EBS Global Facility Limited - SEF Application - Exhibit R: Rules 

Prohibiting Trade Practice Violations 

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EBS Global Facility Limited - SEF Application 

Exhibit R: Rules Prohibiting Trade Practice Violations 
EBS Global Facility Limited - SEF Application - Exhibit R: Rules 

Prohibiting Trade Practice Violations 

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Contents

1 Trading Standards Rules ......................................................................................................3 

Rule 401. Fraudulent Statements and Acts............................................................................ 3 

Rule 402. Abusive Trading Practices ..................................................................................... 3 

Rule 403. Good Faith Bids and Offers ................................................................................... 3 

Rule 404. Pre-Execution Discussions and Pre-Arranged Transactions ................................. 4 

Rule 405. Manipulation and Price Distortion .......................................................................... 5 

Rule 406. Adherence to Law .................................................................................................. 5 

Rule 407. Acts Detrimental to EGFL etc ................................................................................. 5 

Rule 408. Position Limits and Position Accountability............................................................ 5 

2 Procedures for Detecting Possible Violations of Trading Standards Rules ..........................6 
EBS Global Facility Limited - SEF Application - Exhibit R: Rules 

Prohibiting Trade Practice Violations 

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This Exhibit R sets forth EBS Global Facility Limited’s (”EGFL”) Rules prohibiting specific trade 

practice violations. All capitalized terms used in this Exhibit R and not defined have the 

meanings ascribed thereto in the EGFL’s Rulebook (the “Facility Rulebook”), which is included 

as Exhibit M to this Application. All references to “Rules” contained in this Exhibit are 

references to the Rules of the Facility Rulebook. 

1 Trading Standards Rules

Rule 401. Fraudulent Statements and Acts

a) No Participant or Customer shall make any material misrepresentation of fact or omit to 

state any material fact necessary to prevent a statement from being misleading, in 

connection with or related to any transaction on or other activity related to EGFL or the 

Facility. 

b) No Participant or Customer may engage in any fraudulent act or engage in any scheme 

to cheat, defraud or deceive, in connection with or related to any transaction on or other 

activity related to EGFL or the Facility. 

Rule 402. Abusive Trading Practices

a) No Participant or Customer shall create fictitious or wash transactions on the Facility or 

execute any Bid/Offer for a fictitious or wash transaction with knowledge of its nature. 

b) No Participant or Customer shall engage in trading on the Facility or subject to the Rules 

for the purpose of passing money or transferring equity from one account to another.

c) No Participant trading as an Intermediary on behalf of a Customer shall engage in trading 

ahead of a Customer Order, trading against a Customer Order without the Customer’s 

consent, front running a Customer Order, accommodation trading or improper cross 

trading. 

d) No Participant or Customer shall engage in any trading, practice or conduct on the 

Facility or subject to the Rules that (1) violates Bids/Offers; (2) demonstrates intentional 

or reckless disregard for the orderly execution of transactions during the closing period; 

(3) is, is of the character of, or is commonly known to the trade as, “spoofing” (entering a 

Bid/Offer with the intent to cancel the Bid/Offer before execution); or (4) is any other 

manipulative or disruptive trading practice prohibited by the Act or Commission 

Regulations. 

Rule 403. Good Faith Bids/Offers and RFQs

a) A Participant or Customer shall not knowingly enter, or cause to be entered, a Bid/Offer 

or RFQ into the Facility other than in good faith for the purpose of executing bona fide 

transactions. 
EBS Global Facility Limited - SEF Application - Exhibit R: Rules 

Prohibiting Trade Practice Violations 

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b) A Participant or Customer shall not knowingly enter, or cause to be entered, a Bid/Offer 

or RFQ unless such Participant or Customer has sufficient funds to provide the required 

collateral for the related Contract should the Contract be executed. 

Rule 404. Pre-Execution Discussions and Pre-Arranged Transactions

No Participant or Customer shall pre-arrange or pre-negotiate or non-competitively execute any 

transaction on the Facility except as follows: 

a) Block Trades are not subject to this prohibition; 

b) Permitted Transactions executed pursuant to Rule 304 are not subject to this 

prohibition;1

c) Participants and Customers may engage in pre-execution discussions with regard to 

transactions executed on the Facility in accordance with Rule 305(a)(7); provided, 

however, that: 

(1) A party may not engage in pre-execution communications with other market 

participants on behalf of another party unless the party for whose benefit the 

transaction is being made has previously consented to permit such 

communications. 

