA SHARE OF THE MAXIMUM AMOUNT 

FOR THE RESPECTIVE PERIOD. 

(f) THE LIMITATIONS OF LIABILITY IN THIS RULE 901 SHALL NOT APPLY 

TO BSEF’S INDEMNIFICATION OBLIGATION UNDER RULE 902 AND SHALL NOT 

PROTECT ANY PARTY FOR WHICH THERE HAS BEEN A FINAL DETERMINATION 

(INCLUDING EXHAUSTION OF ANY APPEALS) BY A COURT OR ARBITRATOR TO 

HAVE ENGAGED IN FRAUD OR WILLFUL MISCONDUCT. ADDITIONALLY, THE 

FOREGOING LIMITATIONS ON LIABILITY OF THIS RULE SHALL BE SUBJECT TO 

THE CEA AND THE REGULATIONS PROMULGATED THEREUNDER, EACH AS IN 

EFFECT FROM TIME TO TIME.

RULE 902. Indemnification by BSEF

BSEF, at its expense, shall indemnify, hold harmless and defend Participant against any loss, 

claim, demand or expense (including reasonable attorneys’ fees) (“Claim”) that the SEF 

Platform or any portion thereof infringes, misappropriates or violates any intellectual property or 

proprietary rights of any third party; provided, however, that BSEF shall not be required to 

indemnify Participant for any Claim to the extent it arises from or in connection with any (a) 

additions, changes or modifications by Participant to the SEF Platform, which changes were not 

provided by BSEF or any of its affiliates, (b) use of the SEF Platform in combination with other 

products or services not provided by BSEF or its affiliates, or (c) use of the SEF Platform other 

than as expressly permitted by the Rules or the Participant Documentation. BSEF shall control 

such defense and all negotiations relative to the settlement of any such Claim. Participant shall 

promptly provide BSEF with written notice of any claim which falls within the scope of this 

paragraph (provided that failure to provide such notice shall not relieve BSEF of its indemnity 

obligations hereunder except to the extent it is prejudiced thereby).
A-1

Annex A

Excerpt from ISDA Dodd Frank Act-Swap Transaction 

Reporting Party Requirements

Product Attribute Determination

RP Tiebreaker Logic ‐ Rates

Trade Type Explanation Reporting Party

Cap/ Floor When a single Fixed Rate Payer exists Fixed Rate Payer. Otherwise, Reverse ASCII sort, first LEI/Entity ID

Debt Option All Option Buyer

Exotic All Reverse ASCII sort, first LEI/Entity ID

FRA All Fixed Rate Payer

IRS Basis All Reverse ASCII sort, first LEI/Entity ID

IRS Fix‐Fix All Reverse ASCII sort, first LEI/Entity ID

IRS Fix‐Float All Fixed Rate Payer

IRSwap: Inflation When a single Fixed Rate Payer exists Fixed Rate Payer. Otherwise, Reverse ASCII sort, first LEI/Entity ID

IRSwap: OIS All Fixed Rate Payer

Swaption All Option Buyer

XCCY Basis All Reverse ASCII sort, first LEI/Entity ID

XCCY Fix‐Fix All Reverse ASCII sort, first LEI/Entity ID

XCCY Fix‐Float All Fixed Rate Payer

Tiebreaker Logic

When the participant identifier tiebreaker is invoked the following processes will be used:

1a. Determining identifiers

When an entity has multiple entity identifiers (“IDs”), the following

hierarchy will be used to determine which entity ID to use in the RP

determination logic:

• LEI/CICI is used before DTCC GTR ID which is used before an

AVOX ID which is used before any other identifier.

1b. Identifier Tiebreaker Logic Scenarios

i. When both firms must have an LEI/CiCI then rank based on the two

LEI/CICIs.

ii. When one firm has an LEI/CICI and the other firm has a DTCC ID

but does not have an LEI then rank based on the comparison of the

LEI/CICI to the DTCC ID.
A-2

iii. When one firm has an LEI/CICI and the other firm has an AVOX

ID but does not have an LEI then rank based on the comparison of

the LEI/CICI to the AVOX ID.

iv. When neither firm has an LEI/CICI and both firms have a DTCC

ID then rank based on the two DTCC IDs.

v. When neither firm has an LEI/CICI and one firm has a DTCC ID and

the other firm has only an AVOX ID then rank based on the comparison

of the DTCC ID to the AVOX ID.

vi. A firm will be the RP when that firm has a DTCC ID or LEI/CICI and

the other has neither an LEI/CICI nor a DTCC ID nor an AVOX ID. 

Please note that in all cases the RP will have a DTCC ID and by extension

will have an LEI/CICI.

2. Determining sort order of identifiers

• LEI/CICI, DTCC GTR IDs, and AVOX IDs are comprised of

characters from the following set {0‐9, A‐Z}.

• For avoidance of doubt, before comparing IDs convert all IDs to UPPER

CASE only.

• For comparison basis the sort order will be reverse ASCII sort

order. For avoidance of doubt the following are sort order of

precedence:

• Z, Y, X, W, V, U, T, S, R, Q, P, O, N, M, L, K, J, I, H, G, F, E, D, C, B,

A, 9, 8, 7, 6, 5, 4, 3, 2, 1, 0.

3. When comparing two IDs the RP will be the firm with the first ID in the list when

sorted in reverse ASCII sort order.
C-1

Exhibit C

Rulebook (marked)

[see attached]
BLOOMBERG SEF LLC

RULEBOOK

FEBRUARY 3,15, 2015

600015635.135600015635.136
CHAPTER 1. DEFINITIONS 1

CHAPTER 2. SEF GOVERNANCE 13

RULE 201. Board 13

RULE 202. [Reserved] 1314

RULE 203. [Reserved] 1314

RULE 204. Regulatory Oversight Committee 1314

RULE 205. Additional Committees and Panels 1415

RULE 206. Power of the Board to Review Decisions 15

RULE 207. Eligibility 15

RULE 208. Officers 1617

RULE 209. Chief Compliance Officer 17

RULE 210. Conflicts of Interest 1819

RULE 211. Restrictions on Certain Persons who Possess Material, Non-Public

Information: Improper Use or Disclosure of Material Non-Public

Information 20

RULE 212. Emergency Rules 2021

RULE 213. Information-Sharing Agreements 22

RULE 214. Regulatory Services Agreement with the Regulatory Services

Provider 23

CHAPTER 3. PARTICIPANTS 23

RULE 301. Eligibility Criteria for Becoming a Participant 23

RULE 302. Authorized Traders 25

RULE 303. Participant Application Process; Termination of Participant 26

RULE 304. Trading Privileges of a Participant 27

RULE 305. Termination or Limitation of Trading Privileges and Trading

Access 27

RULE 306. Assessments and Fees 28

RULE 307. Authorized Representatives 28

RULE 308. Recording of Communications 2829

RULE 309. Notices to Participants 29

RULE 310. Communications between BSEF and Participants 29

RULE 311. Application of BSEF Rules and Jurisdiction 29

RULE 312. Description of Participant’s Status 30

RULE 313. Dissolution of Participants 30

RULE 314. Withdrawal of Participant 30

RULE 315. Compliance with the Commodity Exchange Act 3031

RULE 316. Access 31

RULE 316.A. ECP Access 31

RULE 316.B. ISV Access 31

RULE 317. Direct Market Access 31

RULE 318. Legal Certainty for SEF Trades 3132

ii
RULE 319. Rights and Responsibilities after Suspension or Termination 32

CHAPTER 4. OBLIGATIONS OF PARTICIPANTS, ACCOUNT MANAGERS,

DMA CUSTOMERS, AUTHORIZED TRADERS AND

SUPERVISED PERSONS 33

RULE 401. Duties and Responsibilities 33

RULE 402. Required Disclosures to BSEF 3334

RULE 403. Inspections by BSEF 35

RULE 404. Minimum Financial and Related Reporting Requirements 35

RULE 405. Position Liquidation upon Default 3536

RULE 406. Authority to Impose Restrictions 3536

RULE 407. Customers and Accounts 36

RULE 408. Disclosure Requirements; Know Your Counterparty Requirements 36

RULE 409. Books and Records 36

RULE 409.A. Participant Books and Records 36

RULE 409.B. BSEF Books and Records 37

RULE 410. Responsibility for Mandatory Trading 3738

RULE 411. Eligibility for Clearing Exempt Transactions 3738

CHAPTER 5. TRADING PRACTICES, REPORTING, CLEARING AND

BUSINESS CONDUCT 38

RULE 501. Scope 38

RULE 502. Procedures 38

RULE 503. Business Days and Trading Hours 3839

RULE 504. Rule Violations 3839

RULE 505. Fraudulent Acts 39

RULE 506. Fictitious, Wash or Pre-Arranged Transactions 39

RULE 507. Pre-Execution Communications 3940

RULE 508. Market Disruption and Market Manipulation 40

RULE 509. Prohibition of Misstatements 40

RULE 510. Acts Detrimental to Welfare of SEF 40

RULE 511. Adherence to Law 4041

RULE 512. Use of Trading Privileges 41

RULE 513. Supervision 41

RULE 514. Misuse of the SEF Platform 41

RULE 515. Mishandling of Customer Orders 4142

RULE 516. Trade Cancellation and Adjustment 4142

RULE 516.A. Errors 4142

RULE 516.B. Prime Broker Trades 4243

RULE 516.C. [Reserved] 43

RULE 517. Withholding Orders Prohibited 43

RULE 518. Priority of Customers’ Orders 43

RULE 519. Trading Against Customers’ Orders Prohibited 43

RULE 519.A. General Prohibition 43

RULE 519.B. Exceptions 4344

iii
RULE 520. Disclosing Orders Prohibited 4344

RULE 521. Simultaneous Buy And Sell Orders For Different Beneficial

Owners 44

RULE 522. Execution of Orders on the SEF Platform 44

RULE 522.A. Required Transactions 44

RULE 522.B. Permitted Transactions 45

RULE 522.C. Package Transactions 45

RULE 522.D. Execution of Swaps Subject to the Clearing Exemption 45

RULE 522.E. Block Trades 45

RULE 523. Trade Confirmations 4546

RULE 524. Order Entry Requirements 47

RULE 524.A. General 47

RULE 524.B. Customer Type Indicator (CTI) Codes 48

RULE 524.C. Pre-Arranged Transactions 4849

RULE 525. Position Limits 4849

RULE 526. Exemptions from Position Limits 49

RULE 527. Position Accountability 49

RULE 528. Bunched Orders and Orders Eligible for Post-Execution Allocation 4950

RULE 529. Orders Entered Prior to SEF Opening 5051

RULE 530. Identification of Authorized Traders 5051

RULE 531. Pre-Arranged Transactions 51

RULE 531.A. Block Trades 51

RULE 531.B. Complex Permitted Transactions 52

RULE 532. Reporting to SDR 52

RULE 533. Cleared Swaps 53

RULE 534. Non-Cleared Swaps 5453

RULE 535. Risk Controls 5554

CHAPTER 6. DISCIPLINARY RULES 5554

RULE 601. General 5554

RULE 602. Inquiries and Investigation 56

RULE 603. Reports of Investigations 57

RULE 604. Opportunity to Respond to Investigation Report 5857

RULE 605. Review of Investigation Reports 5857

RULE 606. Warning Letters 5958

RULE 607. Notice of Charges 5958

RULE 608. Service of Notice of Charges 6059

RULE 609. Answer to Notice of Charges 6059

RULE 610. Admission or Failure to Deny 60

RULE 611. Denial of Charges and Right to a Hearing 6160

RULE 612. Settlements 6160

RULE 613. Hearing Panel 6261

RULE 614. Convening Hearings of Disciplinary Proceedings 6261

RULE 615. Respondent Review of Evidence 6362

RULE 616. Conducting Hearings of Disciplinary Proceedings 6362

RULE 617. Decision of Disciplinary Panel 6564

iv
RULE 618. Sanctions 6665

RULE 619. Costs 6766

RULE 620. Right to Appeal Disciplinary Panel Decision, Summary

Impositions of Fines and Other Summary Actions 6766

RULE 621. Summary Imposition of Fines 6968

RULE 622. Hearings Involving BSEF-Affiliated Trading Entities 7069

RULE 623. [Reserved] 70

RULE 624. Notice to the Respondent, the Regulatory Services Provider and the

Public 70

CHAPTER 7. ARBITRATION 7170

RULE 701. General 7170

RULE 702. Forum and Arbitration Rules 7170

RULE 703. Initiating an Arbitration Claim 71

RULE 704. Claims Relating to Trade Cancelations or Price Adjustments 7271

RULE 705. Penalties 7271

CHAPTER 8. MISCELLANEOUS 7271

RULE 801. Anti-Money Laundering and Anti-Terrorism 7271

RULE 802. Gifts and Gratuities 7271

RULE 803. Market Data 72

RULE 804. Prohibited Use of Data Collected for Regulatory Purposes 7372

RULE 805. Confidentiality 7372

RULE 806. Extension or Waiver of BSEF Rules 7473

RULE 807. Effect of Amendment, Repeal or New Rule 7473

RULE 808. Swap Contract Specifications 7574

RULE 809. Timely Publication of Trading Information 7574

RULE 810. Governing Law, Jurisdiction and Dispute Resolution 7574

CHAPTER 9. LIMITATION OF LIABILITY, NO WARRANTIES 7675

RULE 901. LIMITATION OF LIABILITY, NO WARRANTIES 7675

RULE 902. Indemnification by BSEF 7978

Annex A ISDA Dodd Frank Act-Swap Transaction Reporting Party Requirements

 v
vi
CHAPTER 1.

DEFINITIONS

When used in the Bloomberg BSEF Rules the following terms shall have the respective

meanings as follows:

“Account” means a Person (including a Prime Broker) that (i) granted in

Writing (standalone or as part of a broader instrument) to an Account

Manager investment or trading authority to send RFQs, place Orders and

execute Trades on the SEF on behalf and in the name of such Person; and

(ii) is a Counterparty to a Trade. The definition of “Account” shall not

include any investor, shareholder or any other Person with beneficial

ownership in the Account.

“Account Manager” means a Person that acts as an agent and

attorney-in-fact to buy or sell Swaps via the SEF operated by BSEF in the

name and on behalf of another Person. An Account Manager may also be

a Participant.

“Act” or “CEA” means the Commodity Exchange Act, as amended from

time to time.

“Affected Person” means a SEF applicant whose admission application is

declined or is conditioned or a Person whose status as a Participant is

terminated as set forth in Rule 303(e).

“Affiliate” means, with respect to any Person, any Person who, directly or

indirectly, Controls, is Controlled by, or is under common Control with,

such other Person.

“Appeals Panel” means a panel appointed by the Chief Compliance

Officer pursuant to Rule 620.

“Applicable Law” means, with respect to any Person, any statute, law,

regulation, rule or ordinance of any governmental or Self-Regulatory

Organization applicable to such Person, including the CEA and CFTC

Regulations.

“Appropriate Minimum Block Size” means the minimum notional or

principal amount for a category of Swap that qualifies as a Block Trade

pursuant to CFTC Regulation 43.6.

“Authorized Representative” means any Person who is authorized by a

Participant to represent the Participant in SEF matters pursuant to Rule

307.

 1
“Authorized Trader” means any natural person who (i) has Trading

Access to the SEF operated by BSEF using a Participant ID and (ii) is

assigned a valid Trader ID.

“Block Trade” means a single Swap transaction publicly reportable under

Part 43 of the CFTC Regulations that:

(a) Involves a Swap that is listed on BSEF;

(b) Has a notional or principal amount at or above the Appropriate

Minimum Block Size applicable to such Swap; and

(c) Is (i) executed in accordance with Rule 522.E; or (ii) reported to

BSEF as provided in Rule 531.A.

“Board” means the Board of Directors of BSEF constituted from time to

time in accordance with the Operating Agreement.

“BSEF” means Bloomberg SEF LLC, a Delaware limited liability

company.

“Bunched Orders” means a single Order placed by an Account Manager

for two or more of its Accounts on the SEF operated by BSEF pursuant to

Rule 528.

“Business Day” means a day on which the SEF operated by BSEF is open

for trading.

“By-Laws” means, with respect to any Person that is not an individual, the

By-Laws or Operating Agreement of such Person, and, if no other Person

is specified, means the By-Laws or Operating Agreement of BSEF.

“CFTC” or “Commission” means the Commodity Futures Trading

Commission or any successor regulatory body.

“CFTC Regulations” means the rules and regulations promulgated by the

CFTC, as amended.

“Chief Compliance Officer” means the individual appointed by the

Board as BSEF’s chief compliance officer in accordance with the

Operating Agreement, with the duties and responsibilities as may be

prescribed by the Board from time to time as set forth in Rule 208.

“Claim” has the meaning set forth in Rule 902.

“Cleared Swap” means a Swap that is subject to the mandatory clearing

requirement of Section 2(h)(1)(A) of the CEA or any Swap that is intended

 2
by a Participant to be submitted to a DCO for clearing contemporaneously

with execution.

“Clearing Exception” means an exception from the clearing requirement

set forth in Section 2(h)(1) of the Act because one counterparty to the

transaction is entitled to the exception from the clearing requirement set

forth in Section 2(h)(7) of the Act, CFTC Regulations or CFTC Staff

No-Action Letters.

“Clearing Exception Form” has the meaning set forth in Rule 411.

“Clearing Exempt Transaction” means a Trade exempt from the clearing

requirement of Section 2(h)(1) of the Act because one Counterparty to the

Trade is entitled to and has elected to use a Clearing Exception.

“Clearing House” means such Derivatives Clearing Organization(s) or

non-U.S. central clearing counterparty(ies) recognized or approved by the

CFTC that provide clearing services with respect to any or all of Swaps

traded on the SEF operated by BSEF.

“Clearing House Rules” means the Certificate of Incorporation, the

By-Laws and any rule, interpretation, stated policy, or instrument

corresponding to any of the foregoing, in each case as adopted or amended

from time to time by the Clearing House relating to any or all of the

Swaps.

“Clearing Member” means a member of a Clearing House that is

authorized to clear trades in any or all Swaps for a Participant or its

Accounts or Customers. Each Clearing Member must sign documentation

required by BSEF.

“Client” means an Account.

“CLOB” means an Order Book that will match Orders pursuant to pre-determined,

non-discretionary methods. The CLOB supports the following Order types:

(a) Market Order (Fill_Or_Kill; Immediate_or_Cancel)

(b) Limit Order (Fill_Or_Kill; Immediate_Or_Cancel; Good_Til_Date/Time)

“Complex Permitted Transaction” has the meaning set forth in Rule

531.B.

“Compliance Department” means all SEF Officials and/or agents of

BSEF (including the Regulatory Services Provider) that assist BSEF with

the implementation, surveillance and enforcement of the BSEF Rules and

other Obligations.

 3
“Confirmation” has the meaning set forth in Rule 523(a).

“Control” means the possession, direct or indirect, of the power to direct

or cause the direction of the management and policies of a Person, whether

through the ownership of securities, by Swap, or otherwise. The terms

“controlling” or “controlled” shall have meanings correlative to the

foregoing.

“Counterparty” means a Participant or a Participant’s Account or

Customer whose Legal Entity Identifier is reported by BSEF to an SDR as

a counterparty to a Trade.

“CTI” has the meaning set forth in Rule 524.B.

“Customer” means any Person who uses an FCM or Introducing Broker

as agent in connection with trading in any Swap on the SEF operated by

BSEF. The term “Customer” shall include a DMA Customer.

“Customer Account” means an account carried by a Participant on behalf

of a Customer.

“Daily Settlement Price” means the settlement price for a Swap

calculated each Business Day by or on behalf of BSEF. The Daily

Settlement Price can be expressed in currency, spread, yield or any other

appropriate measure commonly used in swap markets.

“DCM” means a contract market or designated contract market as defined

in CFTC Regulation 1.3(h).

“Derivatives Clearing Organization” or “DCO” has the meaning

attributed to such term by Section 1a(9) of the CEA.

“Direct Market Access” or “DMA” means an arrangement among a

Sponsoring Broker, its Customer and BSEF that allows one or more

representatives of that Customer to have Trading Access using the

Participant ID of the Sponsoring Broker.

“Director” means a member of the Board.

“Disciplinary Panel” means the panel appointed pursuant to Rule 617(a)

to conduct hearings in connection with disciplinary proceedings (other

than summary impositions of fines pursuant to Rule 601(b)), to make

findings, render decisions, and impose sanctions pursuant to Chapter 6 of

the Rules. The Disciplinary Panel must meet the composition

requirements set forth in Part 40 of the CFTC Regulations and the

composition requirements set forth in Rule 617(a).

 4
“Disclosed Order Book” means a screen on the SEF Platform where

Participants have the ability to enter multiple bids and offers, observe or

receive bids and offers entered by other market participants, and transact

on such bids and offers.

“Dispute” has the meaning set forth in Rule 701.

“DMA Customer” means a Customer of a Sponsoring Broker where

representatives of the Customer that are natural persons are designated by

the Sponsoring Broker to have Trading Access to the SEF Platform using

the Participant ID of the Sponsoring Broker and where such Customer

signs the DMA Customer Documentation.

“DMA Customer Documentation” means the agreements (together with

any applicable schedules, exhibits or appendices thereto required by

BSEF) in form and substance acceptable to BSEF, that are required to be

executed and delivered to BSEF before a DMA Customer may access the

SEF Platform.

“DMA Order” means an Order or RFQ placed by a DMA Customer using

the Participant ID of the Sponsoring Broker.

“ECP” means an eligible contract participant as defined in Section 1a(18)

of the CEA.

“Eligibility Criteria” means the criteria set forth in Rule 301(a).

“Emergency” means any occurrence or circumstance that, in the opinion

of the Board, or a Person or Persons duly authorized to issue such an

opinion on behalf of the Board under circumstances and pursuant to

procedures that are specified, requires immediate action and threatens or

may threaten such things as the fair and orderly trading in, or the

liquidation of or delivery pursuant to, any agreements, contracts, swaps or

transactions or the timely collection and payment of funds in connection

with clearing and settlement by a derivatives clearing organization,

including: (a) any manipulative or attempted manipulative activity; (b) any

actual, attempted or threatened corner, squeeze, congestion or undue

concentration of positions; (c) any circumstances which may materially

affect the performance of agreements, contracts, swaps or transactions,

including failure of the payment system or the bankruptcy or insolvency of

any participant; (d) any action taken by any governmental body, or any

other registered entity, board of trade, market or facility which may have a

direct impact on trading or clearing and settlement; (e) at the request of the

CFTC; and (f) any other circumstance which may have a severe, adverse

effect upon the functioning of BSEF.

 5
“Emergency Rules” has the meaning set forth in Rule 212(a).

“End of Trading” means such time as BSEF may from time to time

prescribe. The End of Trading is the time as of which such actions as are

specified in the BSEF Rules or the relevant Swap Specifications as taking

place at the end of a Business Day, such as determination Daily Settlement

Prices, will occur.

“Fill-Or-Kill” means that the Order must be immediately filled

completely or canceled.

“Financial Entity” has the meaning set forth in CEA Section 2(h)(7)(C).

“Futures Commission Merchant” or “FCM” has the meaning set forth in

Section 1a(28) of the CEA.

“Good-til-Date/Time” means that the Order has an expiration time and

date.

“Governmental Body” means (a) any U.S. or non-U.S. federal, national,

state or local court or (b) any U.S. or non-U.S. federal, national, state or

local entity that is (i) a governmental authority, (ii) a regulatory body or

(iii) a self-regulatory body.

“Hearing Panel” means a panel responsible for adjudicating disciplinary

cases pursuant to a Notice of Charges authorized by a Review Panel.

“Immediate-Or-Cancel” means that the Order may be filled partially, but

the Order must be actioned immediately, or else canceled. Any remaining

portion will be canceled.

“Interested Person” has the meaning attributed to such term in Rule

210(a).

