Appendix FF

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CFTC Designated Contract Market 23 Core Principles Chart

CFTC Regulations Part 38 Designated Contract Market 

(“DCM”) Core Principles of section 5(d) of the Commodity 

Exchange Act

Cleartrade Exchange Pte. Limited (“Cleartrade” or 

“Exchange”)

Core Principle 1: DESIGNATION AS A CONTRACT MARKET

(a) In general. To be designated, and maintain a designation, as a 

contract market, a board of trade shall comply with:

(1) Any core principle described in section 5(d) of the Act, and

(2) Any requirement that the Commission may impose by rule 

or regulation pursuant to section 8a(5) of the Act.

(b) Reasonable discretion of the contract market. Unless otherwise 

determined by the Commission by rule or regulation, a board of trade 

described in paragraph (a) of this section shall have reasonable 

discretion in establishing the manner in which the board of trade 

complies with the core principles described in this subsection.

In order to be registered and maintain registration as a foreign board of 

trade (“FBOT”), Cleartrade shall comply with the core principles 

described in Section 5(d) of the Act, to the extent they are applicable to 

Cleartrade in its operation an FBOT, and shall comply with all 

requirements as required under CFTC Regulation Part 48. Cleartrade 

shall also seek to comply with any requirements that the Commission 

may impose by rule or regulation pursuant to Section 8a(5) of the Act. 

Core Principle 2: COMPLIANCE WITH RULES

(a) In general. The board of trade shall establish, monitor, and enforce 

compliance with the rules of the contract market, including:

(1) Access requirements;

(2) The terms and conditions of any contracts to be traded on 

the contract market; and

(3) Rules prohibiting abusive trade practices on the contract 

market.

(b) Capacity of contract market. The board of trade shall have the 

capacity to detect, investigate, and apply appropriate sanctions to any 

person that violates any rule of the contract market.

(c) Requirement of rules. The rules of the contract market shall provide 

the board of trade with the ability and authority to obtain any necessary 

information to perform any function described in this subsection, 

including the capacity to carry out such international information-

(a) Cleartrade has established, monitors and enforces compliance with 

its rules, including with respect to those rules outlined in Core Principle 

These are outlined below. 

(1) Access requirements: Prior to granting any member on 

Cleartrade (“Member”) access to the Cleartrade Platform, a 

Member must consent to the jurisdiction of Singapore law 

coupled with a comparable fee structure. Once a Member 

meets the access requirements as further set forth below, they 

are then subject to access limitations which include impartially 

enforced rules governing denials, suspensions, and revocations 

of a Member’s and a person with trading privileges’ access 

privileges.
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sharing agreements as the Commission may require.

CFTC Guidance: Investigations and investigation reports – Warning 

letters: The rules of a DCM may authorize compliance staff to issue a 

warning letter to a person or entity under investigation or to recommend 

that a disciplinary panel take such an action.

To be a trading Member of Cleartrade, a Member first needs to 

have an existing clearing account with one of the general 

clearing members of Cleartrade’s partner clearing houses to be 

able to clear the products that Cleartrade offers on its platforms 

(Forward Freight Agreements, Iron Ore Swaps, Fertilizer Swaps 

and Containers). The Member must also complete the

Cleartrade Exchange membership process by completing the 

Membership Agreement, Authorised Representative List Form 

and the Responsible Individual List form.

An applicant for access to trading on the Cleartrade Platform as 

a Member must, at the time of its application and at all times 

thereafter:

a. be a corporation or institution duly established and validly 

existing under the laws and rules of its place of 

establishment;

b. be able to demonstrate, to the satisfaction of the Exchange, 

that the applicant is fit and proper to be a Member 

according to the criteria determined by the Exchange 

which reference shall be made to the Guidelines on Fit and 

Proper Criteria (Guideline No: FSG-G01) (“Guidelines”) 

issued by the Monetary Authority of Singapore (“MAS”), 

as amended from time to time; 

c. be able to demonstrate, to the satisfaction of the Exchange, 

that the applicant has sufficient systems and controls in 

place to ensure that all the Member’s Representatives who 

may act on its behalf or in its name in the conduct of 

business on the Cleartrade Platform are fit and proper, 

suitable, adequately trained and properly supervised to 

perform such functions;

d. maintain a properly established office (in a location which 

is acceptable to Cleartrade’s directors (the “Directors”) as 

they may determine in their absolute discretion) for the 

conduct of its business on the Cleartrade Platform;

e. satisfy the minimum financial standing requirements at 

any time being stipulated by the Directors in relation to the 

relevant category of membership;
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f. have sufficient resources and manpower, with adequate 

knowledge, experience, training and competency, to deal 

in the relevant products available on the Exchange;

g. have more than one trader or broker, with adequate 

knowledge, experience, training and competency, to deal 

in the relevant products available on the Exchange;

h. have a designated responsible person for the supervision of 

all trades conducted on the Exchange and the use of the 

Exchange in general;

i. be a party to an Electronic User Agreement, which is in 

full force and effect, in the form prescribed by the 

Directors from time to time for use by the Member of the 

Cleartrade Platform at the address(es) notified to the 

Exchange;

j. be a clearing member of the relevant clearing house(s) (or 

be accepted for such membership), where permitted by 

Cleartrade’s Rules, or be a party to a clearing agreement 

with a clearing member in respect of contracts listed on the 

Exchange and covered by its trading and/or clearing or 

privilege under Rule 2 in the Cleartrade Rulebook from 

time to time; 

k. hold all necessary licenses, authorizations and consents, or 

benefit from available exemptions, so as to allow it to 

carry on business as a Member on the Cleartrade Platform 

in accordance with all applicable laws and regulations; for

avoidance of doubt, in relation to a Member who is based 

in Singapore, it must be appropriately licensed or 

exempted under the Securities and Futures Act (“SFA”) or 

relevant Singapore legislation or regulation; 

l. for applicants who are not licensed under the SFA as 

“Capital Markets Service” licencees and apply for access 

to trading on the Cleartrade Platform as “Broking 

Members” or “Block Trade Broking Members,” they shall 

not have a business presence in Singapore and shall not 

transact business on behalf of Singapore-based clients; and

m. such other specific criteria or other requirements stipulated 
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by the Directors from time to time in relation to the 

particular category of membership applicable to it, 

supplying such documents in support thereof as they may 

require.

(2) The terms and conditions of any contracts to be traded: 

Cleartrade monitors and enforces compliance with its Rules 

with respect to the terms and conditions of contracts to be 

traded on the Cleartrade Platform. Rules 9 and 10 of the 

Cleartrade Rulebook set forth the general provisions for 

contracts traded on the Exchange as well as contract 

procedures. These Rules also set forth the mechanism and 

procedures for the variation of Contract Rules from time to time 

by the Directors.

(3) Rules prohibiting abusive trade practices: Cleartrade has 

established rules to ensure the prohibition of abusive trade 

practices on the Exchange, including the prohibition of front 

running of orders; trading against customer orders; 

accommodation trading; improper cross trading; wash trading; 

prearranged trading; fraudulent trading; and money passes. In 

its Rulebook, Cleartrade sets forth rules that specifically deal 

with circumstances in which acts of misconduct or breaches of 

the rules have occurred, and the steps which Cleartrade can take 

to sanction or punish a Member for such breaches. Cleartrade’s 

Rulebook also sets forth the monitoring and enforcement of 

such rules but outlining the right of Cleartrade to investigate 

such breaches, and stipulating how such breaches should be 

dealt with in set procedures. A detailed description of 

Cleartrade’s trade practice rules and its capacity to detect, 

investigate and sanction persons who violate Cleartrade’s Rules 

is set forth in Exhibit G-2 of the Form FBOT Application.

(b) Cleartrade has the capacity to detect, investigate and apply 

appropriate sanctions to any person that violates any of its Rules. 

