Copyright © 2023 Bitnomial Exchange, LLC. All rights reserved. 1

November 13, 2023

BY ELECTRONIC FILING

Mr. Christopher J. Kirkpatrick

Office of the Secretariat

Commodity Futures Trading Commission

Three Lafayette Centre

1155 21st Street, N.W.

Washington, D.C. 20581

Re: BTNL 2023-006 Self-Certification Pursuant to CFTC Regulation 40.2(a) 

Certification. Listing of Ether US Dollar Deca Futures and Options Contracts

Dear Mr. Kirkpatrick:

Bitnomial Exchange, LLC. (“Bitnomial” or “Exchange”), a designated contract market (“DCM”), 

hereby notifies the Commodity Futures Trading Commission (“CFTC” or “Commission”) that it 

hereby submits for self-certification its initial listing of the Ether US Dollar Deca Futures (“EUD”)

and Options (“EUDO”) contracts to be offered for trading on the Exchange for an intended trade 

date on or after November 15, 2023. Ether US Dollar Deca Futures and Options-related rules 1301-

1305 will be added to the Bitnomial Rulebook.

Contract Descriptions

Ether (ETH) is the native cryptocurrency of the Ethereum platform, used primarily as a form of 

payment for transactions and computational services on the Ethereum network.

The EUD contract is a physically settled, margined futures contract based on the price of ten Ether.

The EUDO options contract is based on one EUD contract. The EUD contract is a physically 

delivered contract. At the current price of approximately $2,000, the notional value of each 

contract would be approximately $20,000. Attached Exchange Rules 1301 and 1302 detail the 

product specifications for EUD and EUDO, respectively. 

Ether Market Overview 

Ethereum is a decentralized, open-source blockchain platform that enables developers to build 

and deploy smart contracts and decentralized applications. Its native cryptocurrency is called 

Ether (ETH). Smart contracts are self-executing contracts with the terms directly written into 

code, automatically executing actions when predetermined conditions are met. These smart 

contracts and decentralized applications can be built and deployed by anyone, operating on a 

global network of public nodes.

Figure 1: Ether Price History
Copyright © 2023 Bitnomial Exchange, LLC. All rights reserved. 2

Source: https://coinmarketcap.com/currencies/ethereum/

Current Ether Circulation

Currently there are approximately 120M (as of Oct. 20th) Ether in circulation. The below chart 

shows the Ether supply growth since the genesis block.

Figure 2: Ether Supply Growth Chart

Source: https:// etherscan.io/chart/ethersupplygrowth
Copyright © 2023 Bitnomial Exchange, LLC. All rights reserved. 3

Before Ethereum transitioned to a proof-of-stake consensus mechanism, miners were issued 

approximately 13,000 ETH per day. After the transition, also known as The Merge, this has 

significantly reduced to approximately 1,700 ETH per day issued to stakers, based on about 14 

million total ETH staked. It's important to note that the exact staking issuance fluctuates based 

on the total amount of ETH staked. With The Merge, only the ~1,700 ETH/day remains, which 

has dropped the total new ETH issuance by about 88%. (Source: 

https://ethereum.org/en/roadmap/merge/issuance/)

Cash Market Ether Trading

Ether is a highly liquid, highly traded digital asset. Ether is ranked #3 in terms of 24hr volume 

only behind USDT (Tether) and BTC (Bitcoin). Source: https://coinmarketcap.com. Figure 3 is a 

historical, 3-year snapshot of month-by-month ETH-USD trading pair volume.

Figure 3: ETH-USD Trading Pair Volume By Month

Source: https://finance.yahoo.com/quote/ETH-USD/history

On average, approximately 402,756,694,771 Ether trade as the ETH-USD pair on ETH cash 

markets per month.