“Introducing Broker” has the meaning set forth in CFTC Regulation

1.3(mm).

“ISDA” means the International Swaps and Derivatives Association, Inc.

“ISV” means an independent software vendor.

“Legal Entity Identifier” has the meaning set forth in Part 45 of the

CFTC Regulations.

“Local Law” has the meaning attributed to such term in Rule 810(a).

 6
“Major Swap Participant” has the meaning set forth in Section 1a(33)

of the CEA.

“Manual Order Ticket” means a function provided by BSEF that allows 

a Participant to send an Order to another Participant. 

“MAT Recipient Participant” shall have the meaning set forth in Rule 

522.A(b).

“NFA” means the National Futures Association.

“No-Bust Range” shall have the meaning set forth in Rule 535(c).

“Non-Cleared Swap” means a Swap that is not a Cleared Swap.

“Non-Cleared Swap Agreement” means an agreement that governs the

performance and settlement of a Non-Cleared Swap including any

applicable credit support and default provisions.

“Notice of Charges” means a notice sent by the Compliance Department

pursuant to Rule 607.

“Notice to Participants” means a communication sent by or on behalf of

BSEF to all Participants as described in Rule 310.

“Obligation” means each BSEF Rule, order or procedure issued by BSEF,

including Notice to Participants, and other requirement implemented by

BSEF under the BSEF Rules.

“Officer” has the meaning attributed to such term in Rule 208.

“Operating Agreement” means the operating agreement of BSEF.

“Order” means (i) a response to a Request For Quote, (ii) a response to a

Resting Quote or, (iii) the display of a quote on an Order Book or (iv) a 

firm offer to enter into a Swap.

“Order Book” means the trading system or platform operated by BSEF in which all

market participants in the trading system or platform have the ability to enter multiple

bids and offers, observe or receive bids and offers entered by other market participants,

and transact on such bids and offers. A Participant must indicate if a bid or offer posted

on an Order Book is firm or indicative.

“Package Transaction” means a transaction involving two or more

instruments:

(1) that is executed between two or more Counterparties;

 7
(2) that is priced or quoted as one economic transaction with

simultaneous or near simultaneous execution of all components;

(3) that has at least one component that is a Required Transaction and

other components are one or more of the following

a. an agency mortgage-backed security

b. a new issue bond

c. a future

d. an uncleared swap (as defined in Section 1a(47) of the

CEA)

e. a non-swap (as defined in Section 1a(47) of the CEA)

Treasury bond; or

f. a security-based swap (as defined in Section 1a(42) of the

CEA); and

(4) where the execution of each component is contingent upon the

execution of all other components.

“Participant” means any Person that has signed the Participant

Documentation and has been granted, and continues to have, Trading

Privileges under the BSEF Rules. Subject to Applicable Law, a

Participant may trade for its own proprietary account or for or on behalf of

a Customer or Account. An ISV cannot be a Participant.

“Participant Documentation” means the agreements (together with any

applicable schedules, exhibits or appendices thereto required by BSEF) in

form and substance acceptable to BSEF, that are required to be executed

and delivered to BSEF before a Person may access the SEF operated by

BSEF as a Participant.

“Participant ID” means each unique identifier assigned to a Participant

by BSEF for access to the SEF operated by BSEF.

“Permitted Transaction” means any transaction involving a Swap that is

not a Required Transaction or a Required Transaction that is a component

of a Package Transaction.

“Person” means a natural person or an entity.

“Pre-Execution Communication” means a communication between two

Persons for the purpose of discerning interest in the execution of a Swap

 8
prior to execution of the Swap on the SEF operated by BSEF, including

any communication that involves discussion of the size, side of market, or

price of an Order or a potentially forthcoming Order; provided that any

communication between two Persons that involves an agreement between

the parties to a Swap that legally binds the parties to such Swap shall not

be considered a Pre-Execution Communication.

“President” means the individual appointed by the Board as BSEF’s chief

executive officer in accordance with the Operating Agreement, with the

duties and responsibilities as may be prescribed by the Board from time to

time as set forth in Rule 208.

“Prime Broker” means a Person that provides prime brokerage services

and that has authorized a Participant to send RFQs, place Orders or enter

into Trades in the name and on behalf of such Person. Each Prime Broker

must sign documentation required by BSEF.

“Prime Broker Trade” means a Trade in a Non-Cleared Swap where one

Counterparty is a Prime Broker and the other is a Participant with which the Prime

Broker has a Non-Cleared Swap Agreement. Only a Permitted Transaction can be

a Prime Broker Trade.

“Proprietary Account” has the meaning set forth in CFTC Regulation

1.3(y).

“Public Director” means a Person that meets the qualifications described

in Rule 207(e).

“Qualified Account Manager” means any Person with more than $25,000,000 in

total assets under management that is either: (A) a commodity trading advisor

registered pursuant to Section 4n of the Act, or exempt from registration under the

Act, or a principal thereof, who has discretionary trading authority or directs client

accounts; (B) an investment adviser who has discretionary trading authority or

directs client accounts and satisfies the criteria of § 4.7(a)(2)(v) of Part 43 of the

CFTC Regulations; or (C) a foreign person who performs a similar role or

function as the persons described in paragraphs (h)(6)(i)(A) or (h)(6)(i)(B) of

CFTC Regulation 43.6 and is subject as such to foreign regulation.

“Recipient Participant” shall have the meaning set forth in Rule 

522.A(b).

“Regulatory Oversight Committee” means the committee of the Board

constituted in accordance with Rule 204.

“Regulatory Services Agreement” means the agreement between BSEF

and the Regulatory Services Provider whereby the Regulatory Services

 9
Provider provides market surveillance and trade practice surveillance

functions as well as other compliance related services to the SEF operated

by BSEF.

“Regulatory Services Provider” means the organization which provides

regulatory services to BSEF pursuant to a Regulatory Services Agreement.

“Reporting Counterparty” has the meaning set forth in Part 45 of the CFTC

Regulations.

“Request for Quote” or “RFQ” means an electronic message

disseminated on the SEF Platform for the purposes of soliciting bids or

offers for a specific Swap.

“Request for Quote Functionality” means a functionality of the SEF

Platform that allows a Requesting Participant to send an RFQ to buy or

sell a Swap to any Participant, to which all such Participants may respond

with a firm or indicative quote. An RFQ can be sent as a request for quote

or as a request for streaming quote. All RFQs and responses to RFQs will

disclose the name of the Person with which the Authorized Trader who

placed an Order or sent an RFQ is associated in BSEF records. The 

recipient Participant of a request for quote may fill at the Order price or 

better.

“Requesting Participant” means a Participant initiating an RFQ.

“Required Number” shall have the meaning set forth in Rule 522.A(b).

“Required Transaction” means any transaction involving a Swap that is

subject to the trade execution requirement of Section 2(h)(8) of the Act.

“Resting Quote” means any firm or indicative bid or offer displayed on an

Order Book.

“Review Panel” means a panel responsible for determining whether a

reasonable basis exists for finding a violation of BSEF Rules, and for

authorizing the issuance of notices of chargers against Persons alleged to

have committed violations if the Review Panel believes that the matter

should be adjudicated.

“Rules” means, with respect to any Person, the rules of such Person and

the interpretations, resolutions, orders, directives and procedures of the

Person thereunder as in effect from time to time, and if no other Person is

specified, means the Rules of the SEF operated by BSEF and the

interpretations, resolutions, orders and directives and procedures of the

SEF operated by BSEF thereunder as in effect from time to time.

10
“SDR” means a swap data repository, as defined in Section 1a(48) of the

CEA.

“SEC” means the U.S. Securities and Exchange Commission.

“SEF” means a swap execution facility as defined in Section 1a(50) of the

CEA.

“SEF Action” and “SEF Actions” have the meanings attributed to such

terms in Rule 210(a).

“SEF Data” has meaning set forth in Rule 803(a).

“SEF Activity” means business for which a Participant is subject to the

BSEF Rules, which is purportedly conducted subject to the BSEF Rules,

or which should have been conducted subject to the BSEF Rules including

Permitted Transactions and Block Trades.

“SEF Official” means any Director or Officer of, or individual employed

directly by, BSEF, the Regulatory Services Provider or any individual

rendering similar services to BSEF under an administrative or similar

agreement.

“SEF Platform” means the electronic trading system of the SEF

established and operated by BSEF, or any successor thereto, that is made

available by BSEF to Participants for trading in Swaps.

“SEF Proceeding” has the meaning attributed to such term in Rule 210(a).

“Self-Regulatory Organization” or “SRO” shall, unless otherwise

provided, have the meaning attributed to such term in CFTC Regulation

1.33(ee) and, in addition, shall include a Derivatives Clearing

Organization, and a registered futures association. BSEF is a

self-regulatory organization.

“Sponsoring Broker” means a Participant that allows its designated

Customers to access the SEF Platform using the Participant ID of the

Participant and (i) with respect to Cleared Swaps, is a Clearing Member;

and (ii) with respect to Non-Cleared Swaps, is (x) an FCM or Introducing

Broker; or (y) non-U.S. Person acting in a similar capacity that is not

required to register as an FCM or Introducing Broker under the Act and

that is appropriately licensed in a jurisdiction where its DMA Customer is

located.

“Supervised Persons” means any directors, officers, employees or agents

of any Participant.

11
“Swap” means any agreement, contract or transaction that is a swap as

defined in Section 1a(47) of the CEA and as further defined by the CFTC,

which is listed on the SEF operated by BSEF in accordance with CFTC

Regulation 37.4.

“Swap Dealer” has the meaning set form in Section 1a(49) of the CEA.

“Swap Specification” means, with respect to any Swap, the Rules or other

trading protocols containing specifications for such Swap, as adopted,

amended, supplemented or otherwise modified from time to time by

BSEF.

“Terms Incorporated by Reference” has the meaning set forth in Rule

523(c).

“Trade” means any purchase or sale of any Swap made on the SEF

Platform or subject to BSEF Rules.

“Trade Communication” has meaning set forth in Rule 523(c).

“Trader ID” means a unique identifier issued to each Authorized Trader

which enables BSEF to identify the individual entering RFQs or Orders

into the SEF operated by BSEF.

“Trading Access” means the right granted to an Authorized Trader to

send RFQs or place Orders and/or enter into transactions for certain or all

Swaps to the SEF Platform or execute Swaps subject to the BSEF Rules.

“Trading Account” means, with respect to each Participant, Account or

Customer, each account established and maintained by such Participant at

BSEF through which the Participant will trade Swaps and through which

BSEF will monitor the open Swap positions and closed Swap positions of

such Participants, Accounts or Customers.

“Trading Hours” means, for any Business Day, the hours as may be

published by BSEF in a Notice to Participants from time to time.

“Trading Privileges” means the right granted to a Participant to use,

directly or indirectly, the SEF operated by BSEF for execution of Swaps.

No Person may exercise Trading Privileges on behalf of a Participant

during any suspension of such Participant’s Trading Privileges.

“Written” or “Writing” means printing, lithography, photography, and

other modes of representing or reproducing words or data in a visible

form, including electronic transmissions.

* * * * * *

12
The following rules of construction shall apply to the BSEF Rules:

(i) the headings in the BSEF Rules are for convenience only and do not affect the

construction of the BSEF Rules;

(ii) all references to time in the BSEF Rules are to local time in New York, New York,

except where expressly provided otherwise;

(iii) in the BSEF Rules, words denoting a singular number include the plural number where

the context permits and vice versa;

(iv) where the context permits or requires, any pronoun shall include the corresponding

masculine, feminine and neuter forms;

(v) forms of the word “include” mean that the inclusion is not limited to the items listed;

(vi) “or” is disjunctive but not exclusive;

(vii) references in the BSEF Rules to statutory provisions include those provisions as

amended, and any rules or regulations promulgated thereunder.

CHAPTER 2.

SEF GOVERNANCE

RULE 201. Board

(a) The Board shall manage the business and affairs of BSEF in accordance with the

Operating Agreement. At all times the Board must be composed of at least 35%, but no less than

two, Public Directors. The Board has the power and authority to call for review, and to affirm,

modify, suspend or overrule, any and all decisions and actions of standing committees or special

committees of the Board or any panel of the Officers.

(b) The Board may act (including to appoint Public Directors, to the extent provided

in the Operating Agreement) only by the decision of an absolute majority in number of the

members of the Board, either by vote at a meeting or by Written consent without a meeting.

(c) Each Director (including Public Directors) shall be appointed in accordance with

the Operating Agreement and the procedures included therein and shall serve until his or her

successor is duly appointed, or until his or her earlier resignation or removal, with or without

cause.

(d) The members of the Board, including Public Directors, shall be of sufficiently

good repute and, where applicable, have sufficient expertise in financial services.

(e) The percentage of Public Directors required to serve on the Board or any

committee thereof pursuant to this Chapter 2 shall be deemed to be modified to comply with the

CEA and CFTC Regulations, in each case, as in effect from time to time.

13
(f) Without limitation of any other provisions of this Rule 201, the provisions of

Article III of the Operating Agreement shall be deemed to be part of the BSEF Rules, and shall

be deemed to be incorporated herein, to the same extent and with the same force and effect as if

set forth herein in their entirety.

RULE 202. [Reserved]

RULE 203. [Reserved]

RULE 204. Regulatory Oversight Committee

(a) The Regulatory Oversight Committee of the Board shall consist only of Public

Directors, appointed by the Board. Each member of the Regulatory Oversight Committee shall

serve until the due appointment of his or her successor, or until his or her earlier resignation or

removal, with or without cause, as a member of the Regulatory Oversight Committee or as a

Director. A member of the Regulatory Oversight Committee may serve for multiple terms. The

Regulatory Oversight Committee shall report to the Board.

(b) The Regulatory Oversight Committee shall oversee BSEF’s regulatory program

on behalf of the Board. It shall make such recommendations to the Board as will, in its

judgment, best promote the interests of the SEF operated by BSEF. The Regulatory Oversight

Committee shall also have such other powers and perform such other duties as set forth in the

BSEF Rules, the Operating Agreement and as the Board may delegate to it from time to time.

(c) Without limiting the generality of the foregoing, the Regulatory Oversight

Committee shall have authority to:

(i) Monitor the compliance program of the SEF operated by BSEF for

sufficiency and effectiveness;

(ii) Oversee all facets of the compliance program, including trade practice and

market surveillance, audits, examinations conducted by the Regulatory Services Provider

and other regulatory responsibilities with respect to Participants, Customers and Accounts

(including ensuring compliance with any financial integrity, financial reporting, sales

practice, recordkeeping and other requirements), and overseeing the conduct of

investigations by the Regulatory Services Provider;

(iii) Review the size and allocation of the regulatory budget and resources and

the number, hiring and termination, and compensation of compliance personnel;

(iv) Assist BSEF in minimizing actual and potential conflicts of interest;

(v) Recommend changes that would ensure fair, vigorous, and effective

compliance; and

(vi) Review compliance proposals and advise the Board as to whether and how

such changes may impact compliance.

14
(d) The Regulatory Oversight Committee shall oversee the regulatory program of the

SEF operated by BSEF on behalf of the Board. The Board shall delegate sufficient authority,

dedicate sufficient resources, and allow sufficient time for the Regulatory Oversight Committee

to fulfill its mandate.

RULE 205. Additional Committees and Panels

(a) The Board may create such additional standing committees of the Board as it may

from time to time deem necessary or advisable.

(b) In addition to the standing committees, the Board may from time to time

constitute and appoint, by Rule or resolution, special committees of the Board and designate their

composition, responsibilities and powers.

(c) BSEF may create additional committees of BSEF, or panels, for such purposes as

may from time to time be necessary or advisable. Members of each such committee may be

members of the Board, Supervised Persons of Participants or such other individuals as may be

qualified to serve on such committee.

RULE 206. Power of the Board to Review Decisions

The Board has the power and authority to call for review, and to affirm, modify, suspend or

overrule, any and all decisions and actions of standing committees or special committees of the

Board.

RULE 207. Eligibility

(a) A Director must meet the qualifications set forth from time to time in the

Operating Agreement.

(b) An individual may not serve as a Director or serve on a committee established by

the Board, a Disciplinary Panel or an Appeals Panel if the individual:

(i) within the prior three (3) years has been found, by a final decision in any

action or proceeding brought in a court of competent jurisdiction, the CFTC or any

Self-Regulatory Organization, to have committed a disciplinary offense;

(ii) within the prior three (3) years has entered into a settlement agreement in

which any of the findings or, in the absence of such findings, any of the acts charged,

included a disciplinary offense;

(iii) has been suspended or expelled from membership in a Self-Regulatory

Organization, is serving any sentence or probation, or owes any portion of a fine or

penalty related to either;

15
1. a finding of a disciplinary offense by a final decision in any action

or proceeding brought in a court of competent jurisdiction, the CFTC, or any

Self-Regulatory Organization; or

2. a settlement agreement in which any of the findings or, in the

absence of such findings, any of the acts charged included a disciplinary offense.

(iv) is currently subject to an agreement with the CFTC or Self-Regulatory

Organization not to apply for registration with the CFTC or for membership in the

Self-Regulatory Organization;

(v) is currently, or within the past three (3) years has been, subject to a

revocation or suspension of registration by the CFTC;

(vi) has been convicted of a felony listed in Section 8a(2)(D)(ii) through (iv) of

the CEA; or

(vii) is currently subject to a denial, suspension or disqualification from serving

on a disciplinary committee, arbitration or appeals panel or governing board of any

Self-Regulatory Organization.

(c) Any Director, member of a committee established by the Board or any member of

a Disciplinary Panel, an Appeals Panel, any individual nominated to serve in any such role, or

any individual authorized by the Regulatory Oversight Committee to take summary action shall

immediately notify the President if such individual meets one or more of the criteria in Rule

207(b).

(d) For purposes of this Rule, the terms “disciplinary offense,” “final decision,” and

“settlement agreement” have the meanings set forth in CFTC Regulation 1.63(a).

(e) To qualify as a Public Director, a Director must be found, by the Board on the

record, to have no material relationship with BSEF or any of its Affiliates. A “material

relationship” is one that reasonably could affect the independent judgment or decision making of

such individual as a Public Director. In addition, an individual shall not be considered a “Public

Director” if any of the following circumstances exist:

(i) such Director is an Officer or an employee of BSEF, or an officer or an

employee of an Affiliate of BSEF;

(ii) such Director is a Participant, or a director, an officer or an employee of a

Participant; or

(iii) such Director, or an entity with which the Director is a partner, an officer,

or a director, receives more than $100,000 in combined annual payments for legal,

accounting, or consulting services from BSEF or any Affiliate of BSEF. Compensation

for services as a director of BSEF or as a director of an Affiliate of BSEF does not count

toward the $100,000 payment limit, nor does deferred compensation for services rendered

16
prior to becoming a Director of BSEF, so long as such compensation is in no way

contingent, conditioned or revocable.

(f) Any of the relationships set forth in sub-paragraphs (e)(i) through (iii) of this Rule

apply to the “immediate family” of such Director, i.e., spouse, parents, children and siblings.

(g) A Public Director may also serve as a director of an Affiliate of BSEF if he or she

otherwise meets the requirements in paragraphs (e) and (f) of this Rule.

RULE 208. Officers

The Board shall appoint a President, a Chief Compliance Officer, one or more vice

presidents, a secretary, a treasurer, and such other officers of BSEF (all of the foregoing,

collectively, the “Officers”) as it may deem necessary or appropriate from time to time, in

accordance with the Operating Agreement. The Officers shall have such powers and duties in the

management of BSEF as the Board may prescribe from time to time in accordance with the

Operating Agreement. Each Director and Officer is entitled to indemnification pursuant to the

Operating Agreement with respect to matters relating to BSEF.

RULE 209. Chief Compliance Officer

(a) The Board shall appoint and approve the Chief Compliance Officer. The Board

shall approve the compensation of the Chief Compliance Officer. Removal of the Chief

Compliance Officer shall require the approval of a majority of the Board. BSEF shall notify the

CFTC of the removal of the Chief Compliance Officer and the appointment of any new Chief

Compliance Officer, whether interim or permanent, within two Business Days of such

appointment.

(b) The individual designated to serve as Chief Compliance Officer shall have the

background and skills appropriate for fulfilling the responsibilities of the position. No individual

disqualified from registration pursuant to Sections 8a(2) or 8a(3) of the CEA may serve as a

Chief Compliance Officer. The Chief Compliance Officer may not be a member of BSEF’s legal

department and may not serve as its general counsel.

(c) The Chief Compliance Officer shall report directly to the Board. The Chief

Compliance Officer shall meet with the Board at least annually. The Chief Compliance Officer

shall also meet with the Regulatory Oversight Committee at least quarterly. Each such meeting

may occur in person or by means of conference telephone. The Chief Compliance Officer shall

provide any information regarding the regulatory program of the SEF operated by BSEF that is

requested by the Board or the Regulatory Oversight Committee.

(d) The position of Chief Compliance Officer shall carry with it the authority and

resources to develop and enforce policies and procedures necessary to fulfill the duties set forth

for chief compliance officers in the Act and the CFTC Regulations. The Chief Compliance

Officer shall have supervisory authority over all staff acting in furtherance of the Chief

Compliance Officer’s obligations.

17
(e) The Chief Compliance Officer’s duties shall include, but are not limited to, the

following:

(i) Overseeing and reviewing the compliance of the SEF operated by BSEF

with Section 5h of the Act and any CFTC Regulations;

(ii) In consultation with the Board or the senior Officer of BSEF, resolving

any conflicts of interest that may arise, including: (1) conflicts between business

considerations and compliance requirements; (2) conflicts between business

considerations and the requirement that the SEF operated by BSEF provide fair, open,

and impartial access as set forth in CFTC Regulation 37.202; and (3) conflicts between

BSEF’s management and members of the Board;

(iii) Establishing and administering Written policies and procedures reasonably

designed to prevent violation of the Act and any Rules adopted by the Commission;

(iv) Taking reasonable steps to ensure compliance with the Act and CFTC

Regulations relating to agreements, contracts, or transactions, and with CFTC

Regulations under Section 5h of the CEA;

(v) Establishing procedures for the remediation of noncompliance issues

identified by the Chief Compliance Officer through a compliance office review,

look-back, internal or external audit finding, self-reported error, or validated complaint;

(vi) Establishing and following appropriate procedures for the handling,

management response, remediation, retesting, and closing of noncompliance issues;

(vii) Establishing and administering a compliance manual designed to promote

compliance with the applicable laws, Rules, and regulations and administering a Written

code of ethics designed to prevent ethical violations and to promote honesty and ethical

conduct;

(viii) Supervising the SEF’s compliance program with respect to trade practice

surveillance; market surveillance; real-time market monitoring; compliance with audit

trail requirements; enforcement, disciplinary and appeals proceedings; audits,

examinations conducted by the Regulatory Services Provider, and other regulatory

responsibilities with respect to Participants, Accounts and Customers (including ensuring

compliance with, if applicable, financial integrity, financial reporting, sales practice,

recordkeeping, and other requirements);

(ix) Supervising the effectiveness and sufficiency of any regulatory services

provided to BSEF by the Regulatory Services Provider; and

(x) Preparing and filing the annual compliance report of BSEF.

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RULE 210. Conflicts of Interest

(a) A Director, Officer, panel member or other Person authorized to exercise BSEF’s

authority concerning any inquiry, investigation or any disciplinary or appeals proceeding,

summary suspension, or other summary actions (any such action, a “SEF Action” and,

collectively, “SEF Actions”), or Emergency actions taken pursuant to Rule 212 (each such SEF

Action or Emergency Action, a “SEF Proceeding”) who knowingly has a “material conflict of

interest” between his or her position as a Director, Officer, panel member or exercise of authority

concerning any SEF Proceeding and his or her personal interests (each, an “Interested Person”)

may not participate in any deliberations or vote of the Board committee, panel or exercise any

authority in any SEF Proceeding involving his or her personal interest, except as described in

Rule 210(d).