(2) Parties to pre-execution communications shall not: 

(i) disclose to a nonparty the details of such communications; or 

(ii) enter a Bid/Offer to take advantage of information conveyed during such 

communications except in accordance with this Rule. 

(3) Notwithstanding paragraph (c)(2) of this Rule, a party may disclose or use such 

communications if such disclosure or use is authorised in writing by the 

counterparty, or is necessary: 

(i) for the effective execution of any Swap for or with the counterparty; 

(ii) to hedge or mitigate any exposure created by such Swap; or 

(iii) to comply with a request of the Commission, the U.S. Department of 

Justice, any self-regulatory organisation, or an applicable prudential 

regulator, including but not limited to the FCA, or as otherwise required 

by law. 

d) Where a transaction is executed pursuant to Rule 315(h), communications concerning 

such transaction shall not be considered pre-execution communications prohibited by 

this Rule 404. 

1 Rule 304 provides procedures for transactions to be arranged off the Facility and submitted to 

the Facility for execution if they are Permitted Transactions, i.e., transactions not subject to the 

trade execution requirement of section 2h(8) of the Commodity Exchange Act. 
EBS Global Facility Limited - SEF Application - Exhibit R: Rules 

Prohibiting Trade Practice Violations 

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Rule 405. Manipulation and Price Distortion

Any manipulation of the market in any Contract is prohibited. Bids/Offers entered into a 

Trading Platform or Pre-Arranged Crosses submitted to an Execution Specialist for the purpose 

of upsetting the equilibrium of the market in any Contract or creating a condition in which prices 

do not or will not reflect fair market values are prohibited and any Participant or Customer who 

makes or assists in entering any such Bid/Offer or Pre-Arranged Cross 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 Bid/Offer or Pre-Arranged Cross, will be deemed to have 

engaged in an act detrimental to EGFL or the Facility. Any other manipulative and disruptive 

behavior not otherwise prohibited by the Rules is prohibited to the extent prohibited by the Act 

or Commission Regulations, including but not limited to Sections 6(c)(1) and (3), 9(a)(2), 

4c(a)(5)(A) and (C) of the Act and Commission Regulations 180.1(a) and 180.2. 

Rule 406. Adherence to Law

No Participant or Customer may engage in conduct in violation of Applicable Law or the rules 

of any DCO which clears a Cleared Contract in connection with or related to any transaction on 

or other activity related to the Facility. 

Rule 407. Acts Detrimental to EGFL etc

It will be an offence for a Participant or Customer to violate any Rule regulating the conduct or 

business of a Participant or Customer or any agreement made with EGFL, or to engage in any 

act detrimental to EGFL’s operations or self-regulatory function or EGFL’s ability to enforce its 

Rules or that are a failure to observe the proper standards of conduct expected of market 

participants. 

Rule 408. Position Limits and Position Accountability

a) To reduce the potential threat of market manipulation or congestion, EGFL shall adopt for 

each Contract, as is necessary and appropriate, Position Limits or position accountability 

levels for speculators. 

b) EGFL has adopted the Commission’s Position Limits for any Contract for which the 

Commission has adopted a Position Limit. In no event will EGFL set its Position Limits at 

a level higher than the Commission’s Position Limits. 

c) For Permitted Transactions, EGFL may set and enforce position accountability levels or 

send the Commission a list of the Permitted Transactions transacted on the Facility. 

d) All Participants and Customers must comply with all EGFL and Commission requirements 

regarding Position Limits or position accountability levels. 

e) Each Participant required to file any report, statement, form or other information with the 

Commission pursuant to Commission Regulations concerning a Position Limit on any 
EBS Global Facility Limited - SEF Application - Exhibit R: Rules 

Prohibiting Trade Practice Violations 

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Contract or commodity underlying a Contract must simultaneously file a copy of such 

report, statement, form or other information with EGFL. Such information shall include,

for Participants who are Intermediaries, information concerning the Customers for which 

transactions are made on the Facility. 

f) Any Participant or Customer who exceeds an EGFL or Commission Position Limit by 

entering into a transaction on the Facility shall be deemed in Violation. In addition, any 

Participant or Customer entering bids or offers, if accepted, which would cause that 

Participant or Customer to exceed the applicable EGFL or Commission Position Limit, 

shall be in Violation. 

g) Without limiting any provision of these Rules, EGFL shall have the authority to obtain from 

any Participant or Customer, on request, information with respect to all positions of such 

Participant or Customer in Contracts which are equivalent, for purposes of EGFL or 

Commission Position Limits, to those transacted in by the Participant on the Facility. 

