Regulatory Compliance

Canadian Oil

Product	Volume (barrels per month)	Incentive Payment
All oil products listed in Schedule D to the CPA	Less than or equal to 100,000 barrels per side	none
All oil products listed in Schedule D to the CPA	Greater than 100,000 barrels per side	20% of the fees for transactions in Canadian oil products, as set out in Schedule A to the CPA

Terms of the incentive payments are set out in the ICE NGX Clearing Incentive Agreement. Terms may be periodically amended by ICE NGX in its sole discretion upon notice to the Participating Brokers in accordance with the ICE NGX Clearing Incentive Agreement. ICE NGX may from time to time offer discounted fees on various products, or amend Schedule "A" to the Contracting Party's Agreement ("CPA"), and under such circumstances the clearing incentive will be similarly discounted.

Services

Clearing & Settlement

Indices & Market Data

Canada

ICE NGX is a recognized exchange and clearing agency in Alberta. It has received exemption orders in the following additional Canadian jurisdictions: Ontario, Manitoba, Saskatchewan, British Columbia and Quebec.

Alberta Securities Commission (“ASC”)

The ASC is ICE NGX’s primary regulator in Canada.ICE NGX is recognized by the ASC under the Securities Act (Alberta) (“ASA”) as an exchange and as a clearing agency for natural gas, electricity, crude oil and related contracts (the Contracts) by orders that became effective on March 31, 2017. The current orders replaced ICE NGX’s previous orders.

On July 28, 2014, through a Canadian Securities Administrators notice issued jointly by the ASC, the Bank of Canada and certain other provincial securities regulators, it was declared that ICE NGX can be considered a qualifying central counterparty (“QCCP”) under the standard on the capital treatment of certain bank exposures to central counterparties developed by the Basel Committee on Banking Supervision.

Under the exchange recognition order, the ASC has:

recognized ICE NGX as an exchange pursuant to section 62 of the ASA with respect to the Contracts;
granted a registration exemption to contracting parties that enter into ICE NGX’s standard form trading agreement;
exempted ICE NGX from the requirements of National Instrument 21-101;
granted an exemption from the requirement in section 62 of the ASA to be recognized as an exchange in relation to the trading of ICE NGX products identified as “Forwards” in ICE NGX’s Contracting Party’s Agreement.

Under the clearing agency recognition order, ICE NGX has been recognized by the ASC as a clearing agency pursuant to section 67 of the ASA (subject to certain conditions).

Pursuant to the orders, ICE NGX must fulfill certain undertakings including complying with certain Clearing Principles, Exchange Principles and Reporting Requirements.

ICE NGX must comply with the following Clearing Principles:

Financial Resources – must have ongoing adequate resources
Participant and Product Eligibility – must maintain appropriate admission standards and product eligibility standards
Risk Management – must manage risk with appropriate tools and procedures
Settlement Procedure – must settle on a timely basis, maintain adequate flow records and comply with netting or offset arrangements of other clearing organizations
Treatment of Funds – must maintain standards and procedures to protect funds
Default Rules and Procedures – must maintain rules to allow for efficient and fair event management
Rule Enforcement – must: (i) maintain adequate arrangements and resources to monitor and enforce rule compliance and dispute resolution and (ii) maintain the authority and ability to limit or discipline members for rule violation
System Safeguards – must maintain oversight and risk analysis, maintain emergency procedures and a disaster recovery plan, ensure annual testing of its systems by professionals
Reporting – must provide to the ASC all information necessary for it to conduct its oversight
Recordkeeping – must maintain records of all activities related to its business in a form and manner acceptable to the ASC
Public Information – must make information regarding rules and operating procedures governing clearing and settlement available to market participants
Information Sharing – must enter into and abide by all applicable information-sharing agreements and use relevant information obtained from the agreements in its risk management program
Restraint of Trade – must avoid unreasonably restraining trade or imposing a material anti-competitive burden on trading in regulated markets

ICE NGX must comply with the following Exchange Operating Requirements:

