April 21, 2017

VIA EMAIL

Mr. Christopher Kirkpatrick

Secretary

Commodity Futures Trading Commission

Three Lafayette Centre

1155 21st Street, NW

Washington, DC 20581

Re: Nodal Clear, LLC – Request for Order of Registration Amendment

Dear Mr. Kirkpatrick:

Pursuant to Commodity Futures Trading Commission (“CFTC” or “Commission”) Regulation 

39.3(a)(2), Nodal Clear, LLC (“Nodal Clear”) is submitting this request for amendment to its 

Order of Registration as a derivatives clearing organization (“DCO”) issued on September 24, 

2015 (“Existing Order”). At the time of its DCO application, Nodal Clear sought to clear 

financially settled electric power and natural gas futures executed on or through its affiliated 

designated contract market, Nodal Exchange, LLC (“Nodal Exchange”). Therefore, the Existing 

Order states “Nodal Clear is permitted to clear, in its capacity as a DCO, financially settled

futures and options on futures” (emphasis added). Nodal Clear now wishes to have the ability to

clear both financially and physically settled futures and options on futures and therefore seeks to 

amend the Existing Order accordingly.

Core Principles Affected

Pursuant to Commission Regulation 39.3(a)(2), Nodal Clear must demonstrate compliance with 

the core principles affected by the requested amendment. In this case, the core principle that is 

being affected is Core Principle E Settlement Procedures. Commission Regulation 39.14 was 

promulgated to implement Core Principle E and it provides in subpart (g) that a DCO that clears 

physically settled products shall:

(1) Establish rules that clearly state each obligation that the derivatives clearing 

organization has assumed with respect to physical deliveries, including whether it has an 

obligation to make or receive delivery of a physical instrument or commodity, or whether 

it indemnifies clearing members for losses incurred in the delivery process; and

(2) Ensure that the risks of each such obligation are identified and managed.

Nodal Clear does not believe that any additional core principles are affected by the requested 

amendment. 
Compliance with Core Principles Affected

Nodal Clear’s original DCO application was based on clearing financially settled contracts;

therefore, the requirements of Commission Regulation 39.14(g) were not applicable. 

Nonetheless, the Nodal Clear rules pertaining to clearinghouse liability were broadly written to 

include limitations on liability arising from “fault in delivery” as well as various other types of 

liability. Specifically, Nodal Clear Rule 7.9.1 Limitation of Liability; No Warranties provides 

that Nodal Clear and its affiliates shall not be liable for any losses arising in connection with 

fault in delivery in connection with the operation of the systems and the services of Nodal Clear. 

Accordingly, Nodal Clears disclaims, via Nodal Clear Rule 7.9.1, any indemnification for losses 

incurred in the delivery process. 

Conclusion

Nodal Clear believes the information provided above supports this request. Accordingly, Nodal 

Clear respectfully asks the Commission to amend the Existing Order to permit Nodal Clear to 

clear futures and options on futures, regardless of settlement type.

If you have any questions or need additional information regarding this request, please contact 

me at 703-962-9864 or alvarez@nodalexchange.com. 

Sincerely,

/s/ Cody Alvarez

Chief Compliance Officer & Corporate Counsel

cc: 

Eileen Donovan, Deputy Director, Division of Clearing and Risk

Meghan Tente, Special Counsel, Division of Clearing and Risk