(b) For purposes of Rule 210(a), a “material conflict of interest” includes a Director’s,

Officer’s, or other Person’s:

(i) being named as a respondent or potential respondent in a SEF Proceeding;

(ii) being an employer, employee, fellow employee or an Affiliate of a

respondent or potential respondent in a SEF Proceeding;

(iii) having any significant, ongoing business relationship with a respondent or

potential respondent in a SEF Proceeding;

(iv) having a family relationship with a respondent or potential respondent in a

SEF Proceeding (including the individual’s spouse, co-habitator, former spouse, parent,

step-parent, child, step-child, sibling, step-brother, step-sister, grandparent, grandchild,

uncle, aunt, nephew, niece, father-in-law, mother-in-law, son-in-law, daughter-in-law,

brother-in-law or sister-in-law); and/or

(v) having a direct and substantial financial interest in the result of the

deliberations or vote based upon either SEF or non-SEF positions. A direct and

substantial financial interest includes positions held in Swaps in the accounts of,

Controlled by, or affiliated with the Interested Person or any other types of direct and

substantial financial positions of the Interested Person that are reasonably expected to

be affected by the deliberations or vote.

(c) Before considering any SEF Proceeding, an Interested Person must disclose in

Writing to the Board the material facts concerning his or her relationship or interest in the matter.

(d) Any Interested Person who would be required otherwise to abstain from

deliberations and voting pursuant to Rule 210(a) as a result of having a direct and substantial

financial interest in the result of the deliberations and vote may participate in deliberations, prior

to a vote on the matter, if:

(i) the material facts about the Interested Person’s financial interest in the

matter are disclosed or known to the Board;

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(ii) the Board determines that the participation by the Interested Person would

be consistent with the public interest; and

(iii) a majority of the Directors (excluding any Interested Persons) vote to

allow the Interested Person to participate in deliberations on the matter.

(e) If a determination is made pursuant to Rule 210(d) that an Interested Person may

participate in deliberations prior to a vote, then the minutes of the meeting of the Board or

committee thereof will reflect the determination and the reasons for the determination.

(f) If a determination is made pursuant to Rule 210(a) that all Directors are Interested

Persons with respect to a matter subject to a vote by the Board, the President will appoint a panel

of individuals who are not Interested Persons with respect to such matter, which will have the

same authority and powers over such matter that the Board would have if the Directors were not

Interested Persons with respect to such matter.

(g) No Director, Officer or member of any committee or panel established by the

Board shall use or disclose for any purpose other than the performance of his or her official

duties and responsibilities as a Director, Officer or committee or panel member any material,

non-public information obtained as a result of the individual’s duties and responsibilities as a

Director, Officer or committee or panel member. No Director, Officer or committee or panel

member shall, directly or indirectly, disclose or use at any time, either during his or her

association with BSEF or thereafter, any confidential information of which the Board member or

committee or panel member becomes aware. Each Director, Officer or committee or panel

member in possession of confidential information shall take all appropriate steps to safeguard the

information and to protect it against disclosure, misuse, espionage, loss and theft.

(h) Notwithstanding Rule 210(g), a Director, Officer or committee or panel member

may disclose confidential information if required by Applicable Law or a court order to be

revealed to the United States Department of Justice or the CFTC.

(i) For the purposes of Rule 210(g), the term “material, non-public information” shall

mean “material information” that is “nonpublic information,” as such terms are defined in CFTC

Regulation 1.59(a).

RULE 211. Restrictions on Certain Persons who Possess Material, Non-Public

Information: Improper Use or Disclosure of Material Non-Public Information

No member of the Board or of any Board committee, no member of any other committee of

BSEF, no Officer of BSEF, no employee of BSEF and no consultant to BSEF shall:

(a) trade for such Person’s own account, or for or on behalf of any other account, in

any commodity interest on the basis of any material, non-public information obtained through the

performance of such Person’s official duties;

(b) use or disclose, for any purpose other than the performance of such Person’s

official duties, any material, non-public information obtained by such Person as a result of such

20
Person’s official duties, provided, however, that this Section shall not prohibit disclosures made

by such Person in the course of his or her official duties or disclosures made to the CFTC, any

Self-Regulatory Organization, a court of competent jurisdiction or any agency or department of

the federal or state government; or

(c) trade, directly or indirectly, in any Swap traded on the SEF operated by BSEF; in

any related commodity interest; or in any commodity interest traded on any DCM or SEF or

cleared by any Clearing House if such Person has access to material non-public information

concerning such Swap or commodity interest.

RULE 212. Emergency Rules

(a) In the event of an Emergency, BSEF may implement temporary emergency

procedures and rules (“Emergency Rules”), subject to the applicable provisions of the CEA and

CFTC Regulations. Implementation of Emergency Rules shall be done in consultation with the

CFTC. Emergency Rules may require or authorize BSEF, the Board, any committee of the

Board, the President, or any other Officer to take actions necessary or appropriate to respond to

the Emergency, including the following actions:

(i) suspending or curtailing trading or limiting trading to liquidation only (in

whole or in part);

(ii) extending or shortening the last trading date for Swaps;

(iii) ordering the fixing of a settlement price;

(iv) ordering the liquidation or transfer of an open position in any Swap, or the

reduction of positions;

(v) extending, limiting or changing the Trading Hours;

(vi) imposing or modifying intraday market restrictions;

(vii) transferring customer contracts and the margin in an emergency;

(viii) imposing special margin requirements;

(ix) extending or shortening the expiration date of a Swap;

(x) altering any Swap’s settlement terms and conditions;

(xi) imposing or modifying price limits;

(xii) imposing, modifying or reducing position limits; and/or

(xiii) temporarily modifying or suspending any provision of the BSEF Rules or

Obligations.

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(b) Before any Emergency Rule may be adopted and enforced, a required vote of the

Board must approve the implementation of such Emergency Rule at a duly convened meeting

requested by the President or any other Officer. Directors may attend such a meeting by

teleconference. Each Director participating in such meeting shall be subject to Rule 210. If the

President determines that Emergency Rules must be implemented with respect to an Emergency

before a meeting of the Board can reasonably be convened, then the President shall have the

authority, without Board action, to implement any Emergency Rules with respect to such

Emergency that he or she deems necessary or appropriate to respond to such Emergency.

(c) Whenever BSEF, the Board, any committee of the Board, or the President takes

actions necessary or appropriate to respond to an Emergency (including the actions set forth in

paragraph (a) above), an Authorized Representative of BSEF will post a Notice to Participants

regarding such Emergency, as soon as practicable. When the Board, any committee of the Board

or the President determines that the Emergency is no longer in effect, permitting the SEF

operated by BSEF to resume normal functioning; any such actions responding to an Emergency

will be terminated.

(d) BSEF will use reasonable efforts to notify the CFTC prior to implementing,

modifying or terminating an Emergency Rule. If such prior notification is not possible or

practicable, BSEF will notify the CFTC as soon as possible or reasonably practicable, but in all

circumstances within twenty-four (24) hours of the implementation, modification or termination

of such Emergency Rule.

(e) Upon taking any action in response to an Emergency, BSEF will document the

decision-making process related to such action. Such documentation will be kept for at least five

years following the date on which the Emergency ceases to exist or to affect the SEF operated by

BSEF, and all such documentation will be provided to the CFTC upon request.

RULE 213. Information-Sharing Agreements

(a) BSEF shall enter into information-sharing agreements or other arrangements or

procedures necessary to allow BSEF to obtain any necessary information to perform any

monitoring of trading and Trade processing, provide information to other markets, the CFTC or

any other Governmental Body with jurisdiction over BSEF upon request and which allow BSEF

to carry out such international information-sharing agreements as the CFTC may require. As part

of any information-sharing agreements or other arrangements or procedures adopted pursuant to

this Rule, BSEF may:

(i) provide market surveillance reports to the CFTC, any Governmental Body

with jurisdiction over BSEF, or, as necessary for BSEF to comply with its SRO

obligations, to other markets;

(ii) share information and documents concerning current and former

Participants to the CFTC, any Governmental Body with jurisdiction over BSEF, or, as

necessary for BSEF to comply with its SRO obligations, to other markets;

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(iii) share information and documents concerning ongoing and completed

investigations to the CFTC, any Governmental Body with jurisdiction over BSEF, or, as

necessary for BSEF to comply with its SRO obligations, to other markets; and/or

(iv) require its current or former Participants to provide information and

documents to BSEF at the request of the CFTC, any Governmental Body with jurisdiction

over BSEF, or, as necessary for BSEF to comply with its SRO obligations, to other

markets.

(b) BSEF may enter into any information-sharing arrangement with any Person or

body (including the CFTC, the NFA, any Self-Regulatory Organization, any SEF, DCM, market,

or clearing organization, or any Governmental Body) if BSEF (i) believes that such entity

exercises a legal or regulatory function under any law or regulation, or a function comprising or

associated with the enforcement of a legal or regulatory function, or (ii) considers such

arrangement to be in furtherance of the purpose or duties of BSEF and the SEF operated by

BSEF under Applicable Law.

(c) BSEF may disclose any information provided by or relating to Participant,

Account Managers, Authorized Traders, Supervised Persons, Customers or Accounts or their

agents, or Trades of Participant or of its Customers or Accounts, including the content of this

Agreement, to any Governmental Body, to the Regulatory Services Provider, to an SDR where

BSEF reports Trades, to any other person or entity as required by Applicable Law or as necessary

to conclude Participant’s Trades, submit Participant’s Trades for clearance or perform services

requested by a Participant, and to any Person providing services to BSEF with respect to the SEF

operated by BSEF. BSEF will not disclose any proprietary data or personal information of any

Participant, Account Manager, Authorized Trader, Supervised Person, Customer or Account

without a corresponding confidentiality agreement between such Person and BSEF, unless the

Person requesting such information is a Governmental Body.

RULE 214. Regulatory Services Agreement with the Regulatory Services Provider

BSEF has contracted with the Regulatory Services Provider to provide certain regulatory services

to BSEF pursuant to a Regulatory Services Agreement. In accordance with the Regulatory

Services Agreement, the Regulatory Services Provider may perform certain surveillance,

investigative, and regulatory functions under the BSEF Rules and BSEF may provide information

to the Regulatory Services Provider in connection with the performance by the Regulatory

Services Provider of those functions. BSEF shall retain ultimate decision-making authority with

respect to any functions that are contracted to the Regulatory Services Provider.

CHAPTER 3.

PARTICIPANTS

RULE 301. Eligibility Criteria for Becoming a Participant

(a) To be eligible for admission as a Participant, an applicant must demonstrate to the

satisfaction of BSEF that it:

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(i) is an ECP, and each Account or Customer on whose behalf it wishes to

trade on the SEF operated by BSEF is an ECP, in each case eligible to enter into the

asset classes of Swaps it wishes to trade on the SEF operated by BSEF;

(ii) is of good reputation and business integrity;

(iii) maintains adequate financial resources and credit;

(iv) is validly organized, in good standing, and authorized by its governing

body and, if relevant, documents of organization, to trade Swaps;

(v) has not filed for bankruptcy;

(vi) is not a SEF Official, agent or affiliate of BSEF;

(vii) is not prohibited from using the services of BSEF for any reason

whatsoever;

(viii) holds all registrations required under Applicable Law, if any;

(ix) is not subject to statutory disqualification under Section 8a(2) of the CEA;

(x) satisfies any other criteria that BSEF may require from a Participant to

perform its SRO responsibilities, comply with Applicable Law or provide SEF services;

and

(xi) is not an ISV or an automated trading system.

(b) Once admitted, the Participant shall continue to comply with all applicable

Eligibility Criteria in this Rule 301.

(c) With respect to Cleared Swaps, each Participant that is an Account Manager,

FCM or Introducing Broker must ensure that each of its, as applicable, Accounts or Customers

has a clearing account with a Clearing Member that is a member of the Clearing House accepting

for clearance Cleared Swaps traded on the SEF operated by BSEF and provide BSEF with

evidence of such relationship. With respect to Non-Cleared Swaps, each Participant that is an

Account Manager or Introducing Broker must ensure that each of its, as applicable, Accounts or

Customers complies with Rule 534, if applicable. A DMA Customer that is an Account Manager

must ensure that each of its Accounts complies with Rule 534, if applicable. Each Participant or

DMA Customer that is an Account Manager must provide BSEF upon BSEF’s prior Written

request with Written representation or proof of authority to place RFQs or Orders and execute

Trades on the SEF operated by BSEF on behalf or in the name of each Account.

(d) With respect to Cleared Swaps, each Participant that is not an Account Manager

must either be a Clearing Member of a Clearing House where the Cleared Swaps are cleared or

have a clearing account with a Clearing Member with respect to such Cleared Swap and provide

24
SEF with evidence of such relationship. With respect to Non-Cleared Swaps, each Participant

that is not an Account Manager must comply with Rule 534, if applicable.

(e) Each Participant must provide BSEF with all information necessary for BSEF to

establish Trading Accounts, and keep such information current and up-to-date.

(f) Participants that do not have a relationship with a Clearing Member as set forth in

subsection (c) or (d) of this Rule 301 are prohibited from entering RFQs or Orders in Cleared

Swaps on the SEF operated by BSEF.

(g) BSEF shall monitor its Participants to ensure that each Participant continues to

qualify as an ECP.

(h) Upon request of BSEF, a Participant shall promptly provide to BSEF or its

Regulatory Services Provider information about its Customers, Accounts and Authorized Traders

as BSEF requests related to or in connection with the SEF Activity of such Customers, Accounts

and Authorized Traders.

RULE 302. Authorized Traders

(a) Each Participant shall nominate or designate one or more Authorized Traders,

who will conduct SEF Activity on behalf of the Participant.

(b) Each Authorized Trader:

(i) must be a natural person;

(ii) must satisfy any other requirements as may be prescribed by BSEF from

time to time; and

(iii) must have a Trader ID.

A Participant that authorizes a third party to trade for its Trading Account on a

discretionary basis pursuant to a power of attorney or other instrument must identify or

approve a specific natural person as its Authorized Trader with respect to such Trading

Account.

(c) Without limiting the foregoing, each Authorized Trader will abide by applicable

BSEF Rules and Applicable Law, and each Participant or DMA Customer, as applicable, will

ensure on an ongoing basis that:

(i) none of its Authorized Traders is subject to a disqualification pursuant to

any Applicable Law (unless an appropriate exemption has been obtained with respect

thereto);

(ii) each of its Authorized Traders will be technically proficient;

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(iii) each of its Authorized Traders will conduct its business in a fair and

equitable manner; and

(iv) each of its Authorized Traders will conduct its business in accordance with

the BSEF Rules.

(d) By agreeing to become an Authorized Trader, an individual agrees to be bound by

the duties and responsibilities of an Authorized Trader under these Rules and to be subject to,

and comply with, the BSEF Rules and Obligations. Among other duties and responsibilities that

BSEF may impose, an Authorized Trader must:

(i) have the authority, at BSEF’s request, to adjust or withdraw any Order

submitted under any Trader ID assigned to him or her; and

(ii) ensure that any SEF Activity conducted under any Trader ID assigned to

him or her complies with all BSEF Rules and Obligations.

(e) To nominate or designate an Authorized Trader, a Participant must follow the

procedures established by BSEF. BSEF may establish criteria that individuals must fulfill to

become an Authorized Trader. Any such criteria will be set out in the BSEF Rules. BSEF will

not accept the registration as an Authorized Trader of any individual who is a SEF Official.

(f) BSEF will promptly notify a Participant in Writing of the approval of nominated

or designated Authorized Traders or if BSEF declines to approve the nomination or designation.

(g) BSEF will maintain a list of all appointed Authorized Traders for each Participant.

(h) BSEF may, in its sole discretion terminate, revoke or suspend an Authorized

Trader and shall promptly notify the Participant in Writing of such action. Upon such

termination, revocation or suspension, BSEF will disable access of such Authorized Trader to the

SEF operated by BSEF.

(i) To request the termination of the designation of an Authorized Trader, the

Participant or the Authorized Trader must notify BSEF following the procedures established by

BSEF. BSEF will terminate access of such Authorized Trader to the SEF operated by BSEF

immediately upon receipt of such notice from Participant.

RULE 303. Participant Application Process; Termination of Participant

(a) Any Person who desires to become a Participant shall (i) submit signed

Participant Documentation; (ii) agree in Writing to abide by the BSEF Rules and Applicable

Law; (iii) provide such information and documentation as may be requested by BSEF; and (iv)

follow the application procedures established by BSEF. Additionally, any Participant organized

or located outside of the United States shall, pursuant to CFTC Regulation 15.05, enter into a

Written agreement appointing a third party as its U.S. agent for service of process, and shall

provide BSEF with a copy of the agreement.

26
(b) In considering an application from a potential Participant, BSEF may require

additional information from the applicant, or conduct an investigation to verify information

submitted by the applicant, or both.

(c) If BSEF decides to admit an applicant as a Participant, it shall promptly notify the

applicant and state in such notice the date on which the applicant shall become a Participant.

(d) If BSEF decides to decline or condition an application for admission as a

Participant, or terminate a Person’s status as a Participant, BSEF shall promptly notify such

Affected Person thereof in a Writing sent to the address provided by the applicant or maintained

in BSEF registry of Participants. Such Affected Person may, within seven (7) calendar days,

request in Writing that BSEF provide the reasons for the denial, conditioning or termination of

Participant status. Within fourteen (14) calendar days after receiving such Written request, BSEF

shall send in Writing to the Affected Person the reasons for the denial, conditioning or

termination. Within fourteen (14) calendar days of receiving the BSEF’s Written response, the

Affected Person may request in Writing that BSEF reconsider its determination, and may provide

any relevant representations or other information that such Affected Person believes to be

relevant to the reconsideration.

(e) BSEF may deny, condition or terminate Participant status of any Person if: (i)

such Person is unable to satisfactorily demonstrate its ability to satisfy the Eligibility Criteria as

set forth in Rule 301(a) to become or remain a Participant; (ii) such Person is unable to

satisfactorily demonstrate its capacity to adhere to all applicable BSEF Rules; (iii) such Person

would bring BSEF into disrepute as determined by BSEF in its sole discretion; or (iv) for such

other cause as BSEF may reasonably determine.

RULE 304. Trading Privileges of a Participant

(a) Upon admission as a Participant, the Participant must execute such Participant

Documentation as required from time to time by BSEF, and such Participant Documentation

must remain in effect for the Participant to access the SEF operated by BSEF.

(b) Admission as a Participant entitles the Participant only to Trading Privileges and

does not confer any right of ownership in, or right to attend or vote at meetings of, BSEF, or right

to share in the profits, of BSEF. A Participant may not transfer or assign its status as a

Participant.

RULE 305. Termination or Limitation of Trading Privileges and Trading Access

(a) Notwithstanding anything in the BSEF Rules to the contrary, the Chief

Compliance Officer may, after consultation with the Regulatory Oversight Committee, if

practicable, summarily suspend, revoke, limit, condition, restrict or qualify the Trading Privileges

of a Participant or the Trading Access of an Authorized Trader, and may take other summary

action against any Participant or any of its Supervised Persons or any Authorized Trader in

accordance with the BSEF Rules; provided, however, that the Chief Compliance Officer must

reasonably believe that the business, conduct or activities of the Participant, Authorized Trader or

27
Supervised Person in question is not in the best interests of BSEF or the marketplace, including

based on any of the following: (i) statutory disqualification from registration as provided in CEA

Section 8a(2) or (3); (ii) non-payment of fees, costs, charges, fines or arbitration awards; or (iii)

the reasonable belief that immediate action is necessary to protect the public or the best interests

of BSEF and the SEF operated by BSEF. BSEF may deny or limit Trading Privileges of a

Participant or Trading Access of any Authorized Trader upon default of the Participant,

Customer or Account, as applicable, on any Swap with respect to such Participant, Customer or

Account.

(b) Whenever practicable, the Compliance Department, acting on behalf of the Chief

Compliance Officer, shall provide prior Written notice to the party against whom any action in

accordance with paragraph (a) shall be taken. If prior notice is not practicable, BSEF will give

notice at the earliest possible opportunity to the respondent against whom the action is brought.

The Compliance Department, acting on behalf of the Chief Compliance Officer, will prepare a

notice of summary action (which will state the action, the reasons for the action, and the effective

time, date and duration of the action) and serve the notice on such party.

(c) The summary action will become final upon the expiration of 20 days after the

notice of action is served on the respondent.

(d) At the request of BSEF, a respondent against whom a summary action is brought

pursuant to this Rule 305 must provide books and records over which the respondent has access

or control and must furnish information to, or appear or testify before, BSEF or the in connection

with the enforcement of any BSEF Rule.

(e) BSEF may review an appeal by any applicant of BSEF’s decision to deny or

otherwise limit Trading Privileges or Trading Access of such applicant pursuant to the BSEF

Rules; provided, however, that any such decision by BSEF to deny or otherwise limit applicant’s

Trading Privileges or Trading Access shall continue in effect during such review.

RULE 306. Assessments and Fees

BSEF shall set the times and amounts of any assessments or fees to be paid by Participants,

which assessments or fees shall be paid to BSEF when due. If a Participant fails to pay when due

any such assessments or fees levied on such Participant, and such payment obligation remains

unsatisfied for thirty days after its due date, BSEF may suspend, revoke, limit, condition, restrict

or qualify the Trading Privileges of such Participant as it deems necessary or appropriate.

RULE 307. Authorized Representatives

Each Participant shall designate one or more Authorized Representatives who will represent the

Participant before BSEF and its committees and receive notices on behalf of the Participant. The

Authorized Representative shall be empowered by the Participant to act on its behalf and BSEF

shall be entitled to rely on the actions of the Authorized Representative as binding on the

Participant. Each Participant must provide BSEF with current contact and other requested

28
information for each of its Authorized Representatives so that BSEF is able to immediately

contact the Authorized Representatives.

RULE 308. Recording of Communications

BSEF may record conversations and retain copies of electronic communications between SEF

Officials, on one hand, and Participants, their Account Managers, Authorized Traders,

Supervised Persons or other agents, on the other hand, to the extent required by Applicable Law.

Any such recordings may be retained by BSEF or the Regulatory Services Provider in such

manner and for such periods of time as BSEF may deem necessary or appropriate.

RULE 309. Notices to Participants

BSEF shall publish a notice with respect to each addition to, modification of, or clarification of,

the BSEF Rules or of any action to implement any BSEF Rules, in a form and manner that is

reasonably designed to enable each Participant to become aware of and familiar with, and to

implement any necessary preparatory measures to be taken by it with respect to, such addition or

modification, prior to the effective date thereof (each a “Notice to Participants”). For purposes

of publication in accordance with the first sentence of this Rule, it shall be sufficient (without

limiting the discretion of BSEF as to any other reasonable means of communication) if a Notice

to Participants is published on BSEF’s website and posted on BSEF’s internal notification

system. Any Notice to Participants shall also be deemed to have been made to all Account

Managers, Authorized Traders and Supervised Persons.

RULE 310. Communications between BSEF and Participants

Each Participant must provide BSEF with its current electronic mail address and telephone

number and the electronic mail address and telephone number of any of its Authorized Traders

and immediately (and in any event within 24 hours) update this information whenever it changes.

All communications between BSEF and the Participant will be transmitted by electronic mail

and/or posted on BSEF’s website, except as otherwise specified by BSEF. The Participant shall

be responsible for conveying such communications to its Authorized Traders and/or to its

Account Managers. Each Participant will be responsible for promptly reviewing and, if

necessary, responding to all electronic communications from BSEF to the Participant or any of

its Account Managers, Authorized Traders, Supervised Persons or any Person to whom it has

given Trader ID(s). All communications made to a Participant shall also be deemed to have been

made to all Account Managers, Authorized Traders and Supervised Persons of such Participant.