2 Procedures for Detecting Possible Violations of Trading

Standards Rules

1) The following exception reports will be produced either by EGFL or its outside Regulatory 

Services Provider and reviewed in conjunction with Market Regulation Staff: 

a) Report showing transactions where two Authorized Traders from the same Trading 

Privilege Holder are on opposite sides of the transaction. This report will be reviewed to 

determine whether there is an indication of fictitious, accommodation, wash or money 

passing transactions. 

b) Report showing transactions where a Contract is executed on behalf of a Customer by 

an Authorized Trader for a Trading Privilege Holder within 15 minutes after the same 

Contract is executed for the proprietary account of the same Trading Privilege Holder. 

This report will be reviewed to determine whether there is an indication of front running 

or trading ahead. 

c) Report showing all instances where the cancellation of a bid or offer by an Authorized 

Trader for a Trading Privilege Holder is followed by re-entry of the same bid or offer by 

the same or another Authorized Trader for the same Trading Privilege Holder within 15 

minutes. This report will be reviewed to determine whether there is any indication of 

spoofing. 

d) Report showing where there are two Bids/Offers from the same Trading Privilege 

Holder or its Authorized Traders which are entered within less than 15 seconds and 

which are executed against each other. This report will be reviewed to determine 

whether Bids/Offers subject to pre-execution discussions are being properly executed. 

e) Report showing transactions which were modified. This report will be reviewed to 

determine whether modifications are being made for legitimate reasons, and not for 
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Prohibiting Trade Practice Violations 

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improper reasons such as money passing.

f) Report showing cancelled transactions. The reviewer will determine whether high 

percentages of transactions are being cancelled by any Authorized Trader or Trading 

Privilege Holder, and whether the reasons for cancellation are legitimate. 

g) Report showing bids and offers during the last 5 minutes of trading. This report will be 

reviewed to determine whether there was any disorderly trading during the closing 

period. 

2) Either EGFL or its outside Regulatory Services Provider, in conjunction with the Market 

Regulation Staff, will review each exception report as described above, and will document 

the review. Either EGFL or its outside Regulatory Services Provider may retrieve additional 

information from the Facility’s records, and may request additional information from Trading 

Privilege Holders, including on a random sample basis, as necessary to determine whether 

there is information that indicates a possible basis for a finding that a violation of any of 

EGFL’s rules has occurred or will occur. 

3) Upon determining that there is a possible basis for finding that a violation of an EGFL rule 

has occurred or will occur, either EGFL or its outside Regulatory Services Provider will 

investigate the matter, and will report the results of the investigation to the Compliance 

Function . The Compliance Function may refer the matter to the appropriate persons for 

possible emergency action pursuant to Facility Rule 104 to the Chairman of the Regulatory 

Oversight Committee for possible summary suspension pursuant to Facility Rule 514, or to 

the Review Panel for possible charges pursuant to Facility Rules 502 and 503. 

4) Procedures for resolving charges are Rule 504 (Notice of Charges), Rule 505 (Answer; 

Request for Hearing; Failure to Answer or Deny Charges), Rule 506 (Selection of Hearing 

Panel), Rule 507 (Challenge to Members of Hearing Panel), Rule 508 (Hearing on 

Sanctions in the Event of Failure to Deny Charges; Failure to Request Hearing Deemed 

Acceptance of Sanctions), Rule 509 (Settlement Prior to Commencement of Hearing), Rule 

510 (Hearing Procedures), Rule 511 (Written Decision of Hearing Panel), Rule 512 

(Liability for Expenses), Rule 513 (Effective Date of Sanctions) and Rule 515 (Extension of 

Time Limits).