November 19, 2013
Washington, DC – The Commodity Futures Trading Commission (Commission) has notified North American Derivatives Exchange Inc. (Nadex) of the results of a rule enforcement review completed by the Commission’s Division of Market Oversight (Division). The review covered the target period from June 15, 2011 through June 15, 2012. The Division evaluated the Exchange’s compliance with Core Principles 2 (Compliance With Rules) and 12 (Protection of Market Participants), which relate to an exchange’s trade practice surveillance program.
The Division found that Nadex maintains an adequate trade practice surveillance program, including adequate staff, systems, investigatory work and sanctions.
The Division also found specific areas where Nadex should improve its trade practice program. Among other items, the Division recommended that Nadex improve the recordkeeping of its investigation logs and investigation memoranda.
With respect to the composition of Nadex’s Regulatory Oversight Committee (ROC), the Division recommended that Nadex implement tie-breaking procedures to resolve tie votes in its ROC, or alternatively, the Exchange should ensure that the committee is composed of an odd number of members greater than one.
Copies of the report are available from the Commission’s Office of Public Affairs, Three Lafayette Centre, 1155 21st Street N.W., Washington, DC 20581, 202-418-5080, or by accessing the Commission’s website at www.cftc.gov.
Last Updated: November 19, 2013