RULE 311. Application of BSEF Rules and Jurisdiction

(a) ANY MARKET PARTICIPANT THAT DIRECTLY OR INDIRECTLY

EFFECTS A TRANSACTION ON THE SEF OPERATED BY BSEF, OR ANY

PARTICIPANT, AUTHORIZED TRADER OR OTHER PERSON ACCESSING OR

ENTERING ANY RFQ OR ORDER OR SUBMITTING ANY SWAP INTO THE SEF

OPERATED BY BSEF OR EXECUTING ANY TRADE PURSUANT TO THE RULES

(i) IS BOUND BY, AND SHALL COMPLY WITH, THE BSEF RULES AND

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OBLIGATIONS, THE CLEARING HOUSE RULES, SWAP SPECIFICATIONS AND

APPLICABLE LAW, IN EACH CASE TO THE EXTENT APPLICABLE TO IT, (ii)

SUBMITS TO THE JURISDICTION OF BSEF WITH RESPECT TO ANY AND ALL

MATTERS ARISING FROM, RELATED TO, OR IN CONNECTION WITH, THE

STATUS, ACTIONS OR OMISSIONS OF SUCH PARTICIPANT, AUTHORIZED

TRADER OR OTHER PERSON, AND (iii) AGREES TO ASSIST BSEF IN

COMPLYING WITH ITS LEGAL AND REGULATORY OBLIGATIONS,

COOPERATE WITH BSEF, THE CFTC AND ANY GOVERNMENTAL BODY WITH

JURISDICTION OVER BSEF OR THE SEF OPERATED BY BSEF IN ANY INQUIRY,

INVESTIGATION, AUDIT, EXAMINATION OR PROCEEDING.

(b) Any Person whose access to the SEF operated by BSEF is suspended for any

period remains subject to the BSEF Rules, the Obligations and BSEF’s jurisdiction throughout

the period of suspension. Any Person whose access to the SEF operated by BSEF is revoked or

terminated shall remain bound by the BSEF Rules and Applicable Law, in each case to the

extent applicable to it, and subject to the jurisdiction of BSEF with respect to any and all matters

arising from, related to, or in connection with, the status, actions or omissions of such

Participant prior to such revocation or termination.

RULE 312. Description of Participant’s Status

A Participant shall ensure that the form, content and context of any description of the

Participant’s status on the SEF operated by BSEF is not inconsistent with, and does not

misrepresent, the Participant’s capacity on the SEF operated by BSEF under the BSEF Rules or

the Participant’s registration, if any, under the CEA, or under any other Applicable Law.

RULE 313. Dissolution of Participants

All rights and privileges of a Participant terminate upon, and all obligations of a Participant shall

survive the dissolution of the Participant.

RULE 314. Withdrawal of Participant

(a) To withdraw from the SEF operated by BSEF, a Participant must notify BSEF of

its withdrawal. Such withdrawal shall be accepted and effective immediately upon receipt of

such notice by BSEF.

(b) When BSEF accepts the withdrawal of a Participant, all rights and privileges of

such Participant terminate (including the Trading Privileges). The accepted withdrawal of a

Participant shall not affect the rights of BSEF under the BSEF Rules or relieve the former

Participant of such Participant’s obligations under the BSEF Rules before such withdrawal.

Notwithstanding the accepted withdrawal of a Participant, the withdrawn Participant remains

subject to the BSEF Rules, the Obligations and the jurisdiction of BSEF for acts done and

omissions made while a Participant, and must cooperate in any SEF Proceeding under Chapter 6

as if the withdrawn Participant were still a Participant.

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RULE 315. Compliance with the Commodity Exchange Act

All SEF Participants shall comply with all relevant provisions of the CEA and the Rules and

regulations duly issued pursuant thereto by the CFTC, including the filing of reports,

maintenance of books and records, and permitting inspection and visitation by Authorized

Representatives of the CFTC or Department of Justice.

RULE 316. Access

RULE 316.A. ECP Access

BSEF will provide its services to any ECP with access to its markets and BSEF services that is

impartial, transparent and applied in a fair and non-discriminatory manner; provided, however,

that each ECP complies with BSEF’s documentation and the eligibility requirements set forth in

this Rulebook.

RULE 316.B. ISV Access

BSEF will provide ISVs with access to its trading platform and its data in a fair and

non-discriminatory manner; provided, however, that each ISV shall comply with BSEF’s criteria

governing such access. Such access criteria shall be impartial and transparent.

RULE 317. Direct Market Access

(a) DMA may be sponsored only by a Sponsoring Broker.

(b) All trades in Cleared Swaps executed via DMA connection must be guaranteed by

a Sponsoring Broker that assumes financial responsibility for all activity through the DMA

connection.

(c) Each DMA Customer must execute the DMA Customer Documentation as a

condition of being granted access to the SEF operated by BSEF.

(d) A Sponsoring Broker shall assist BSEF in any investigation into potential

violations of the BSEF Rules, CFTC Regulations or the Act which occur through or with respect

to a DMA connection guaranteed by such Sponsoring Broker. Such assistance must be timely

and may include requiring any DMA Customer to produce documents, to answer questions from

BSEF, and/or to appear in connection with an investigation.

(e) A Sponsoring Broker shall suspend or terminate the Trading Access of a DMA

Customer or any Authorized Trader associated with such DMA Customer if BSEF determines

that the actions of the DMA Customer or any of its Authorized Traders threaten the integrity of

the SEF operated by BSEF or liquidity of any Swap or violate any BSEF Rule or if the DMA

Customer or any of its Authorized Traders fails to cooperate in an investigation.

(f) If a Sponsoring Broker has actual or constructive notice of a violation of the

BSEF Rules in connection with Direct Market Access by its DMA Customer and the Sponsoring

Broker fails to take appropriate action, BSEF may consider that the Sponsoring Broker has

committed an act detrimental to the interest or welfare of BSEF.

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RULE 318. Legal Certainty for SEF Trades

A transaction entered into on or pursuant to the BSEF Rules shall not be void, voidable, subject

to rescission, otherwise invalidated, or rendered unenforceable as a result of:

(a) a violation by BSEF of the provisions of section 5h of the Act or CFTC

Regulations;

(b) any CFTC proceeding to alter or supplement a Rule, term, or condition under

section 8a(7) of the Act or to declare an emergency under section 8a(9) of the Act; or

(c) any other proceeding the effect of which is to:

(i) alter or supplement a specific term or condition or trading rule or

procedure; or

(ii) require BSEF to adopt a specific term or condition, trading rule or

procedure, or to take or refrain from taking a specific action.

RULE 319. Rights and Responsibilities after Suspension or Termination

(a) When the Trading Privileges of a Participant or the Trading Access of any

Authorized Trader are suspended, none of its rights and Trading Privileges (including the right to

hold oneself out to the public as a Participant, enter RFQs or Orders into the SEF operated by

BSEF and receive Participant rates for fees, costs, and charges at Participant levels) will apply

during the period of the suspension, except for the right of the Participant in question to assert

claims against others as provided in the BSEF Rules or the right to Trading Access. Any such

suspension will not affect the rights of creditors under the BSEF Rules or relieve the Participant

in question of its, his or her obligations under the BSEF Rules to perform any Swaps entered into

before the suspension, or for any SEF fees, costs, or charges incurred during the suspension.

(b) When the Trading Privileges of a Participant or the Trading Access of any

Authorized Trader are terminated, all of a Participant’s rights and Trading Privileges or an

Authorized Trader’s right to Trading Access will terminate, except for the right of the Participant

in question to assert claims against others, as provided in the BSEF Rules. Any such termination

will not affect the rights of creditors under the BSEF Rules. A terminated Participant may only

seek to reinstate its Trading Privileges by applying for Trading Privileges pursuant to Rule 304.

BSEF will not consider the application of a terminated Participant if such Participant continues

to fail to appear at disciplinary or appeals proceedings without good cause or continues to impede

the progress of disciplinary or appeals proceedings.

(c) A suspended or terminated Participant, Authorized Trader or Supervised Person

remains subject to the BSEF Rules and the jurisdiction of BSEF for acts and omissions prior to

the suspension or termination, and must cooperate in any inquiry, investigation, disciplinary or

appeals proceeding, summary suspension or other summary action as if the suspended or

terminated Participant still had Trading Privileges or the terminated Authorized Trader still had

Trading Access. BSEF may discipline a suspended Participant or Authorized Trader under this

Chapter 6 for any violation of a BSEF Rule or provision of Applicable Law committed by the

Participant or Authorized Trader before, during or after the suspension.

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(d) Upon the request of a Customer, in the event of the suspension or revocation of

the Trading Privileges of a Participant, BSEF shall seek to facilitate the transfer of any Customer

accounts held by such Participant to other Participants with Trading Privileges.

CHAPTER 4.

OBLIGATIONS OF PARTICIPANTS, ACCOUNT MANAGERS, DMA CUSTOMERS,

AUTHORIZED TRADERS AND SUPERVISED PERSONS

RULE 401. Duties and Responsibilities

(a) Each Participant, Account Manager, DMA Customer, Authorized Trader and

Supervised Person shall:

(i) ensure that BSEF’s facilities are used in a responsible manner and are not

used for any improper purpose;

(ii) ensure that BSEF’s facilities are used only to conduct SEF Activity;

(iii) ensure that all SEF Activity conducted by the Participant, Account

Managers, Authorized Traders and Supervised Persons is performed in a manner

consistent with applicable BSEF Rules and their respective Obligations;

(iv) comply with all BSEF Rules and Obligations and act in a manner

consistent with each BSEF Rule and Obligation;

(v) observe high standards of integrity, market conduct, commercial honor,

fair dealing, and just and equitable principles of trade while conducting or attempting to

conduct any SEF Activity, or any aspect of any business connected with or concerning the

SEF operated by BSEF;

(vi) not mislead or conceal any material fact or matter in any dealings or filings

with BSEF or in response to any SEF Proceeding; and

(vii) keep the Authorized Trader’s Trader IDs, account numbers and passwords

confidential.

(b) Each Participant shall be responsible for promptly informing BSEF of any

material changes to Eligibility Criteria information provided to BSEF by the Participant.

RULE 402. Required Disclosures to BSEF

Each Participant shall immediately notify the Compliance Department upon becoming aware of

any of the following events:

(a) any material change to the contact information provided to BSEF by the

Participant;

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(b) any damage to, or failure or inadequacy of, the systems, facilities or equipment of

the Participant to effect transactions pursuant to the BSEF Rules or to timely perform the

Participant’s financial obligations under or in connection with Swaps of such Participant or

Swaps of any Customer or Account of such Participant;

(c) any refusal of admission of the Participant for membership in, any

Self-Regulatory Organization, SEF, DCM, or Derivatives Clearing Organization;

(d) any expulsion, suspension or fine in excess of $25,000 (whether through an

adverse determination, voluntary settlement or otherwise) imposed on the Participant by any

Self-Regulatory Organization, SEF, DCM, Derivatives Clearing Organization or, with respect to

SEF Activity, any relevant Governmental Body;

(e) any revocation, suspension or conditioning of any registration or license of a

Participant necessary to conduct SEF Activity granted by any relevant Governmental Body;

(f) (A) the commencement of any judicial or administrative proceeding against the

Participant or any Authorized Trader or Supervised Person or (B) the imposition of any fine in

excess of $25,000, cease and desist order, denial of trading privileges, censure or other sanction

or remedy (whether through an adverse determination, voluntary settlement or otherwise)

imposed, in each case of (A) and (B), by any Self-Regulatory Organization, SEF, DCM,

Derivatives Clearing Organization or, with respect to SEF Activity, any relevant Governmental

Body;

(g) any indictment or conviction of, or any confession of guilt or plea of guilty or nolo

contendere by, any principals or senior officers of the Participant or any Authorized Trader for

any felony or misdemeanor involving, arising from, or related to, the purchase or sale of any

commodity, futures contract, swap, option, security, securities futures product or other financial

instrument, or involving or arising from fraud or moral turpitude; and

(h) the Participant’s or a 10% or greater owner of the Participant becoming the

subject of a petition for bankruptcy;

(i) the appointment of a receiver, trustee or administrator for the Participant or a 10%

or greater owner of the Participant;

(j) the presentment of a petition, or the passing of a resolution, for the Participant’s or

a 10% or greater owner of the Participant winding-up;

(k) the commencement of proceedings for the Participant’s or the 10% or greater

owner’s of the Participant dissolution; or

(l) the occurrence of an event of insolvency with respect to the Participant or the 10%

owner or greater owner of the Participant.

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RULE 403. Inspections by BSEF

(a) BSEF or the Regulatory Services Provider (or their respective authorized

representatives), shall have the right with such prior reasonable advance notice as is practicable

under the circumstances, in connection with determining whether all BSEF Rules are being, will

be, or have been complied with by the Participant, to:

(i) inspect the books and records of the Participants relating to SEF Activity;

(ii) inspect systems, equipment and software of any kind operated by the

Participant in connection with SEF Activity and any data stored in any of the systems or

equipment related to SEF Activity; and/or

(iii) copy or reproduce any data to which BSEF has access under this Rule.

(b) Such books and records, systems, equipment, software and data shall be made

available to BSEF and the Regulatory Services Provider and their respective authorized

representatives during regular business hours and BSEF and the Regulatory Services Provider

and their respective authorized representatives agree to adhere to Participant’s reasonable logical

and physical access and security procedures.

(c) Each Participant, DMA Customer and Authorized Trader shall provide the

Regulatory Services Provider with the same access to their books and records as they are required

to provide to BSEF under the BSEF Rules and Applicable Law.

(d) The Compliance Department may require a Participant to furnish (periodically or

on a particular occasion) information concerning the Participant’s SEF Activity.

RULE 404. Minimum Financial and Related Reporting Requirements

Each Participant that is registered with any Self-Regulatory Organization shall comply with the

provisions of Applicable Law relating to minimum financial and related reporting and

recordkeeping requirements.

RULE 405. Position Liquidation upon Default

Upon default of any Swap by a Participant, Customer or Client, BSEF shall have the right to

arrange the liquidation of all or some Swap positions of such Participant, Customer or Client, as

applicable, opened via the SEF operated by BSEF.

RULE 406. Authority to Impose Restrictions

Whenever a Participant is subject to the early warning requirements set forth in the CFTC

Regulations, including CFTC Regulation 1.12, the President, or his or her designee, may impose

such conditions or restrictions on the business and operations of such Participant as the President,

or his or her designee, may deem necessary or appropriate for the protection of Customers, other

Participants or the SEF operated by BSEF.

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RULE 407. Customers and Accounts

(a) No Participant shall carry an account for a Customer or enter an RFQ or Order in

the name of a Account unless the Participant has entered into a Written agreement with the

Customer or Account that is in compliance with Applicable Law and the BSEF Rules.

(b) Each Participant must: (1) ensure that the Customer or Account is an ECP at the

time of execution of any Swap; (2) subject every Swap executed for the Customer or Account to

the terms of the BSEF Rules insofar as they are applicable to that Swap; (3) in relation to any

Swap executed for the Customer or Account, be able to comply with all requirements of the

BSEF Rules and any other arrangements, provisions and directions given by BSEF; and (4)

provide BSEF and its agents, including its Regulatory Services Provider, access to all

information in connection with or related to its SEF Activity necessary for monitoring and

enforcement of BSEF Rules.

RULE 408. Disclosure Requirements; Know Your Counterparty Requirements

(a) With respect to Non-Cleared Swaps, Participants that are Swap Dealers or Major

Swap Participants shall verify the status of each Counterparty as an ECP with respect to each

Trade as provided in Part 23 of the CFTC Regulations applicable to business conduct standards

for Swap Dealers and Major Swap Participants in their dealing with counterparties.

(b) Each Participant must comply with the disclosure requirements imposed by the

BSEF Rules.

RULE 409. Books and Records

RULE 409.A. Participant Books and Records

(a) Each Participant shall prepare and keep current all books, ledgers and other

similar records relating to its SEF Activity required to be kept by it pursuant to the Act, CFTC

Regulations and these Rules and shall prepare and keep current such other books and records

relating to its SEF Activity and adopt such forms as BSEF may from time to time prescribe.

Such books and records shall be made available, upon request, to BSEF, the CFTC, the

Department of Justice or any Governmental Body, regulator or Self-Regulatory Organization

with jurisdiction over BSEF, and their respective Authorized Representatives.

(b) In addition to information required by subsection (a) of this Rule 409, each

Participant must comply with all applicable requirements of CFTC Regulation 1.35.

(c) If a Participant cannot enter an Order or Request for Quote received from its

Customer into the SEF Platform, the Participant must immediately create an electronic record

that includes the account identifier that relates to the Customer Account, time of receipt, and

terms of the Order or Request for Quote.

(d) As required by CFTC Regulation 37.404, each Participant must keep records of

their trading on the SEF operated by BSEF (including records of its activity in the index or

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instrument used as a reference price, the underlying commodity and related derivatives markets)

and make such records available, upon request, to BSEF, the CFTC or any Governmental Body,

regulator or Self-Regulatory Organization with jurisdiction over BSEF, and their respective

Authorized Representatives.

(e) Each Participant shall keep all books and records required to be kept by it

pursuant to these Rules for a period of five years from the date on which they are first prepared

unless otherwise provided in these Rules or required by Applicable Law. Such books and records

shall be readily accessible during the first two years of such five-year period. During such

five-year period, all such books and records shall be made available for inspection by, and copies

thereof shall be delivered to, BSEF and its Authorized Representatives upon request.

(f) Each Participant and Authorized Trader shall provide the NFA with the same

access to its books and records and offices as it is required to provide BSEF under these Rules

and Applicable Law.

(g) BSEF may require a Participant to furnish such information concerning the

Participant’s business that is subject to these Rules as BSEF deems necessary to enable it to

perform its obligations under Applicable Law, including information relating to (i) Swaps

executed on the SEF operated by BSEF and in related derivatives markets, including in the

products underlying those Swaps, and (ii) information requested by a government agency relating

to the SEF and/or BSEF’s compliance with Applicable Law that BSEF believes is maintained by,

or otherwise in the possession of, a Participant.

(h) All data and information provided to or obtained by BSEF pursuant to this Rule

409 shall be subject to the provisions of Rule 805.

RULE 409.B. BSEF Books and Records

BSEF shall keep, or cause to be kept, complete and accurate books and records, including all

books and records required to be maintained pursuant to the CEA, the CFTC Regulations or the

BSEF Rules as required by CFTC Regulation 1.31.

RULE 410. Responsibility for Mandatory Trading

Each Participant that is a Swap Dealer or Major Swap Participant shall be responsible for

compliance with the mandatory trading requirement under Section 2(h)(8) of the CEA and shall

not enter into any Required Transaction outside a SEF that lists a Swap related to such Required

Transaction.

RULE 411. Eligibility for Clearing Exempt Transactions

Each Participant wishing to execute any Clearing Exempt Transaction on the SEF operated by

BSEF must submit to BSEF the documentation required by Part 50 of the CFTC Regulations or

CFTC Staff No-Action Letter 13-22 (each a “Clearing Exception Form”) prior to sending an

RFQ or placing an Order subject to the Clearing Exception. A Participant shall submit to BSEF

37
all documentation supporting its eligibility (or the eligibility of its relevant Client or Customer, if

applicable) for the Clearing Exception.

CHAPTER 5.

TRADING PRACTICES, REPORTING, CLEARING AND BUSINESS CONDUCT

RULE 501. Scope

This Chapter 5 prescribes Rules concerning trading practices and business conduct on the SEF

operated by BSEF and applies to all RFQs, Orders and Trades in Swaps as defined in Chapter 1.

RULE 502. Procedures

(a) With respect to trading on or though the SEF Platform or subject to BSEF Rules,

BSEF may adopt, without limitation, procedures relating to transactions in Swaps and trading on

the SEF Platform or subject to BSEF Rules, including procedures to:

(i) disseminate the prices of bids and offers on, and trades in, Swaps;

(ii) record, and account for, Swaps and SEF Activity and regulate

administrative matters affecting Swaps and SEF Activity;

(iii) establish limits on the number and/or size of RFQs or Orders that may be

submitted by a Participant through the SEF Platform or subject to BSEF Rules;

(iv) establish limits on the aggregate notional amount of Swaps that may be

held by a Participant;

(v) establish a limit on the maximum daily price fluctuations for any Swap

and provide for any related restriction or suspension of trading in the Swap; and

(vi) establish minimum price quoting increments for each Swap.

(b) BSEF may, in its discretion and at any time, amend any procedures adopted

pursuant to Rule 502(a), and will publish the amendments in a Notice to Participant or in any

other manner determined appropriate by BSEF.

RULE 503. Business Days and Trading Hours

Except as provided in Rule 212 with respect to Emergencies, BSEF shall determine and publish a

Notice to Participants listing the Business Days of the SEF operated by BSEF and the Trading

Hours for each Swap.

RULE 504. Rule Violations

(a) It shall be an offense for a Participant, Account Manager, DMA Customer,

Authorized Trader or Supervised Person to violate any BSEF Rule regulating the conduct or

business of a Participant or its Account Managers, Authorized Traders or Supervised Persons, or

38
any agreement made with BSEF, or to engage in fraud, dishonorable or dishonest conduct, or in

conduct which is inconsistent with just and equitable principles of trade.

(b) Participants shall assist BSEF in any investigation into potential violations of the

BSEF Rules or, with respect to the SEF Activity, the CEA. Such assistance must be timely and

may include, but not be limited to, producing documents, answering questions from BSEF or its

designee, and/or appearing in connection with an investigation.

(c) If a Participant has actual or constructive notice of a violation of BSEF Rules in

connection with the use of the SEF operated by BSEF by a Participant, Customer, Account or

Authorized Trader and the Participant fails to take appropriate action, the Participant may be

found to have committed an act detrimental to the interest or welfare of the SEF operated by

BSEF.

RULE 505. Fraudulent Acts

No Participant, Account Manager, DMA Customer, Authorized Trader, Supervised Person or any

market participant that directly or indirectly effects a transaction on the SEF operated by BSEF

shall engage in any fraudulent act or engage in any scheme to defraud, deceive, trick or mislead

in connection with or related to any SEF Activity. Specifically, no Participant, Account

Manager, DMA Customer, Authorized Trader or Supervised Person shall engage in front

running, fraudulent trading, money passes, trading ahead of Customers, trading against

Customers or accommodation trading.

RULE 506. Fictitious, Wash or Pre-Arranged Transactions

(a) No Participant, Account Manager, DMA Customer, Authorized Trader,

Supervised Person or any market participant that directly or indirectly effects a transaction on the

SEF operated by BSEF shall create fictitious transactions or wash transactions or execute any

Order with knowledge of its nature. No Person shall place or accept Orders in the same Swap

where the Person knows or reasonably should know that the purpose of the Orders is to avoid

taking a bona fide market position exposed to market risk (transactions commonly known or

referred to as wash sales). Orders for different accounts with common beneficial ownership that

are entered with the intent to negate market risk or price competition shall also be deemed to

violate the prohibition on wash trades. Additionally, no Person shall knowingly execute or

accommodate the execution of such Orders by direct or indirect means.

(b) No Participant, Account Manager, DMA Customer or Authorized Trader shall

engage in a pre-arranged transaction except as permitted by Rule 521 and Rule 531, or Rule 533

in the case of New Trades (as defined in Rule 533(d)).

RULE 507. Pre-Execution Communications

(a) Pre-Execution Communications with respect to Swaps executed through the

Order Book shall be prohibited except in the case of Trades executed in accordance with Rule

521.

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(b) Pre-Execution Communications are permitted with respect to Swaps executed

through the Request for Quote Functionality in accordance with Rule 522.A(b).

RULE 508. Market Disruption and Market Manipulation

(a) Orders or RFQs entered into the SEF operated by BSEF for the purpose of

upsetting the equilibrium of the market in any Swap without the intent to reflect fair market

values or creating a condition in which prices do not or will not reflect fair market values are

prohibited, and any Participant, Account Manager, DMA Customer, Authorized Trader or

Supervised Person who makes or assists in entering any such Order or RFQ with knowledge of

the purpose thereof or who, with such knowledge, in any way assists in carrying out any plan or

scheme for the entering of any such Order or RFQ, will be deemed to have engaged in an act

detrimental to the SEF operated by BSEF.

