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EXHIBIT F – THE REGULATORY REGIME GOVERNING THE FOREIGN 

BOARD OF TRADE IN ITS HOME COUNTRY OR COUNTRIES

(1) A description of the regulatory regime/authority’s structure, resources, staff, and 

scope of authority; the regulatory regime/authority’s authorizing statutes, 

including the source of its authority to supervise the foreign board of trade; the 

rules and policy statements issued by the regulator with respect to the 

authorization and continuing oversight of markets, electronic trading systems, and 

clearing organizations; and the financial protections afforded customer funds.

(2) A description of and, where applicable, copies of the laws, rules, regulations and 

policies applicable to:1

(i) The authorization, licensure or registration of the foreign board of trade.

(ii) The regulatory regime/authority’s program for the ongoing supervision and 

oversight of the foreign board of trade and the enforcement of its trading rules.

(iii) The financial resource requirements applicable to the authorization, licensure 

or registration of the foreign board of trade and the continued operations thereof.

(iv) The extent to which the IOSCO Principles are used or applied by the 

regulatory regime/authority in its supervision and oversight of the foreign board 

of trade or are incorporated into its rules and regulations and the extent to which 

the regulatory regime/authority reviews the applicable trading systems for 

compliance therewith.

(v) The extent to which the regulatory regime/authority reviews and/or approves 

the trading rules of the foreign board of trade prior to their implementation.

(vi) The extent to which the regulatory regime/authority reviews and/or approves 

futures, option or swap contracts prior to their being listed for trading. 

(vii) The regulatory regime/authority’s approach to the detection and deterrence 

of abusive trading practices, market manipulation, and other unfair trading 

practices or disruptions of the market. 

(3) A description of the laws, rules, regulations and policies that govern the 

authorization and ongoing supervision and oversight of market intermediaries 

who may deal with members and other participants located in the United States 

participants, including: 

(i) Recordkeeping requirements.

(ii) The protection of customer funds.

(iii) Procedures for dealing with the failure of a market intermediary in order to 

minimize damage and loss to investors and to contain systemic risk.

(4) A description of the regulatory regime/authority’s inspection, investigation and 

surveillance powers; and the program pursuant to which the regulatory 

regime/authority uses those powers to inspect, investigate, and enforce rules 

applicable to the foreign board of trade.

(5) For both the foreign board of trade and the clearing organization (unless 

addressed in Supplement S-1), a report confirming that the foreign board of trade 

and clearing organization are in regulatory good standing, which report should be 

 

1

 To the extent that any such laws, rules, regulations or policies were provided as part of Exhibit A-5(1), they 

need not be duplicated. They may be cross-referenced.
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prepared subsequent to consulting with the regulatory regime/authority governing 

the activities of the foreign board of trade and any associated clearing 

organization. The report should include:

(i) Confirmation of regulatory status (including proper authorization, licensure 

and registration) of the foreign board of trade and clearing organization.

(ii) Any recent oversight reports generated by the regulatory regime/authority 

that are, in the judgment of the regulatory regime/authority, relevant to the 

foreign board of trade’s status as a registered foreign board of trade.

(iii) Disclosure of any significant regulatory concerns, inquiries or investigations 

by the regulatory regime/authority, including any concerns, inquiries or 

investigations with regard to the foreign board of trade’s arrangements to monitor 

trading by members or other participants located in the United States or the 

adequacy of the risk management controls of the trading or of the clearing system.

(iv) A description of any investigations (formal or informal) or disciplinary actions 

initiated by the regulatory regime/authority or any other self-regulatory, 

regulatory or governmental entity against the foreign board of trade, the clearing 

organization or any of their respective senior officers during the past year.

(6) For both the foreign board of trade and the clearing organization (unless 

addressed in Supplement S-1), a confirmation that the regulatory 

regime/authority governing the activities of the foreign board of trade and the 

clearing organization agree to cooperate with a Commission staff visit subsequent 

to submission of the application on an “as needed basis,” the objectives of which 

will be to, among other things, familiarize Commission staff with supervisory staff 

of the regulatory regime/authority; discuss the laws, rules and regulations that 

formed the basis of the application and any changes thereto; discuss the 

cooperation and coordination between the authorities, including, without 

limitation, information sharing arrangements; and discuss issues of concern as 

they may develop from time to time (for example, linked contracts or unusual 

trading that may be of concern to Commission surveillance staff).

Introduction

1. ICE Endex Derivatives B.V. (the "Exchange") is subject to a comprehensive regulatory 

regime in the Netherlands and Europe. This regulatory structure includes: financial and 

other fitness criteria for the Exchange; reporting and record-keeping requirements; 

procedures governing the treatment of customer funds and property; conduct of 

business standards; provisions designed to protect the integrity of the markets; and 

statutory prohibitions on fraud, abuse and market manipulation. In addition, the 

Exchange must submit its members to a comprehensive framework of rules applicable 

to those members.

2. Responsibility for financial services legislation and broad policy in the Netherlands lies 

with the Dutch Ministry of Finance, which is answerable to Parliament. Responsibility 

for regulating the market conduct of investment business, providing investor protection 

and preventing market manipulation in the Netherlands rests with the Dutch Financial 

Markets Authority (Autoriteit Financiële Markten, the "AFM"). 

3. The applicable regulatory regime for the Netherlands is not dependent on the home 

country’s classification of the product being traded on the Exchange as a future, option, 
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swap, which are all financial instruments, or otherwise, since leading will be whether 

the relevant product qualifies as a financial instrument according to Dutch regulatory 

law. The principal legal provisions with respect to the Dutch regulatory regime 

applying to the Exchange and its members are contained in, or derived from, the Dutch 

Financial Supervision Act (Wet op het financieel toezicht, “DFSA”) and the AFM

fulfills its regulatory responsibilities within the framework established by the DFSA

and related legislation. 