Cleartrade demonstrates compliance with this Core Principle 2 by its 
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response in Exhibit G-2 of its Form FBOT Application. A summary of 

this section is provided below: 

The sanctions which may be imposed on a person subject to the 

Rules by the Compliance Committee of the Exchange shall not 

exceed the following:

a. the issue of a warning or reprimand, which is line with 

CFTC Guidance on this Core Principle;

b. in the case of an individual, disqualification (either 

indefinitely or for a fixed term) from being a Director or 

member of any committee of the Exchange;

c. in the case of a Member, disqualification (either 

indefinitely or for a fixed term) of any of its Member’s 

representatives from being a Director or member of any 

committee of the Exchange;

d. a fine of any amount not exceeding the equivalent of 3-

years of subscription and/or license fees due from the 

Member, to be paid on such terms as may be prescribed;

e. a recommendation to the Directors that they expel a 

Member from membership of the Exchange, or in the case 

of other persons subject to the Rules, permanently remove 

their right to access the Trading Facilities as set forth in the

membership requirements under the Cleartrade Rulebook;

f. in relation to any infringement of Cleartrade’s Rules related 

to base capital requirements, deposits with clearinghouses, 

maintenance of reserve funds, risk base capital 

requirements, false statements, keeping and safeguarding of 

books, audits and accounts and noncompliance herein (Rule 

2A of the Cleartrade Rulebook), the Exchange may direct 

the Member to (i) submit statements on a periodic basis for 

such duration and in such form and substance as the 

Exchange may specify, (ii) cease any increase in positions, 

(iii) operate its business in such manner and on such 

conditions as the Exchange may impose, or the Exchange 

may suspend or terminate the membership of the Member;

g. any combination of the foregoing.
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(c) Requirement of rules: Under Rule 1.2.1 of the Cleartrade 

Rulebook, Cleartrade may make arrangements with any person for 

monitoring compliance with an investigating alleged breaches of the 

Rules and/or the SFA; co-operate generally with any person, agency or 

authority have responsibility for the regulation of investment or any 

other financial business or the enforcement of law, including but not 

limited to MAS in relation to alleged breaches of the SFA in relation to 

the Member’s act, omission or conduct on Cleartrade; and enter into 

any other arrangement that may be necessary or relevant for purposes of 

operating and maintaining the Exchange in accordance with the Rules. 

Rule 1.2.2 also provides Cleartrade with the authority to make 

arrangements for the sharing of information and sets forth that 

Cleartrade may at any time refer a complaint or any other matter 

coming to its attention to one or more regulatory bodies, agencies or 

persons for their comments or investigation and may, pending the result 

of such reference, either suspend or continue with (in whole or in part) 

its own investigations, proceedings or other actions. 

Core Principle 3: CONTRACTS NOT READILY SUBJECT TO MANIPULATION

The board of trade shall list on the contract market only contracts that 

are not readily susceptible to manipulation.

All contracts that are offered on the Cleartrade Platform receive 

approval from MAS prior to being made available on the Platform. 

Only contracts that are deemed satisfactory in the eyes of MAS to not 

be readily susceptible to manipulation will be approved by MAS and 

listed on the market. 

Core Principle 4: PREVENTION OF MARKET DISRUPTION

The board of trade shall have the capacity and responsibility to prevent 

manipulation, price distortion, and disruptions of the delivery or cashsettlement process through market surveillance, compliance, and 

enforcement practices and procedures, including:

(a) Methods for conducting real-time monitoring of trading; and

(b) Comprehensive and accurate trade reconstructions.

CFTC Guidance: The detection and prevention of market manipulation, 

disruptions, and distortions should be incorporated into the design of 

The Cleartrade Rulebook sets forth broad authority for Cleartrade to 

prevent manipulation, price distortion and disruptions of the delivery or 

cash-settlement process through market surveillance, compliance and 

enforcement practices and procedures. 

Exhibit G-4 of the Form FBOT sets forth in detail the role of 

Cleartrade’s Market Operations team, who is responsible of providing 

market surveillance of all trades executed on Cleartrade’s trading 

platform. Cleartrade performs market surveillance to check for 
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programs for monitoring trading activity. Monitoring of intraday 

trading should include the capacity to detect developing market 

anomalies, including abnormal price movements and unusual trading 

volumes, and position-limit violations. The DCM should have rules in 

place that allow it broad powers to intervene to prevent or reduce 

market disruptions. Once a threatened or actual disruption is detected, 

the DCM should take steps to prevent the disruption or reduce its 

severity.

CFTC Acceptable Practices: (1) General Requirements. Real-time 

monitoring for market anomalies and position-limit violations are the 

most effective, but the DCM may also demonstrate that it has an 

acceptable program if some of the monitoring is accomplished on a T+1 

basis. An acceptable program must include automated trading alerts to 

detect market anomalies and position-limit violations as they develop 

and before market disruptions occur or become more serious. In some 

cases, a DCM may demonstrate that its manual processes are effective. 

(2) Physical-delivery contracts. For physical-delivery contracts, the 

DCM must demonstrate that it is monitoring the adequacy and 

availability of the deliverable supply, which, if such information is 

available, includes the size and ownership of those supplies and 

whether such supplies are likely to be available to short traders and 

saleable by long traders at the market value of those supplies under 

normal cash marketing conditions. Further, for physical-delivery 

contracts, the DCM must continually monitor the appropriateness of a 

contract’s terms and conditions, including the delivery instrument, the 

delivery locations and location differentials, and the commodity 

characteristics and related differentials. The DCM must demonstrate 

that it is making a good-faith effort to resolve conditions that are 

interfering with convergence of its physical-delivery contract to the 

price of the underlying commodity of causing price distortions or 

market disruptions, including, when appropriate, changes to contract 

terms. (3) Cash-settled contracts. At a minimum, an acceptable 

program for monitoring cash-settled contracts must include access, 

either directly or through an information-sharing arrangement, to 

traders’ positions and transactions in the reference market for traders of 

irregular trades that may distort the market. Cleartrade Market 

Operations personnel is responsible for conducting monitoring of 

trading by downloading trade logs of business day T during business 

day T+1 from Cleartrade. Market Operations personnel then look for 

irregular trades. If there are any suspected irregular trades, the Market 

Operations personnel will investigate further by looking at trading 

patterns according to the Trade IDs of the trades done as well as 

identifing the trading counterparties associated with the suspected 

irregular trade. The Cleartrade Exchange Irregular Trades Procedures 

Manual, attached as Appendix S to the Form FBOT, is a reference 

guide for Market Operations personnel in performing irregular trades 

and investigations. Similarly, as the order information and trade 

information are stored, should there be any alleged infringement, 

accurate trade reconstruction of events can be done. 

Cleartrade has also established risk controls for trading by setting nocancellation ranges and price reasonability limits. These are hard limits 

and bids above the reasonability limit and offers below the limit are not 

accepted. Please refer to Cleartrade’s No-Cancellation Range 

Procedures Manual, attached as Appendix T to the Form FBOT, for 

more information.

Subsequently, if Members are found to have engaged in acts of 

misconduct, under Rules 5.5 through 5.7 of the Rulebook, Cleartrade 

has the authority to engage in disciplinary proceedings and sanctions on 

its Members. 

All contracts are cash settled. The Baltic Exchange is the world’s only 

independent source of maritime freight market information used in the 

settlement of shipping freight derivative and physical contracts. There 

is not a centralized market at Cleartrade because brokers can find 

competitive prices through a variety of dealers around the globe. In 

other words, orders are not routed to Cleartrade and are not matched 

with an offsetting order as there is not a specific reference to a physical 

market. This is entirely consistent with the coal contract that the 

Chicago Mercantile Exchange offers. 
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a significant size in the DCM near the settlement of the contract. (4) 

Ability to obtain information. With respect to the DCM’s ability to 

obtain information, a DCM may limit the application of the requirement 

to keep and provide such records only to those that are reportable under 

its large-trader reporting system or otherwise hold substantial positions. 

(5) Risk controls for trading. An acceptable program for preventing 

market disruptions must demonstrate appropriate trade risk controls, in 

addition to pauses and halts. Such controls must be adapted to the 

unique characteristics of the markets to which they apply and must be 

designated to avoid market disruptions without unduly interfering with 

that market’s price discovery function. The DCM may choose from 

among controls that include: pre-trade limits on order size, price collars 

or bands around the current price, message throttles, and daily price 

limits, or design other types of controls. Within the specific array of 

controls that are selected, the DCM also must set the parameters for 

those controls, so long as the types of controls and their specific 

parameters are reasonably likely to serve the purpose of preventing 

market disruptions and price distortions. If a contract is linked to, or is 

a substitute for, other contracts, either listed on its market or on other 

trading venues, the DCM must, to the extent practicable, coordinate its 

risk controls with any similar controls placed on those other contracts. 

If a contract is based on the price of an equity security or the level of an 

equity index, such risk controls must, to the extent practicable, be 

coordinated with any similar controls placed on national security 

exchanges.

Core Principle 5: POSITION LIMITATIONS OR ACCOUNTABILITY

To reduce the potential threat of market manipulation or congestion 

(especially during trading in the delivery month), the board of trade 

shall adopt for each contract of the board of trade, as is necessary and 

appropriate, position limitations or position accountability for 

speculators. For any contract that is subject to a position limitation 

established by the Commission pursuant to section 4a(a), the board of 

the trade shall set the position limitation of the board of trade at a level 

not higher than the position limitation established by the Commission.

Cleartrade do not impose position limits, although it has the ability to 

do so under Rule 7.9 of the Rulebook. However, subject to CFTC 

Regulation Part 48, a foreign board of trade is not required to impose 

position limits except for linked-contracts.

All products traded at Cleartrade are entirely fungible. All traders 

comply with the position limits that are enforced by the clearing houses. 

