Trading Rules and Market Integrity Policy

Updated: 9 May 2026

1. Status of this policy

1.1 This Trading Rules and Market Integrity Policy forms part of the Trading Rules incorporated into the Terms of Use.

1.2 Capitalised terms used but not defined in this policy have the meaning given in the Terms of Use.

1.3 This policy applies to all trading activity made through or in connection with the Application or Derive Protocol, including orderbook transactions, RFQs, block transactions, OTC or principal transactions, API activity, market maker activity, liquidity provider activity, settlement, liquidation, and related activity.

2. Trade finality and exceptions

2.1 Transactions are intended to be final and binding once executed, matched, confirmed, settled, or otherwise processed in accordance with the applicable protocol, smart contract, RFQ, orderbook, settlement, liquidation, or other mechanics.

2.2 Finality is subject to the Terms of Use, this policy, RFQ and Block Trading Rules, API and Automated Trading Policy, Oracle, Mark Price and Settlement Policy, Margin, Liquidation and Loss Allocation Rules, Market Parameters and Controls Schedule, Market Maker and Liquidity Provider Supplement, and any applicable market integrity, Mistrade, Erroneous Transaction, liquidation, settlement, oracle, governance, risk, or emergency process.

3. Fair and orderly markets

3.1 Users must trade in a manner consistent with fair and orderly market operation.

3.2 We may, through available Application functionality and where applicable through protocol governance, smart contract mechanics, risk parameters, or governance-approved processes, take or facilitate action where we reasonably consider that activity may impair market integrity, create disorderly market conditions, create artificial pricing, create artificial liquidity, create misleading open interest, create abnormal concentration, overload systems, exploit technical or operational issues, or otherwise harm fair and orderly operation.

3.3 We may consider any available information, including market data, account activity, RFQ history, orderbook state, API logs, message rates, quote history, execution history, hedging activity, oracle data, index data, mark prices, settlement values, theoretical values, implied volatility, put-call parity, comparable venues, counterparty activity, concentration, timing, expiry proximity, liquidation impact, margin impact, settlement impact, and any other information we reasonably consider relevant to making an objective determination of whether market integrity has been impaired or is at risk.

3. Fair and orderly markets

3.1 Users must trade in a manner consistent with fair and orderly market operation.

3.2 We may, through available Application functionality and where applicable through protocol governance, smart contract mechanics, risk parameters, or governance-approved processes, take or facilitate action where we reasonably consider that activity may impair market integrity, create disorderly market conditions, create artificial pricing, create artificial liquidity, create misleading open interest, create abnormal concentration, overload systems, exploit technical or operational issues, or otherwise harm fair and orderly operation.

3.3 We may consider any available information, including market data, account activity, RFQ history, orderbook state, API logs, message rates, quote history, execution history, hedging activity, oracle data, index data, mark prices, settlement values, theoretical values, implied volatility, put-call parity, comparable venues, counterparty activity, concentration, timing, expiry proximity, liquidation impact, margin impact, settlement impact, and any other information we reasonably consider relevant to making an objective determination of whether market integrity has been impaired or is at risk.

4. Mistrades and Erroneous Transactions

4.1 A Mistrade or Erroneous Transaction may occur where a transaction, order, RFQ response, quote, fill, settlement, liquidation, transfer, protocol interaction, or other activity is executed, submitted, displayed, accepted, matched, settled, or processed at a price, size, quantity, volatility, theoretical value, mark price, index price, oracle price, settlement price, margin requirement, liquidation value, or other parameter that is materially inconsistent with prevailing market conditions, expected execution parameters, the applicable risk framework, or fair and orderly market operation, as determined based on contemporaneous market data, theoretical value, comparable venue pricing, oracle data, or other objective evidence available at the relevant time.

4.2 We may review and determine whether a Mistrade or Erroneous Transaction has occurred on our own initiative or following notice from a user, market maker, liquidity provider, counterparty, service provider, affiliate, or other participant.

4.3 A participant seeking review should notify us as soon as reasonably practicable and, where possible, within 60 minutes of execution and before expiry or settlement of the affected instrument. A notice within this period, where supported by sufficient detail to identify the affected transaction, the basis for the review request, and the general nature of the alleged error or irregularity, may trigger a longer review, settlement pause, account restriction through the Application, withdrawal restriction through the Application, market restriction, or other temporary measure while we assess the relevant facts and determine appropriate treatment. Any withdrawal restriction imposed as a temporary measure under this section will be subject to the time limits and conditions set out in section 4.3.7 of the Terms of Use.