4. Additional authority rests with the Fiscal Intelligence and Investigation Service 

(Fiscale Inlichtingen en Opsporingdienst, the "FIOD") which investigates serious and 

complex fraud. The FIOD may decide for a criminal investigation in conjunction with 

the Public Prosecution Service. In the case of fiscal fraud the Tax and Customs 

Administration may also opt for a penalty order instead of a summons served by the 

public prosecutor. This means that the Tax and Customs Administration will impose a 

fine on the fraudster.

A description of the regulatory regime/authority’s structure 

5. The AFM is a foundation. As a result, it has no shareholders. It is registered with the 

Dutch Chamber of Commerce under number 41207759. The AFM has its registered 

office at Vijzelgracht 50, 1017 HS Amsterdam, the Netherlands.

6. The AFM has an executive board (Section 1:26 DFSA), as well as a supervisory board 

(Section 1:27 DFSA). 

7. The AFM is managed by the executive board, which is responsible for setting the dayto-day policy and taking care of the day-to-day business of the AFM. The board 

consists by law of three to five members. Board members are appointed by the Minister 

of Finance for a period of four years which can be renewed twice (Section 1:26(1)

DFSA). 

8. On 24 June 2016 the board of executive directors had five members: Ir. M.W.L. van 

Vroonhoven (president), mr. drs. G.J. Everts, drs. H.W.O.L.M. Korte,Prof. mr. dr. F. de 

Vries and drs. F.J.J.G. van den Hurk. Details of the board members, of the division of 

the portfolios and of additional activities of the board members can be found via:

https://www.afm.nl/en/over-afm/organisatie/bestuuroverzicht/bestuursleden.

9. The supervisory board supervises the policy set by the executive board and daily 

business and advises the board when necessary (Section 1:27(2) DFSA). The 

supervisory board is also responsible for approving the AFM's annual plan and budget 

and adopting the annual accounts. Executive board resolutions of major strategic 

importance - e.g. to adopt or alter policy plans for the medium or long term, change the 

organizational structure, appoint or dismiss the external auditor, amend the Statutes or 

accept new tasks - are submitted to the supervisory board in advance for approval.

10. The Minister of Finance has the power to appoint and dismiss the members of the 

supervisory board. Members are appointed to the supervisory board based on 

nominations by the supervisory board. The board consists by law of three to five 

members. Board members are appointed by the Minister of Finance for a period of four 

years which can be renewed twice (Section 1:27(3) DFSA). 
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11. On 24 June 2016 the supervisory board had four members: P. Rosenmöller (president), 

D.C.C. van Everdingen (vice president), R. Becker and B. Koolstra. A list of the 

members of the supervisory board and of their additional activities of the members of 

the supervisory board can be found via: https://www.afm.nl/en/overafm/organisatie/rvt.

12. An organizational chart of the AFM can be found in Annex F-1.

(1) A description of the regulatory regime/authority’s structure, resources, staff, and 

scope of authority; the regulatory regime/authority’s authorizing statutes, 

including the source of its authority to supervise the foreign board of trade; the 

rules and policy statements issued by the regulator with respect to the 

authorization and continuing oversight of markets, electronic trading systems, and 

clearing organizations; and the financial protections afforded customer funds.

Resources

13. The general powers of the AFM to raise fees are set out in Section 11-13 Financing of 

Financial Supervision Act (Wet bekostiging financieel toezicht, "FFSA"). The actual 

fees levied from market participants in 2016 have been laid down in the Rules on 

financing of financial supervision 2016 (Regeling bekostiging financieel toezicht 2016) 

and for the Exchange consist of a fixed amount of EUR 49,430 to be increased with an 

amount per transaction, which is dependent on the actual number of transactions 

concluded via the Exchange. 

Scope of authority

14. As mentioned above under 2, the AFM is the responsible authority for market conduct 

supervision (Section 1:25(2) DFSA). This supervision aims at ensuring an orderly and 

transparent market process and fair dealings between market parties and effective client 

protection (Section 1:25(1) DFSA). As part of this task, the AFM decides on the 

admittance of market parties to the Dutch financial markets. As a consequence of this 

the strategic goals of the AFM are: (1) ensuring meticulous financial services, (2) fair 

and efficient functioning of the capital markets and (3) contributing to the stability of 

the financial system. For this, we refer to the summary of the 2015 annual report of the 

AFM (Annex F-2).

15. The AFM uses a risk-based approach. The AFM sets its priorities in regulation in the 

areas it considers to be the most at risk. Each year the AFM presents multiple focus 

themes. On the basis of these focus themes it decides on the core themes of its 

supervision activities in a given year and how it will allocate its resources in such year.

Authorizing statutes 

16. As set out above under 3, the AFM's authority is based on the DFSA. The DFSA

assigns the AFM as the entity responsible for market conduct supervision (Section 1:25

DFSA). The AFM derives most of its powers and functions from the DFSA, this 

includes the power to set rules for the Exchange. 
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17. The DFSA is for a large part composed of rules that originate from EU legislation, such 

as the MiFID Directive and the Prospectus Directive.

18. The Dutch Minister of Finance may, if he has been provided in the DFSA with such 

authority with regard to a specific topic, issue a governmental decree (algemene 

maatregel van bestuur). Such governmental decree generally sets more specific 

requirements based on the general requirements set out in the DFSA.

19. Furthermore, the AFM has been given the authority to set further rules with regard to 

various topics on financial supervision. This authority is provided for in specific 

provisions of the DFSA and further rules and regulations thereto.