Core Principle 6: EMERGENCY AUTHORITY

The board of trade, in consultation or cooperation will the Commission, Cleartrade has adopted rules to provide for the exercise of emergency 
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shall adopt rules to provide for the exercise of emergency authority, as 

is necessary and appropriate, including the authority –

(a) To liquidate or transfer open positions in any contract;

(b) To suspend or curtail trading in any contract; and

(c) To require market participants in any contract to meet 

special margin requirements.

CFTC Guidance: In consultation and cooperation with the 

Commission, a DCM should have the authority to intervene as 

necessary to maintain markets with fair and orderly trading and to 

prevent or address manipulation or disruptive trading practices, whether 

the need for intervention arises exclusively from the DCM’s market or 

as a part of a coordinated, cross-market intervention. DCM rules 

should include procedures and guidelines to avoid conflicts of interest 

in accordance with the provisions of § 40.9 of this chapter, and include 

alternate lines of communication and approval procedures to address 

emergencies associated with real-time events. To address perceived 

market threats, the DCM should have rules that allow it to take certain 

actions in the event of an emergency, as defined in § 40.1(h) of this 

chapter, including: imposing or modifying position limits, price limits, 

and intraday market restrictions; imposing special margin requirements; 

ordering the liquidation or transfer of open positions in any contract; 

ordering the fixing of a settlement price; extending or shortening the 

expiration date or the trading hours; suspending or curtailing trading in 

any contract; transferring customer contracts and the margin or altering 

any contract’s settlement terms or conditions; and, where applicable, 

providing for the carrying out of such actions through its agreements 

with its trade-party provider of clearing or regulatory services. In 

situations where a contract is fungible with a contract on another 

platform, emergency action to liquidate or transfer open interest must be 

as directed, or agreed to, by the Commission or the Commission’s staff. 

The DCM has the authority to independently respond to emergencies in 

an effective and timely manner consistent with the nature of the 

emergency, as long as all such actions taken by the DCM are made in 

good faith to protect the integrity of the markets. The Commission 

should be notified promptly of the DCM’s exercise of emergency 

action, explaining how conflicts of interest were minimized, including 

authority, as is necessary and appropriate. Rule 9.17 of the Cleartrade 

Rulebook sets forth the role of the Trade Emergency Committee which 

consists of a minimum of three people comprising: the Compliance 

Officer; the Chief Executive; a Relevant Clearing House senior 

executive nominated for this purpose by the Relevant Clearing House; 

or lay directors of the Exchange. The Trade Emergency Committee may 

take such professional advice as it sees fit in coming to any decision. 

If in the opinion of the Trade Emergency Committee an excessive 

position or unwarranted speculation or any other undesirable situation 

or practice affecting or capable of affecting the Market is developing, or 

has developed, it may take any steps whatsoever to provide for, correct 

or check the further development of such situation or practice and may 

give directions to Members accordingly. Such steps may (without 

prejudice to the generality of this Rule), if the Trade Emergency 

Committee thinks fit, extend to trading which occurred before or on the 

date that such step is instigated.

A Member contravening a direction of the Trade Emergency Committee 

under the Rule shall be liable to the same sanctions (including 

expulsion or suspension from membership) as if a breach of the Rules 

were committed.

Similarly, under Rule 1.2.2(b) and (c) of the Cleartrade Rulebook, the 

Directors may at any time make additional rules, or amend or revoke 

the Rules or part of them, to the extent they consider necessary or 

desirable for the continued recognition of the Exchange as a 

Recognized Market Operator under the SFA. Any Rule so made, and 

any such amendment or revocation, shall be subject to MAS confirming 

in writing that they have no objection to the proposed amendments and 

announced by circular to Members and shall take effect at such time 

and in such manner as the Directors may determine. 

In a case considered by the Chairman to be one of urgency, the 

Directors’ powers and authority under this Rule may be exercised by a 

committee consisting of the Chairman and the Chief Executive 
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the extent to which the DCM considered the effect of its emergency 

action on the underlying markets and on the markets that are linked or 

referenced to the contract market and similar markets on other trading 

venues. Information on all regulatory actions carried out pursuant to a 

DCM’s emergency authority should be included in a timely submission 

of a certified rule pursuant to part 40 of this chapter.

CFTC Acceptable Practices: A DCM must have procedures and 

guidelines for decision-making and implementation of emergency 

intervention in the market. At a minimum, the DCM must have the 

authority to liquidate or transfer open positions in the market, suspend 

or curtail trading in any contract, and require market participants in any 

contract to meet special margin requirements. In situations where a 

contract is fungible with a contract on another platform, emergency 

action to liquidate or transfer open interest must be directed, or agreed 

to, by the Commission or the Commission’s staff. The DCM must 

promptly notify the Commission of the exercise of its emergency 

authority, documenting its decision-making process, including how 

conflicts of interest were minimized, and the reasons for using its 

emergency authority. The DCM must also have rules that allow it to 

take such market actions as may be directed by the Commission.

provided that such committee shall report the circumstances, and 

particulars of the Rules so made, amended or revoked, as soon as 

possible to the Directors.

Rule 7.10 of the Cleartrade Rulebook sets forth Cleartrade’s authority 

to suspend trading of any contract in an emergency event or the event in 

which suspension of trading is necessary in the interests of the 

Exchange, its staff or its Member, or to maintain a fair and orderly 

market. The Compliance Officer may declare that trading on the 

Cleartrade Platform has been suspended and will remain so until all the 

consequences of such an event have been remedied to their satisfaction. 

Trading will be resumed as soon as reasonably practicable following 

any such interruption. Furthermore, if as a result of such a suspension, 

trading in respect of any contract may not be resumed before the end of 

the trading session, or at a time which, in the opinion of the Compliance 

Officer or his designated deputies, would leave sufficient time before 

the end of the trading as would allow the operation of a fair and orderly 

market, the Compliance Officer or his designated deputies will either 

declare the trading session suspended or refer the matter to a Director 

who may declare that trading continues on Cleartrade’s Telephone 

Trading market. Any three Directors may also suspend trading upon 

reasonable belief that immediate suspension is necessary to protect the 

interests, reputation or welfare of the Exchange and its Members or to 

ensure an orderly market, suspend for up to ten working days the right 

of any individual associated with a particular Member to enter the 

Market to trade.

Cleartrade confirms that it will promptly notify the Commission of the 

exercise of its emergency authority, documenting its decision-making 

process, including how conflicts of interest were minimized, and the 

reasons for using its emergency authority.]

Cleartrade may take such market actions as may be directed by the 

Commission under Rule 1.2 of the Cleartrade Rulebook.

Core Principle 7: AVAILABILITY OF GENERAL INFORMATION

The board of trade shall make available to market authorities, market Cleartrade makes available to market authorities, market participants 
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participants, and the public accurate information concerning –

(a) The terms and conditions of the contracts of the contract 

market; and

(b)(1) The rules, regulations, and mechanisms for executing 

transactions on or through the facilities of the contract market; 

and

(2) The rules and specifications describing the operation of the 

contract market’s: (i) Electronic market platform, or (ii) Trade 

execution facility.

and the public information concerning the terms and conditions of the 

contract available on Cleartrade. Specifically, contract specifications 

are available for download to the general public.

Cleartrade’s Rulebook and other documents describing Cleartrade’s 

mechanisms for execution transactions on its facilities and Cleartrade’s 

operations are available to market participants when requested and 

forms part of the distribution of membership materials given out to 

Members. 

Core Principle 8: DAILY PUBLICATION OF TRADING INFORMATION

The board of trade shall make public daily information on settlement 

prices, volume, open interest and opening and closing ranges for 

actively traded contracts on the contract market.

Cleartrade produces a weekly report of market volumes (by product), 

price movements (by product) as well as market size. Both a daily and 

weekly report is distributed to Members via email and is also made 

available to the public on Cleartrade’s website. Separately, the daily 

trade information is also available via the trading platform and available 

for Members and view-only users of Cleartrade to extract and 

download. 

The Cleartrade Market Operations personnel are responsible for storing 

market data and producing statistical reports. The range of market data 

stored by Cleartrade includes daily market volumes (by product/by time 

of the day/by lot sizes), trade prices (across time) and daily closing 

prices with daily highs and lows (across all products). 