4.4 We may initiate review at any time where we reasonably consider this necessary to protect users, the Application, the Derive Protocol, market integrity, settlement, the insurance fund, or orderly market operation.

4.5 We will aim to complete reviews promptly. We may extend any review beyond the initial notice period where the matter involves near-expiry instruments, oracle data, settlement, liquidation, multiple counterparties, technical issues, market disruption, legal analysis, unavailable data, unavailable participants, or other circumstances requiring additional time.

4.6 Possible outcomes include no action, account or market restriction, trade confirmation, trade adjustment, trade cancellation, price adjustment, cash adjustment, fee rebate, voluntary unwind, forced settlement, delayed settlement, adjusted settlement, cost reimbursement on a contractual basis in accordance with section 4.3.15 of the Terms of Use, or other corrective action permitted by the Terms of Use or Trading Rules where technically and operationally practicable through available Application functionality, protocol governance, smart contract mechanics, risk parameters, or governance-approved processes.

5. Market Integrity Review Procedure

5.1 Where we initiate a market integrity, Mistrade or Erroneous Transaction review, we may follow one or more of the following steps:

a. identify the affected market, account, subaccount, transaction, expiry, instrument, counterparty, functionality, or process;

b. apply temporary restrictions where reasonably necessary and subject to the limits set out in the Terms of Use, including settlement pauses, account restrictions, withdrawal restrictions through the Application, market restrictions, RFQ restrictions, API restrictions, or other temporary measures;

c. preserve relevant records, including RFQ records, API logs, orderbook state, oracle data, mark prices, settlement data, account activity, communications, wallet data, and transaction records;

d. request information from affected users, market makers, liquidity providers, service providers, counterparties, affiliates, or other participants;

e. assess relevant market data, theoretical value, implied volatility, put-call parity, comparable venues, concentration, timing, expiry proximity, liquidation impact, margin impact, settlement impact, and any other information we consider relevant;

f. determine whether no action, voluntary resolution, trade adjustment, cancellation, repricing, settlement adjustment, access restoration, cost reimbursement, or another outcome is appropriate; and

g. where reasonably practicable, notify affected users of the general outcome.

5.2 We may adapt, shorten, extend, or omit any step in the review process where we reasonably consider this necessary or appropriate because of market integrity, security, settlement, liquidation, oracle, technical, operational, legal, compliance, or timing considerations, provided that we will not omit the evidence assessment step in section 5.1(e) where a participant's account restriction or withdrawal restriction remains in place at the time the determination is made.

5. Market Integrity Review Procedure

5.1 Where we initiate a market integrity, Mistrade or Erroneous Transaction review, we may follow one or more of the following steps:

a. identify the affected market, account, subaccount, transaction, expiry, instrument, counterparty, functionality, or process;

b. apply temporary restrictions where reasonably necessary and subject to the limits set out in the Terms of Use, including settlement pauses, account restrictions, withdrawal restrictions through the Application, market restrictions, RFQ restrictions, API restrictions, or other temporary measures;

c. preserve relevant records, including RFQ records, API logs, orderbook state, oracle data, mark prices, settlement data, account activity, communications, wallet data, and transaction records;

d. request information from affected users, market makers, liquidity providers, service providers, counterparties, affiliates, or other participants;

e. assess relevant market data, theoretical value, implied volatility, put-call parity, comparable venues, concentration, timing, expiry proximity, liquidation impact, margin impact, settlement impact, and any other information we consider relevant;

f. determine whether no action, voluntary resolution, trade adjustment, cancellation, repricing, settlement adjustment, access restoration, cost reimbursement, or another outcome is appropriate; and

g. where reasonably practicable, notify affected users of the general outcome.

5.2 We may adapt, shorten, extend, or omit any step in the review process where we reasonably consider this necessary or appropriate because of market integrity, security, settlement, liquidation, oracle, technical, operational, legal, compliance, or timing considerations, provided that we will not omit the evidence assessment step in section 5.1(e) where a participant's account restriction or withdrawal restriction remains in place at the time the determination is made.

6. Orderbook Rules

6.1 Orders may be accepted, rejected, matched, partially matched, cancelled, expired, amended, suspended, or otherwise processed according to the applicable order type, time-in-force, risk checks, margin checks, price bands, market status, API rules, smart contract mechanics, Terms of Use, and Trading Rules.