Authority to supervise the foreign board of trade 

20. Based on Section 5:26(1) DFSA, it is prohibited to operate or manage a regulated 

market in the Netherlands without a license from the Dutch Minister of Finance. A

regulated market is defined in Section 1:1 DFSA as:

 a multilateral system;

 which brings together or facilitates the bringing together of multiple third‐party 

buying and selling interests in financial instruments, in the system and in 

accordance with its nondiscretionary rules;

 in a way that results in a contract, in respect of the financial instruments admitted 

to trading under its rules and/or systems; and 

 which is authorized and functions regularly and in accordance with the ongoing 

requirements.

21. A license application will be first assessed by the AFM, following which assessment 

the AFM will advise the Dutch Minister of Finance on whether or not the license 

should be granted.

22. The Exchange has obtained a license as referred to above. Please find attached as 

Annex F-3 a print of the license of the Exchange. This Annex F-3 also contains a print 

from the AFM register of trading platforms. The Exchange is listed as a licensed entity. 

The license was granted on 25 October 2004. At that time, the name of the Exchange 

was "Endex European Energy Derivatives Exchange N.V.".

23. Furthermore, Based on Section 1:25(2) DFSA, the AFM has the task to exercise

supervision on financial markets. There are several requirements set forth in the MiFID 

Implementing Regulation, the DFSA and delegated rules and guidelines thereto that

apply to regulated markets such as the Exchange (i) when applying for a license and (ii) 

on an ongoing basis, the compliance with which is therefore supervised and enforced 

by the AFM. Also, the DFSA contains several rules that explicitly require the Exchange 

in certain circumstances to inform the AFM, for example if a change takes place with 

regard to the information that the Exchange had to provide in respect of its license 

application (Section) 5:27(4) DFSA). 

The rules and policy statements issued by the regulator with respect to the 

authorization and continuing oversight of markets, electronic trading systems, and 

clearing organizations 
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24. The AFM has published several interpretations and guidelines on the abovementioned

topics, which are of relevance for the Exchange and/or its members in relation to their 

activities on the Exchange. We have included in Annex F-4 the rules and policy 

statements of the AFM that are available in English and see to:

 Market manipulation;

 Explanatory brochure on manipulative patterns; 

 The Notification Requirement (reasonable suspicion of market abuse); 

 Insider dealing; 

 Quick Guide to Inside Information; and

 Inside information.

The financial protections afforded customer funds

25. Given that the Exchange itself does not hold customer funds, no rules aiming at the 

protection of such funds apply to the Exchange itself. However, as we will describe in 

more detail below:

 in paragraph (2)(i), on the basis of the Oversight Framework rules apply to Ice 

Clear in order to mitigate the risks of a default of one of the participants;

 in paragraph (3)(ii), detailed rules apply for the Exchange's members with respect 

to clients assets.

26. The ICE Endex markets are cleared by ICE Clear Europe a CFTC registered DCO. 

(2) A description of and, where applicable, copies of the laws, rules, regulations and 

policies applicable to:2

(i) The authorization, licensure or registration of the foreign board of trade.

27. As set out above, Section 5:26(1) DFSA sets a license requirement for the Exchange.

The Minister of Finance shall grant a license as referred to in Section 5:26(1) DFSA if 

the applicant demonstrates that the Exchange has its registered office in the Netherlands 

and that it will comply with the following provisions stated in Section 5:27(1) DFSA:

 Section 5:29 DFSA with regard to the suitability and integrity of the persons 

referred to in that section. For this, we also refer to Exhibit C.

 Sections 5:30 and 5:32(1) DFSA with regard to the rules of the Exchange;

 Section 5:30(f) DFSA with regard to the financial resources to promote the orderly 

operation of the Exchange;

 Section 5:32a(1)(a) DFSA with regard to the rules on the admission of financial 

instruments to trading on the Exchange; and

 Section 5:32b DFSA with regard to the rules on access to the Exchange.

28. Also, the Exchange must ensure that the rules referred to above, the manner in which 

these are applied and the monitoring of compliance with those rules will meet the 

 

2

 To the extent that any such laws, rules, regulations or policies were provided as part of Exhibit A-5, they need 

not be duplicated. They may be cross-referenced.
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standards necessary with a view to the interests which the DFSA seeks to protect

(Section 5:27(3) DFSA).

29. For a more detailed description of the provisions stated above, we refer to Annex F-5, 

which contains a non-official translation of Chapter 5.2 of the DFSA.

30. Furthermore, as a condition of its license, it is stated that the Exchange must comply 

with the terms and conditions of the Oversight Framework Clearing and Settlement 

Endex ("Oversight Framework", Annex F-6). The Oversight Framework is an 

agreement on the basis of which - in the absence of statutory provisions dealing with 

supervision on clearing and settlement - the AFM and the Dutch Central Bank (which 

pursuant to the DFSA is entrusted with prudential supervision on the financial markets) 

supervise the Exchange and ICE Clear Europe Limited, "ICE Clear" with regard to 

clearing and settlement, to which the Exchange has agreed. Based on the Oversight 

Framework, the clearing and settlement systems (ICE Clear) rendering services to the 

Exchange, as well as the internal control by the Exchange on those systems are subject 

to the Oversight Framework. The Oversight Framework requires, in short, from the 

Exchange the following:

 to ensure that the clearing and settlement systems meet the required standards; and

 to ensure that the clearing and settlement systems have a well-founded, transparent 

and enforceable legal basis in the relevant jurisdictions.

31. The Oversight Framework requires ICE Clear to:

 require participants to have sufficient financial resources and robust operational 

capacity to meet obligations arising from participation in the clearing and 

settlement systems;

 measure counterparty risk exposures at least daily and management of exposures to 

potential losses;

 identify sources of operational risk and minimize those risks; and

 implementing governance arrangements to fulfill public interest requirements and 

to promote the objectives of the owners and the users.