Core Principle 9: EXECUTION OF TRANSACTIONS

The board of trade shall provide a competitive, open, and effective 

market and mechanism for executing transactions that protects the price 

discovery process of trading in the centralized market of the board of 

trade. The rules of the board of trade may authorize, for bona fide 

business purposes:

(a) Transfer trades or office trades;

(b) An exchange of:

(1) Futures in connection with a cash commodity transaction;

Cleartrade has adopted Rules to ensure a competitive, open and 

effective market and mechanism for execution transactions that protects 

the price discovery process of trading. Under Rule 1.1.1 of the 

Cleartrade Rulebook, the Rules are binding on all Members in respect 

of their participation in and use of the Exchange. All Members must

observe the Rules at all times which shall be interpreted and given 

effect in the manner most conducive to the recognition of the Exchange 

as a Recognized Market Operator under Section 8(2) of the SFA and the 
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(2) Futures for cash commodities; 

(3) Futures for swaps; or

(c) A futures commission merchant, acting as principal or 

agent, to enter into or confirm the execution of a contract for 

the purchase or sale of a commodity for futures delivery if the 

contract is reported, recorded, or cleared in accordance with the 

rules of the contract market or a derivatives clearing 

organization.

good reputation of the Exchange (and its Members); in particular with 

references to Cleartrade being an organized and regulated market place 

for OTC commodity derivatives which are currently and have been 

previously unregulated, and therefore the Exchange’s requirements to 

enforce the provisions of Cleartrade’s Rulebook in priority over 

“common practices” in the unregulated OTC commodity derivatives 

markets; the promotion and maintenance of an orderly market, free of 

undesirable situations or practices; in particular with reference to Rule 2 

under the Rulebook (Membership) and the provisions applicable to 

“Broking Members,” Rule 7 (Trading Rules), Rule 7A (Additional 

Requirements for Conduct of Business) and to Rule 1.1.1(a); high 

standards of integrity and fair dealing at all times by all Members when

transacting on or via the Exchange with particular reference to Rule 7 

and 7A of Cleartrade’s Rules; and the proper protection for all persons 

and/or entities interested in the performance of transactions entered into 

the Exchange, with particular reference to Rule 7 and Rule 7A.

Currently, Cleartrade does not offer transfer trades or office trades; or 

an exchange of: (1) Futures in connection with a cash commodity 

transaction; (2) Futures for cash commodities; (3) Futures for swaps.

Cleartrade confirms that an FCM can either be a principal or as an agent 

when acting for the purchase or sale of a commodity for futures 

delivery if the contract is reported, recorded or cleared in accordance 

with its Rules. 

Core Principle 10: EXECUTION OF TRANSACTIONS

The board of trade shall maintain rules and procedures to provide for 

the recording and safe storage of all identifying trade information in a 

manner that enables the contract market to use the information:

(a) To assist in the prevention of customer and market abuses; 

and

(b) To provide evidence of any violations of the rules of the 

contract market.

Cleartrade has established its rules and procedures regarding the 

recording and safe storage of all identifying trade information in its 

Rulebook and in the Cleartrade Exchange Infrastructure & Security 

Overview, attached as Appendix V to Cleartrade’s Form FBOT 

application. Cleartrade’s trading platform is configured in such a way 

that any trade data and market events data is immediately captured in 

the system and backed up in a master-slave mode in its data server and 

then subsequently backed up to a remove location on a periodic basis. 

This data is stored for a period for a minimum of 7 years. Hence, any 
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changes to orders will also be captured by the above process and 

archived accordingly. This information can be used to assist in the 

prevention of customer and market abuses and to provide evidence of 

any violations of the rules of Cleartrade.

Cleartrade’s application and database is also backed up every night, 

moved off site and saved for 32 days. Cleartrade’s host provider also 

takes one backup on the first of every month of the database which is 

stored off site for 7 years. The Cleartrade Exchange Business 

Continuity Plan, attached as Appendix P of Cleartrade’s Form FBOT 

application, provides in detail how Cleartrade assures trading data is 

backed up to prevent loss of data. As per Rule 2A.5 of the Cleartrade 

Rulebook, all Members are all required to provide records of 

transactions and shall store them for a period of not less than 5 years. 

Core Principle 11: FINANCIAL INTEGRITY OF TRANSACTIONS

The board of trade shall establish and enforce:

(a) Rules and procedures for ensuring the financial integrity of 

transactions entered into on or through the facilities of the 

contract market (including the clearance and settlement of the 

transactions with a derivatives clearing organization); and

(b) Rules to ensure:

(1) The financial integrity of any: (i) Futures commission 

merchant, and (ii) Introducing broker; and

(2) The protection of customer funds.

Rule 7.4 of the Cleartrade Rulebook sets forth Cleartrade’s rules on the 

validity of a contract. Although Cleartrade does not clear contracts, the 

rules of the partner clearing houses has both relevant and prescriptive 

rules that also administers the financial integrity of any futures 

commission merchant coupled with introducing brokers and the 

protection of customer funds. Rule 7A of Cleartrade’s Rulebook 

provides Cleartrade’s rules and procedures regarding the protection of 

customer funds as well. 

Core Principle 12: PROTECTION OF MARKETS AND MARKET PARTICIPANTS

The board of trade shall establish and enforce rules:

(a) To protect markets and market participants from abusive 

practices committed by any party, including abusive practices 

committed by a party acting as an agent for a participant; and

(b) To promote fair and equitable trading on the contract 

market.

Cleartrade’s Rulebook sets forth rules that specifically deal with 

circumstances in which acts of misconduct or breaches of the Rules 

have occurred, and the steps which Cleartrade can take to sanction or 

punish a Member for such breaches. Cleartrade also has the authority to 

investigate any breaches in set procedures.

As a condition of participating on the Cleartrade Platform, Cleartrade’s 

Members are subject to a number of Rules to ensure that Cleartrade or 

its Members are not engaged in any fraud or abusive trading practices. 
14

Members are prohibited in relation to contracts entered into, or orders

placed, on the market or otherwise in accordance with the Rules, to 

commit any acts of fraud or bad faith; act dishonestly, engage or 

attempt to engage in extortion, continue (otherwise than to liquidate 

existing positions) to trade or enter into such contracts knowingly, 

disseminate false, misleading or inaccurate reports concerning any 

product or market information or conditions that affect or tend to affect 

prices on the market, manipulate or attempt to manipulate the market or 

create or attempt to create a disorderly market, or assist its clients, or 

any other person to do so, mark or report a false or fictitious trade, enter 

into any contract or fail to close out the same either intending to default 

in performance of the same or having no reasonable grounds for 

thinking that it would be able to avoid such default (provided that it 

shall not be sufficient to have intended to comply with any contractual 

or other provision governing the consequences of default), use or reveal 

any information confidential to Cleartrade or another person obtained 

by reason of participating in any investigation or disciplinary 

proceedings, or otherwise commit or cause to commit a breach of the 

SFA. Cleartrade performs trade and market surveillance in order to 

detect and investigate potential trade practice violations.

In addition, as stated in the Cleartrade Exchange Error Policy, 

consequential trades done from error trades could also be cancelled if 

Cleartrade is satisfied that the consequential trades were derived and 

executed as a result of the error trade. 

Core Principle 13: DISCIPLINARY PROCEDURES

The board of trade shall establish and enforce disciplinary procedures 

that authorize the board of trade to discipline, suspend, or expel 

members or market participants that violate the rules of the board of 

trade, or similar methods for performing the same functions, including 

delegation of the functions to third parties.

CFTC Guidance: (1) Notice of charges. If the rules of the DCM so 

provide, a notice may also advise: (i) That failure to request a hearing 

within the period prescribed in the notice, except for good cause, may 

As set forth in the Cleartrade Rulebook, Cleartrade has established 

disciplinary procedures that authorize it to discipline, suspend or expel

Members that violate any of the Rules in the Cleartrade Rulebook. 

Specifically, Rule 5 of the Cleartrade Rulebook deals with 

circumstances in which acts of misconduct or breaches of the Rules 

have occurred, and the steps which the Exchange can take to sanction or 

punish a Member for such breaches. Rule 5 also outlines the right of 

the Exchange to investigate such breaches, and stipulates how such 

breaches should be dealt with in set procedures. Members have the 
15

be deemed a waiver of the right to a hearing; and (ii) That failure to 

answer or to deny expressly a charge may be deemed to be an 

admission of such charge. (2) Admission or failure to deny charges. 

The rules of a DCM may provide that if a respondent admits or fails to 

deny any of the charges, a disciplinary 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. If 

the DCM’s rules so provide, then: (i) The disciplinary panel should 

impose a sanction for each violation found to have been committed; (ii) 

The disciplinary panel should promptly notify the respondent in writing 

of any sanction to be imposed pursuant to paragraph 2(i) of this section 

and shall advise the respondent that it may request a hearing on such 

sanction within the period of time, which shall be stated in the notice; 

(iii) The rules of a DCM may provide that if a respondent fails to 

request a hearing within the period of time stated in the notice, the 

respondent will be deemed to have accepted the sanction. (3) Settlement 

offers. (i) The rules of a DCM may permit a respondent to submit a 

written offer of settlement at any time after an investigation report is 

completed. The disciplinary panel presiding over the matter may accept 

the offer of settlement, but may not alter the terms of a settlement offer 

unless the respondent agrees. (ii) The rules of a DCM may provide that, 

in its discretion, a disciplinary panel may permit the respondent to 

accept a sanction without either admitting or denying the rule violations 

upon which the sanction is based. (iii) If an offer of settlement is 

accepted, the panel accepting the offer should 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 should include full customer restitution 

where customer harm is demonstrated, except where the amount of 

restitution and to whom it should be provided cannot be reasonably 

determined. If an offer of settlement is accepted without the agreement 

of the enforcement staff, the decision should adequately support the 

disciplinary panel's acceptance of the settlement. Where applicable, the 

decision should also include a statement that the respondent has 

accepted the sanctions imposed without either admitting or denying the 

rule violations. (iv) The respondent may withdraw his or her offer of 

right of appeal, and the appeals procedure is outlined in Rule 5.