Access – (i) must not unreasonably inhibit, condition or limit access or permit unreasonable discrimination amongst contracting parties; (ii) will only provide access to entities authorized by ICE NGX and will take reasonable steps to prevent unauthorized access; (iii) must take reasonable steps to ensure that each officer and director, or other individual performing a similar function, of each entity applying to become a contracting party, is a fit and proper person for that role; (iv) where a decision has been made to deny or suspend access, must ensure that the party has been given an opportunity to have that decision reviewed; and (v) must not impose any restriction on competition among contracting parties that is not reasonably necessary or appropriate
Fees – process for setting fees must be fair and appropriate and the fee model must be readily accessible
Financial Integrity of Transactions – must take steps to ensure the financial integrity of transactions, including (i) requiring transactions, other than forwards, to be cleared and (ii) periodically confirming that each contracting party continues to satisfy qualification requirements
Trade Monitoring and Market Integrity – (i) must have an effective program for monitoring trading activity; (ii) contracts must not be readily susceptible to manipulation; (iii) must establish risk-control mechanisms including powers to address trading errors and system malfunctions, impose trading halts or suspensions and apply position-management mechanisms; (iv) trade cancellations must be conducted in a transparent manner
Recordkeeping – must maintain records of all activities relating to the exchange trading platform in a form and manner acceptable to the ASC, and make such records available to the ASC upon request
Post-trade reporting – within one business day, must report to the public daily information on settlement prices, volume, open interest and opening and closing ranges
Conflicts of Interest – must establish a process for identifying and managing conflicts of interest
Inquiries and Investigations – must be empowered to may make inquiries or conduct investigations relating to the trading activities of contracting parties
Governance – (i) arrangements must be designed to ensure effective oversight; (ii) must take reasonable steps to ensure that each officer and director is a fit and proper person for that role
System Safeguards – (i) must maintain a program of risk analysis and oversight designed to identify and manage sources of operational risk; (ii) must have adequate business continuity and disaster recovery plans and regularly test and review such plans, and if practicable, coordinate such plans with essential service providers and contracting parties
Resources and Outsourcing – must (i) have access to sufficient financial, operational, managerial and regulatory compliance and oversight resources, and (ii) ensure that any outsourcing arrangements will not impair the ability to comply with exchange recognition requirements

The reporting requirements require ICE NGX to report certain information to the ASC quarterly, annually, and upon the occurrence of certain key events

The ASC also conducts periodic oversight assessments of ICE NGX’s operations to confirm compliance with its orders.

Links to the ASC orders have been provided below.

ASC Exchange Order

ASC Clearing Order

Ontario Securities Commission (“OSC”)

ICE NGX was exempted from the requirements of an exchange by the OSC under the Securities Act (Ontario) (“OSA”) and the Commodities Futures Act (“CFA”) by an order dated March 31, 2009.

The order was subsequently varied on February 11, 2011 and again on July 27, 2012, following the acquisition of TMX by Maple to expand ICE NGX corporate governance obligations. The OSC ordered that:

ICE NGX be exempt from registration as a commodity futures exchange under section 15 of the CFA;
Trades in contracts on ICE NGX (“Contracts”) by ICE NGX participants in Ontario (“Ontario Participants”) be exempt from the registration requirement under section 22 of the CFA;
Trades in Contracts by Ontario Participants be exempt from the requirements under section 33 of the CFA; and
ICE NGX be exempt from recognition as an exchange under section 21 of the OSA.

Because the definition of a clearing agency under the OSA does not include an exchange, the OSC found ICE NGX to be an exchange with clearing agency functions (not an exchange and a clearing agency) and therefore found it unnecessary to address exemption as a clearing agency.

Manitoba Securities Commission

Pursuant to an order dated April 22, 2009, ICE NGX has received the following relief:

An exemption from the need for recognition as an extra-provincial commodity futures exchange under Section 36(1) of the Commodity Futures Act (Manitoba) (the “Manitoba CFA”) for the purpose of the trading restrictions contained in Section 40 of the Manitoba CFA;
An exemption from the need for approval of the form of contract under Section 38(1) of the Manitoba CFA for the purpose of the trading restrictions contained in Section 40; and
An exemption for current and future contracting parties from the registration requirement contained in Section 24(1) of the Manitoba CFA.

ICE NGX is required to comply with the ASC recognition order, including any variations or amendments.