(b) Any intentional attempted or completed manipulation of the market in any Swap

is prohibited.

(c) A Participant may not post on an Order Book and submit an RFQ to the SEF

Platform in the same Swap at the same time using the same Participant ID.

RULE 509. Prohibition of Misstatements

It shall be an offense to make any knowing misstatement of a material fact to BSEF, any SEF

Official, any Board committee or SEF panel, the Compliance Department and/or agents of BSEF

(including the Regulatory Services Provider) or any Participant or any of its Account Managers,

Authorized Traders or Supervised Persons.

RULE 510. Acts Detrimental to Welfare of SEF

It shall be an offense to engage in any act that is detrimental to the interest or welfare of the SEF

operated by BSEF.

RULE 511. Adherence to Law

(a) No Participant, Account Manager, Customer, Authorized Trader or Supervised

Person shall engage in conduct in violation of the BSEF Rules, the Act, CFTC Regulations, the

Rules of any SEF, or the rules of any DCM, DCO or SRO that has jurisdiction over such

Participant, Account Manager, Customer, Authorized Trader or Supervised Person or, with

respect to SEF Activity, the laws, rules or regulations of any relevant Governmental Body.

(b) Without limiting subsection (a) of this Rule,

(i) each Participant that is an FCM or a Clearing Member must comply with

all requirements of Applicable Law regarding the treatment of Customer funds and

Customer Orders; and

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(ii) each Participant, Customer or Account must comply with all margin

requirements established by each relevant Clearing House and by each relevant Clearing

Member, if applicable, as well as any margin requirements set forth by the CFTC or

Applicable Law.

RULE 512. Use of Trading Privileges

No Participant, Account Manager, DMA Customer, Authorized Trader or Supervised Person

may use such Participant’s Trading Privileges in any way that could be expected to bring

disrepute upon such Participant, Account Manager, DMA Customer, Authorized Trader or

Supervised Person.

RULE 513. Supervision

Each Participant, DMA Customer and Account Manager shall be responsible for establishing,

maintaining and administering reasonable supervisory procedures to ensure that its Authorized

Traders and Supervised Persons, as applicable, comply with the BSEF Rules, the Act, CFTC

Regulations, the Rules of any SEF, or the rules of any DCM, DCO or SRO that has jurisdiction

over such Participant, Account Manager, DMA Customer, Authorized Traders or Supervised

Persons or, with respect to SEF Activity, the laws, rules or regulations of any relevant

Governmental Body, and such Participant may be held accountable for the actions of such

Account Managers, Authorized Traders or Supervised Persons.

RULE 514. Misuse of the SEF Platform

Misuse of the SEF Platform is strictly prohibited. Only Swaps can be traded on the SEF operated

by BSEF. It shall be deemed an act detrimental to the interest and welfare of the SEF operated

by BSEF to willfully or negligently engage in unauthorized use of the SEF Platform, to assist any

Person in obtaining unauthorized access to the SEF Platform, to trade on the SEF Platform

without an agreement and an established account with a Derivatives Clearing Organization or a

Clearing Member, to alter the equipment associated with the SEF Platform, to interfere with the

operation of the SEF Platform, to intercept or interfere with information provided thereby, or in

any way to use the SEF Platform in a manner contrary to the BSEF Rules.

RULE 515. Mishandling of Customer Orders

Any Participant that mishandles any Customer Order is responsible for all remedial actions with

respect to such Order.

RULE 516. Trade Cancellation and Adjustment

RULE 516.A. Errors

(a) If an Order was incorrectly executed or rejected by the SEF operated by BSEF, a

Participant or its Authorized Trader may, within one Business Day thereafter, request review of

the Order or the Trade by providing the confirmation number for the Order or the Trade and

stating the nature of the alleged error.

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(b) Upon receipt by BSEF of a request for review of an Order and the accompanying

confirmation number, BSEF will review its electronic audit trail to determine if the SEF operated

by BSEF correctly executed the Order. Such review will be completed (i) on the same Business

Day if BSEF received such request for review prior to 12:00 noon on any Business Day or (ii) by

the end of the following Business Day if such request was received (x) on or after 12:00 noon on

any Business Day or (y) on any day that is not a Business Day.

(c) If the review described in this Rule reveals that the Order was incorrectly

executed or rejected, then the Order or the resulting Trade, as applicable, shall be canceled or

adjusted.

(d) If the review described in this Rule reveals that the Order was correctly executed

or rejected by the SEF operated by BSEF, then no adjustment shall be made in the Trading

Accounts of any Participants or Accounts.

(e) Notwithstanding anything to the contrary in this Rule, if BSEF determines in its

sole discretion that the execution of any Trade was the result of Orders being incorrectly

processed by the SEF Platform, or any other cause beyond the control of any Participant, then

BSEF may cancel such Trade in the Trading Accounts of all affected Participants.

(f) BSEF may adjust Trade prices to mitigate market disrupting events caused solely

by improper conduct such as market manipulation or clearly erroneous trading behavior (e.g., fat

finger). If BSEF takes action pursuant to this Rule 516.A(f), it will give prompt notice and in

any event will use good faith, commercially reasonable efforts to provide the affected

Participants with reasonable prior notice and to obtain such Participants’ consent to such

adjustment. For purposes of this Rule 516.A, Participants acting as Account Managers,

Introducing Brokers or FCMs involved in a Trade subject to a price adjustment shall have the

authority to consent to the adjustment of the price of such Trade on behalf of the Counterparties

involved in the Trade.

RULE 516.B. Prime Broker Trades

(a) A Participant that is a Counterparty to a Prime Broker Trade may request the

cancellation of a Prime Broker Trade by sending a cancellation message to BSEF. The

cancellation message must state the name and contact information of the Prime Broker for the

Prime Broker Trade and the reason for cancellation. If the Prime Broker confirms the

cancellation, BSEF will cancel the Prime Broker Trade.

(b) A Prime Broker shall have the right to cancel any Prime Broker Trade (i) that is

executed in excess of the limit established by the Prime Broker with respect to the Prime Broker

Trade, (ii) because the Prime Broker Trade was executed by a Person that was not authorized by

the Prime Broker, or (iii) because the Prime Broker Trade was executed for an unauthorized

product. The Prime Broker shall communicate the cancellation directly to BSEF within 48 hours

after the execution of the Prime Broker Trade and indicate the reason for the cancellation.

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RULE 516.C. [Reserved]

RULE 517. Withholding Orders Prohibited

(a) Any Participant entering RFQs or Orders on the SEF operated by BSEF for its

Customers shall not withhold or withdraw from the market any RFQ or Order, or any part of an

RFQ or Order, for the benefit of any Person other than the Customers.

(b) A Participant must enter immediately into the SEF operated by BSEF all Orders

or Requests for Quotes received from its Customers that are executable immediately. If a

Participant cannot immediately enter into the SEF Platform an Order or Request for Quote

received from its Customer, the Participant must enter the Order or Request for Quote into the

SEF operated by BSEF as soon as practicable, and must immediately create an electronic record

as provided in Rule 409.

RULE 518. Priority of Customers’ Orders

No Participant that is an FCM or Introducing Broker shall enter an Order into the SEF operated

by BSEF for his own account, an account in which he has a direct or indirect financial interest or

an account over which he has discretionary trading authority, including an Order allowing

discretion as to time and price, when such Person is in possession of any Order in the same Swap

for its Customer that the SEF operated by BSEF is capable of accepting.

RULE 519. Trading Against Customers’ Orders Prohibited

RULE 519.A. General Prohibition

No Person in possession of a Customer’s Order shall knowingly take, directly or indirectly, the

opposite side of such Order for its own account, an account in which it has a direct or indirect

financial interest, or an account over which it has discretionary trading authority.

RULE 519.B. Exceptions

The foregoing restriction shall not apply to transactions executed pursuant to Rule 531.A or Rule

531.B.

RULE 520. Disclosing Orders Prohibited

No Person shall disclose another Person’s RFQ or Order to buy or sell except to a designated

SEF Official or the CFTC, and no Person shall solicit or induce another Person to disclose RFQ

or Order information. No Person shall take action or direct another to take action based on

non-public RFQ or Order information, however acquired.

RULE 521. Simultaneous Buy And Sell Orders For Different Beneficial Owners

(a) A Participant that is a broker or a dealer which seeks either to execute against a

Customer’s Order or to execute two Customers against each other through an Order Book

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following some form of pre-arrangement or pre-negotiating of such Orders must expose one side

of the transaction for a minimum of 15 seconds to the other Participants before the second side of

the transaction (whether for the Participant’s own account or for a second Customer) can be

submitted for execution.

(b) Notwithstanding the foregoing clause (a), this Rule shall not apply to any DMA

Order.

RULE 522. Execution of Orders on the SEF Platform

RULE 522.A. Required Transactions

(a) No Participant shall execute a Required Transaction in a Swap listed on the SEF

operated by BSEF other than as described in this Rule 522.A unless it is a Block Trade.

(b) Request for Quote Functionality

(i) An RFQ for a specific Swap must be sent to at least three MAT Recipient

Participants. A Participant is prohibited from sending an RFQ to less than three MAT

Recipient Participants.

(ii) Together with the first response from any MAT Recipient Participant, the

SEF Platform will display to a Requesting Participant any firm Resting Quotes for the

Swap indicated in the RFQ that are posted on an Order Book together with any responses

to the RFQ from the MAT Recipient Participants, and such Resting Quotes will remain

displayed until all responses to the RFQ are received or the time for response has lapsed.

The SEF Platform will permit the Requesting Participant to execute against such firm

Resting Quotes along with any responsive Order from a MAT Recipient Participant.

“MAT Recipient Participant” means, with respect to any Requesting Participant

sending any RFQ via the Request for Quote functionality of the SEF Platform, a

Participant other than the Requesting Participant that (x) is not an Affiliate of or

Controlled by the Requesting Participant and (y) is not an Affiliate of or Controlled by

any other MAT Recipient Participant receiving the same RFQ of the Requesting

Participant.

(c) CLOB

Only firm bids and offers can be posted on the CLOB. Firm bids or offers may be

posted on the CLOB only by a Participant that is a member of the applicable Clearing

House, by a Participant that has a clearing account with a Clearing Member as set forth in

Rule 533(b), or by a Participant in the name of an Account or Customer that has a

clearing account with a Clearing Member as set forth in Rule 533(b). Bids and offers

posted on the CLOB are anonymous and will be matched on a price/time priority basis.

RULE 522.B. Permitted Transactions

Order Book and Request For Quote Functionality will beThe following execution 

methods are available for Permitted Transactions.

44
(a) Order Book;

(b) Request For Quote Functionality

(c) Manual Order Ticket

RULE 522.C. Package Transactions

A Package Transaction or a component of a Package Transaction that is a Required

Transaction may be executed by any means of execution for Permitted Transactions in

accordance with CFTC No -Action Letter 14-137.

RULE 522.D. Execution of Swaps Subject to the Clearing Exemption

No Participant shall enter into a Clearing Exempt Transaction unless it (or its Account or

Customer) or its Counterparty can claim a Clearing Exception with respect to such Clearing

Exempt Transaction. An Order for a Clearing Exempt Transaction will be rejected if an

applicable Clearing Exception Form is not on file with BSEF.

RULE 522.E. Block Trades

(a) In accordance with CFTC No-Action Letter 14-118, which expires December 15,

2015 at 12:00 a.m. EST, until December 15, 2015 Block Trades in Cleared Swaps may be

executed using the Request for Quote Functionality and reported to an SDR as set forth in BSEF

Rule 532(d).

(b) Each Counterparty to a Block Trade must be an ECP.

(c) The aggregation of Orders for different accounts in order to satisfy the Minimum

Block Trade size is permissible only by a Person who is a Qualified Account Manager.

(d) A Qualified Account Manager transacting an aggregated Block Trade on behalf of

any other Person must receive prior Written instruction or consent from each such other Person

to do so. Such instruction or consent may be provided in the power of attorney or similar

document by which the other Person provides the Person with discretionary trading authority or

the authority to direct the trading in its account.

RULE 523. Trade Confirmations

(a) BSEF will confirm each Trade at the same time as execution of the Trade. BSEF

will provide each Counterparty to a Trade that is entered into on or pursuant to the BSEF Rules

with a Written record of all of the terms of the Trade which shall legally supersede any previous

agreement and serve as a confirmation of the transaction (a “Confirmation”) as soon as

technologically practicable after the execution of a Trade. Such terms shall legally supersede any

previous agreement and serve as a confirmation of the Trade. BSEF will not include specific

customer identifiers for accounts included in Bunched Orders if the applicable requirements of

CFTC Regulation 1.35(b)(5) are met.

(b) On the Confirmation BSEF will:

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(i) provide USI for the Trade and the name of the SDR where the Trade is

reported;

(ii) identify the Counterparty that is a Reporting Counterparty pursuant to

CFTC Regulation 45.8, and notify each Counterparty or its agent if the

Counterparty is a Reporting Counterparty, using the information provided

by a Participant pursuant to Rule 524.A or 524.C; and

(iii) if each Counterparty has equal reporting status under CFTC Regulation

45.8 BSEF will designate the Reporting Counterparty using the following

rules:

 For rates asset class, the Reporting Counterparty will be

determined in accordance with the ISDA Dodd-Frank Act – Swap

Transaction Reporting Party Requirements, the relevant portion of

which is attached to this Rulebook as Annex A;

 For credit asset class, the Reporting Counterparty is the seller of

protection;

 For foreign exchange, commodity and equity asset class: the

Reporting Counterparty is the liquidity provider. A “liquidity

provider” is a Person that: (i) for RFQ, provided the responses to

an RFQ that led to the reported Trade; or (ii) for an Order Book,

provided the first quote that led to the reported Trade.

(c) With respect to any Swap that is not a Cleared Swap, a Confirmation shall for

purposes of Commission Regulation 37.6(b) consist of the Trade Communication and the Terms

Incorporated by Reference. In the event of any conflict between (x) the Trade Communication

and (y) the Terms Incorporated by Reference, the Trade Communication shall prevail to the

extent of any inconsistency.

“Trade Communication” shall mean a Written communication provided by

BSEF to each Participant involved in a Trade containing the economic terms of

the Trade agreed by the Participants on the SEF operated by BSEF.

“Terms Incorporated by Reference” shall mean the documents and agreements

(including, without limitation, ISDA master agreements, other master agreements,

terms supplements, master confirmation agreements, and incorporated industry

definitions) governing such Trade memorialized in the Trade Communication and

existing at the time of execution of the Trade.

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RULE 524. Order Entry Requirements

RULE 524.A. General

Each Authorized Trader entering an RFQ or Order with respect to any Swap traded on the SEF

operated by BSEF must include with the Order, as applicable:

(a) the Trader ID;

(b) the Participant ID;

(c) the Legal Entity Identifier of the Participant or Account Manager placing

the RFQ or Order, if available;

(d) the Counterparty’s Legal Entity Identifier;

(e) the Swap description or code;

(f) the price or yield, quantity, maturity or expiration date of the Swap;

(g) side of the Order;

(h) the CTI code;

(i) Trading Accounts and other relevant account(s);

(j) a yes/no indication of whether the Counterparty is a Swap Dealer with

respect to the Swap with respect to which the Order is placed;

(k) a yes/no indication of whether the Counterparty is a Major Swap

Participant with respect to the Swap with respect to which the Order is

placed;

(l) a yes/no indication of whether the Counterparty is a Financial Entity;

(m) a yes/no indication of whether the Counterparty is a U.S. person;

(n) a yes/no indication that a Swap is an inter-affiliate Swap that should not be

subject to the real-time reporting requirements;

(o) a yes/no indication of the Clearing Exception;

(p) an indication of whether the Swap is a leg of a Package Transaction that is

a Swap subject to (i) the trade execution requirement of Section 2(h)(8) of

the Act and (ii) relief granted by CFTC No-Action Letter 14-137;

(q) if applicable, other terms of a Swap that is not a Cleared Swap required by

BSEF (e.g., type of Clearing Exception, collaterization); or

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(r) if the Swap will be allocated:

(i) an indication that the Swap will be allocated; and

(ii) the Legal Entity Identifier of the Account Manager.

RULE 524.B. Customer Type Indicator (CTI) Codes

Each Participant must identify each transaction submitted to the SEF operated by BSEF with the

correct customer type indicator code (a “CTI” code). The CTI codes are as follows:

CTI 1- Transactions executed by a Participant for its own account, for an account it

controls, or for an account in which it has an ownership or financial interest.

Applies to Trades placed by Account Managers and proprietary traders other than

FCMs and Introducing Brokers.

CTI 2- Transactions executed for the Proprietary Account of a Participant. Applies to

FCMs and Introducing Brokers trading for their Proprietary Accounts.

CTI 3- Orders that a Participant executes on behalf of another Participant, or for an

account such other Participant controls or in which such other Participant has an

ownership or financial interest. Applies to Trades placed by a DMA Customer

using the Participant ID of the Sponsoring Broker.

CTI 4- Any transaction not meeting the definition of CTIs 1, 2 or 3. Applies to Trades

placed by FCMs and Introducing Brokers for their Customers and anything else.

RULE 524.C. Pre-Arranged Transactions

All Trades executed in accordance with Rule 531, unless otherwise exempted by a Rule, must be

in the form of a Written or electronic record and include in the Order ticket all information

required by Rule 524.A.

RULE 525. Position Limits

(a) BSEF shall have the authority to establish position limits for any Swap as it may

determine necessary and appropriate, in accordance with CFTC Regulations. Where the CFTC

has established a position limit for any Swap, BSEF’s position limit for that Swap shall not be

higher than such limit established by the CFTC. Such limits will apply only with respect to

trading on the SEF operated by BSEF.

(b) Except as otherwise provided by the BSEF Rules, no Person, including a

Participant, may hold or control a position in excess of such position limits and a Participant may

not maintain a position in excess of such position limits for an Account or Customer if such

Participant knows, or with reasonable care should know, that such position will cause such

Account or Customer to exceed the applicable position limits.

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(c) Position limits shall apply to (i) all positions in accounts for which any Person, by

power of attorney or otherwise, directly or indirectly holds positions or controls trading, and (ii)

positions held by two or more Persons acting pursuant to an expressed or implied agreement or

understanding, as if the positions were held by, or the trading of the positions were done by, a

single Person.

(d) For Required Transactions, BSEF will enforce position limits only for Trades

executed on the SEF operated by BSEF. For Permitted Transactions, BSEF will demonstrate

compliance with CFTC Regulation 37.600 by sending the CFTC a list of Permitted Transactions

traded on the SEF operated by BSEF.

RULE 526. Exemptions from Position Limits

Any Person seeking an exemption from the position limits referred to in Rule 525 must file an

application with BSEF. BSEF shall notify the applicant whether the exemption has been

approved and whether BSEF has imposed any limitations or conditions on the exemption. The

decision of BSEF shall be final.

RULE 527. Position Accountability

(a) BSEF may establish a position accountability level for any Swap as it determines

necessary and appropriate, in accordance with CFTC Regulations. Any Person, including a

Participant, who owns or controls Swaps in excess of the applicable position accountability level

shall provide to BSEF at its request any information regarding the nature of the position, trading

strategy or hedging activities, if applicable, and if ordered by BSEF, shall not increase the size of

any such position.

(b) For purposes of this Rule, all positions in accounts for which a Person, by power

of attorney or otherwise, directly or indirectly controls trading shall be included with the

positions held by such Person. The provisions of this Rule shall apply to positions held by two or

more Persons acting pursuant to an expressed or implied agreement or understanding, as if the

positions were held by a single Person.

RULE 528. Bunched Orders and Orders Eligible for Post-Execution Allocation

(a) Only the following categories of Persons may place a Bunched Order to be

allocated post-execution on the SEF Platform or that is subject to BSEF Rules:

(i) a commodity trading advisor registered with the Commission pursuant to

the Act or excluded or exempt from registration under the Act or the CFTC Regulations,

except for entities exempt under CFTC Regulation 4.14(a)(3);

(ii) an investment adviser registered with the SEC pursuant to the Investment

Advisers Act of 1940 or with a state pursuant to applicable state law or excluded or

exempt from registration under the Investment Advisers Act of 1940 or applicable state

law or rule;

49
(iii) a bank, insurance company, trust company, or savings and loan association

subject to federal or state regulation;

(iv) a foreign adviser that exercises discretionary trading authority solely over

the accounts of non-U.S. persons, as defined in CFTC Regulation 4.7(a)(1)(iv);

(v) a Futures Commission Merchant registered with the Commission pursuant

to the Act; or

(vi) an Introducing Broker registered with the Commission pursuant to the Act.

(b) Bunched Orders must be allocated and recorded in accordance with CFTC

Regulation 1.35(b)(5) and the NFA’s Interpretative Notice related to Compliance Rule 2-10.

(c) Bunched Orders may be entered using an Account Series Designation or suspense

account number; provided, however that:

(i) the Order is being placed by an Account Manager for multiple accounts

eligible for post-execution allocation; or

(ii) a Written, pre-determined allocation scheme that defines the series has

been provided to the FCM accepting or clearing the Order prior to the time that such

Order is entered. In the latter case, if such information has not been provided to the FCM

prior to the time of Order enter, each specific account number must be provided to BSEF.

Additionally, for all such Bunched Orders executed on the SEF Platform or subject to

BSEF Rules, the final account-specific allocations must be provided to BSEF no later

than the End of Trading.

RULE 529. Orders Entered Prior to SEF Opening

Participants are prohibited from sending any Request for Quote or Order or using an Order Book

or any other facility of BSEF prior to the opening of the trading session.

RULE 530. Identification of Authorized Traders

Each Authorized Trader shall be identified to BSEF and shall be subject to the BSEF Rules. It is

the duty of the Participant to ensure that Authorized Trader (and Trader ID) registration is current

and accurate at all times. Each individual must use a Trader ID to access the SEF operated by

BSEF. In no event may a Person enter an RFQ or Order or permit the entry of an RFQ or Order

by an individual using a user Trader ID other than the individual’s own Trader ID.

50
RULE 531. Pre-Arranged Transactions

RULE 531.A. Block Trades

(a) Each buy or sell Order underlying a Block Trade must (1) state explicitly that it is

to be, or may be, executed by means of a Block Trade and (2) comply with any other applicable

CFTC Regulations governing Block Trades.

(b) Each Person transacting a Block Trade shall be a Participant and shall comply

with all applicable BSEF Rules other than those which by their terms only apply to trading

through the SEF Platform.

(c) Each Counterparty to a Block Trade must be an ECP.

(d) A Block Trade must be reported to the SEF operated by BSEF. A Block Trade

must be reported to the SEF operated by BSEF by one Counterparty (or a Participant acting on

behalf of such Counterparty) and confirmed by the other Counterparty (or a Participant acting on

behalf of such Counterparty) as soon as practicable after its execution, but may not be submitted

any later than 10 minutes after the execution of the Block Trade. Each Block Trade must state

the time of execution to the nearest millisecond.

(e) BSEF will review the information submitted by the Participant(s) for the Block

Trade and will report the Block Trade as required by Part 43 and Part 45 of the CFTC

Regulations if the details are complete and accurate in accordance with this Rule. A Participant

that executes a Bunched Order as a Block Trade must comply with Rule 524.C. A Participant

that executes a Bunched Order as a Block Trade must provide BSEF with the allocation

information as soon as practicable.

(f) Block Trades shall not trigger unexecuted Orders.

(g) Each Participant or Account Manager that is a party to a Block Trade or executes

a Block Trade on behalf of its Accounts or Customers must comply with the recordkeeping

requirements set forth in Rule 409.A(c). Upon request by BSEF, such Participant shall produce

satisfactory evidence, including the order ticket referred to in the preceding sentence, that the

Block Trade meets the requirements set forth in this Rule 531.A.