(1) Notice of charges. Under Rule 5.4.2 Cleartrade’s Compliance 

Committee shall issue a Notice of Investigation (NoI) notifying the 

Member concerned that an investigation has been commenced. The NoI 

shall be sent to the Member or the person concerned and copied to the 

Member’s compliance officer. The NoI shall contain a brief description 

of the matter under investigation.

When the Compliance Committee decides to commence disciplinary 

proceedings, they shall direct that a written notice (“Notice”) be sent to 

the Member (or, in the case of proceedings against some other person, 

that person and any Member with whom he was associated at the time 

of the matter in question). The Notice shall set out the alleged act of 

misconduct or infringement, including a summary of facts relied upon.

(2) Admission or failure to deny charges. Under Rule 5.5.3, where no 

defense has been served and no settlement has been reached, the 

Exchange will deem the Member or other person who is the subject of 

the Notice to have accepted the facts and matters alleged in the Notice. 

If the Exchange or Member (or person concerned and any associated 

Member or either of them) should fail to meet a time limit imposed by 

the Compliance Committee or fail to attend a hearing, the Committee 

may in its absolute discretion allow an extension of time, adjourn its 

proceedings or proceed, if necessary in the absence of the Member (or 

the person and Member, or either of them).

The findings of the Compliance Committee, and particulars of any 

sanction, shall be notified in writing to the Member concerned (or the 

person concerned and any associated Member). Such findings and 

sanction shall be deemed conclusive and binding subject to appeal 

process. 

The Compliance Committee may adopt such procedures as it deems 

appropriate in hearing the appeal but shall give both the appellant and 
16

settlement at any time before final acceptance by a disciplinary panel. If 

an offer is withdrawn after submission, or is rejected by a disciplinary 

panel, the respondent should not be deemed to have made any 

admissions by reason of the offer of settlement and should not be 

otherwise prejudiced by having submitted the offer of settlement. (4) 

Hearings. The rules of a DCM may provide that a sanction may be 

summarily imposed upon any person within its jurisdiction whose 

actions impede the progress of a hearing. (5) Right to appeal. The 

rules of a DCM may permit the parties to a proceeding to appeal 

promptly an adverse decision of a disciplinary panel in all or in certain 

classes of cases. Such rules may require a party's notice of appeal to be 

in writing and to specify the findings, conclusions, or sanctions to 

which objection are taken. If the rules of a DCM permit appeals, then 

both the respondent and the enforcement staff should have the 

opportunity to appeal and the DCM should provide for the following: 

(i) The DCM should establish an appellate panel that should be 

authorized to hear appeals of respondents. In addition, the rules of a 

DCM may provide that the appellate panel may, on its own initiative, 

order review of a decision by a disciplinary panel within a reasonable 

period of time after the decision has been rendered. (ii) The 

composition of the appellate panel should be consistent with the 

requirements set forth in part 40 of this chapter and paragraph (4) of the 

acceptable practices for Core Principle 16, and should not include any 

members of the DCM's compliance staff, or any person involved in 

adjudicating any other stage of the same proceeding. The rules of a 

DCM should provide for the appeal proceeding to be conducted before 

all of the members of the appellate panel or a panel thereof. (iii) Except 

for good cause shown, the appeal or review should be conducted solely 

on the record before the disciplinary panel, the written exceptions filed 

by the parties, and the oral or written arguments of the parties. (iv) 

Promptly following the appeal or review proceeding, the appellate panel 

should issue a written decision and should provide a copy to the 

respondent. The decision issued by the appellate panel should adhere to 

all the requirements of § 38.708 of this part, to the extent that a different 

conclusion is reached from that issued by the disciplinary panel. (6) 

Summary fines for violations of rules regarding timely submission of 

the Directors reasonable opportunity to make representations.

(3) Settlement 

Under Rule 5.6 of the Cleartrade Rulebook, the Member and/or the 

person alleged to have committed the infringement may attempt to 

settle in good faith the disciplinary proceedings at any stage (including 

any appeal) with the Exchange. The terms of any settlement shall be 

agreed between the Compliance Officer and the individual or Member 

as the case may be and submitted in writing to the Chairman of the 

Compliance Committee, or in his absence, a quorum of this Committee 

for ratification. Upon ratification, the terms of the settlement shall take 

effect. In the event the settlement is not ratified, the disciplinary 

proceedings shall continue. 

(4) Hearings 

Under Rule 5.5.5 of the Cleartrade Rulebook, without adjournment the 

Compliance Committee, or a quorum of the Compliance Committee 

hearing a case summarily, may amend a Notice by deletion, alteration 

or addition, or may vary the Rule breach alleged or add another Rule 

breach provided that they are of the opinion that:

a. the amendment or variation is material to the course of 

conduct under investigation;

b. the essential character of the allegation or Rule breach has 

not been changed; and

c. the Member would not be prejudiced in any defense it 

might wish to put before the Compliance Committee.

Under Rule 5.11, where in all the circumstances of a case the 

Compliance Committee considers summary enforcement of the Rules to 

be apt, it may, summarily hear and determine the case itself. Any 

matter which financial penalty or impact to Cleartrade would be less 

than US$50,000 can be summarily dealt with. 

(5) Right to appeal. Where an alleged infringement or misconduct falls 
17

records, or other similar activities. A DCM may adopt a summary fine 

schedule for violations of rules relating to the timely submission of 

accurate records required for clearing or verifying each day's 

transactions, decorum, attire, or other similar activities. A DCM may 

permit its compliance staff, or a designated panel of contract market 

officials, to summarily impose minor sanctions against persons within 

the DCM's jurisdiction for violating such rules. A DCM's summary fine 

schedule may allow for warning letters to be issued for first-time 

violations or violators. If adopted, a summary fine schedule should 

provide for progressively larger fines for recurring violations. (7) 

Emergency disciplinary actions. (i) A DCM may impose a sanction, 

including suspension, or take other summary action against a person or 

entity subject to its jurisdiction upon a reasonable belief that such 

immediate action is necessary to protect the best interest of the 

marketplace. (ii) Any emergency disciplinary action should be taken in 

accordance with a DCM's procedures that provide for the following: (A) 

If practicable, a respondent should be served with a notice before the 

action is taken, or otherwise at the earliest possible opportunity. The 

notice should state the action, briefly state the reasons for the action, 

and state the effective time and date, and the duration of the action. (B) 

The respondent should have the right to be represented by legal counsel 

or any other representative of its choosing in all proceedings subsequent 

to the emergency action taken. The respondent should be given the 

opportunity for a hearing as soon as reasonably practicable and the 

hearing should be conducted before the disciplinary panel pursuant to 

the requirements of § 38.707 of this part. (C) Promptly following the 

hearing provided for in this rule, the DCM should render a written 

decision based upon the weight of the evidence contained in the record 

of the proceeding and should provide a copy to the respondent. The 

decision should include a description of the summary action taken; the 

reasons for the summary action; a summary of the evidence produced at 

the hearing; a statement of findings and conclusions; a determination 

that the summary action should be affirmed, modified, or reversed; and 

a declaration of any action to be taken pursuant to the determination, 

and the effective date and duration of such action.

outside those mentioned under Rule 5 of the Cleartrade Rulebook, 

before commencing a summary hearing the Compliance Committee 

shall inform the Member or other person concerned that such person 

may object to summary enforcement. A Member or other person 

proceeded against, may appeal to the Chairman against a summary 

determination of the Compliance Committee if notice of appeal is given 

to Cleartrade within 7 days of notification of the Committee’s 

determination. 

(6) Summary fines for violations of rules regarding timely submission of 

records, or other similar activities. 

The sanctions which may be imposed by the Compliance Committee 

are those set forth in Rule 5 above save that:

i. the sanction of expulsion shall not be available to the 

Committee;

ii. the maximum sanction of suspension which may be 

imposed by the Committee on an individual is limited to 3 

calendar months; and

iii. the maximum fine which may be imposed by the 

Committee is limited to $100,000 for a Member in respect 

of each offence.