6.2 An order remains open and capable of execution until cancelled, expired, rejected, matched, suspended, or otherwise handled under the Terms of Use or Trading Rules.

6.3 We may reject, cancel, suspend, review, or restrict orders that breach price bands, risk checks, margin requirements, market integrity controls, rate limits, self-trade prevention controls, sanctions controls, technical requirements, or other applicable rules.

6.4 Orderbook activity may be subject to Mistrade, Erroneous Transaction, market integrity, API, settlement, liquidation, oracle, and other review processes under the Terms of Use and Trading Rules.

6. Orderbook Rules

6.1 Orders may be accepted, rejected, matched, partially matched, cancelled, expired, amended, suspended, or otherwise processed according to the applicable order type, time-in-force, risk checks, margin checks, price bands, market status, API rules, smart contract mechanics, Terms of Use, and Trading Rules.

6.2 An order remains open and capable of execution until cancelled, expired, rejected, matched, suspended, or otherwise handled under the Terms of Use or Trading Rules.

6.3 We may reject, cancel, suspend, review, or restrict orders that breach price bands, risk checks, margin requirements, market integrity controls, rate limits, self-trade prevention controls, sanctions controls, technical requirements, or other applicable rules.

6.4 Orderbook activity may be subject to Mistrade, Erroneous Transaction, market integrity, API, settlement, liquidation, oracle, and other review processes under the Terms of Use and Trading Rules.

7. Fast Market, Disrupted Market, and abnormal conditions

7.1 We may declare or treat conditions as a Fast Market, Disrupted Market, Settlement Disruption, Oracle Disruption, Technical Disruption, or other abnormal condition where we reasonably determine that market conditions, liquidity, volatility, data quality, oracle operation, index operation, settlement, liquidation, network performance, system performance, or participant activity may impair fair and orderly trading.

7.2 During any such condition, we may modify risk parameters, price bands, RFQ settings, Mistrade ranges, margin requirements, liquidation settings, order types, RFQ availability, API availability, market availability, expiry treatment, settlement treatment, withdrawal availability through the Application, or access to any feature of the Application.

8. Market abuse and prohibited conduct

8.1 Users must not engage in conduct prohibited by the Terms of Use or this policy.

8.2 Prohibited conduct includes fraud, front-running, accommodation trading, fictitious transactions, pre-arranged or non-competitive transactions, cornering, spoofing, manipulation, wash trading, layering, quote stuffing, churning, self-trading, circular trading, artificial volume generation, improper money passing, abuse of RFQ functionality, submission of non-bona fide orders or RFQs, and any trading pattern reasonably likely to create a false or misleading impression of price, liquidity, volume, open interest, market depth, demand, supply, or market activity.

8.3 For the avoidance of doubt, bona fide proprietary trading, hedging, RFQ activity, block trading, principal trading, or liquidity provision by an Affiliate Liquidity Provider or unaffiliated market maker conducted in accordance with section 3.4.4 of the Terms of Use, these Trading Rules, disclosed conflicts, and Applicable Law shall not by itself constitute a breach of this section 8.

9. Confirmations and records

9.1 Trade confirmations, transaction records, RFQ records, account records, settlement records, liquidation records, fee records, and other records made available through the Application or Derive Protocol are intended to be conclusive and binding absent manifest error, Mistrade, Erroneous Transaction, technical issue, or other reviewable issue under the Terms of Use or Trading Rules.

9.2 You must notify us promptly, and where possible within 24 hours, if you believe any record, confirmation, trade, balance, position, fee, settlement, liquidation, or account entry is inaccurate or incomplete. Failure to notify us promptly may limit the remedies available. Where any inaccuracy relates to a potential Mistrade or Erroneous Transaction, the notification period set out in section 4.3.7 of the Terms of Use applies and takes precedence over the 24-hour period in this section 9.2.

10. Participant responsibility

10.1 Users, market makers, liquidity providers, API users, and other participants are responsible for all activity submitted through their wallets, accounts, subaccounts, API keys, session keys, bots, algorithms, quote engines, employees, contractors, delegates, agents, systems, or service providers.

10.2 Participants must maintain appropriate controls to prevent erroneous, excessive, disruptive, manipulative, malformed, unintended, or disorderly orders, RFQs, quotes, cancellations, messages, or transactions.

10.3 Participants operating automated trading systems, bots, algorithms, or quote engines must conduct appropriate testing of such systems before deployment and following any material change, and must maintain records of such testing for a minimum of 12 months.

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