Deliverable Supply Estimate

As stated above, there are approximately 120M Ether in circulation, with a supply growth of 

approximately ~0.52% annually (624,000 Ether). The Exchange proposes a spot month position 
Copyright © 2023 Bitnomial Exchange, LLC. All rights reserved. 4

limit of 60,000 ETH or 6,000 Ether futures contract equivalents, representing 0.05% of total 

deliverable supply.

Core Principle Compliance

Bitnomial has determined that its rules related to the listing of EUD and EUDO contracts comply 

with the requirements of the Commodity Exchange Act and the rules and regulations promulgated 

by the Commission thereunder. Bitnomial has reviewed the DCM Core Principles and related 

guidance and determined that the listing of EUD and EUDO contracts impact the following Core 

Principles:

Core Principle 2 - Compliance with Rules:

Trading and delivery of EUD contracts are subject to the Business Conduct and Trading Practice 

Rules found in Chapter 4 of the Bitnomial Rulebook including Rule 403 which forbids prearranged, pre-negotiated non-competitive trades. Trading and delivery in these products will also 

be subject to Market Operations and Discipline and Enforcement Rules found in Chapters 5 and 

6, respectively.

Core Principle 3 - Contracts Not Readily Subject to Manipulation:

Trading and delivery of EUD contracts are not readily subject to manipulation because they are 

subject to position limits. Daily and Final settlement will be determined in accordance with 

Bitnomial Rule 509.

Core Principle 4 - Prevention of Market Disruption:

Trading and delivery of EUD contracts are subject to prohibitions of market disruption under 

Chapters 4, 5, and 6 relating to Business Conduct and Trading Practices, Market Operations, and 

Discipline and Enforcement, respectively. All trading at Bitnomial Exchange is subject to market 

surveillance and a robust disciplinary framework.

Core Principle 5 - Position Limits or Accountability:

Trading and delivery of EUD contracts are subject to position limits set forth in Chapter 13. The 

position limits are consistent with Commission guidance. Position limits may be adjusted based 

on market needs. 

Core Principle 7 - Availability of General Information:

Prior to the launch of trading of EUD contracts, product terms and conditions will be available on 

the Bitnomial website. Information on delivery of EUD contracts is also available on the Bitnomial 

website.
Copyright © 2023 Bitnomial Exchange, LLC. All rights reserved. 5

Core Principle 8 - Daily Publication of Trading Information:

The Exchange will publish EUD trading volumes, open interest levels, and price information on 

its website and through quote vendors. 

Core Principle 9 - Execution of Transactions:

Execution of all EUD contracts will take place on the Bitnomial electronic trading platform. 

Electronic execution provides competitive and transparent transactions. All EUD contracts will be 

cleared by MGEX.

Core Principle 10 - Trade Information:

All requisite trade information will be recorded and stored in the audit trail and will be surveilled 

and monitored in accordance with Bitnomial Rules.

Core Principle 11 - Financial Integrity of Transactions:

All EUD contracts will be cleared through MGEX, a DCO subject to Commission rules and 

oversight.

Core Principle 12 - Protection of Markets and Market Participants:

Bitnomial Rules have set forth numerous requirements and protections to prevent intermediaries 

from disadvantaging customers. 

Core Principle 13 - Disciplinary Procedures:

All EUD contracts are subject to the protections provided by Chapter 6 of the Bitnomial Rulebook. 

Chapter 6 describes the disciplinary procedures of the Exchange that authorize the Exchange to 

discipline, suspend, or expel Participants that violate Exchange Rules.

Core Principle 14 - Dispute Resolution:

Disputes arising from trading of EUD contracts must be arbitrated in accordance with Bitnomial 

Rules found in Chapter 7. All disputes, controversies or claims between or among themselves that 

relate to or arise out of any contract or otherwise arise out of one or more transactions made or to 

be made on the Exchange or subject to the Rules and are based upon facts and circumstances that 

occurred at a time when the parties were Participants or Customers.