(7) Emergency disciplinary actions. The following sets forth 

Cleartrade’s authority for emergency disciplinary actions under Rule 

9.17 of the Cleartrade Rulebook:

a. In the event of the Exchange, whether by its Compliance 

Officer or otherwise, identifying or suspecting the 

development or possible development of a situation or 

practice referred to below, it shall forthwith refer the matter 

to a committee (the Trade Emergency Committee) being a 

minimum of three people comprising: the Compliance 

Officer; the Chief Executive; a Relevant Clearing House 

senior executive nominated for this purpose by the Relevant 

Clearing House; or lay directors of the Exchange. The 

Trade Emergency Committee may take such professional 

advice as it sees fit in coming to any decision. 
18

b. If in the opinion of the Trade Emergency Committee, an 

excessive position, unwarranted speculation or any other 

undesirable situation or practice affecting or capable of 

affecting the Market is developing, or has developed, it 

may take any steps whatsoever to provide for, correct or 

check the further development of such situation or practice 

and may give directions to Members accordingly. Such 

steps may (without prejudice to the generality of this Rule), 

if the Trade Emergency Committee thinks fit, extend to 

trading which occurred before or on the date that such step 

is instigated.

c. A Member contravening a direction of the Trade 

Emergency Committee under this Rule shall be liable to the 

same sanctions (including expulsion or suspension from 

membership) as if a breach of the Rules were committed.

Core Principle 14: DISPUTE RESOLUTION

The board of trade shall establish and enforce rules regarding, and 

provide facilities for alternative dispute resolution as appropriate for, 

market participants and any market intermediaries.

CFTC Guidance: A DCM should provide customer dispute resolution 

procedures that are: appropriate to the nature of the market; fair and 

equitable; and available on a voluntary basis, either directly or through 

another self-regulatory organization, to customers that are non-eligible 

contract participants.

CFTC Acceptable Practices: (1) Fair and equitable procedure. Every 

contract market shall provide customer dispute resolution procedures 

that are fair and equitable. An acceptable customer dispute resolution 

mechanism would: (i) Provide the customer with an opportunity to have 

his or her claim decided by an objective and impartial decisionmaker; 

(ii) Provide each party with the right to be represented by counsel at the

commencement of the procedure, at the party's own expense; (iii) 

Provide each party with adequate notice of the claims presented against 

such party, an opportunity to be heard on all claims, defenses and 

Cleartrade has established and enforces rules regarding, and provide 

facilities for alternatives dispute resolution as appropriate, for market 

participants. Rules regarding dispute resolution is covered under Rule 8 

of the Cleartrade Rulebook. In the event of a complaint against 

Cleartrade or any of its officers, Rule 8 outlines the procedures for 

handling disputes between Members and the Exchange. It specifies that 

disputes shall be attempted to be resolved in good faith, and if this fails, 

shall be referred to arbitration in Singapore. For disputes between 

Members, Clearing Members of the Relevant Clearing Houses and the 

Clearing Houses themselves, all dispute resolution shall occur away 

from the Exchange and without the involvement of the Exchange other 

than in an advisory role. The Rule stipulates each party’s duty to 

participate in dispute resolution and which procedures are set as 

guidelines in case of disputes. This Rule also deals with the role of the 

Relevant Clearing House in relation to Contracts and the Exchange.
19

permitted counterclaims, and an opportunity for a prompt hearing; (iv) 

Authorize prompt, written, final settlement awards that are not subject 

to appeal within the DCM; and (v) Notify the parties of the fees and 

costs that may be assessed. (2) Voluntary Procedures. The use of 

dispute settlement procedures shall be voluntary for customers other 

than eligible contract participants as defined in section 1a(18) of the 

Dodd-Frank Act, and may permit counterclaims as provided in § 166.5 

of this chapter. (3) Member-to-Member Procedures. If the DCM also 

provides procedures for the resolution of disputes that do not involve 

customers (i.e., member-to-member disputes), the procedures for 

resolving such disputes must be independent of and shall not interfere 

with or delay the resolution of customers' claims or grievances. (4) 

Delegation. A DCM may delegate to another self-regulatory 

organization or to a registered futures association its responsibility to 

provide for customer dispute resolution mechanisms, provided, 

however, that in the event of such delegation, the DCM shall in all 

respects treat any decision issued by such other organization or 

association with respect to such dispute as if the decision were its own, 

including providing for the appropriate enforcement of any award 

issued against a delinquent member.

Core Principle 15: GOVERNANCE FITNESS STANDARDS

The board of trade shall establish and enforce appropriate fitness 

standards for directors, members of any disciplinary committee, 

members of the contract market, and any other person with direct access 

to the facility (including any party affiliated with any person described 

in this paragraph).

CFTC Guidance: (1) A DCM should have appropriate eligibility 

criteria for the categories of persons set forth in the Core Principle that

should include standards for fitness and for the collection and 

verification of information supporting compliance with such standards. 

Minimum standards of fitness for persons who have member voting 

privileges, governing obligations or responsibilities, or who exercise 

disciplinary authority are those bases for refusal to register a person 

under section 8a(2) of the Act. In addition, persons who have governing 

obligations or responsibilities, or who exercise disciplinary authority, 

Cleartrade has established and enforces the fitness standards required 

under the Guidelines.

MAS expects a relevant person to be competent, honest, to have 

integrity and to be of sound financial standing. This provides MAS with 

the assurance that the relevant person is willing and able to fulfill its or 

his obligations under any written law. This also underpins Cleartrade’s 

requirements that the relevant person performs the activities regulated 

under the relevant legislation efficiently, honestly and fairly and acts in 

the best interests of its or his stakeholders and customers.

The onus is on each relevant person to establish that he or she is a fit 

and proper person rather than for MAS to show otherwise. Where a 

relevant person is required under the relevant legislation to ensure that 

another relevant person is fit and proper, the onus is on the former to 
20

should not have a significant history of serious disciplinary offenses, 

such as those that would be disqualifying under § 1.63 of this chapter. 

Members with trading privileges but having no, or only nominal, 

equity, in the facility and non-member market participants who are not 

intermediated and do not have these privileges, obligations, 

responsibilities or disciplinary authority could satisfy minimum fitness 

standards by meeting the standards that they must meet to qualify as a 

“market participant.” Natural persons who directly or indirectly have 

greater than a ten percent ownership interest in a DCM should meet the 

fitness standards applicable to members with voting rights. (2) The 

Commission believes that such standards should include providing the 

Commission with fitness information for such persons, whether 

registration information, certification to the fitness of such persons, an 

affidavit of such persons' fitness by the contract market's counsel or 

other information substantiating the fitness of such persons. If a 

contract market provides certification of the fitness of such a person, the 

Commission believes that such certification should be based on verified 

information that the person is fit to be in his or her position.

establish to the satisfaction of MAS that the latter is fit and proper. As 

different appointments and designations entail different responsibilities, 

these Guidelines would be applied in a manner and to the extent that is 

suitable to the circumstances. MAS will consider the nature of the 

responsibilities of the relevant person in determining the relative 

emphasis and standard that should be expected of the relevant person.

Cleartrade will provide such information to the Commission as 

requested regarding the fitness for such persons, whether registration 

information, certification to the fitness of such persons, an affidavit of 

such persons’ fitness by Cleartrade’s counsel or other information 

substantiating the fitness of such persons.

Core Principle 16: CONFLICTS OF INTEREST

The board of trade shall establish and enforce rules—

(a) to minimize conflicts of interest in the decision making 

process of the contract market; and

(b) to establish a process for resolving conflicts of interest 

described in paragraph (a) of this section.

CFTC Guidance: The means to address conflicts of interest in decision 

making of a contract market should include methods to ascertain the 

presence of conflicts of interest and to make decisions in the event of 

such a conflict. In addition, the Commission believes that the contract 

market should provide for appropriate limitations on the use or 

disclosure of material non-public information gained through the 

performance of official duties by board members, committee members 

and contract market employees or gained through an ownership interest 

in the contract market.

CFTC Acceptable Practices: All DCMs bear special responsibility to 

Cleartrade’s conflicts of interest summarized as follows: each director 

of Cleartrade must act in such a way as to avoid a situation in which he 

has or could have an interest which conflicts with the interests of 

Cleartrade. In particular, this applies to transactions between the 

director and a third party (not Cleartrade, as disclosure rules will apply 

in this regard) regarding the exploitation of any property, information or 

opportunity available to Cleartrade and applies whether or not 

Cleartrade could take advantage of such property, information or 

opportunity.

Cleartrade seeks to minimize and resolve conflicts of interest by first 

identifying and managing which conflicts of interests (“COIs”) exist 

and then maintaining a register that details any real or potential COIs. 

The following information outlines Cleartrade’s processes and policies 

with respect to COIs.