32. Also, a Regulatory Co-Operation Agreement ("Co-op Agreement", Annex F-7) is 

applicable to ICE Clear and its parent companies. This agreement has been entered into 

between the AFM, the Dutch Central Bank, ICE Clear and its parent companies. Based 

on the Co-op Agreement, ICE Clear is also submitted to the provisions stated in (i) the 

license of the Exchange and (ii) the Oversight Framework. The parent companies agree 

in the Co-op Agreement to endeavor compliance by ICE Clear.

(ii) The regulatory regime/authority’s program for the ongoing supervision and 

oversight of the foreign board of trade and the enforcement of its trading rules.

33. The license requirements continue to apply once the license has been obtained. The 

Exchange must notify the AFM of any changes with respect to the mandatory 

information that it has provided with the application (Section 5:27(4) DFSA). Also, the 

requirements stated in the Oversight Framework apply on an ongoing basis.
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34. Furthermore, there are laws, rules, regulations and policies applicable to the AFM’s 

program for the ongoing supervision and oversight of the Exchange and the 

enforcement of its trading rules. These rules can be found in the MiFID Implementing 

Regulation (No 1287/2006, "MiFID Regulation"), the DFSA and further rules and 

regulations thereto.

MiFID Implementing Regulation

35. The MiFID Regulation, which is EU legislation with direct application, thus without 

the need for national implementation, in the Netherlands, contains several ongoing 

requirements for regulated markets. As far as relevant for the Exchange this consists of 

the following requirements with regard to admission of derivatives to trading (Section 

37 MiFID Regulation):

 the terms of the contract establishing the financial instrument must be clear and 

unambiguous, and enable a correlation between the price of the financial instrument

and the price or other value measure of the underlying;

 with regard to certain derivatives, the price or other value measure of the underlying 

must be reliable and publicly available;

 sufficient information of a kind needed to value the derivative must be publicly 

available;

 the arrangements for determining the settlement price of the contract must be such 

that the price properly reflects the price or other value measure of the underlying; and

 where the settlement of the derivative requires or provides for the possibility of the 

delivery of an underlying security or asset rather than cash settlement, there must be 

adequate arrangements to enable market participants to obtain relevant information 

about that underlying as well as adequate settlement and delivery procedures for the

underlying.

36. We refer to the MiFID Regulation attached as Annex F-8.

DFSA

37. Chapter 5.2 DFSA contains several rules on ongoing supervision of the Exchange.

These include the following:

Access to the Exchange

 Only investment firms, banks and certain qualified persons may be admitted as 

members or as participants in the Exchange (Section 5:32c DFSA);

Outsourcing and control structure

 If the Exchange delegates activities to a third party, it must ensure that such third 

party complies with the DFSA rules applicable with regard to those activities

(Section 5:31(1) DFSA);

 The Exchange must not be affiliated with persons in a formal or actual control 

structure which is lacking transparency (Section 5:31(3) DFSA);

 The Exchange may not be affiliated with persons in a formal or actual control

structure if the law of a non-member state of the European Economic Area, 

applicable to those persons, constitutes or may constitute an impediment to the 

adequate exercise of supervision of compliance with the DFSA by the Exchange

(Section 5:31(4) DFSA);
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Supervision on and enforcement of trading rules and procedures

 The Exchange must monitor the transactions conducted by its members or 

participants, so as to be able to identify violations of its rules and procedures, as 

well as trading conditions disrupting the orderly operation of the market or actions 

indicative of market abuse (Section 5:32(2) DFSA);

 The Exchange must report serious violations referred to in Section 5:32(2) DFSA 

to the AFM (Section 5:32(3) 5:32(3) DFSA);

 The Exchange must, without delay, supply the applicable information to the AFM, 

the Public Prosecution Service (Openbaar Ministerie) or investigating officers 

competent under the Economic Offences Act (Wet economische delicten), and shall 

fully cooperate with the AFM, the Public Prosecution Service or these 

investigating officers in their investigation or prosecution of actions indicative of 

market abuse that have occurred in or via its systems (Section 5:32(4) 5:32(4) 

DFSA);

 The Exchange must ensure the effective enforcement of the rules on the admission 

of financial instruments to trading on the Exchange (Section 5:32a(2) DFSA);

 The Exchange may not suspend trading in a financial instrument or exclude a 

financial instrument from trading where that instrument no longer complies with 

the rules of the Exchange, if such a measure might seriously harm the interests of 

investors or the orderly operation of the Exchange (Section 5:32g(1) DFSA);

 The Exchange that suspends trading in a financial instrument or excludes a 

financial instrument from trading must disclose this decision and notify the AFM. 

The AFM shall notify the supervisory authorities of the other member states of the 

European Economic Area (Section 5:32g(2) DFSA);

Obligations to notify

 The Exchange must notify the AFM of every intended change to the rules needed

to have in place when applying for a license and which thus have been assessed by 

the AFM as part of the license application procedure, and of every intended change 

with regard to all information provided to the AFM during an application (Section 

5:27(4) DFSA);

 The Exchange must supply the AFM with information on (changes to) its 

ownership structure and that of the Exchange it operates or manages (Section 

5:32l(1)(a) DFSA);

 The Exchange must report to the AFM each transfer of ownership that causes a 

change in the circle of persons exerting a significant influence on the operation of 

the Exchange (Section 5:32l(1)(b) DFSA);

 The Exchange must periodically provide the AFM with a list of the members of 

and participants in the Exchange (Section 5:32l(2)DFSA); and

 If the Exchange intends to take measures in another member state of the European 

Economic Area in order to enable members or participants based in such member 

state to access and trade on the Exchange, it shall inform the AFM of such 

intention (Section 5:32f(1) DFSA).