(h) Any Block Trade in violation of these requirements shall constitute conduct which

is inconsistent with just and equitable principles of trade.

(i) The aggregation of Orders for different accounts in order to satisfy the Minimum

Block Trade size is permissible only by a Person who is a Qualified Account Manager.

(j) A Qualified Account Manager transacting an aggregated Block Trade on behalf of

any other Person must receive prior Written instruction or consent from each such other Person

to do so. Such instruction or consent may be provided in the power of attorney or similar

document by which the other Person provides the Person with discretionary trading authority or

the authority to direct the trading in its account.

RULE 531.B. Complex Permitted Transactions

(a) Two Participants may arrange bilaterally a Complex Permitted Transaction

subject to BSEF Rules outside the SEF Platform.

(b) A Complex Permitted Transaction shall comply with all applicable BSEF Rules

other than those which by their terms apply only to execution through the SEF Platform.

51
(c) A Complex Permitted Transaction must be reported to BSEF as soon as

technologically practicable but no later than 10 minutes after the arrangement is made.

(d) A Complex Permitted Transaction shall not be executed and binding on the

Counterparties until received by BSEF and confirmed by BSEF in accordance with Rule 523.

A “Complex Permitted Transaction” means a complex multi-legged transaction for which

electronic methods of execution on the SEF Platform have not yet been developed. Such

transactions must be composed of Swaps listed on the SEF operated by BSEF and each leg must

be a Permitted Transaction.

RULE 532. Reporting to SDR

(a) BSEF will report each Trade to an SDR of BSEF’s choice as soon as

technologically practicable after the execution of such Trade. BSEF will report all real-time data

required by Part 43 of the CFTC Regulations and all creation data required by Part 45 of the

CFTC Regulations.

(b) The Reporting Counterparty designated in accordance with subsection (b) of Rule

523 shall comply with all reporting obligations set forth in Part 45 of the CFTC Regulations

applicable to a Reporting Counterparty including reporting Trade allocations.

(c) BSEF will report the actual notional or principal amount of a Block Trade to the

appropriate SDR as set forth in Part 43 and Part 45 of the CFTC Regulation.

(d) A Participant that is a Reporting Counterparty or the Account Manager or broker

for a Reporting Counterparty may instruct BSEF to report a Trade executed pursuant to BSEF

Rules 522.E or 531.A as a “block trade” for purposes of Part 43 of CFTC Regulations.

(e) Each Participant that is the Reporting Counterparty, or an Account Manager or

broker for a Reporting Counterparty shall review the Trade details as soon as soon as

technologically practicable upon transmission of the Trade details to the Participant. The

non-reporting counterparty shall report any errors in such Trade details to the Reporting

Counterparty as soon as technologically practicable. The Reporting Counterparty shall report all

errors in such Trade details to BSEF as soon as technologically practicable after finding or being

made aware of any error or omission in the data as reported and/or maintained by the relevant

SDR. BSEF shall then submit the corrected data to the relevant SDR.

(f) No Person, including BSEF, shall submit or agree to submit a cancellation or

correction for the purpose of re-reporting Swap transaction and pricing data in order to gain or

extend a delay in public dissemination of accurate Swap transaction or pricing data or to

otherwise evade the reporting requirements in Part 43 of the CFTC Regulations.

RULE 533. Cleared Swaps

(a) Each Cleared Swap shall be cleared through the Clearing House indicated in the

Swap Specification in accordance with the CEA and the CFTC Regulations.

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(b) For each Cleared Swap a Participant expects to enter into via the SEF Platform or

subject to BSEF Rules, the Participant or an Account or Customer of the Participant must

establish a clearing account with the Clearing House or with a Clearing Member of the Clearing

House, in each case, designated in the Swap Specification for such Cleared Swap.

(c) All Trades in Cleared Swaps by a Participant or its Account or Customer must be

guaranteed to the Clearing House by a Clearing Member following the Clearing Member’s

acceptance of such Trade for clearing.

(d) BSEF shall submit each Trade to the Clearing House specified in the Swap

Specifications. If BSEF receives a notice from the Clearing House rejecting a Trade for clearing,

such Trade is void ab initio. A Trade rejected because of the sequencing of submission of the 

legs of a Package Transaction (“Original Trade”) may, pursuant to the procedures set forth in 

Rule 533(f) below, be resubmitted to the Clearing House with terms and conditions that match 

the terms and conditions of the Original Trade other than such error and the time of execution 

(“New Trade”). The procedures set forth in Rule 533(f) are not available for Trades that are 

rejected by a Clearing House because the Package Transaction as a whole breached a credit limit. 

(e) BSEF will provide each Clearing Member with tools to screen each Order or RFQ 

in Cleared Swaps based on criteria established by such Clearing Member. If an Order or an RFQ 

fails to satisfy the criteria established by the Clearing Member, BSEF will reject the Order or will 

not allow the RFQ to be sent. 

(f) Upon notice that a Cleared Swap has been rejected by a Clearing House because 

of the sequencing of submission of the legs of a Package Transaction, BSEF will notify both 

Participants involved in the Original Trade of the rejection of the Original Trade promptly after 

the receipt of the Clearing House reject notice (the “Reject Notice”). The following conditions 

must be met in order to facilitate the submission of the New Trade to a Clearing House:

(i) Both Clearing Members must agree to submit the New Trade;

(ii) Each Clearing Member must obtain the consent of its Customer, if any, to 

submit the New Trade;

(iii) The Clearing Member cannot require a Customer to agree in advance to 

consent to the submission of the New Trade. The consent must be sought on a 

case-by-case basis, after the Original Trade has been rejected;

(iv) The New Trade must be submitted as quickly as technologically

practicable after receipt by the Clearing Members of the notice of rejection from clearing, 

but in any case, no later than 60 minutes from the issuance of a Reject Notice by the 

Clearing House to BSEF.

(v) Both the Original Trade and the New Trade must be subject to 

pre-execution credit checks;

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(vi) The New Trade must be submitted with the terms and conditions that 

match the terms and conditions of the Original Trade other than any such error and the 

time of execution; 

(vii) BSEF will report the Swap transaction data to the relevant SDR as soon as 

technologically practicable after the Original Trade is rejected by the DCO, including:

A. A part 43 cancellation for the Original Trade;

B. A part 45 termination indicating that the Original Trade is void ab 

initio; and

C. Swap transaction data pursuant to Parts 43 and 45 for the New 

Trade. This data will reference the canceled Original Trade and indicate that such 

Trade has been reported pursuant to the procedures described in CFTC No-Action 

Letter 13-66. This data will also link the Original Trade to the New Trade for 

both Parts 43 and 45 reporting to the relevant SDR.

and

(viii) If the New Trade is (A) not submitted within 60 minutes of the Original 

Trade in the case of the leg of a Package Transaction or, in the case of any other 

Transaction, within 30 minutes of the Original Trade, or (B) rejected by the Clearing 

House, in each case, it is void ab initio and the Participants will not be provided a second 

opportunity to submit a New Trade.

RULE 534. Non-Cleared Swaps

(a) Any Participant that is a Swap Dealer or Major Swap Participant, or if neither

Counterparty is a Swap Dealer or Major Swap Participant, the Participant that is the Reporting

Counterparty, that places an Order or sends or responds to an RFQ with respect to a Non-Cleared

Swap shall ensure that there is a Non-Cleared Swap Agreement between the Participant or its

Account, as applicable, and the prospective Counterparty to such Swap prior to placing such

Order or sending or responding to such RFQ. Both Participants involved in execution of a

Non-Cleared Swap (whether in a principal capacity or in their capacity as agents on behalf of

their respective Accounts or Customers) shall, upon the request of BSEF, make available to

BSEF any terms of such Non-Cleared Swap that are not reflected in the applicable Swap

Specification and shall comply with Order entry requirements for Non-Cleared Swaps that BSEF

shall establish from time to time.

(b) Each Participant involved in a Prime Broker Trade must notify the Prime Broker

as soon as technologically possible of each Prime Broker Trade executed pursuant to the Rules of

BSEF to which the Prime Broker is a Counterparty, and provide to the Prime Broker the

Confirmation for the Prime Broker Trade issued by BSEF.

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RULE 535. Risk Controls

(a) BSEF may, in its sole discretion, reject any RFQ or Order or Block Trade placed

or reported on the SEF Platform if such RFQ or Order or Block Trade is in violation of any

BSEF Rule or Applicable Law.

(b) BSEF shall have the right to take any action to reduce the potential of market

disruption, including market restrictions that pause or halt trading in market conditions

prescribed by BSEF if such action is in the best interest of the swap markets.

(c) BSEF shall have the right in its sole discretion to cancel Trades executed at prices

outside the No-Bust Range but not submitted to the Clearing House. “No-Bust Range” shall

mean the price of a Swap that is no more than 30% higher or lower than the prior Business Day’s

Daily Settlement Price for such Swap.

(d) If a Swap affected by any action of BSEF under this Rule 535 is fungible with,

linked to, or a substitute for, other Swaps on the SEF operated by BSEF, BSEF may apply the

same action to any such other Swaps.

(e) If a Swap is fungible with, linked to or a substitute for a financial instrument

trading on another trading venue, including any trading venue regulated by the SEC (a “Linked

Swap”), and such other trading venue placed risk controls on such financial instrument, BSEF

shall have the right to place similar risk controls on the Linked Swap.

CHAPTER 6. DISCIPLINARY RULES

RULE 601. General

(a) Any Person is subject to this Chapter 6 if it is alleged to have violated, to have

aided and abetted a violation, to be violating, or to be about to violate, any BSEF Rule or any

provision of Applicable Law for which BSEF possesses disciplinary jurisdiction.

(b) BSEF, through the Compliance Department, the Disciplinary Panels and the

Appeals Panels, will conduct inquiries, investigations, disciplinary and appeals proceedings,

summary impositions of fines, summary suspensions or other summary actions in accordance

with this Chapter 6.

(c) No SEF Official will interfere with or attempt to influence the process or

resolution of any inquiry, investigation, disciplinary or appeals proceeding, summary imposition

of fines, summary suspension or other summary action. No Director will interfere with or

attempt to influence the process or resolution of any inquiry, investigation, disciplinary or

appeals proceeding and summary imposition of fines, summary suspension or other summary

action, except to the extent provided under the BSEF Rules with respect to a proceeding in which

the Director is a member of the relevant panel.

(d) Any Participant, Account Manager, Authorized Trader, Account, Customer,

Supervised Person or any market participant that directly or indirectly effects a transaction on the

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SEF operated by BSEF may be represented by counsel during any inquiry, investigation,

disciplinary or appeals proceeding, summary imposition of fines, summary suspension or other

summary actions pursuant to this Chapter 6.

(e) Pursuant to this Chapter 6, BSEF may hold a Participant liable for, and impose

sanctions against such Participant, for such Participant’s own acts and omissions that constitute a

violation as well as for the acts and omissions of each (A) Authorized Trader of such Participant,

(B) Supervised Person of such Participant, (C) other Person using the Trader ID or login

credentials linked to the Participant or Participant ID, or (D) other agent or representative of such

Participant, in each case, that constitute a violation as if such violation were that of the

Participant.

(f) Pursuant to this Chapter 6, BSEF may hold an Authorized Trader liable for, and

impose sanctions against him or her, for such Authorized Trader’s own acts and omissions that

constitute a violation as well as or for the acts and omissions of any other agent or representative

of such Authorized Trader that constitute a violation as if such violation were that of the

Authorized Trader.

(g) A Person subject to a disciplinary or appeals proceeding (and any counsel or

representative of such Person) and the Compliance Department and/or the Review Panel (and any

counsel or representative of the Compliance Department including any Regulatory Services

Provider and Review Panel) shall not knowingly make or cause to be made an ex parte

communication relevant to the merits of a disciplinary or appeals proceeding to any member of

the Hearing Panel hearing such proceeding. Members of a Hearing Panel shall not knowingly

make or cause to be made an ex parte communication relevant to the merits of a disciplinary or

appeals proceeding to any Person subject to such proceeding (and any counsel or representative

of such Person) and the Compliance Department (and any counsel or representative of the

Compliance Department) or the Review Panel (and any counsel or representative of the Review

Panel). Any Person who receives, makes or learns of any communication which is prohibited by

this Rule shall promptly give notice of such communication and any response thereto to the

Compliance Department and all parties to the proceeding to which the communication relates. A

Person shall not be deemed to have violated this Rule if the Person refuses an attempted

communication concerning the merits of a proceeding as soon as it becomes apparent the

communication concerns the merits.

RULE 602. Inquiries and Investigation

(a) The Compliance Department will investigate any matter within the BSEF’s

disciplinary jurisdiction of which it becomes aware. The Compliance Department will determine

the nature and scope of its inquiries and investigations within its sole discretion and will function

independently of any commercial interests of BSEF. The Compliance Department’s

investigation must be completed within 12 months of the date when the Compliance Department

commenced its investigation unless there are mitigating factors that may reasonably justify an

investigation taking longer than 12 months, including the complexity of the investigation, the

number of Participants or individuals involved as potential wrongdoers, the number of potential

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violations to be investigated, and the volume of documents and data to be examined and analyzed

by the Compliance Department.

(b) The Compliance Department has the authority to:

(i) initiate and conduct inquiries and investigations;

(ii) prepare investigation reports and make recommendations concerning initiating

disciplinary proceedings;

(iii) prosecute alleged violations within BSEF’s disciplinary jurisdiction; and

(iv) represent BSEF on summary imposition of fines, summary suspension or

other summary action.

(c) Each Participant, Account Manager, Authorized Trader and Supervised Person:

(i) is obligated to appear and testify and respond in Writing to interrogatories

within the time period required by the Compliance Department in connection with: (A)

any BSEF Rule; (B) any inquiry or investigation; or (C) any preparation by and

presentation during a disciplinary or appeals proceeding, summary imposition of fines,

summary suspension or other summary action by BSEF;

(ii) is obligated to produce books, records, papers, documents or other tangible

evidence in its, his or her possession, custody or control within the time period required

by the Compliance Department in connection with: (A) any BSEF Rule; (B) any inquiry

or investigation; or (C) any preparation by and presentation during a disciplinary or

appeals proceeding, summary imposition of fines, summary suspension or other

summary action by BSEF; and

(iii) may not impede or delay any inquiry, investigation, disciplinary or appeals

proceeding, summary imposition of fines, summary suspension or other summary

action.

RULE 603. Reports of Investigations

(a) The Compliance Department will maintain a log of all investigations and their

disposition. The Compliance Department will prepare a Written report of each investigation,

regardless of whether the evidence gathered during any inquiry or investigation forms a

reasonable basis to believe that a violation within BSEF’s jurisdiction has occurred or is about to

occur or whether the evidence gathered results in closing the matter without further action or

through summary action.

(b) Any Written report of investigation will include the reasons for initiating the

investigation (including a summary of the complaint, if any), all relevant facts and evidence

gathered, staff analysis, conclusions and the recommendation of the Compliance Department.

The report must also include the Participant’s disciplinary history at BSEF. For each potential

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respondent, the Compliance Department will recommend either (i) closing the investigation

without further action, (ii) summary action, (iii) resolving the investigation through an informal

disposition, including the issuance of a warning letter or (iv) initiating disciplinary proceedings.

An informal disposition (including the issuance of a warning letter) will not constitute a finding

of a violation or a sanction.

RULE 604. Opportunity to Respond to Investigation Report

(a) After completing its investigation report, the Compliance Department may, upon

approval of the Chief Compliance Officer, notify each potential respondent that the Compliance

Department has recommended formal disciplinary charges against the potential respondent.

(b) The Compliance Department may allow a potential respondent to propose a

settlement of the matter or to submit a Written statement explaining why a disciplinary

proceeding should not be instituted or one or more of the potential charges should not be

brought. The potential respondent shall submit such Written statement within the time limit

established by the Compliance Department.

RULE 605. Review of Investigation Reports

The Review Panel will review promptly each completed investigation report and any Written

statement provided by the potential respondent pursuant to Rule 604 to determine whether a

reasonable basis exists for finding that a violation of BSEF Rules within BSEF’s jurisdiction has

occurred or is about to occur. Within 30 days of receipt of the investigation report the Review

Panel must take one of the following actions:

(a) If the Review Panel determines that additional investigation or evidence is needed

to decide whether a reasonable basis exists to find that a violation of BSEF Rules within the

BSEF’s jurisdiction has occurred or is about to occur, the Review Panel will promptly direct the

Compliance Department to conduct further investigation.

(b) After receiving completion of an investigation, the Review Panel will determine

for each potential respondent whether to authorize:

(i) the commencement of disciplinary proceedings because a reasonable basis

exists to believe that a violation BSEF Rules within the BSEF’s jurisdiction has

occurred or is about to occur and adjudication is warranted;

(ii) the informal disposition of the investigation (by issuing a warning letter as

more fully discussed in Rule 606) because disciplinary proceedings are unwarranted, in

which case the Review Panel shall provide a Written explanation which must set forth

the facts and analysis supporting the decision; or

(iii) the closing of the investigation without any action because no reasonable

basis exists to believe that a violation of BSEF Rules within the BSEF’s jurisdiction has

occurred or is about to occur in which case the Review Panel shall provide a Written

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explanation including the facts and analysis supporting the decision to the Compliance

Department.

RULE 606. Warning Letters

BSEF authorizes compliance staff to issue a warning letter to a Person or entity under

investigation or to recommend that a disciplinary committee take such an action. A copy of a

warning letter issued by compliance staff must be included in the investigation report. After

August 4, 2014, no more than one warning letter may be issued to the same Person for the same

Rule violation within a rolling 12-month period.

RULE 607. Notice of Charges

(a) If the Review Panel authorizes disciplinary proceedings pursuant to Rule

605(b)(i), the Review Panel will prepare, and serve in accordance with Rule 608, a Notice of

Charges.

(b) A Notice of Charges will:

(i) state the acts, practices or conduct that the respondent is alleged to have

engaged in;

(ii) state the BSEF Rule or provision of Applicable Law alleged to have been

violated or about to be violated;

(iii) state the proposed sanctions;

(iv) advise the respondent of its right to a hearing;

(v) state the period of time within which the respondent can request a hearing

on the Notice of Charges, which will not be less than 20 days after service of the Notice

of Charges;

(vi) advise the respondent that any failure to request a hearing within the

period stated, except for good cause, will be deemed to constitute a waiver of the right

to a hearing;

(vii) advise the respondent that any allegation in the Notice of Charges that is

not expressly denied will be deemed to be admitted; and

(viii) advise the respondent of its right to be represented by legal counsel or any

other representative of its choosing in all succeeding sages of the disciplinary process.

RULE 608. Service of Notice of Charges

Any Notice of Charges or other documents contemplated to be served pursuant to this Chapter 6

may be served (and service shall be deemed complete) upon the respondent either personally or

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by leaving the same at his or her place of business, or by tracked delivery via reputable overnight

courier, or by deposit in the United States mail, postage prepaid, via registered or certified mail

addressed to the respondent at the address as it appears on the books and records of BSEF.

RULE 609. Answer to Notice of Charges

(a) If the respondent determines to answer a Notice of Charges, the respondent must

file answers within 20 days after being served with such notice, or within such other time period

determined appropriate by the Review Panel.

(b) To answer a Notice of Charges, the respondent must in Writing:

(i) specify the allegations that the respondent denies or admits;

(ii) specify the allegations that the respondent does not have sufficient

information to either deny or admit;

(iii) specify any specific facts that contradict the Notice of Charges;

(iv) specify any affirmative defenses to the Notice of Charges; and

(v) sign and serve the answer on the Review Panel.

(c) Any failure by the respondent to timely serve an answer to a Notice of Charges

will be deemed to be an admission to the allegations in such notice. Any failure by the

respondent to answer one or more allegations in a Notice of Charges will be deemed to be an

admission of that allegation or those allegations. Any allegation in a Notice of Charges that the

respondent fails to expressly deny will be deemed to be admitted. A statement of a lack of

sufficient information shall have the effect of a denial of an allegation. A general denial by the

respondent, without more, will not satisfy the requirements of paragraph (b) above.

RULE 610. Admission or Failure to Deny

If respondent admits or fails to deny any of the charges, a Hearing Panel may find that the

violations alleged in the Notice of Charges for which the respondent admitted or failed to deny

any of the charges have been committed. The Hearing Panel then must take the following action:

(a) impose a sanction for each violation found to have been committed; and

(b) notify the respondent in Writing of any sanction to be imposed and advise the respondent

that it may request a hearing on such sanction within a specified period of time.

If a respondent fails to request a hearing within 20 days as specified in the notice, the respondent

will be deemed to have accepted the sanction.

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RULE 611. Denial of Charges and Right to a Hearing

In every instance where a respondent has denied a charge, the respondent shall have a right to

request a hearing. Except for good cause, the hearing must concern only with those charges

denied for which a hearing has been requested.

RULE 612. Settlements

(a) A respondent or potential respondent may at any time after the investigation report

is complete propose in Writing an offer of settlement to anticipated or instituted disciplinary

proceedings. Any offer of settlement should contain proposed findings and sanctions and be

signed by the respondent or potential respondent and submitted to the Review Panel. A

respondent or potential respondent may offer to settle disciplinary proceedings without admitting

or denying the findings contained in the order of the disciplinary proceedings but must accept the

jurisdiction of BSEF over it and over the subject matter of the proceedings and consent to the

entry of the findings and sanctions imposed.

(b) If a respondent or potential respondent submits an offer of settlement in

accordance with paragraph (a) above, the Compliance Department will forward the offer to the

Chief Compliance Officer with a recommendation on whether to accept or reject the offer. Any

preliminary determination by the Chief Compliance Officer to accept the offer shall be submitted

for review by the Review Panel. If the Review Panel agrees, then the Chief Compliance Officer

shall conditionally accept an offer of settlement, without alteration unless the respondent agrees,

and that the settlement will become final upon the expiration of 20 days after an order of the

disciplinary proceedings consistent with the terms of the offer of settlement is served on the

respondent.

(c) If an offer of settlement is accepted, the Review Panel must issue a Written

decision specifying the Rule violations it has reason to believe were committed, including the

basis or reasons for the panel’s conclusions, and any sanction to be imposed, which must include

full Customer restitution where Customer harm is demonstrated. If an offer of settlement is

accepted without the agreement of the Compliance Department, the decision must adequately

support the Hearing Panel’s acceptance of the settlement. Where applicable, the decision must

also include a statement that the respondent has accepted the sanctions imposed without either

admitting or denying the Rule violations. Further, the settlement is accepted the related order of

disciplinary proceedings becomes final, the respondent’s submission of the offer will be deemed

to constitute a waiver of the right to notice, opportunity for a hearing and review under the BSEF

Rules.

(d) If the offer of settlement of a respondent or potential respondent is not accepted by

agreement between the Chief Compliance Officer and the Review Panel, fails to become final or

is withdrawn by the respondent or potential respondent, the matter will proceed as if the offer had

not been made and the offer and all documents relating to it will not become part of the record.

Neither a respondent or potential respondent nor the Compliance Department may use an

unaccepted offer of settlement as an admission or in any other manner at a hearing of disciplinary

proceedings.

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RULE 613. Hearing Panel

The Hearing Panel is responsible for adjudicating disciplinary cases pursuant to a Notice of

Charges authorized by a Review Panel.

A respondent may seek to disqualify any individual on the Hearing Panel for the reasons

identified in the BSEF Rules or for any other reasonable grounds, by serving Written notice on

the Chief Compliance Officer. By not timely filing a request for disqualification, the respondent

will be deemed to have waived any objection to the composition of a Hearing Panel. The Chief

Compliance Officer of BSEF will decide the merits of any request for disqualification within his

or her sole discretion. Any such decision will be final and not subject to appeal.