Quebec – Autorité des Marchés Financiers (“AMF”)

ICE NGX has received orders from the AMF dated November 29, 2002, July 27, 2004 and April 29, 2009 authorizing it to carry on exchange and clearing house activities and exempting it from:

The obligation to register as a dealer for its contracting parties;
The obligation to register for any natural person who acts on behalf of its contracting parties; and
The obligation to qualify for the creation or marketing of derivatives offered to the public.

ICE NGX must advise the AMF of all important changes with respect to the situation described in its request and must annually provide the AMF with a list of its contracting parties.

Saskatchewan – Financial and Consumer Affairs Authority

Pursuant to a decision dated May 16, 2014, the Financial and Consumer Affairs Authority of Saskatchewan:

current and future ICE NGX participants in Saskatchewan (“Saskatchewan Participants”) trading in contracts on ICE NGX are exempt from registration;
current and future Saskatchewan Participants are exempt from the trading restrictions contained in subsection 40(1) of The Securities Act, 1988 (Saskatchewan); and
ICE NGX is exempt from the requirement to be recognized as an exchange and from the requirement to be recognized as a clearing agency.

Prior to the current order, ICE NGX operated in Saskatchewan pursuant to exemptive relief provided through a Mutual Reliance Relief System order dated December 1, 2004.

British Columbia Securities Commission (“BCSC”)

Pursuant to an order dated September 18, 2001, the BCSC ordered that:

Trades in exchange contracts and swap contracts by contracting parties through the system operated by ICE NGX are exempt from the registration requirement in section 34(1) of the Securities Act (British Columbia) (“BCSA”); and
ICE NGX is exempt from the prohibition in section 59(1) of the BCSA against trading exchange contracts on unrecognized exchanges outside British Columbia.

United States

ICE NGX is regulated by the Commodity Futures Trading Commission (“CFTC”) in the United States and is registered to operate as a clearinghouse through its Derivatives Clearing Organization (“DCO”) order and as an exchange through its Foreign Board of Trade (“FBOT”) order.

Foreign Board of Trade (“FBOT”) Order

ICE NGX was the first entity to be granted FBOT status and received the order on May 2, 2013. The order permits identified members and other participants located in the United States to enter trades directly into ICE NGX’s order entry and trade matching system subject to the following:

ICE NGX must comply with the Commodity Exchange Act (“CEA”) and the regulations thereunder applicable to ICE NGX as a FBOT;
ICE NGX must comply with the applicable conditions of registration specified in CFTC regulation 48.8 and any additional conditions that the CFTC may impose; and
ICE NGX must fulfill the representations made in support of its application for registration.

Derivatives Clearing Organization (“DCO”) Order

The CFTC granted ICE NGX a DCO order on December 12, 2008, which was amended on March 20, 2013, for the clearing of: (i) physically delivered or financially settled contracts (futures or swaps) based on energy products that could qualify as exempt commodities as defined in the CEA, traded on or subject to the rules of a registered FBOT; and (ii) physically delivered or financially settled swaps as defined in the CEA, based on energy products that could qualify as exempt commodities as defined in the CEA, and which are traded bilaterally or on or subject to the rules of a Designated Contract Market or registered Swap Execution Facility. Clearing spot and forward contracts is not subject to the CEA and therefore not prohibited by the order.

The order generally requires ICE NGX’s compliance with the CEA and regulations and also sets out (i) the accounting methodology required for daily settlement procedures, (ii) the self-regulatory functions required of ICE NGX; (iii) certain reporting requirements upon changes to applicable law; and (iv) a requirement to maintain an agent for service in the United States.

ERCOT

ICE NGX also provides clearing for Electric Reliability Council of Texas (“ERCOT”) physical electricity futures products, which commenced in August 2013. ICE NGX is registered as a power marketer by the Public Utility Commission of Texas and its function as a registered power marketer is not subject to FERC jurisdiction.

Europe

Effective January 28, 2016, ICE NGX received third country central clearing counterparty (“CCP”) recognition from the European Securities and Markets Authorities (“ESMA”). Recognition as a third country CCP under European Market Infrastructure (“EMIR”) allows CCPs from outside the European Union (“EU”) to provide central clearing services to clearing members or trading venues established in the EU. Pursuant to EU capital requirements regulations, recognition under EMIR also provides for QCCP status in the EU.