Identifying Conflicts 
21

regulate effectively, impartially, and with due consideration of the 

public interest, as provided for in section 3 of the Act. Under Core 

Principle 15, they are also required to minimize conflicts of interest in 

their decision making processes. To comply with this Core Principle, 

contract markets should be particularly vigilant for such conflicts 

between and among any of their self-regulatory responsibilities, their 

commercial interests, and the several interests of their management, 

members, owners, customers and market participants, other industry 

participants, and other constituencies. Acceptable practices for 

minimizing conflicts of interest shall include the following elements: 

(1) Board composition for contract markets (i) At least thirty-five 

percent of the directors on a contract market's board of directors shall be 

public directors; and (ii) The executive committees (or similarly 

empowered bodies) shall be at least thirty-five percent public. (2) 

Public director (i) To qualify as a public director of a contract market, 

an individual must first be found, by the board of directors, on the 

record, to have no material relationship with the contract market. A 

“material relationship” is one that reasonably could affect the 

independent judgment or decision-making of the director. (ii) In 

addition, a director shall be considered to have a “material relationship” 

with the contract market if any of the following circumstances exist: (A) 

The director is an officer or employee of the contract market or an 

officer or employee of its affiliate. In this context, “affiliate” includes 

parents or subsidiaries of the contract market or entities that share a 

common parent with the contract market; (B) The director is a member 

of the contract market, or an officer or director of a member. “Member” 

is defined according to section 1a(34) of the Commodity Exchange Act 

and Commission Regulation 1.3(q); (C) The director, or a firm with 

which the director is an officer, director, or partner, receives more than 

$100,000 in combined annual payments from the contract market, or 

any affiliate of the contract market (as defined in subsection (2)(ii)(A)), 

for legal, accounting, or consulting services. Compensation for services 

as a director of the contract market or as a director of an affiliate of the 

contract market does not count toward the $100,000 payment limit, nor 

does deferred compensation for services prior to becoming a director, so 

long as such compensation is in no way contingent, conditioned, or 

Cleartrade must first take all reasonable steps to identify conflicts of 

interest between: 

(1) Cleartrade, including its managers, employees and “Appointed 

Representatives” (or where applicable, “Tied Agents”, or any person

directly or indirectly linked to them by control, and a client of 

Cleartrade; or 

(2) one member of Cleartrade and another member; 

“Appointed Representatives” and “Tied Agents” refer to individuals 

who are allowed to carry on certain regulated activities by an authorized 

firm (his principal) under a contract by which the principals accept 

responsibility for the regulated activities carried on by its appointed 

representatives.

Types of Conflict

For the purposes of identifying the types of conflict of interest that 

arise, or may arise, in the course of providing a service and whose 

existence may entail a material risk of damage to the interests of a 

member, Cleartrade must take into account, as a minimum, whether 

Cleartrade or a relevant person, or a person directly or indirectly linked 

by control to Cleartrade: 

(1) is likely to make a financial gain, or avoid a financial loss, at the 

expense of the member; 

(2) has an interest in the outcome of a service provided to the 

member or of a transaction carried out on behalf of the member, which 

is distinct from the member’s interest in that outcome; 

(3) has a financial or other incentive to favour the interest of another 

member or group of members over the interests of the member; 

(4) carries on the same business as the member; or 

(5) receives or will receive from a person other than the member an 

inducement in relation to a service provided to the member, in the form 

of monies, goods or services, other than the standard commission or fee 

for that service. 

Record of Conflicts

Cleartrade keeps and regularly updates a record of the kinds of service 
22

revocable; (D) Any of the relationships above apply to a member of the 

director's “immediate family,” i.e., spouse, parents, children and 

siblings. (iii) All of the disqualifying circumstances described in 

subsection (2)(ii) shall be subject to a one-year look back. (iv) A 

contract market's public directors may also serve as directors of the 

contract market's affiliate (as defined in subsection (2)(ii)(A)) if they 

otherwise meet the definition of public director in this section (2). (v) A 

contract market shall disclose to the Commission which members of its 

board are public directors, and the basis for those determinations. (3) 

Regulatory oversight committee (“ROC”) (i) A board of directors of 

any contract market shall establish a ROC as a standing committee, 

consisting of only public directors as defined in section (2), to assist it 

in minimizing actual and potential conflicts of interest. The ROC shall 

oversee the contract market's regulatory program on behalf of the board. 

The board shall delegate sufficient authority, dedicate sufficient 

resources, and allow sufficient time for the ROC to fulfill its mandate. 

(ii) The ROC shall: (A) Monitor the contract market's regulatory 

program for sufficiency, effectiveness, and independence; (B) Oversee 

all facets of the program, including trade practice and market 

surveillance; audits, examinations, and other regulatory responsibilities 

with respect to member firms (including ensuring compliance with 

financial integrity, financial reporting, sales practice, recordkeeping, 

and other requirements); and the conduct of investigations; (D) 

Supervise the contract market's chief regulatory officer, who will report 

directly to the ROC; (E) Prepare an annual report assessing the contract 

market's self-regulatory program for the board of directors and the 

Commission, which sets forth the regulatory program's expenses, 

describes its staffing and structure, catalogues disciplinary actions taken 

during the year, and reviews the performance of disciplinary 

committees and panels; (E) Prepare an annual report assessing the 

contract market's self-regulatory program for the board of directors and 

the Commission, which sets forth the regulatory program's expenses, 

describes its staffing and structure, catalogues disciplinary actions taken 

during the year, and reviews the performance of disciplinary 

committees and panels; (F) Recommend changes that would ensure fair, 

vigorous, and effective regulation; and (G) Review regulatory proposals 

or activity carried out by or on behalf of Cleartrade in which a conflict 

of interest entailing a material risk of damage to the interests of one or 

more members has arisen or, in the case of an ongoing service or 

activity, may arise.

Managing Conflicts

Cleartrade must maintain and operate effective organisational and 

administrative arrangements with a view to taking all reasonable steps 

to prevent conflicts of interest.

Disclosure of Conflicts

(1) The disclosure must: -

(a) be made in a “durable medium“; and 

(b) include sufficient detail, taking into account the nature of the 

member, to enable that member to take an informed decision with 

respect to the service in the context of which the conflict of interest 

arises. 

Cleartrade aims to identify and manage the conflicts of interest arising 

in relation to its various business lines and its activities under a 

comprehensive conflicts of interest policy. In particular, the disclosure 

of conflicts of interest by Cleartrade should not exempt it from the 

obligation to maintain and operate the effective organisational and 

administrative arrangements, an over-reliance on disclosure without 

adequate consideration as to how conflicts may appropriately be 

managed is not permitted.

Conflicts Policy 

Cleartrade’s conflicts of interest policy seeks to implement an effective 

conflicts of interest policy that is appropriate to the size and 

organisation of Cleartrade and the nature, scale and complexity of its 

business. Where Cleartrade is a member of a group, the policy must 

also take into account any circumstances, of which Cleartrade is or 

should be aware, which may give rise to a conflict of interest arising as 

a result of the structure and business activities of other members of the 

group.
23

and advise the board as to whether and how such changes may impact 

regulation. (4) Disciplinary panels. All contract markets shall minimize 

conflicts of interest in their disciplinary processes through disciplinary 

panel composition rules that preclude any group or class of industry 

participants from dominating or exercising disproportionate influence 

on such panels. Contract markets can further minimize conflicts of 

interest by including in all disciplinary panels at least one person who 

would qualify as a public director, as defined in subsections (2)(ii) and 

(2)(iii) above, except in cases limited to decorum, attire, or the timely 

submission of accurate records required for clearing or verifying each 

day's transactions. If contract market rules provide for appeal to the 

board of directors, or to a committee of the board, then that appellate 

body shall also include at least one person who would qualify as a 

public director as defined in subsections (2)(ii) and (2)(iii) above.

(1) The “conflicts of interest policy“ includes the following: 

(a) identify in accordance, by reference to the specific services and 

activities carried out by or on behalf of Cleartrade, the circumstances 

which constitute or may give rise to a conflict of interest entailing a 

material risk of damage to the interests of one or more members; and 

(b) it must specify measures to be adopted in order to manage such 

conflicts. 

(2) Measures provided must: -

(a) be designed to ensure that relevant persons engaged in different 

business activities involving a conflict of interest of the kind specified 

above to ensure a level of independence appropriate to the size and 

activities of the of the group to which it belongs, and to the materiality 

of the risk of damage to the interests of members; and 

(b) include such of the following as are necessary and appropriate for 

Cleartrade to ensure the requisite degree of independence: -

(i) effective procedures to prevent or control the exchange of 

information between relevant persons engaged in activities involving a 

risk of a conflict of interest where the exchange of that information may 

harm the interests of one or more members; 

(ii) the separate supervision of relevant persons whose principal 

functions involve carrying out activities on behalf of, or providing 

services to, members whose interests may conflict, or who otherwise 

represent different interests that may conflict, including those of 

Cleartrade; 

(iii) the removal of any direct link between the remuneration of 

relevant persons principally engaged in one activity and the 

remuneration of, or revenues generated by, different relevant persons 

principally engaged in another activity, where a conflict of interest may 

arise in relation to those activities; 

(iv) measures to prevent or limit any person from exercising 

inappropriate influence over the way in which a relevant person carries 

out services or activities; and 

(v) measures to prevent or control the simultaneous or sequential 

involvement of a relevant person in separate services or activities where 

such involvement may impair the proper management of conflicts of 
24

interest. 

