The North American Derivatives Exchange (Nadex) has requested guidance regarding its Amended Order of Registration as a Derivatives Clearing Organization (the Nadex DCO Order) and Nadex’s Amended Order as a Designated Contract Market (the Nadex DCM Order, and, together with the Nadex DCO Order, the Nadex Orders), both dated March 30, 2010. Among other things, the Nadex Orders allow intermediation of contracts traded on Nadex’s designated contract market provided that such contracts are fully collateralized. Because a futures commission merchant (FCM) customer with a fully collateralized position on Nadex may suffer losses on another exchange such that the customer would owe a balance to its FCM, Nadex sought an interpretation from the Division confirming that the position on Nadex would be considered “fully collateralized” notwithstanding such a scenario. The Division of Clearing and Intermediary Oversight has concluded that an intermediated contract traded on Nadex, on behalf of the intermediary’s customer, remains “fully collateralized,” as contemplated by the Nadex Orders, notwithstanding subsequent balances owed by that customer to the intermediary due to losses suffered on other exchanges, as long as Nadex holds, at all times, sufficient funds of such customer to cover the maximum possible loss that may be sustained by such customer upon liquidation of any or all Nadex contracts.