RULE 614. Convening Hearings of Disciplinary Proceedings

(a) All disciplinary proceedings (except for summary impositions of fines pursuant to

Rule 621) will be conducted at a hearing before the Hearing Panel. A hearing will be conducted

privately and confidentially. Notwithstanding the confidentiality of hearings, the Hearing Panel

may appoint an expert to attend any hearing and assist in deliberations if such expert agrees to be

subject to an appropriate confidentiality agreement.

(b) After reasonable notice to each respondent, the Hearing Panel will promptly

convene a hearing to conduct the disciplinary proceedings with respect to such respondent.

Parties to a disciplinary proceeding include each respondent and the Compliance Department

including the Enforcement Staff.

(c) The chairperson of the Hearing Panel may continue, adjourn or otherwise conduct

the hearing, as he or she may deem appropriate. The chairperson of the Hearing Panel will

determine all procedural and evidentiary matters, including the admissibility and relevance of any

evidence proffered. In determining procedural and evidentiary matters, the chairperson of the

Hearing Panel will not be bound by any evidentiary or procedural rules or law. Once admitted

during the hearing, the Hearing Panel may consider, and attach the weight it believes appropriate

to, evidence or other materials. The Chief Compliance Officer of BSEF, or its designee, will

provide guidance to the chairperson of the Hearing Panel on the conduct of the hearing.

(d) Except for procedural and evidentiary matters decided by the chairperson of the

Hearing Panel pursuant to paragraph (c) above and Rule 616, unless each respondent otherwise

consents, the entire Hearing Panel must be present during the entire hearing and any related

deliberations.

RULE 615. Respondent Review of Evidence

(a) Prior to the commencement of a hearing, each respondent will be given the

opportunity to review all books, records, documents, papers, transcripts of testimony and other

tangible evidence in the possession or under the control of BSEF that the Compliance

Department will use to support the allegations and proposed sanctions in the Notice of Charges

or which the chairperson of the Hearing Panel deems relevant to the disciplinary proceedings.

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Notwithstanding the foregoing, no respondent will have the right to review, and BSEF will have

no obligation to disclose, any information protected by attorney-client privilege.

(b) If any books, records, documents, papers, transcripts of testimony, or other

tangible evidence contain information that could adversely affect the competitive position of the

Person providing the information or if such information might compromise other investigations

being conducted by the Compliance Department, the Compliance Department may redact, edit or

code such information before furnishing it to the respondent.

(c) Notwithstanding anything in paragraph (b) above to the contrary, the Compliance

Department:

(i) will not redact, edit or code competitive or investigative information

contained in documents in a manner that would impair the respondent’s ability to

defend against the allegations or proposed sanctions in the notices of charges, and

(ii) will provide the respondent with access to the information and portions of

the documents that the Compliance Department intends to rely on to support the

allegations or proposed sanctions in the Notice of Charges.

(d) For purposes of this Rule 615, information that could adversely affect competitive

positions include positions in Swaps currently held, trading strategies employed in establishing or

liquidating positions, the identity of any Participant or Authorized Trader and the personal

finances of the Person providing the information.

RULE 616. Conducting Hearings of Disciplinary Proceedings

(a) At a hearing conducted in connection with any disciplinary proceedings, the

Compliance Department will present its case supporting the allegations and proposed sanctions

in the Notice of Charges to the Hearing Panel. If a respondent has timely filed an answer to the

Notice of Charges in accordance with Rule 609, the respondent is entitled to attend and

participate in the hearing.

(b) At a hearing conducted in connection with any disciplinary proceedings, the

Hearing Panel or the Compliance Department and each respondent may:

(i) present evidence and facts determined relevant and admissible by the

chairperson of the Hearing Panel;

(ii) call and examine witnesses; and

(iii) cross-examine witnesses called by other parties.

(c) Any Person within its jurisdiction who is called as a witness must participate in

the hearing and produce evidence. BSEF will make reasonable efforts to secure the presence of

all other Persons called as witnesses whose testimony would be relevant.

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(d) If the respondent fails to file an answer, has filed a general denial, or if any or all

of the allegations in the Notice of Charges are not expressly denied in the respondent’s answer,

the chairperson of the Hearing Panel may limit evidence concerning any allegations not expressly

denied in determining the sanctions to impose. If a respondent fails to file an answer but appears

at the hearing, the respondent may not participate in the hearing (by calling or cross examining

witnesses, testifying in defense, presenting evidence concerning the Notice of Charges, or

otherwise) unless the Hearing Panel determines that the respondent had a compelling reason for

failing to timely file an answer. If the Hearing Panel determines that the respondent had a

compelling reason for failing to timely file an answer, the Hearing Panel will adjourn the hearing

and direct the respondent to promptly file a Written answer in accordance with Rule 609.

(e) Any Person entitled, or required or called upon, to attend a hearing before a

Hearing Panel pursuant to paragraph (b)(ii) above will be given reasonable notice, confirmed in

Writing, specifying the date, time and place of the hearing, and the caption of the disciplinary

proceedings. BSEF will require all Participants (that are individuals), Customers, Account

Managers, Authorized Traders and Supervised Persons that are called as witnesses to appear at

the hearing and produce evidence. BSEF will make reasonable efforts to secure the presence of

all other Persons called as witnesses whose testimony would be relevant.

(f) If during any disciplinary proceedings the Hearing Panel determines that a

reasonable basis exists to believe that the respondent violated or is about to violate a BSEF Rule

or a provision of Applicable Law other than the violations alleged in the Notice of Charges, the

Hearing Panel may consider those apparent violations after providing the respondent with an

opportunity to answer the additional allegations in accordance with Rule 609. In connection with

considering apparent violations pursuant to this paragraph (e), the Hearing Panel may request that

the Compliance Department provide the Hearing Panel with any additional information

(g) The Hearing Panel may summarily impose sanctions on any Participant, Account

Manager, Authorized Trader or Supervised Person that impedes or delays the progress of a

hearing

(h) BSEF will arrange for any hearing conducted in connection with disciplinary

proceedings to be recorded hearing verbatim, or substantially verbatim, in a manner capable of

accurate transcription. If the respondent requests a copy of all or portions of the recording of a

hearing, the chairperson of the Disciplinary Panel may within his or her sole discretion order the

respondent to pay the costs for transcribing the recording of the hearing.

(i) As promptly as reasonable following a hearing, the Hearing Panel will issue an

order rendering its decision based on the weight of the evidence contained in the record of the

disciplinary proceedings. A decision by a majority of the Hearing Panel will constitute the

decision of the Hearing Panel.

(j) No interlocutory appeals of rulings of any Hearing Panel or chairperson of the

Hearing Panel are permitted.

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(k) If the respondent has requested a hearing, a copy of the hearing shall be made and

shall become a part of the record of the proceeding. The record shall not be required to be

transcribed unless:

(i) the transcript is requested by Commission staff or the respondent;

(ii) the decision is appealed pursuant to the BSEF Rules; or

(iii) the decision is reviewed by the Commission pursuant to section 8c of the

Act or Part 9 of CFTC Regulations. In all other instances, a summary record of a

hearing is permitted.

RULE 617. Decision of Disciplinary Panel

(a) Each Disciplinary Panel shall be composed of three individuals selected by the

Chief Compliance Officer. Except in cases concerning the timely submission of accurate

records, each Disciplinary Panel shall consist of at least one individual who would not be

disqualified from serving as a Public Director, who shall chair the Disciplinary Panel. No Person

involved in adjudicating any other stage of a proceeding shall participate in a Disciplinary Panel

for such proceeding.

(b) Promptly following a hearing conducted in accordance with Rule 616, the

Disciplinary Panel shall render a Written decision.

(c) The Written decision must be based upon the weight of the evidence contained in

the record of the proceeding and shall provide a copy to the respondent. The decision shall

include:

(i) the Notice of Charges or a summary of the charges;

(ii) the answer, if any, or a summary of the answer;

(iii) a summary of the evidence produced at the hearing or, where appropriate,

incorporation by reference of the investigation report;

(iv) a statement of findings and conclusions with respect to each charge, and a

complete explanation of the evidentiary and other basis for such findings and

conclusions with respect to each charge;

(v) an indication of each specific Rule that the respondent was found to have

violated; and

(vi) a declaration of all sanctions imposed against the respondent, including the

basis for such sanctions and the effective date of such sanctions.

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(d) The order of the disciplinary proceedings will become final upon the expiration of

20 days after the order is served on the respondent and a copy thereof is provided to the

Compliance Department.

RULE 618. Sanctions

(a) After notice and opportunity for hearing in accordance with the BSEF Rules,

BSEF will impose sanctions if any Participant, Account Manager, Authorized Trader, Supervised

Person or other Person using any Trader ID or login credentials linked to the Participant is found

to have violated or to have attempted to violate a BSEF Rule or provision of Applicable Law for

which BSEF possesses disciplinary jurisdiction. Subject to the limitations set forth in Rule

618(b), BSEF may impose one or more of the following sanctions or remedies: (i) censure; (ii)

limitation on Trading Privileges, Trading Access or other activities, functions or operations; (iii)

suspension of Trading Privileges or Trading Access; (iv) fine (subject to paragraph (b) below);

(v) disgorgement; (vi) termination of Trading Privileges or Trading Access; (vii) in the event of a

customer harm, full customer restitution, except where the amount of restitution or to whom it

should be provided cannot reasonably be determined; or (viii) any other sanction or remedy

deemed to be appropriate. All sanctions, including those imposed pursuant to an accepted

settlement offer, shall take into account respondent’s disciplinary history.

For purposes of Rule 618(a)(vii), “customer” shall have the meaning set forth in CFTC

Regulation 1.3(k).

(b) BSEF may impose a fine of up to $100,000 for each violation of a BSEF Rule. If

a fine or other amount is not paid within 30 days of the date that it becomes payable, then interest

will accrue on the sum from the date that it became payable at the quoted prime rate plus three

percent. BSEF has sole discretion to select the bank on whose quotations to base the prime rate.

Each Participant will be responsible for paying any fine or other amount imposed on, but not paid

by, any of its Authorized Traders, Account Managers or Supervised Persons. The following

schedule lists the recommended fines that BSEF may impose:

Type of Violation Fine Per Occurrence1

First

Violation

Second

Violation

Third

Violation

Violation of Order entry requirements pursuant to Rule

524

$1250 $1500 $1750

Violation of Trade reporting requirements $1250 $1500 $1750

RULE 619. Costs

(a) Regardless of the outcome of any disciplinary proceeding, the Disciplinary Panel

may order a respondent to pay some or all of the costs associated with the disciplinary

proceedings that the Disciplinary Panel believes were unnecessarily caused by the respondent.

Costs may include costs associated with the inquiry or investigation, the prosecution by the

1

 Within a “rolling” 12-month period.

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Compliance Department, legal and professional assistance, the hearing and administrative and

other expenses incurred by the Disciplinary Panel.

(b) The Disciplinary Panel may only award costs against BSEF if the Panel concludes

that BSEF has behaved in a manifestly unreasonable manner in the commencement or conduct of

the disciplinary proceedings in question. The Disciplinary Panel must limit any award of costs

against BSEF to an amount that the Panel concludes is reasonable and appropriate, but does not

exceed the respondent’s costs for external legal or other external professional assistance.

(c) The Disciplinary Panel may determine the amounts and allocation of costs in any

manner it may deem appropriate. BSEF or the respondent will pay any costs ordered to be paid

by it by the Disciplinary Panel within 30 days of Written notice of the amount imposed by the

Disciplinary Panel.

RULE 620. Right to Appeal Disciplinary Panel Decision, Summary Impositions of Fines

and Other Summary Actions

(a) Each respondent found by the Disciplinary Panel to have violated (or, in the case

of a Participant, whose Authorized Trader, Supervised Person or other Person using its

Participant ID was found to have violated) a Rule or who is subject to any summary fine imposed

pursuant to Rule 621 or any summary action imposed pursuant to Rule 622 may appeal the

decision within 20 days of receiving the order of the Disciplinary Panel or the notice of summary

action, as the case may be, by filing a notice of appeal with the Chief Compliance Officer.

(b) BSEF may appeal all or any part of a decision of the Disciplinary Panel, including

any sanctions that may or may not have been imposed by the Disciplinary Panel, within 20 days

of receiving the order of the Disciplinary Panel, by filing a notice of appeal with the Chief

Compliance Officer.

(c) While an appeal is pending, the effect of the order of the Disciplinary Panel or the

summary action (including any sanctions, remedies or costs imposed thereby) shall be suspended.

(d) The notice of appeal must state in writing the grounds for appeal, including the

findings of fact, conclusions or sanctions to which the appellant objects. An appellant may

appeal the order of the Disciplinary Panel or any summary action on the grounds that:

(i) the order or summary action was arbitrary, capricious, an abuse of

discretion, or not in accordance with these Rules;

(ii) the order or summary action exceeded the authority or jurisdiction of the

Disciplinary Panel, the Chief Compliance Officer or BSEF;

(iii) the order or summary action failed to observe required procedures;

(iv) the order or summary action was unsupported by the facts or evidence; or

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(v) the sanctions, remedies or costs which were imposed were inappropriate or

unsupported by the record.

(e) The Chief Compliance Officer will forward copies of any notice of appeal

received by it to all parties to the disciplinary proceeding or summary action, as the case may be,

except the appellant. On or before the 20th day after filing a notice of appeal, the appellant must

file with the Chief Compliance Officer and serve on BSEF a brief supporting the notice of appeal

and documents supporting the brief. On or before the 20th day after the date on which the

appellant serves its supporting brief, the appellee must file and serve its brief in opposition. On

or before the 10th day after the date on which the appellee serves its brief in opposition, the

appellant must file and serve on BSEF a brief in reply.

(f) In connection with any appeal, BSEF will furnish to the Chief Compliance Officer

and to the respondent/appellant a transcript of the hearing, any exhibits introduced at the hearing,

the notice of appeal and briefs filed to support and oppose the appeal.

(g) No later than 30 days after the last submission filed pursuant to paragraph (e) of

this Rule 620, the Chief Compliance Officer will appoint an Appeals Panel to consider and

determine the appeal. An Appeals Panel shall be comprised of three individuals, none of whom

shall be a member of the Compliance Department or have been a member of any Disciplinary

Panel involved in the matters on appeal. The chairperson of the Appeals Panel shall be an

individual who would not be disqualified from serving as a Public Director.

(h) Within 10 days of being notified of the appointment of the Appeals Panel, an

appellant or appellee may seek to disqualify any individual named to the Appeals Panel for the

reasons identified in these Rules, by serving written notice on the Chief Compliance Officer. By

not timely filing a request for disqualification, the appellant or appellee will be deemed to have

waived any objection to the composition of the Appeals Panel. The Chief Compliance Officer

will decide the merits of any request for disqualification within his or her sole discretion. Any

such decision will be final and not subject to appeal.

(i) The Appeals Panel may hold a hearing to allow parties to present oral arguments.

Any hearing will be conducted privately and confidentially. Notwithstanding the confidentiality

of hearings, the Appeals Panel may appoint an expert to attend any hearing and assist in the

deliberations if such individual(s) agree to be subject to appropriate confidentiality agreements.

In determining procedural and evidentiary matters, the Appeals Panel will not be bound by

evidentiary or procedural rules or law.

(j) The Appeals Panel will only consider on appeal the record before the Disciplinary

Panel or, in the case of a summary action, the record considered by the Chief Compliance

Officer, the notice of appeal, the briefs filed in support and opposition of the appeal, and any oral

arguments of the parties. The Appeals Panel may only consider new evidence when the Appeals

Panel is satisfied that good cause exists for why the evidence was not introduced during the

disciplinary proceeding or when imposing the summary action.

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(k) After completing its review, the Appeals Panel may affirm, modify or reverse any

order of the Disciplinary Panel or summary action under appeal, in whole or in part, including

increasing, decreasing or eliminating any sanction or remedy imposed, imposing any other

sanction or remedy authorized by these Rules, or remanding the matter to the same or a different

Disciplinary Panel for further disciplinary proceedings or for reconsideration by the Chief

Compliance Officer in the case of summary action. The Appeals Panel may order a new hearing

for good cause or if the Appeals Panel deems it appropriate.

(l) As promptly as reasonably possible following its review, the Appeals Panel will

issue a written decision on appeal rendering its decision based on the preponderance of the

evidence before the Appeals Panel. The decision of the Appeals Panel will include a statement

of findings of fact and conclusions for each finding, sanction, remedy and cost reviewed on

appeal, including each specific Rule and provision of Applicable Law that the respondent is

found to have violated, if any, and the imposition of sanctions, remedies and costs, if any, and the

effective date of each sanction, remedy or cost.

(m) The Appeals Panel’s written order on appeal (including findings of fact and

conclusions and the imposition of sanctions, remedies and costs, and the effective date of any

sanction, remedy cost) will be the final action of BSEF and will not be subject to appeal within

BSEF.

RULE 621. Summary Imposition of Fines

(a) The Chief Compliance Officer may summarily impose a fine against a Participant

(on behalf of the Participant or any of its Authorized Traders, Account Managers, Supervised

Persons or other Persons using any Trader IDs) for failing:

(i) to make timely payments of fees, cost, charges or fines to BSEF;

(ii) to make timely and accurate submissions to BSEF of notices, reports or

other information required by the BSEF Rules; or

(iii) to keep any books and records required by the BSEF Rules.

(b) The Compliance Department, acting on behalf of the Chief Compliance Officer,

will give notice of any fine imposed pursuant to this Rule 621 to each Participant subject thereto.

The notice will specify (i) the violations of the BSEF Rules for which the fine is being imposed,

(ii) the date of the violation for which the fine is being imposed and (iii) the amount of the fine.

Within 20 days of serving the notice of fine, the Participant must either pay or cause the payment

of the fine. The fine will become final upon the expiration of 20 days after the notice of fine is

served on the Participant.

(c) BSEF will set the amount of any fines imposed pursuant to this Rule 621, with the

maximum fine for each violation not to exceed $5,000. Summary imposition of fines pursuant to

this Rule 621 will not preclude BSEF from bringing any other action against the Participant (or

any of its Account Managers, Authorized Traders or Supervised Persons) or Authorized Trader,

69
as the case may be. The following schedule lists the recommended summary fines that BSEF or

the Chief Compliance Officer may impose:

Type of Violation Fine Per Occurrence2

First

Violation

Second

Violation

Third

Violation

Failure to maintain complete and accurate books and

records as required by BSEF Rule 409.B

$1000 $1500 $2500

Failure to provide information to BSEF as required by

the BSEF Rules

$1000 $1500 $2500

Impeding or delaying a BSEF examination, inquiry or

investigation undertaken pursuant to the BSEF Rules

$1000 $1500 $2500

Failure to provide any disclosure required by BSEF Rule

402

$1000 $1250 $1500

Failure to identify and maintain a current list of

Authorized Traders as required by BSEF Rule 530

$1000 $1250 $1500

RULE 622. Hearings Involving BSEF-Affiliated Trading Entities

(a) No BSEF employee that is also an employee of an affiliate of BSEF that engages

in trading activity shall perform an investigation of such affiliated trading entity.

(b) In the event that a Disciplinary Panel is convened for a hearing involving an

affiliated trading entity, no Person associated with BSEF or such affiliated trading entity shall be

a member of such Disciplinary Panel.

(c) The Board must approve the issuance of disciplinary charges and acceptance of

settlement offers involving an affiliated trading entity.

RULE 623. [Reserved]

RULE 624. Notice to the Respondent, the Regulatory Services Provider and the Public

BSEF will provide Written notice of disciplinary proceedings to the parties consistent with

applicable CFTC Regulations. Whenever BSEF suspends, expels, fines or otherwise disciplines,

or denies any Person access, to BSEF, BSEF will make the disclosures required by CFTC

Regulations.

2

 Within a “rolling” 12-month period.

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CHAPTER 7.

ARBITRATION

RULE 701. General

(a) Except as otherwise provided in these Rules, Participants, Authorized Traders and

any market participant that directly or indirectly effects a transaction on the SEF operated by

BSEF shall submit to the NFA for arbitration all disputes, controversies and claims between or

among themselves arising out of a Swap or the use of the systems or services of BSEF or the

services, equipment, or facilities used to support such systems or services, including the SEF

Platform and the SEF operated by BSEF (each, a “Dispute”). Any such claim against a

Participant shall be brought within two years from the time that a cause of action has accrued.

This Rule 701 shall in no way be construed to create a cause of action and shall not authorize an

action that would otherwise be prohibited by these Rules or Applicable Law. In the event that

this Rule 701 is held to be unenforceable in connection with any Dispute or a claim is deemed by

a court of competent jurisdiction to be not arbitrable, (i) exclusive jurisdiction for any such

Dispute will reside in any state or federal court sitting in New York County, New York, (ii) the

Participants involved in the Dispute will be presumed to have submitted to the personal

jurisdiction of any such court, and (iii) an action to enforce any judgment or decision of such

court may be brought in the same court or in any other court with jurisdiction or venue. Finally,

all Participants unconditionally and irrevocably waive any and all right to trial by jury in

connection with any such Dispute.

(b) Notwithstanding the foregoing, this Rule 701 does not apply to Disputes between

Participants, Authorized Traders or any market participant that directly or indirectly effects a

transaction on the SEF operated by BSEF that: (i) such Persons are required by the Rules of a

Self-Regulatory Organization to submit to the Dispute resolution procedures of that

Self-Regulatory Organization; or (ii) such Persons have, by valid and binding agreement,

committed to negotiate or litigate in a forum other than the forum set out in Rule 702.

RULE 702. Forum and Arbitration Rules

NFA will conduct any and all arbitrations of a type described in Rule 701 pursuant to NFA’s

Member Arbitration Rules, as if each Participant or Authorized Trader to such arbitration was an

“NFA Member”.

RULE 703. Initiating an Arbitration Claim

(a) A Participant or Authorized Trader may initiate an arbitration claim by submitting

the required documents and fees to NFA.

(b) A Participant or Authorized Trader submitting an arbitration claim shall provide

notice of such claim to BSEF.

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RULE 704. Claims Relating to Trade Cancelations or Price Adjustments

All claims relating to Trade cancelations pursuant to Rule 516 shall be arbitrated in accordance

with this Chapter 7.

RULE 705. Penalties

(a) Any failure on the part of any Participant or Authorized Trader to arbitrate a case

subject to arbitration, or the commencement by any such Participant or its Person of a suit in any

court prior to arbitrating a case subject to arbitration, violates these Rules and subjects such

Person to disciplinary proceedings pursuant to Chapter 6.

(b) BSEF may summarily suspend, pursuant to Chapter 6, a Participant or Authorized

Trader that fails to satisfy an arbitration award rendered in any arbitration conducted pursuant to

this Chapter 7.

CHAPTER 8. MISCELLANEOUS

RULE 801. Anti-Money Laundering and Anti-Terrorism

(a) It is SEF policy: (1) Not to engage in or knowingly assist any money laundering or

other illicit business, and (2) Not to engage in or knowingly assist, or be a conduit for, terrorist

financing.

(b) Participants will be required to provide sufficient information for Participants and

their Accounts, if applicable, for SEF to complete “know your customer” checks and to conduct

restricted list searches, including searches against the Specially Designated Nationals and

Blocked Persons list maintained by the Office of Foreign Assets Control of the U.S. Department

of the Treasury.

RULE 802. Gifts and Gratuities

Except as permitted in Writing by the Chief Compliance Officer, no Participant or Authorized

Trader shall, directly or indirectly, give or permit to be given anything of value (including

gratuities) to a SEF Official or BSEF, including any agents or independent contractors of BSEF.

A gift of any kind is considered a gratuity.

RULE 803. Market Data

(a) Subject to each Participant's rights in Participant’s own data (and the data of its

Accounts and Customers) as set forth in the Participant Documentation, BSEF shall own all

rights, title and interest, database rights and trade secret rights in and to all data and other

information contained in, displayed on, generated by or derived from the SEF Platform or the

SEF operated by BSEF or Trades entered into pursuant to the BSEF Rules, including Orders,

prices and volumes (“SEF Data”).