Duty to Avoid Conflicts

Cleartrade’s policy regarding the duty to avoid conflicts can be 

summarised as follows: each director of Cleartrade must act in such a 

way as to avoid a situation in which he has or could have an interest 

which conflicts with the interests of Cleartrade. In particular, this 

applies to transactions between the director and a third party (not 

Cleartrade, as disclosure rules will apply in this regard) regarding the 

exploitation of any property, information or opportunity available to 

Cleartrade and applies whether or not Cleartrade could take advantage 

of such property, information or opportunity.

Duty Not to Accept Benefits from Third Parties

This restates the existing rule known as ‘non profit’ in that a director is 

not permitted to accept a benefit from a third party by reason of (a) his 

being a director or (b) his doing or not doing anything as a director.

“Benefits” cover both monetary and non monetary benefits, including 

non-executive directorships and even corporate entertainment. 

However, a director will not be in breach of this duty if the acceptance 

of such benefit cannot reasonably be regarded as likely to give rise to a 

conflict of interest. Nevertheless, because it is not always clear whether 

certain benefits will give rise to conflicts of interest, directors should 

seek advice on this area.

Duty to Declare Interest in Proposed Transaction

If a director is in any way, whether directly or indirectly, interested in a 

proposed transaction or arrangement with Cleartrade, he must declare 

(before Cleartrade enters into the transaction or arrangement) the nature 

and extent of that interest to the other directors. Disclosure must also 

be made where a director should reasonably to be aware of the 

conflicting interest. Disclosure extends to a person connected with the 

director, for example, his wife and children. The requirement for 

disclosure is dispensed in circumstances where the interest cannot 

reasonably be regarded as likely to give rise to a conflict of interest or if 

other directors are already aware or should reasonably to be aware’ of 
25

the director’s interest.

Enforcement for Breach

The consequences of a breach of any of Cleartrade’s conflicts of interest 

policies are the same as would be applied if the corresponding common 

law rule or equitable principal were applied (with the exception of the 

duty to exercise reasonable skill and care).

Cleartrade is in process of updating its records to reflect the “CFTC 

Acceptable Practices” in the left column.

Core Principle 17: COMPOSITION OF THE GOVERNING BOARDS OF CONTRACT MARKETS

The governance arrangements of the board of trade shall be designed to 

permit consideration of the views of market participants.

As provided under Rule 1.4.5 of the Cleartrade Rulebook, any change 

to the Cleartrade Rulebook will need at least 14 days’ prior notice 

circulated to the Members. 

In general terms Cleartrade seeks consultation from its market 

participants and then takes into account their views coupled with our 

governance arrangements prior to issuing a change in the Rulebook. 

Core Principle 18: RECORDKEEPING

The board of trade shall maintain records of all activities relating to the 

business of the contract market—

(a) In a form and manner that is acceptable to the Commission; 

and

(b) For a period of at least 5 years.

Currently, records must be maintained for five years. Section 39 of the 

SFA and Regulation 5 of the Securities and Futures (Markets) 

Regulations 2005 (“SFMR”) require an RMO to maintain a detailed 

record of all transactions effected through its facilities and keep all 

relevant books and other information for a minimum of five (5) years. 

Core Principle 19: ANTITRUST CONSIDERATIONS

Unless necessary or appropriate to achieve the purposes of this Act, the 

board of trade shall not—

(a) Adopt any rule or taking any action that results in any 

unreasonable restraint of trade; or

(b) Impose any material anticompetitive burden on trading on 

the contract market.

CFTC Guidance: An entity seeking designation as a contract market 

may request that the Commission consider under the provisions of 

section 15(b) of the Act, any of the entity's rules, including trading 

The Commission's antitrust tools are complementary to these regulatory 

measures performed by Cleartrade which together seek to ensure safe, 

sound and efficient financial markets 

In its seeking registration as an FBOT, Cleartrade requests that the 

Commission consider under the provisions of Section 15(b) of the Act, 

any of Cleartrade’s rules, including trading policies, and including both 

operational Rules and the terms or conditions of products listed for 

trading, at the time of registration or thereafter.
26

protocols or policies, and including both operational rules and the terms 

or conditions of products listed for trading, at the time of designation or 

thereafter. The Commission intends to apply section 15(b) of the Act to 

its consideration of issues under this core principle in a manner 

consistent with that previously applied to contract markets.

Core Principle 20: SYSTEM SAFEGUARDS

The board of trade shall—

(a) Establish and maintain a program of risk analysis and 

oversight to identify and minimize sources of operational risk, 

through the development of appropriate controls and 

procedures, and the development of automated systems, that are 

reliable, secure, and have adequate scalable capacity;

(b) Establish and maintain emergency procedures, backup 

facilities, and a plan for disaster recovery that allow for the 

timely recovery and resumption of operations and the 

fulfillment of the responsibilities and obligations of the board of 

trade; and

(c) Periodically conduct tests to verify that backup resources are 

sufficient to ensure continued order processing and trade 

matching, price reporting, market surveillance, and 

maintenance of a comprehensive and accurate audit trail.

Cleartrade has a risk management manual which governs its risk 

analysis and oversight. Separately, there are also technical documents 

such as the infrastructure and security overview document which look 

at the development of automated systems that are reliable, secure, and 

have adequate scalable capacity. 

In terms of audit trail, the production MySQl database is replicated realtime to a slave instance running on a separate machine. Full database 

backups are performed daily from this slave instance and kept for 7 

years. 

Cleartrade also has a disaster recovery procedure which allows 

Cleartrade to establish emergency procedures when activated. 

The disaster recovery procedures are tested annually to ensure that the 

procedures remain relevant and that there are sufficient backup 

resources to ensure continued order processing and trade matching. 

Core Principle 21: FINANCIAL RESOURCES

(a) In General. The board of trade shall have adequate financial, 

operational, and managerial resources to discharge each responsibility 

of the board of trade.

(b) Determination of adequacy. The financial resources of the board of 

trade shall be considered to be adequate if the value of the financial 

resources exceeds the total amount that would enable the contract 

market to cover the operating costs of the contract market for a 1-year 

period, as calculated on a rolling basis.

The capital requirement that Cleartrade has to abide by is derived from 

the approval letter from MAS to Cleartrade on the March 8, 2011, to 

recognize Cleartrade as a Recognised Market Operator in Singapore, 

and requires that Cleartrade: 

• shall not cause or permit its base capital to fall below 

S$500,000; and

• shall not cause or permit its financial resources to fall below its 

total risk requirement. The total risk requirement for Cleartrade 

shall be the higher of 18% of its annual operating revenue or 

50% of its annual operating costs.
27

Cleartrade also sets out to provide the MAS with our updated base 

capital, financial resources and risk requirement on a monthly basis to 

determine that we are still operating in line with our capital 

requirements.

The premise of such a regulatory capital calculation by MAS is to allow 

for the financial resources to cover the operating costs of the contract 

market for an extended period. Cleartrade considers a 6 month period 

adequate should it be needed to wind down. 

Core Principle 22: DIVERSITY OF BOARD OF DIRECTORS

The board of trade, if a publicly traded company, shall endeavor to 

recruit individuals to serve on the board of directors and the other 

decision-making bodies (as determined by the Commission) of the 

board of trade from among, and to have the composition of the bodies 

reflect, a broad and culturally diverse pool of qualified candidates.

Cleartrade Exchange is not a publically traded company. 

Core Principle 23: SECURITIES AND EXCHANGE COMMISSION

The board of trade shall keep any such records relating to swaps defined 

in section 1a(47)(A)(v) open to inspection and examination by the 

Securities and Exchange Commission.

CFTC Guidance: A DCM should have arrangements and resources for 

collecting and maintaining accurate records pertaining to any swaps 

agreements defined in section 1a(47)(A)(v) of the Act, and should leave 

them open to inspection and examination for a period of five years.

Currently, records must be maintained for five (5) years. Section 39 of 

the SFA and Regulation 5 of the SFMR require an RMO to maintain a 

detailed record of all transactions effected through its facilities and keep 

all relevant books and other information for a minimum of 5 years. 

Rule 1.2 of the Cleartrade Rulebook requires for Cleartrade to make 

arrangements for such records to be available for other regulatory 

authorities at their request.