Certification 
Copyright © 2023 Bitnomial Exchange, LLC. All rights reserved. 6

The Exchange has spoken with Clearing Members and market participants who support the 

decision to launch Ether US Dollar Deca Futures and Options contracts. The Exchange is not aware 

of any substantive opposing views to the Contracts. The Exchange certifies that the Contracts and 

related rules certified herein comply with the Commodity Exchange Act and the rules and 

regulations promulgated thereunder. 

The Exchange certifies that this submission has been concurrently posted on the Exchange’s 

website at: https://bitnomial.com/exchange/regulation/

If you have any questions or require further information, please contact the undersigned at 

james.walsh@bitnomial.com.

Sincerely, /s/ 

James A. Walsh

Chief Regulatory Officer

Bitnomial Exchange, LLC
Copyright © 2023 Bitnomial Exchange, LLC. All rights reserved.

ETHER US DOLLAR DECA FUTURES AND OPTIONS

Rule 1301 Ether US Dollar Deca Futures

Product Name Ether US Dollar Deca Futures

Product Code EUD

Contract Size 10 Ether

Price Quotation US Dollars per Ether

Minimum Price Fluctuation $1 per Ether ($10 per contract)

Trading Hours 8:30 Open to 14:30 Close CPT, Monday through Friday

Trading Termination 9:30 CPT of the trading day two trading days prior to the last 

Friday of the expiry month

Reportable Position Level 25 contracts

Margin US Dollars

Settlement Deliverable1

Settlement Price See Rule 1305

Listing Up to twelve consecutive contract months

Deliver Rules Bitnomial Rulebook Chapter 11

Clearing and Delivery 

Timeline

See MGEX Rulebook Chapter 23: Bitnomial Exchange Clearing 

Rules

1 Bitnomial Settlement, LLC is authorized by the Exchange and not licensed, approved, or registered with 

the CFTC.
Copyright © 2023 Bitnomial Exchange, LLC. All rights reserved.

Rule 1302 Ether US Dollar Deca Futures Options

Product Name Ether US Dollar Deca Futures Options

Product Code EUDO

Strike Price Listing

Initial listing includes at least one strike at the previous 

settlement price of the underlying contract rounded down to the 

nearest minimum strike interval. Minimum strike interval is 

$100.00. Additional strikes may be listed at the discretion of the 

Exchange on any trading day.

Contract Size One EUD futures contract

Exercise Style European

At-The-Money Behavior Abandon Calls and Puts. Please see MGEX Rule 23.8.2: 

Options – Automatic Exercise

Underlying Product Code EUD

Minimum Price Fluctuation $1 per Ether ($10.00 per contract)

Trading Hours 8:30 Open to 14:30 Close CPT, Monday through Friday.

Trading Termination Trading in an option class shall terminate at 14:30 CPT six 

business days prior to trading termination of the underlying 

futures contract.

Reportable Position Level 25 contracts

Margin Unit US Dollars

Settlement Deliverable into EUD futures contract

Settlement Price See Rule 1305

Listing Up to 4 consecutive quarterly contract months or as otherwise 

determined by the Exchange from time to time.

Rule 1303 Ether US Dollar Deca Futures and Options Price Bands and Price Limits

(a) Price Bands. Price Bands are a per-product price range for aggressive 

orders based on the latest top-of-book price. The initial Price Bands are based on the 

previous day settlement price +/- the Price Band Variation which is set by the Bitnomial 

Market Operations & Risk Team. The Price Band Variation range is continuously re-
Copyright © 2023 Bitnomial Exchange, LLC. All rights reserved.

calculated from top-of-book.

(b) Price Limits. Price Limits are a per product price range based on a 

percentage of the previous day settlement price. If a trade occurs at the Price Limit for a 

side, the matching engine triggers a timer. If the timer elapses and no trades occur inside 

of the Price Limit, the Price Limits are re-calculated and reset. The resultant Price Limits 

are outside the original Price Limits to allow for additional price movement. The Exchange 

Market Operations & Risk Team may adjust the daily Price Limits at its sole discretion 

based on market conditions.