72
(b) Participants and Authorized Traders shall not, and shall cause their Affiliates,

Accounts and Customers not to, distribute, sell or retransmit SEF Data or other information

obtained via the SEF operated by BSEF, provided that any such restrictions shall not apply to

Participant’s own data (and the data of its Accounts and Customers).

(c) BSEF may at any time restrict or establish utilization fees in respect of SEF Data

and/or the format and presentation thereof with respect to Participants, Customers or Accounts,

provided that any such fees shall not apply to Participants’ use of Participant's own data (and the

data of its Accounts and Customers).

(d) Subject to Rule 805, BSEF may make SEF Data and other information it may

deem appropriate available to Participants and other Persons at such times and in such manner

(whether through the SEF Platform, a ticker, financial information services or otherwise) as it

may consider necessary or advisable from time to time. Each Participant or other Person

receiving any such information through the SEF operated by BSEF may redistribute such

information only to such extent and in such manner as may be permitted by BSEF from time to

time.

RULE 804. Prohibited Use of Data Collected for Regulatory Purposes

BSEF shall not use for business or marketing purposes any proprietary data or personal

information it collects or receives, from or on behalf of any person, for the purpose of fulfilling

its regulatory obligations; provided, however, that BSEF may use such data or information for

business or marketing purposes if the Person from whom it collects or receives such data or

information clearly consents in Writing to BSEF’s use of such data or information in such

manner. BSEF shall not condition access to its market(s) or market services on a Person’s

consent to BSEF’s use of proprietary data or personal information for business or marketing

purposes. BSEF, where necessary for regulatory purposes, may share such data or information

with one or more SEFs or DCMs registered with the CFTC.

RULE 805. Confidentiality

(a) All non-public information provided by a Participant or Authorized Trader to

BSEF shall be held in confidence and shall not be made known to any other Person except as

follows:

(i) with the consent of the Participant or Authorized Trader providing such

information;

(ii) to a Governmental Body if BSEF is requested or legally required to do so

by such Governmental Body;

(iii) pursuant to a lawful discovery request;

(iv) to a Derivatives Clearing Organization of which such Participant is a

member or in connection with the clearing of a Swap;

73
(v) to a Swap Data Repository;

(vi) subject to appropriate confidentiality requirements, to any Person

providing services to BSEF, including the Regulatory Services Provider;

(vii) pursuant to an information sharing agreement or other arrangement or

procedures in accordance with Rule 213;

(viii) subject to appropriate confidentiality requirements, to BSEF employees,

the Board, Board committees, Disciplinary Panels, Appeals Panels, BSEF Officers,

attorneys, auditors, and agents, independent contractors or other Persons that have been

engaged by BSEF, in each case, who require such information in connection with the

discharge of their duties to BSEF; and

(ix) as otherwise permitted under these Rules.

(b) All information and data obtained or received by BSEF from inspections of

accounting and other records will be treated as confidential by BSEF; however, this Rule does

not supplant Rule 212 (Emergency Rules) and the Rules in Chapter 6 (Disciplinary Rules), or any

other requirement of legal process or law.

RULE 806. Extension or Waiver of BSEF Rules

If necessary and expedient, the Chief Compliance Officer may, in its sole discretion, waive, or

extend the time period for performing, any act or acts designated by the BSEF Rules, but only to

the extent such waiver or extension is not inconsistent with the CEA or the CFTC Regulations or

other applicable regulations.

RULE 807. Effect of Amendment, Repeal or New Rule

(a) If an amendment or repeal of a BSEF Rule or adoption of a new BSEF Rule does

not materially change the terms or conditions of a Swap and does not affect the value of open

Swaps, then the effective date of any amendment or repeal of a Rule or adoption of a new Rule

relating to Swaps is binding on all Swaps entered into before and after the effective date of such

amendment, repeal or adoption and, to the extent applicable, before the effective date of such

amendment, repeal or adoption.

(b) If an amendment or repeal of a BSEF Rule or adoption of a new Rule materially

changes the terms or conditions of an open Swap or affects the value of open Swaps, then the

amendment, repeal or new BSEF Rule shall not affect any open Swaps and shall be binding only

on new Swaps listed for trading after the effective date of such amendment, repeal or adoption,

and Swaps listed as of the effective date of such amendment, repeal or adoption with no open

positions then in existence, unless otherwise specifically provided by the Board.

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RULE 808. Swap Contract Specifications

(a) BSEF shall permit trading only in Swaps that are not readily susceptible to

manipulation. To demonstrate to the CFTC compliance with the requirements of this Rule

808(a), BSEF shall, at the time it submits a new Swap in advance to the CFTC pursuant to Part

40 of the CFTC Regulations, provide the applicable information as set forth in Appendix C to

Part 38 of the CFTC Regulations – Demonstration of Compliance That a Contract is not Readily

Susceptible to Manipulation.

(b) Notwithstanding any provision of the BSEF Rules to the contrary, the Swap

Specification with respect to a particular Swap shall govern the applicability of the BSEF Rules

to trading in such Swap and, in the event of any conflict between the BSEF Rules and the Swap

Specification, the Swap Specification shall govern with respect to trading in the relevant Swap.

(c) The Swap Specification for each individual Swap may specify:

(i) different classes of Participants eligible to trade such Swaps. Each such

class of Participants shall have the rights and obligations specified by the

Swap Specification for each such Swap;

(ii) whether such Swap may be settled via cash settlement, physical delivery of

the underlying commodity, or by any other means, as applicable; and

(iii) the method for determining settlement prices.

(d) Each Swap contract will be published by BSEF on its website.

(e) Swap Specifications are incorporated into the Rulebook by reference and each

Swap Specification shall constitute a BSEF Rule.

RULE 809. Timely Publication of Trading Information

BSEF will publish trading information as required by Core Principle 9 of Part 37, and by Part 16,

of the CFTC Regulations.

RULE 810. Governing Law, Jurisdiction and Dispute Resolution

(a) Unless preempted by the Act, the law of the State of New York governs the BSEF

Rules and any Participant Documentation regardless of the laws that would otherwise apply

under choice-of-law principles. If a Participant provides an opinion of a counsel (i) stating that

the Participant cannot be subject to the law of the State of New York and must be subject to the

law of the jurisdiction of the location where the Participant is organized (the “Local Law”) and

(ii) enumerating specific provisions of these Rules or the Participant Documentation that must be

subject to the Local Law, BSEF will specify the application of the Local Law to the enumerated

specific provisions of these Rules and the Participant Documentation; provided, however, that in

no event shall Local Law supersede any provision of the Act.

75
(b) Any dispute between BSEF and a Participant or any market participant that

directly or indirectly effects a transaction on the SEF operated by BSEF arising from or in

connection with the BSEF Rules or use of the SEF operated by BSEF must be brought to

arbitration pursuant to subsection (c) of this Rule 810 within one (1) year from the occurrence of

the event giving rise to the dispute. This Rule 810 shall in no way create a cause of action nor

authorize an action that would otherwise be prohibited by the BSEF Rules.

(c) Any dispute between BSEF and a Participant or any market participant that

directly or indirectly effects a transaction on the SEF operated by BSEF arising from or in

connection with the BSEF Rules will be settled by arbitration administered in New York County,

New York by the American Arbitration Association (the “AAA”) under its Commercial

Arbitration Rules. The dispute will be submitted to one arbitrator who will be appointed by the

AAA. Any arbitrator appointed for purposes of this Rule 810 will have experience with and

knowledge of commodities, derivatives and Swaps as listed on the National Roster of Arbitrators

kept in the AAA’s records. Judgment on the award rendered by the arbitrator will be binding on

the parties and may be entered in any state or federal court sitting in New York County, New

York, and BSEF and each Participant shall be deemed to have consented to the personal

jurisdiction of any such court. Each party to the dispute will bear its own costs and expenses in

connection with any arbitration hereunder, as well as an equal share of the administrative fees

and the fees of the arbitrator; provided, however, that the arbitrator will be entitled to include in

any award a full reimbursement for the prevailing party’s costs and expenses, such party’s share

of the administrative fees and the fees of the arbitrator, or any combination of any or all of the

above. In the event that this Rule 810 is held to be unenforceable in connection with any dispute

or a claim is deemed by a court of competent jurisdiction to be not arbitrable, (i) exclusive

jurisdiction for any such dispute will reside in any state or federal court sitting in New York

County, New York, (ii) BSEF and the Participant involved in the dispute will be presumed to

have submitted to the personal jurisdiction of any such court, and (iii) an action to enforce any

judgment or decision of such court may be brought in the same court or in any other court with

jurisdiction or venue. Finally, all Participants unconditionally and irrevocably waive any and all

right to trial by jury in connection with any such dispute.

CHAPTER 9. LIMITATION OF LIABILITY, NO WARRANTIES

RULE 901. LIMITATION OF LIABILITY, NO WARRANTIES

(a) NONE OF BSEF, ITS AFFILIATES OR ANY CONTRACTORS AND

SUB-CONTRACTORS PROVIDING SERVICES RELATED TO BSEF OR THE SEF

OPERATED BY BSEF, NOR ANY OF THEIR RESPECTIVE SUCCESSORS OR ASSIGNS,

DIRECTORS, OFFICERS, EMPLOYEES, AGENTS, PARTNERS, CONSULTANTS, OR

LICENSORS (EACH, A “DISCLAIMING PARTY”) SHALL BE LIABLE TO ANY PERSON

(INCLUDING ANY PARTICIPANT, AUTHORIZED TRADER, SUPERVISED PERSON,

ACCOUNT, CUSTOMER OR ANY MARKET PARTICIPANT THAT DIRECTLY OR

INDIRECTLY EFFECTS A TRANSACTION ON THE SEF OPERATED BY BSEF) FOR

ANY LOSSES, DAMAGES, COSTS OR EXPENSES (INCLUDING LOSS OF PROFITS,

LOSS OF USE, AND DIRECT, INDIRECT, SPECIAL, INCIDENTAL, CONSEQUENTIAL

OR PUNITIVE DAMAGES), ARISING FROM:

76
(i) ANY FAILURE, MALFUNCTION, FAULT IN DELIVERY, DELAY,

OMISSION, SUSPENSION, INACCURACY, INTERRUPTION, TERMINATION, OR

ANY OTHER EVENT, IN CONNECTION WITH THE FURNISHING,

PERFORMANCE, OPERATION, MAINTENANCE, USE OF OR INABILITY TO USE

ALL OR ANY PART OF ANY OF THE SEF OPERATED BY BSEF, SEF PLATFORM

OR SERVICES OF THE DISCLAIMING PARTY, OR SERVICES, EQUIPMENT OR

FACILITIES USED TO SUPPORT SUCH SEF OPERATED BY BSEF, SEF

PLATFORM OR SERVICES, INCLUDING ELECTRONIC ORDER

ENTRY/DELIVERY, TRADING THROUGH ANY ELECTRONIC MEANS,

ELECTRONIC COMMUNICATION OF MARKET DATA, SEF DATA OR

INFORMATION, WORKSTATIONS USED BY PARTICIPANTS, AUTHORIZED

TRADERS, SUPERVISED PERSONS, ACCOUNTS OR CUSTOMERS, PRICE

REPORTING SYSTEMS AND ANY AND ALL COMMUNICATIONS NETWORKS,

SOFTWARE AND HARDWARE RELATING THERETO;

(ii) ANY FAILURE, MALFUNCTION, FAULT IN DELIVERY, DELAY,

OMISSION, SUSPENSION, INACCURACY, INTERRUPTION OR TERMINATION,

OR ANY OTHER EVENT, OF THE SEF PLATFORM OR ANY SERVICES OF A

DISCLAIMING PARTY, OR SERVICES, EQUIPMENT OR FACILITIES USED TO

SUPPORT SUCH TRADING SYSTEMS OR SERVICES, CAUSED BY ANY THIRD

PARTIES INCLUDING INDEPENDENT SOFTWARE VENDORS OR NETWORK

PROVIDERS;

(iii) ANY ERRORS OR INACCURACIES IN INFORMATION PROVIDED

BY THE DISCLAIMING PARTY OR IN ANY OF THE DISCLAIMING PARTY’S

SYSTEMS, SERVICES, EQUIPMENT OR FACILITIES;

(iv) ANY UNAUTHORIZED ACCESS TO OR UNAUTHORIZED USE OF

ANY OF THE DISCLAIMING PARTY’S SYSTEMS, SERVICES, EQUIPMENT OR

FACILITIES BY ANY PERSON.

THE FOREGOING LIMITATION OF LIABILITY SHALL APPLY WHETHER

A CLAIM ARISES IN CONTRACT, TORT, NEGLIGENCE, STRICT LIABILITY,

CONTRIBUTION OR OTHERWISE AND WHETHER THE CLAIM IS BROUGHT

DIRECTLY OR AS A THIRD PARTY CLAIM.

(b) NOTWITHSTANDING SUBSECTION (a), (c) or (f) OF THIS RULE 901, IN

NO EVENT SHALL ANY AFFILIATE OF BSEF ACTING AS SEF PLATFORM

TECHNOLOGY SERVICES PROVIDER BE LIABLE TO ANY PERSON NOR SHALL ANY

PERSON BRING ANY LEGAL ACTION (WHETHER IN TORT, NEGLIGENCE, OR

BREACH OF CONTRACT) FOR ANY LOSSES, DAMAGES, COSTS OR EXPENSES

INCLUDING LOSS OF PROFITS, LOSS OF USE, DIRECT, SPECIAL, PUNITIVE,

INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES, ARISING FROM THE USE

OF THE SEF OPERATED BY BSEF OR SEF PLATFORM.

77
(c) WITHOUT LIMITING BSEF’S INDEMNIFICATION OBLIGATION UNDER

RULE 902, THERE ARE NO EXPRESS OR IMPLIED WARRANTIES OR

REPRESENTATIONS (INCLUDING WARRANTIES OF MERCHANTABILITY AND

FITNESS FOR A PARTICULAR PURPOSE OR USE) PROVIDED BY ANY DISCLAIMING

PARTY RELATING TO ANY SYSTEMS OR SERVICES OF ANY DISCLAIMING PARTY

OR SERVICES, EQUIPMENT OR FACILITIES USED TO SUPPORT SUCH SYSTEMS OR

SERVICES.

(d) ANY DISPUTE ARISING OUT OF THE USE OF SYSTEMS OR SERVICES

OF ANY DISCLAIMING PARTY OR SERVICES, EQUIPMENT, OR FACILITIES USED TO

SUPPORT SUCH SYSTEMS OR SERVICES IN WHICH THE DISCLAIMING PARTY OR

DISCLAIMING PARTIES IS A PARTY SHALL BE SUBJECT TO ARBITRATION AS

PROVIDED IN RULE 810(c) AS IF THE DISCLAIMING PARTY WERE BSEF AND THE

OPPOSITE PARTY OR PARTIES WERE A PARTICIPANT. ANY ACTIONS, SUITS OR

PROCEEDINGS BROUGHT AGAINST ANY DISCLAIMING PARTY MUST BE BROUGHT

WITHIN ONE YEAR FROM THE TIME THAT A CAUSE OF ACTION HAS ACCRUED.

THIS PARAGRAPH (d) SHALL IN NO WAY BE CONSTRUED TO LIMIT A PARTY’S

OBLIGATION TO ARBITRATE ITS CLAIM OR TO CREATE A CAUSE OF ACTION (OR

MODIFY THE LIMITATION ON ACTIONS PROVIDED IN RULE 901(a)) AND SHALL

NOT AUTHORIZE AN ACTION THAT WOULD OTHERWISE BE PROHIBITED BY THE

BSEF RULES. IF FOR ANY REASON, A COURT OF COMPETENT JURISDICTION FINDS

THAT A DISPUTE IS NOT ARBITRABLE, SUCH DISPUTE SHALL BE SUBJECT TO THE

JURISDICTION OF EACH OF THE FEDERAL AND STATE COURTS LOCATED IN NEW

YORK COUNTY, NEW YORK IN CONNECTION WITH ANY MATTERS ARISING OUT

OF THIS RULEBOOK AND NO PARTY TO SUCH DISPUTE MAY ASSERT A DEFENSE

OF FORUM NON CONVENIENS, SOVEREIGN IMMUNITY, ACT OF STATE OR

ANALOGOUS DOCTRINES IN CONNECTION WITH ANY ACTION.

(e) TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE TOTAL

COMBINED AGGREGATE LIABILITY OF BSEF SHALL NOT EXCEED (i) $20,000 FOR

ALL LOSSES AND CLAIMS FROM ALL CAUSES SUFFERED ON A SINGLE DAY, (ii)

$100,000 FOR ALL LOSSES AND CLAIMS FROM ALL CAUSES SUFFERED IN A SINGLE

CALENDAR MONTH; AND (iii) $1,000,000 FOR ALL LOSSES AND CLAIMS FROM ALL

CAUSES SUFFERED IN A SINGLE CALENDAR YEAR. ANY DISPUTED CLAIM

PURSUANT TO THIS PARAGRAPH (e) SHALL BE SUBJECT TO ARBITRATION TO THE

EXTENT PROVIDED IN RULE 810(c).

IN NO EVENT SHALL TOTAL COMBINED AGGREGATE LIABILITY OF BSEF FOR ALL

CLAIMS AND CLAIMS AGAINST DISCLAIMING PARTIES ARISING OUT OF ANY

FAILURES, MALFUNCTIONS, FAULTS IN DELIVERY, DELAYS, OMISSIONS,

SUSPENSIONS, INACCURACIES, INTERRUPTIONS, TERMINATIONS, OR ANY OTHER

CAUSES, IN CONNECTION WITH THE FURNISHING, PERFORMANCE, OPERATION,

MAINTENANCE, USE OF OR INABILITY TO USE ALL OR ANY PART OF ANY OF THE

SEF OPERATED BY BSEF OR SEF PLATFORM, OR SERVICES, EQUIPMENT OR

FACILITIES USED TO SUPPORT BSEF, THE SEF OPERATED BY BSEF OR SEF

78
PLATFORM, OR THE NEGLIGENCE OR GROSS NEGLIGENCE OF BSEF EMPLOYEES,

AGENTS OR SUBAGENTS EXCEED $1,000,000 IN ANY GIVEN CALENDAR YEAR.

IF THE NUMBER OF ALLOWED CLAIMS ARISING OUT OF ANY FAILURES OR

MALFUNCTIONS ON A SINGLE DAY, SINGLE MONTH OR SINGLE YEAR CANNOT BE

FULLY SATISFIED BECAUSE OF THE ABOVE DOLLAR LIMITATIONS, ALL SUCH

CLAIMS SHALL BE LIMITED TO A PRO RATA SHARE OF THE MAXIMUM AMOUNT

FOR THE RESPECTIVE PERIOD.

(f) THE LIMITATIONS OF LIABILITY IN THIS RULE 901 SHALL NOT APPLY

TO BSEF’S INDEMNIFICATION OBLIGATION UNDER RULE 902 AND SHALL NOT

PROTECT ANY PARTY FOR WHICH THERE HAS BEEN A FINAL DETERMINATION

(INCLUDING EXHAUSTION OF ANY APPEALS) BY A COURT OR ARBITRATOR TO

HAVE ENGAGED IN FRAUD OR WILLFUL MISCONDUCT. ADDITIONALLY, THE

FOREGOING LIMITATIONS ON LIABILITY OF THIS RULE SHALL BE SUBJECT TO

THE CEA AND THE REGULATIONS PROMULGATED THEREUNDER, EACH AS IN

EFFECT FROM TIME TO TIME.

RULE 902. Indemnification by BSEF

BSEF, at its expense, shall indemnify, hold harmless and defend Participant against any loss,

claim, demand or expense (including reasonable attorneys’ fees) (“Claim”) that the SEF

Platform or any portion thereof infringes, misappropriates or violates any intellectual property or

proprietary rights of any third party; provided, however, that BSEF shall not be required to

indemnify Participant for any Claim to the extent it arises from or in connection with any (a)

additions, changes or modifications by Participant to the SEF Platform, which changes were not

provided by BSEF or any of its affiliates, (b) use of the SEF Platform in combination with other

products or services not provided by BSEF or its affiliates, or (c) use of the SEF Platform other

than as expressly permitted by the Rules or the Participant Documentation. BSEF shall control

such defense and all negotiations relative to the settlement of any such Claim. Participant shall

promptly provide BSEF with written notice of any claim which falls within the scope of this

paragraph (provided that failure to provide such notice shall not relieve BSEF of its indemnity

obligations hereunder except to the extent it is prejudiced thereby).

79
Annex A

Excerpt from ISDA Dodd Frank Act-Swap Transaction

Reporting Party Requirements

Product Attribute Determination

RP Tiebreaker Logic - Rates

Trade Type Explanation Reporting Party

Cap/ Floor When a single Fixed Rate Payer exists Fixed Rate Payer. Otherwise, Reverse ASCII sort, first LEI/Entity ID

Debt Option All Option Buyer

Exotic All Reverse ASCII sort, first LEI/Entity ID

FRA All Fixed Rate Payer

IRS Basis All Reverse ASCII sort, first LEI/Entity ID

IRS Fix-Fix All Reverse ASCII sort, first LEI/Entity ID

IRS Fix-Float All Fixed Rate Payer

IRSwap: Inflation When a single Fixed Rate Payer exists Fixed Rate Payer. Otherwise, Reverse ASCII sort, first LEI/Entity ID

IRSwap: OIS All Fixed Rate Payer

Swaption All Option Buyer

XCCY Basis All Reverse ASCII sort, first LEI/Entity ID

XCCY Fix-Fix All Reverse ASCII sort, first LEI/Entity ID

XCCY Fix-Float All Fixed Rate Payer

Tiebreaker Logic

When the participant identifier tiebreaker is invoked the following processes will be used:

1a. Determining identifiers

When an entity has multiple entity identifiers (“IDs”), the following

hierarchy will be used to determine which entity ID to use in the RP

determination logic:

 LEI/CICI is used before DTCC GTR ID which is used before an

AVOX ID which is used before any other identifier.

1b. Identifier Tiebreaker Logic Scenarios

i. When both firms must have an LEI/CiCI then rank based on the two

LEI/CICIs.

ii. When one firm has an LEI/CICI and the other firm has a DTCC ID

but does not have an LEI then rank based on the comparison of the

LEI/CICI to the DTCC ID.

A- 1
iii. When one firm has an LEI/CICI and the other firm has an AVOX ID

but does not have an LEI then rank based on the comparison of the

LEI/CICI to the AVOX ID.

iv. When neither firm has an LEI/CICI and both firms have a DTCC

ID then rank based on the two DTCC IDs.

v. When neither firm has an LEI/CICI and one firm has a DTCC ID and

the other firm has only an AVOX ID then rank based on the comparison

of the DTCC ID to the AVOX ID.

vi. A firm will be the RP when that firm has a DTCC ID or LEI/CICI and

the other has neither an LEI/CICI nor a DTCC ID nor an AVOX ID. Please

note that in all cases the RP will have a DTCC ID and by extension will

have an LEI/CICI.

2. Determining sort order of identifiers

 LEI/CICI, DTCC GTR IDs, and AVOX IDs are comprised of

characters from the following set {0-9, A-Z}.

 For avoidance of doubt, before comparing IDs convert all IDs to UPPER

CASE only.

 For comparison basis the sort order will be reverse ASCII sort

order. For avoidance of doubt the following are sort order of

precedence:

 Z, Y, X, W, V, U, T, S, R, Q, P, O, N, M, L, K, J, I, H, G, F, E, D, C, B,

A, 9, 8, 7, 6, 5, 4, 3, 2, 1, 0.

3. When comparing two IDs the RP will be the firm with the first ID in the list when

sorted in reverse ASCII sort order.

A- 2