January 17, 2014

CFTC Staff Issues Exemptive and Interpretative Letters to Nadex and Commission Amends Nadex Derivatives Clearing Organization Registration Order

Washington, DC — In response to a request from the North American Derivatives Exchange, Inc. (Nadex), a registered derivatives clearing organization (DCO), the U.S. Commodity Futures Trading Commission’s (Commission) Division of Clearing and Risk (DCR), acting under delegated authority from the Commission, issued an exemptive letter that grants Nadex relief from certain provisions of the Commission’s regulations applicable to DCOs. DCR also issued an interpretative letter that addresses the applicability of certain regulatory provisions to Nadex.

The request from Nadex was prompted by the Commission’s 2011 adoption of regulations that implemented Dodd-Frank Act amendments to the Commodity Exchange Act “core principles” for DCOs. The regulations address issues that arise in connection with a typical intermediated derivatives clearing model. However, Nadex’s clearing model is different in that it features non-intermediated clearing of transactions in fully-collateralized products. Because of this, Nadex requested that DCR provide relief from compliance with regulatory provisions that are inapplicable to Nadex’s model, and it requested an interpretation regarding applicability of and compliance with other regulatory provisions.

In addition, the Commission on its own initiative approved an amended order of DCO registration for Nadex to better align the terms and conditions of Nadex’s registration order with the Commodity Exchange Act, as amended by the Dodd-Frank Act, and the Commission’s current regulations.

Last Updated: January 17, 2014