38. We refer to Annex F-5, which contains a translation of Chapter 5.2 of the DFSA.

39. MiFID II (2014/65/EU)
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On 2 July 2014, MiFID II entered into force and EU member states are required to implement 

MiFID II in their legislation prior to July 2017. With MiFID II entering into force, the rules 

and requirements that apply to, amongst others, regulated markets will change. Although the 

official Dutch legislative proposals for the implementation of MiFID II in the Netherlands are 

not available at this point, we have included an overview of the most important changes for 

regulated markets as a result of MiFID II. The overview below is based on the official text of 

MiFID II and MiFIR and is a non-exhaustive summary of the main amendments under the 

revised framework. Although MiFID II will be worked out in further detail in a level 2 

regulation, the official text thereof is not yet available. The level 2 regulation is therefore not 

included in the below.

Organisational requirements

Pursuant to Article 48 MiFID II, regulated markets are required to:

 have in place procedures, systems and arrangements to ensure that the trading systems 

are resilient and have adequate capacity to deal with peak order and message volumes, 

are able to ensure orderly trading under conditions of severe market stress, are fully 

tested to ensure such conditions are met and are subject to effective business 

continuity arrangements to ensure continuity of its services if there is any failure of its 

trading systems;

 have in place procedures, systems and arrangements to reject orders that exceed predetermined volume and price thresholds or that are clearly erroneous;

 be able to temporarily halt or constrain trading if there is a significant price movement 

in a financial instrument on that (or a related) market during a short period, and, to be 

able to cancel vary or correct any transaction. Parameters determining the need to 

temporarily halt trading must take into account the liquidity of different asset classes 

and sub-classes, the nature of the market model and types of users and is sufficient to 

avoid significant disruptions to the orderliness of trading;

 have in place procedures, systems and arrangements to ensure that algorithmic trading 

systems cannot create or contribute to disorderly trading conditions on the market and 

to manage any disorderly trading conditions which do arise from such algorithmic 

trading system. Part of this requirement is to limit the ratio of unexecuted orders, to 

slow down the flow of orders if there is a risk of the system capacity being reached 

and to limit and enforce the minimum tick size that may be executed on the market;

 systems, procedures and arrangements, including requiring members or participants to 

carry out appropriate testing of algorithms and providing environments to facilitate 

such testing, to ensure that algorithmic trading systems cannot create or contribute to 

disorderly trading conditions on the market and to manage any disorderly trading 

conditions which do arise from such algorithmic trading systems, including systems to 

limit the ratio of unexecuted orders to transactions that may be entered into the system 

by a member or participant, to be able to slow down the flow of orders if there is a 

risk of its system capacity being reached and to limit and enforce the minimum tick 

size that may be executed on the market;

 set and apply appropriate criteria regarding the suitability of persons to whom direct 

electronic access may be provided. Appropriate standards regarding risk controls and 

thresholds on trading must also be installed, in addition to arrangements to suspend or 

terminate the provision of direct electronic access by a member or participant to a 

client in the case of non-compliance; 
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 ensure that its rules on co-location services are transparent, fair and nondiscriminatory. Fee structures must in no event create incentive for disorderly trading 

conditions or market abuse; and

 identify orders generated by algorithmic trading, the different algorithmic used for the 

creation of orders and the relevant persons initiating orders. This information must be 

made available to the competent authorities upon request thereto.

Tick sizes (Article 49 MiFID II)

 For the purpose of preventing the disorderly functioning of the European financial 

markets, MiFID II provides for the harmonization of tick size regimes. Per group of 

financial instruments with the same liquidity class (based on the average number of 

trades per day), a tick size regime will have to be developed and adapted if 

appropriate. Such a tick size regime will be calibrated to reflect the liquidity profile of 

the financial instrument in different markets and the average bid-ask spread, taking 

into account the desirability of enabling reasonably stable prices without unduly 

constraining further narrowing of spreads.

Synchronisation of business clocks

 All trading venues (regulated markets included) and their members/participants are 

required to synchronise their business clocks that are used to record date and time of 

any reportable event. (Article 50 MiFID II)

Requirements in connection to algorithmic trading

 Pursuant to MiFID II, trading venues (regulated markets included) where market 

making activities are undertaken must meet certain requirements. In this respect, there 

are two main goals of MiFID II, namely (i) the introduction of an element of 

predictability to the liquidity in the order book and (ii) maintain the ability of market 

participants to transfer risks efficiently during stressed market conditions (Article 

48(6) MiFID II).

 To fulfil the aims mentioned above, MiFID II includes several new/additional 

requirements for both investment firms that engage in algorithmic trading and for 

regulated markets where such investments firms trade. 

Transparency requirements

Under MiFID II, the following pre-trade transparency requirements will apply for trading 

venues in respect of equity and equity like financial instruments.

 In order to ensure uniform applicable conditions between regulated markets and 

MTF's, both types of trading venues have to comply with the same pre-trade 

transparency requirements. (article 4(6) MiFIR).

 The content of the pre-trade transparency requirements that are included in Table 1 of 

Annex II of the Implementing Regulation of MiFID (1287/2006) will under MiFID II 

apply to all trading venues, regardless the type of equity financial instrument traded. 

Under the current framework, this table only applies to shares admitted to trading on a 

regulated market. 

 Under MiFID II, the same pre-trade transparency requirements for non-equity 

instruments would apply equally to regulated markets, OTF's and MTF's (article 9(5) 

MiFIR). 
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 The pre-trade transparency requirements for non-equity instruments will be based on 

the pre-trade transparency requirements for equity and equity-like financial 

instruments as included in Table 1 of Annex II of the Implementing Regulation of 

MiFID.

