Nadex Contracts Categorized as ‘Swaps’ Under Dodd-Frank

In July 2010, the Dodd-Frank Act became law, amending the Commodity Exchange Act (the “Act”), and since then the Commodity Futures Trading Commission (“CFTC”) has been working to issue new regulations to implement the new law. Among other things, the Commission has promulgated regulations to clarify what constitutes a “swap”. Nadex has been informed by CFTC staff that the binary option and spread contracts listed on Nadex are “commodity options” that fall within the definition of a “swap” under the Commodity Exchange Act and CFTC regulations. Nadex looks forward to working with CFTC staff to address the impact of this determination with respect to swap reporting and other relevant requirements. That said, Nadex understands that retail market participants are permitted to trade swaps, including commodity options, on a Designated Contract Market such as Nadex, and Nadex remains committed to continuing to offer unique products like its binary options and spread contracts for trading by its market participants.