Nadex seeks authority to limit trading privileges to minimize risk for market and members

Maria Nikolova

Nadex wants to limit trading privileges in cases where such an action may reduce risk, or otherwise protect the Exchange, the Members and the Market.

North American Derivatives Exchange, Inc. (Nadex), a subsidiary of IG Group Holdings plc (LON:IGG), has filed a notice with the United States Commodity Futures Trading Commission (CFTC), seeking to tighten the rules for the measures it may take against market participants in order to protect itself, its Members and the market.

The notice, dated April 7, 2017, specifies that “Nadex may, in its sole discretion, deny any Member application, or suspend, revoke, limit, condition, restrict, or qualify the trading privileges of any Market participants or their Authorized Trader(s) as it deems necessary or appropriate”.

Nadex explains that these measures will be applied in cases where there has been no breach of its rules that could lead to disciplinary action, but where Nadex has decided that an action is necessary “to minimize risk, or otherwise protect the Exchange, the market, or its Members”.

In case there are no objections from the CFTC, Nadex’s proposed rule changes will become effective as of April 25, 2017.

In a separate notice with the CFTC, Nadex also proposed changes to its rules governing membership applications. Under the proposals, the Exchange “may return any account balance and terminate any account upon the discovery that the Membership Application was completed by anyone other than the named individual identified on the Membership Application.” Another change concerns Nadex’s right to retain jurisdiction over anyone who initiates a transaction on the Exchange (directly or via an intermediary), even after termination or revocation of the person’s trading privileges. In case these proposals do not face opposition from the CFTC, they will also become effective April 25, 2017.

This is the second important set of changes proposed by Nadex this year. In January, the Exchange informed the CFTC of its intentions to change its rules for handling of customer orders. The changes sought to better reflect Commission Regulation 38.152, or, putting it otherwise, the requirements against abusive trading practices.

Nadex’s strict stance when it comes to providing a regulated environment to traders was underlined by Nadex’s CEO Tim McDermott who, in an interview with FinanceFeeds, has noted that:

“US customers are used to trading on regulated exchanges. They trade equities, stocks and futures on exchange. It is a different mentality of trader that makes up the market place here in America compared to other regions, and therefore companies must be able to offer that kind of clientele an exchange traded product that the customers feel comfortable with, this being a component within a regulated, normalized exchange based market.”

Read this next

Digital Assets

GK8 now allows clients to control their digital assets as they would their fiat

“As the institutional market is increasingly turning to self custody, our policy engine empowers them to automate transactions, approvals, and even crucial workflows, while providing the highest degree of security, consistency, governance and control.”

Digital Assets

Retail CBDCs in the UK: “Welcomed” by CryptoUK and R3, but “Dystopian” for ETC Group

“At this stage, we judge it likely that the digital pound will be needed in the future. It is too early to decide whether to introduce the digital pound, but we are convinced preparatory work is justified”, said the BoE and HM Treasury.

Institutional FX

Centroid taps Iress API to provide retail brokers with real-time market data

“It has always been a challenge to have an efficient, elegant solution for market data and order execution for retail brokers, but with Iress we have found absolutely the right partner to add to our client offering.”

Digital Assets

Ramp launches FCA-approved off-ramp product, onboards Brave, Trust Wallet, Ledger

“To obtain and maintain our FCA registration, we must meet and operate within their strict anti-money laundering and counter-terrorist financing standards. This is a huge achievement for us, as compliance is a cornerstone of our business and what we stand for.”

Institutional FX

State Street launches FIX API for Fund Connect ETF platform

“Expanding from proprietary APIs to the FIX industry standard will bring us closer to our goal of 100% digital interactions. This is another example of innovations we’ve brought to our operating model as we celebrate 30 years of servicing ETFs since the launch of SPY.”

Industry News

HollyWally opens office in Portugal to bring B2B2C wallet-as-a-service platform to Europe

“We looked at a number of centers for startups throughout Europe and were attracted straight away to Lisbon. There is great Government support and enthusiasm for startups, it’s well positioned between our Asian and US offices, it’s a cost-effective city in which to base a fintech and it’s a beautiful place.”

Retail FX

Eightcap integrates Acuity’s economic calendar for trade ideas on MT4 or MT5

“By incorporating Acuity’s cutting-edge AI technology into our platform, we are able to offer our clients a powerful new tool that will help them stay ahead of the markets. We are committed to providing an extensive range of tools and educational resources that will enhance our clients’ trading experience and allow them to trade smarter.”

Digital Assets

Fuse Network powers Web3 economy, payments with ‘Fuse 2.0’

Web3 payments revolution startup Fuse Network announced the release of ‘Fuse 2.0.’ alongside a new roadmap, whitepaper, and fresh branding aimed at bringing crypto payments to the mainstream global economy.

Inside View

Private Equity Renaissance

Recent years have seen a resurgence in the concept of trading physical equities, with a slew of new arrivals joining the market for what is arguably one of the oldest forms of investing. But what has been the driving force behind this change in momentum?

<