 Regulated markets are required to make public information in respect of transactions

executed by or under the rules of the regulated markets. These post-trade transparency 

requirements apply both to transactions in equities and in equity-like instruments. 

Information that has to be provided contains, among others, trading day and time, 

instrument identification, unit price and trade venue identification (article 20 MiFIR).

Reporting

 If commodity derivatives or emission allowances (or derivatives thereof) are traded 

on a regulated market, the market operator is obliged to produce and publish weekly 

position reports with the aggregate positions held by the different categories of 

persons divided by the different commodity derivative. In addition, a market maker 

must provide the competent authority with a complete breakdown of the positions 

held by all persons, including the members or participants and the clients thereof, at 

least on a daily basis (Article 58 MiFID II).

Clearing

MiFIR contains obligations for regulated markets regarding the clearing of derivatives traded 

on regulated markets and timing of acceptance for clearing (Article 29 MiFIR).

 The regulated market is required to ensure that all these transactions are cleared in 

accordance with applicable regulation. 

 This means that the regulated market has to install effective systems, procedures and 

arrangements in relation to cleared derivatives in order to ensure that the transactions 

in cleared derivatives are submitted and accepted for clearing as quickly as 

technologically practice using automatic systems.

(iii) The financial resource requirements applicable to the authorization, licensure or 

registration of the foreign board of trade and the continued operations thereof.

40. According to Section 5:30(f) DFSA, the Exchange must have sufficient financial 

resources to promote the orderly operation of the market, in view of the nature and size 

of the transactions carried out on the market and the scope and level of the risks to 

which it is exposed.

41. The Exchange should maintain a minimum of 3 months OPEX as restricted cash; € 1.0 

Million. 

42. Also, shareholdings in the Exchange are regulated. According to Section 5:32d DFSA,

no party may, except after obtaining a declaration of no objection, own, acquire or 

increase a qualifying holding or exercise any control relating to a qualifying holding in 

the Exchange. Such declaration of no objection will be rejected if: (i) the act might or 

would have the effect that the Exchange becomes affiliated to persons in a formal or 

actual control structure that is so lacking in transparency that it would constitute an 

impediment to the adequate exercise of supervision of compliance with the rules
ICE ENDEX DERIVATIVES

29 June 2016

 

applicable to the Exchange, (ii) the act might or would lead to an influence on the 

Exchange that is contrary to the interests which the DFSA seeks to protect, and (iii) the 

act might jeopardize the healthy and prudent management of the Exchange.

43. The Minister of Finance has published a policy on the declaration of non-objection 

(Beleidslijn verklaring van geen bezwaar gekwalificeerde deelneming in een 

marktexploitant ex artikel 5:32d Wft), which is available in English translation as 

Annex F-5(1). 

(iv) The extent to which the IOSCO Principles are used or applied by the regulatory 

regime/authority in its supervision and oversight of the foreign board of trade or 

are incorporated into its rules and regulations and the extent to which the 

regulatory regime/authority reviews the applicable trading systems for compliance 

therewith.

44. The AFM is a member of IOSCO and explicitly states on its website that it cooperates 

on an international level with its colleagues of IOSCO. It furthermore declares on its 

website that an extensive set of Objectives and Principles of Securities Regulation has 

been formulated, which it acknowledges as setting the benchmark for securities 

supervision. The content of this part of the website is unfortunately not available in 

English.

45. Furthermore, the minimum standards in the Oversight Framework (see Annex F-6, 

signed version under Annex A-5(2)), to which the Exchange and ICE Clear are 

subjected, are based on the international Recommendations for Securities Settlement 

Systems, which are developed by, amongst others, the Technical Committee of the 

IOSCO. We refer to Section 3.10 of the Oversight Framework.

46. Finally, as follows from Section 4(a) of the Co-op Agreement (see Annex F-7) the 

Principles for Financial Market Infrastructures have been issued in cooperation with the 

IOSCO, will be taken into account by the AFM and the Dutch Central Bank in 

exercising their supervisory powers.

(v) The extent to which the regulatory regime/authority reviews and/or approves the 

trading rules of the foreign board of trade prior to their implementation.

47. Based on Section 5:32a(1)(a) DFSA, the Exchange must have in place clear and 

transparent rules on the admission of the derivatives on the Exchange.

48. Also, Section 37 MiFID Regulation (see Annex F-8) requires that:

 the terms of the contract establishing the financial instrument must be clear and 

unambiguous, and enable a correlation between the price of the financial instrument

and the price or other value measure of the underlying;

 with regard to certain derivatives, the price or other value measure of the underlying 

must be reliable and publicly available;

 sufficient information of a kind needed to value the derivative must be publicly

available;

 the arrangements for determining the settlement price of the contract must be such 

that the price properly reflects the price or other value measure of the underlying; and
ICE ENDEX DERIVATIVES

29 June 2016

 

 where the settlement of the derivative requires or provides for the possibility of the 

delivery of an underlying security or asset rather than cash settlement, there must be 

adequate arrangements to enable market participants to obtain relevant information 

about that underlying as well as adequate settlement and delivery procedures for the

underlying.

49. Furthermore, based on Section 5:30(a-e) DFSA, the Exchange must ensure that it has 

in place rules on the following topics:

 identifying and controlling potential negative consequences for the operation or 

proper functioning of the Exchange or for its participants of conflicts between the 

interests of the owners or the Exchange; 

 control of the risks to which it is exposed, in any case by having rules and 

regulations for identifying all significant risks to the operation and for taking 

effective measures to limit those risks; 

 a healthy management of the technical operation of the system and effective 

precautionary measures to eliminate risks relating to system breakdowns; 

 fair and orderly trading, as well as objective criteria for the efficient execution of 

orders; and

 settling transactions carried out through its system efficiently and in time.

