This US Cleared Product Annex (as amended from time to time, this “Annex”) is an annex to the User Agreement (the “User Agreement”) that the related user has executed with respect to their usage of the communications software provided by Paradigm Connect, Inc. DBA Paradigm (“Paradigm”) and relates to US Cleared Products (as defined below). This Annex supplements and forms an integral part of the User Agreement with respect to US Cleared Products. Capitalized terms used but not defined in this Annex have the meanings given to such terms in the User Agreement. Usage of the System to negotiate eligible US Cleared Products that are then submitted for clearing on a Clearing Organization for US Cleared Products constitutes agreement by the User to the terms of this Annex, as amended from time to time.
“Clearing Organization” means, with respect to any US Cleared Product, the relevant clearing organization for such US Cleared Product.
“US Cleared Product” means a future and option of a given venue as labeled “US Cleared” that Paradigm supports, as listed on https://www.paradigm.co/help/products/derivatives/venues
a. No transactions in a US Cleared Product may be negotiated through the System unless submitted to the relevant Clearing Organization through the System for clearance by such Clearing Organization.
b. A “futures contract” has the meaning given to such term under US law. As a general matter, a “futures contract” is a contract to buy or sell a given digital asset (including BTC and ETC, for example), in the future at a pre-agreed price or based on a reference point, where actual delivery does not occur. If a User has questions regarding whether a given transaction may constitute a “futures contract” or an option, they should contact their lawyer.
c. Paradigm does not list any of its own tradable contracts or securities. Paradigm simply provides a communication platform for the bilateral negotiation of terms for contracts specified in the above table.
d. All contract and other relevant specifications including but not limited to any exchange fees, minimum tick sizes, minimum quote sizes and corresponding margin requirements are set by and subject to agreements, rules and regulations set by the relevant Clearing Organization.
As listed with the “US Cleared” label at: https://www.paradigm.co/help/products/derivatives/venues
a. Only Users that have signed and agreed to the Terms of Service or similar agreement with the relevant Clearing Organization, and have all other necessary contractual arrangements (such as give-up agreements and agreements with their futures commission merchant (“FCM”)) and that have an active account at the relevant Clearing Organization are eligible to negotiate transactions in US Cleared Products utilizing the System.
b. The following Persons are not eligible to utilize the System to negotiate transactions in US Cleared Products:
i. Any person or entity that is located in or organized under the laws of a US embargoed country, province, or region;
ii. Any person or entity listed on the US Treasury Department’s list of Specially Designated Nationals or the US Department of Commerce Denied Person’s List or Entity List;
iii. Any person or entity not permitted under applicable law to utilize the System to negotiate futures or options transactions in the jurisdiction(s) in which they are located; and
iv. Any person or entity who is a resident of or located in a country, province, or region that is disallowed from accessing or utilizing services offered by the relevant Clearing Organization.
c. In order to utilize the System, a User must (i) have a minimum financial instrument portfolio, including both cash deposits and financial instruments, in excess of US$500,000; (ii) the sophistication to understand the transactions that the User (or its Authorized Users) are negotiating themselves through the System; and (iii) otherwise satisfy all legal requirements to use the System (including the legal ability to enter into transactions) in the jurisdiction(s) in which they are located.
By usage of the System to negotiate transactions in US Cleared Products, a User represents and warrants, on an ongoing basis, that it satisfies the eligibility criteria set forth above in the preceding paragraphs of this Section 3.
Each User agrees (i) not to use the System to engage in abusive trading practices, including in connection with any transactions that the User communicates about on the System (abusive trading practices include, but are not limited to, the following: wash trading, market manipulation, front-running, accommodation trading, or fraudulent trading); (ii) to only use the System for communication purposes and (iii) not to use the System in any way that would violate Paradigm’s agreements with the applicable Clearing Organization. For all purposes of the User Agreement and this Annex, references to “Software” include the API, in the case of US Cleared Products being submitted for clearing on the Chicago Mercantile Exchange Inc. or its subsidiaries (“CME”), that is utilized by Paradigm to submit transactions in such Products to CME for clearing.
a. Request For Quote (RFQ) and Bilateral Price Negotiation/Agreement Process
i. To initiate bilateral negotiations between two Users, each User must first “approve” each other in their web-dashboard. Each User is responsible for their own KYC, AML or any other verification processes deemed necessary to be compliant with the User’s regulatory jurisdiction(s).
ii. Once approved, direct communication channels can be opened between Users wherein both Users (or their Authorized User) can exchange text based RFQs and come to a price agreement for the product/strategy requested. All communication for RFQs, responses, and price agreements can be automated through Paradigm buttons and “/” commands.
iii. All Users are solely responsible for all risks (including market, credit and process risks) related to or arising out of the transactions negotiated by themselves or their Authorized Users, and Paradigm is not responsible for any such risks.
b. Confirmation Process
An agreement is reached when the initiating counterparty (“Taker”) confirms, via the Trade Recap popup screen, the terms put forth in the RFQ by the responding counterparty (“Maker”). After an agreement is reached, all agreement details are (i) displayed within the conversation via a Trade Recap; (ii) displayed in each user’s in-app blotter; and (iii) summarized in a Trade Recap email to each user in the “Trade Channel.”
c. Settlement and Clearing Process
The System will submit affirmed (matched, dual-sided) price-agreement details to the relevant Clearing Organization along with complete account and party information (including FCM Firm Number, Account Name and Entering Trader ID(s)) for both the buy side and sell side of the trade to be cleared by the relevant Clearing Organization. The relevant Clearing Organization will validate these trades for party, account, product and limits and acknowledges the submitter. If the trade fails any validations, the trade is rejected and a negative acknowledgement is sent to the submitter. The submitter should contact the relevant Clearing Organization if they have any questions regarding a rejected trade (in the case of CME, to the CME’s Global Command Center, which Users can access via their CME Group Login).
Disputes regarding transactions (including with respect to whether an agreement has been reached, the terms of that agreement, or the breach of that agreement) are solely subject to, and resolved in accordance with, the rules of the relevant Clearing Organization. To the extent a transaction is not subject to dispute resolution under the relevant Clearing Organization’s rules, such dispute must be directly resolved between the applicable Users. Paradigm will not be involved in any dispute resolution, and each User agrees to not hold Paradigm liable for any dispute with the other applicable User or clearing venue.