Products Price Band Variation Price Limit (the greater of)

EUD $25 50% or $1,000

EUD-EUD $5 50% or $500

EUDO $25 100% or $1,000

Rule 1304 Ether US Dollar Deca Futures and Options Position Limits

For purposes of aggregation, no market participant shall own or control any combination 

of futures and options contracts that exceeds sixty thousand (60,000) Ether US Dollar Deca 

Futures-equivalent contracts net long or short in any single month, twelve thousand (12,000) of 

such contracts net long or short beginning on the first trading day of the delivery month, or six

thousand (6,000) of such contracts net long or short beginning on the first day of the Delivery 

Period. In no case may a market participant own, or control more than two hundred forty thousand 

(240,000) Ether US Dollar Deca Futures-equivalent contracts net long or short for all contract 

months.

In determining whether any market participant has exceeded the position limits, all 

positions in accounts for which such market participant by power of attorney or otherwise directly 

or indirectly holds positions or controls trading will be included with the positions held by such 

market participant. Position limits will apply to positions held by two or more market participants 

acting pursuant to an expressed or implied agreement or understanding, the same as if the 

positions were held by a single market participant.

Rule 1305 Ether US Dollar Deca Futures and Options Settlement Price Computation

(a) Settlement Times and Definitions

Daily Settlement Period Five minutes prior to Trading Close

Final Settlement Period Five minutes prior to Trading Termination

Settlement Period Daily or Final Settlement Period

Roll Period Five trading days prior to contract expiration day

Front Month Contract 

After Roll Period Next contract to expire
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Deferred Month 

Contracts

All contracts yet to expire excluding the Front Month 

Contract

Pricing Contract Contract used for determining settlement prices

(b) Futures Pricing Contract Selection. Unless during the Roll Period, the 

Front Month Contract is the Pricing Contract for determining settlement prices. During the 

Roll Period, the next-to-expire Deferred Month Contract is used as the Pricing Contract.

(c) Futures Settlement Price Computation

(i) The settlement price of the Pricing Contract is the volume-weighted 

average price (VWAP) of all the trades during the Settlement Period.

(ii) If no trades occur during the Settlement Period, the settlement price is 

the time-weighted average price (TWAP) of the bid-ask spread 

midpoint during the Settlement Period.

(iii) If a bid-ask spread isn’t available during the Settlement Period, earlier 

market data or a composite spot price is used from spot markets 

deemed acceptable by Bitnomial.

(iv) All settlement prices are rounded to the nearest tick.

(d) Options Settlement Price Computation

(i) The settlement price of the Pricing Contract is the volume-weighted 

average price (VWAP) of all the trades during the Settlement Period.

(ii) If no trades occur during the Settlement Period, the settlement price is 

the time-weighted average price (TWAP) of the bid-ask spread 

midpoint during the Settlement Period.

(iii) If a bid-ask spread isn’t available during the Settlement Period, the 

settlement price is the output of the Black-Scholes model based on that 

day’s settlement price and 30-day volatility of the underlying contract.

(iv) All settlement prices are rounded to the nearest tick.

(e) Futures Non-Pricing Contract Settlement Prices. The settlement prices 

for non-Pricing Contracts are inferred from the quoted spread market relationships to the 

Pricing Contract settlement price, directly or indirectly.

(f) Futures Final Settlement. During the Final Settlement Period the Front 

Month Contract final settlement price is determined using the non-Pricing Contract 

settlement price procedure.
Copyright © 2023 Bitnomial Exchange, LLC. All rights reserved.

(g) Options Final Settlement. During the Final Settlement Period the Front 

Month Option Contract will settle based on the underlying Futures Contract.

(h) Sole Discretion. The Exchange has sole discretion to determine an 

alternative settlement price if the stated settlement procedure produces prices which are not 

representative of the fair value of the contract.