50. Having these rules in place is not only an ongoing requirement but also a requirement 

for obtaining a license to operate or manage a regulated market in the Netherlands 

(Section 5:27(1)(b, d) DFSA) and these rules will therefore be reviewed by the AFM as 

part of the license application.

51. After having obtained the license, the Exchange must notify the AFM of every intended 

change to these rules (Section 5:27(4) DFSA).

52. For these rules, we refer to Annex F-5.

(vi) The extent to which the regulatory regime/authority reviews and/or approves 

futures, option or swap contracts prior to their being listed for trading. 

53. There is no legal provision that requires the Exchange to let the AFM evaluate the 

individual derivative contracts prior to such contracts being traded on the Exchange.

54. However, the Exchange and the AFM have agreed that the Exchange will submit a 

description of any new instrument to the AFM before listing it for trading. The 

Exchange will not list the instrument if the AFM objects thereto. 

55. In addition, the Exchange is required to set clear and transparent rules on the admission 

of financial instruments on the Exchange (such as the derivative contracts traded) 

(Section 5:32a(1)(a) DFSA). This requirement is part of the requirements set for a 

license (Section 5:27(1)(d) DFSA) and amendments to such admittance rules should be 

disclosed to the AFM at any time after the license is obtained (Section 5:27(4) DFSA).

(vii) The regulatory regime/authority’s approach to the detection and deterrence of 

abusive trading practices, market manipulation, and other unfair trading 

practices or disruptions of the market. 
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29 June 2016

 

56. Per 3 July Regulation No 596/2014 on market abuse (“MAR”) is applicable repealing 

the Directive 2003/6/EC (”MAD”). The regulation is directly applicable in all EU 

member states and does have not to be implemented in national legislation. The MAR 

should ensure for a consistent anti-market abuse framework in the entire European 

Union. In general the MAR contains provisions on the prohibition of insider trading 

and market manipulation. Further it contains reporting requirements for investment 

firms. 

57. Besides these prohibitive provisions, the MAR contains several other rules to prevent 

market abuse, i.e. the obligation for institutions to disclose inside information to the 

public as soon as possible, the obligation to draw up a list of persons who have access 

to inside information, the duty to notify certain transactions of persons within the 

higher management of the institution and the duty to report suspicious, potentially 

market-abuse related transactions to the regulator.

58. The AFM provided guidance on market manipulation (see Annex F-4).

(3) A description of the laws, rules, regulations and policies that govern the 

authorization and ongoing supervision and oversight of market intermediaries who may 

deal with members and other participants located in the United States participants, 

including: 

59. Based on Section 2:96(1) DFSA, it is prohibited to provide investment services in the 

Netherlands without a license from the AFM, unless an exception or exemption applies. 

Investment services include, amongst others, executing orders with regard to financial 

instruments for the account of clients in the pursuit of a profession or business (Section 

1:1 DFSA). An entity that provides such investment services qualifies as an investment 

firm.

60. In order to obtain such a license, an investment firm must, in short, comply with 

requirements on the following topics (Section 2:99(1) DFSA):

 the suitability of the persons responsible for the day-to-day policy;

 the integrity of the persons responsible for the day-to-day policy;

 the policy on the sound conduct of business;

 the minimum number of persons determining the day-to-day policy and the place 

from which they perform their activities;

 the control structure;

 the operational structure;

 adequate measures to protect clients’ rights;

 adequate policy in order to preclude the conflicts of interests;

 the minimum equity capital; and

 solvency.

61. For this requirement, we also refer to Annex F-9. 
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29 June 2016

 

62. Admission of Members is governed by the Rules, clause I-4, (which can be found in 

Annex A-6(1)) and which is further explained in Exhibit B. 

63. With respect to the provision of investment services, the AFM performs ongoing 

supervision on, in short, the following topics:

 classification of clients according to their financial expertise;

 commercial communications (such as advertisements);

 mandatory provision of information, before and during the provision of the 

investment services;

 know-your-customer;

 separation of assets;

 conflicts of interest;

 client files;

 inducements;

 order execution; and

 administration.

(i) Recordkeeping requirements.

64. According to Section 4:89 DFSA, the investment firm must keep a file of each client 

that contains a description of the mutual rights and obligations. Also, the investment 

firm must agree with the client on the mutual rights and obligations in an agreement in 

written form or on a durable medium.

65. Furthermore, an investment firm must retain all relevant data regarding the transactions 

in financial instruments it conducted for a minimum period of five years (Section 

4:90e(1) DFSA).

66. We refer to Annex F-10 for these rules.

(ii) The protection of customer funds.

67. The Dutch financial legislation provides several rules on separation of assets. Based on 

Section 4:87(1) DFSA, an investment firm that holds financial instruments belonging to 

a client must take adequate measures to protect the client’s rights to those financial 

instruments and to prevent the use by the investment firm of those financial instruments 

for its own account, except with the client’s express permission. These rules are further 

specified in the Further Regulations on the Supervision of the Conduct of Financial 

Undertakings DFSA ("FR", Nadere Regeling Gedragstoezicht financiële 

ondernemingen Wft). Based on Section 6:15 FR, the investment firm must ensure that:

 monies and financial instruments of a client are held with a credit institution (such 

as a bank) on an account in the name of the client;

 when executing transactions, no accounts of the investment firm are used; and

 the mandate from the client is explicitly limited to using the monies and financial 

instruments of the client in the performance of the services by the investment firm.
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29 June 2016

 

68. Also, the Oversight Framework demands from ICE Clear that it requires participants to 

have sufficient financial resources to meet obligations arising from participation in the 

clearing and settlement system (Section 3.2.2 Oversight Framework, Annex F-6).

(iii) Procedures for dealing with the failure of a market intermediary in order to 

minimize damage and loss to investors and to contain systemic risk.

69. Based on Section 3.2.3 of the Oversight Framework, ICE Clear must manage its 

exposures to potential losses from defaults by the participants through margin 

requirements and other effective risk control mechanisms. The margin requirements 

should cover potential price movements in normal market conditions. Sufficient 

financial resources should be available in the clearing system to withstand a default by 

the participant which is responsible for the largest exposure under plausible market 

conditions. All financial resources should be held in such a manner that liquidity,

market and credit risks are minimized. The default procedures should be clearly and 

specify timely actions to contain losses and liquidity pressures and should ensure ICE 

Endex to continue meeting its obligations (See Annex F-6).

70. Both the Exchange and ICE Clear have formulated default rules.

71. The Exchange may suspend a Member upon receiving a copy of a default notice, as 

provided for in clause I-10 of the Rules (which can be found in Annex A-6(1). A 

Member has not access to the ICE Endex Platform or services while suspended. The 

Exchange will immediately cease to process and submit any transaction data to the 

Clearing House in such case.

72. The default rules of ICE Clear Europe are attached at Annex H-1(1). Under these rules 

ICE Clear Europe has a range of options. Contracts between the defaulting member and 

ICE Clear Europe (as counterparty to the contract) may be allowed to settle or 

transferred to another clearing member or the positions will be closed out.

(4) A description of the regulatory regime/authority’s inspection, investigation and 

surveillance powers; and the program pursuant to which the regulatory 

regime/authority uses those powers to inspect, investigate, and enforce rules 

applicable to the foreign board of trade.

73. The AFM has several investigative powers, like the authority to demand information, 

the authority to demand to inspect business information and documents and the 

authority to enter any place with the exception of a dwelling. Any person is obliged to 

give the supervisor all such assistance as he may reasonably demand in the exercise of 

his investigative powers.

74. If a violation is discovered, the AFM may use one of the enforcement tools available 

under the DFSA, like issuing an instruction order, the appointment of one or more 

persons as custodian with regard to all or certain bodies or representatives of a financial 

enterprise, imposing an order for incremental penalty payments or imposing an 

administrative fine. In principle, the maximum fine for an individual violation is EUR

4,000,000. However, if at the time of the violation, a period of five years has not yet 

lapsed since the imposition of a fine for an identical violation, the fine for the second 

violation can be doubled. This means that the maximum fine may amount to EUR 
ICE ENDEX DERIVATIVES

29 June 2016

 

8,000,000 in case of a repeated violation. In addition, the law provides that, if the 

benefits obtained as a result of the violation exceed EUR 2,000,000, the fine may also 

be determined on the basis of twice the benefits which were realized by the breach. In 

that case, the fine could be higher than EUR 8,000,000.

75. Acting in contravention of Sections 5:26(1) (license requirement), 5:30/5:32 (Exchange 

rules and procedures and financial resources) and 5:32d(1) (obtaining a qualified 

holding in the Exchange) DFSA may also constitute an economic offence under the 

Economic Offences Act (Wet op de economische delicten, "EOA"). The sanctions in 

the EOA differ depending on whether the offence was committed intentionally or not. 

These sanctions include imprisonment up to a maximum of two years and penalties up 

to a maximum of EUR 780,000.

(5) For both the foreign board of trade and the clearing organization (unless addressed 

in Supplement S-1), a report confirming that the foreign board of trade and 

clearing organization are in regulatory good standing, which report should be 

prepared subsequent to consulting with the regulatory regime/authority governing 

the activities of the foreign board of trade and any associated clearing organization. 

The report should include:

(i) Confirmation of regulatory status (including proper authorization, licensure and 

registration) of the foreign board of trade and clearing organization.

(ii) Any recent oversight reports generated by the regulatory regime/authority that 

are, in the judgment of the regulatory regime/authority, relevant to the foreign 

board of trade’s status as a registered foreign board of trade.

(iii) Disclosure of any significant regulatory concerns, inquiries or investigations by 

the regulatory regime/authority, including any concerns, inquiries or investigations 

with regard to the foreign board of trade’s arrangements to monitor trading by 

members or other participants located in the United States or the adequacy of the 

risk management controls of the trading or of the clearing system.

(iv) A description of any investigations (formal or informal) or disciplinary actions 

initiated by the regulatory regime/authority or any other self-regulatory, regulatory 

or governmental entity against the foreign board of trade, the clearing organization 

or any of their respective senior officers during the past year.

76. A letter confirming that the Exchange is in regulatory good standing is attached as 

Annex A-7(1). It is understood that as ICE Clear Europe is CFTC supervised DCO 

there is no need to submit a good stand report for it.

(6) For both the foreign board of trade and the clearing organization (unless addressed 

in Supplement S-1), a confirmation that the regulatory regime/authority governing 

the activities of the foreign board of trade and the clearing organization agree to 

cooperate with a Commission staff visit subsequent to submission of the application 

on an “as needed basis,” the objectives of which will be to, among other things, 

familiarize Commission staff with supervisory staff of the regulatory 

regime/authority; discuss the laws, rules and regulations that formed the basis of 

the application and any changes thereto; discuss the cooperation and coordination 

between the authorities, including, without limitation, information sharing 

arrangements; and discuss issues of concern as they may develop from time to time 

(for example, linked contracts or unusual trading that may be of concern to 

Commission surveillance staff).
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29 June 2016

 

77. The confirmation that the AFM is willing to cooperate with a Commission staff visit 

subsequent to submission of the application on an “as need basis”, is attached as Annex 

F-11