US (United States) Code. Title 7. Chapter 1: Commodity exchanges

Codificación normativa de EEUU (Estados Unidos). Legislación federal estadounidense # Agriculture

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7 USC CHAPTER 1 - COMMODITY EXCHANGES 01/06/03

-EXPCITE-

TITLE 7 - AGRICULTURE

CHAPTER 1 - COMMODITY EXCHANGES

.

-HEAD-

CHAPTER 1 - COMMODITY EXCHANGES

-MISC1-

Sec.

1. Short title.

1a. Definitions.

2. Jurisdiction of Commission; liability of principal for act of

agent; Commodity Futures Trading Commission; transaction in

interstate commerce.

(a) Jurisdiction of Commission; Commodity Futures

Trading Commission.

(b) Transaction in interstate commerce.

(c) Agreements, contracts, and transactions in

foreign currency, government securities, and

certain other commodities.

(d) Excluded derivative transactions.

(e) Excluded electronic trading facilities.

(f) Exclusion for qualifying hybrid instruments.

(g) Excluded swap transactions.

(h) Legal certainty for certain transactions in

exempt commodities.

(i) Application of commodity futures laws.

2a to 4a. Transferred.

5. Findings and purpose.

(a) Findings.

(b) Purpose.

6. Regulation of futures trading and foreign transactions.

(a) Restriction on futures trading.

(b) Regulation of foreign transactions by United

States persons.

(c) Public interest exemptions.

(d) Effect of exemption on investigative authority of

Commission.

6a. Excessive speculation.

(a) Burden on interstate commerce; trading or

position limits.

(b) Prohibition on trading or positions in excess of

limits fixed by Commission.

(c) Applicability to bona fide hedging transactions

or positions.

(d) Persons subject to regulation; applicability to

transactions made by or on behalf of United

States.

(e) Rulemaking power and penalties for violation.

6b. Fraud, false reporting, or deception prohibited.

(a) Contracts designed to defraud or mislead;

bucketing orders.

(b) Buying and selling orders for commodity.

(c) Inapplicability to transactions on foreign

exchanges.

6c. Prohibited transactions.

(a) In general.

(b) Regulated option trading.

(c) Regulations for elimination of pilot status of

commodity option transactions; terms and

conditions of options trading.

(d) Dealer options exempt from subsections (b) and

(c) prohibitions; requirements.

(e) Rules and regulations.

(f) Nonapplicability to foreign currency options.

(g) Oral orders.

6d. Dealing by unregistered futures commission merchants or

introducing brokers prohibited; duties in handling customer

receipts; rules to avoid duplicative regulations.

(a) Registration requirements; duties of merchants in

handling customer receipts.

(b) Duties of clearing agencies, depositories, and

others in handling customer receipts.

(c) Rules to avoid duplicative regulation of dual

registrants.

6e. Dealings by unregistered floor trader or broker prohibited.

6f. Registration and financial requirements; risk assessment.

(a) Registration of futures commission merchants,

introducing brokers, and floor brokers and

traders.

(b) Financial requirements for futures commission

merchants and introducing brokers.

(c) Risk assessment for holding company systems.

6g. Reporting and recordkeeping.

(a) In general.

(b) Daily trading records: registered entities.

(c) Daily trading records: floor brokers, introducing

brokers, and futures commission merchants.

(d) Daily trading records: form and reports.

(e) Disclosure of information.

(f) Authority of Commission to make separate

determinations unimpaired.

6h. False self-representation as registered entity member

prohibited.

6i. Reports of deals equal to or in excess of trading limits; books

and records; cash and controlled transactions.

6j. Restrictions on dual trading in security futures products on

designated contract markets and registered derivatives

transaction execution facilities.

(a) Issuance of regulations.

(b) ''Dual trading'' defined.

(c) ''Broker association'' defined.

6k Registration of associates of futures commission merchants,

commodity pool operators, and commodity trading advisors;

required disclosure of disqualifications; exemptions for

associated persons.

6l. Commodity trading advisors and commodity pool operators;

Congressional finding.

6m. Use of mails or other means or instrumentalities of interstate

commerce by commodity trading advisors and commodity pool

operators; relation to other law.

6n. Registration of commodity trading advisors and commodity pool

operators; application; expiration and renewal; record keeping

and reports; disclosure; statements of account.

6o. Fraud and misrepresentation by commodity trading advisors,

commodity pool operators, and associated persons.

6o-1. Special procedures to encourage and facilitate bona fide

hedging by agricultural producers.

(a) Authority.

(b) Report.

6p. Standards and examinations.

7. Designation of boards of trade as contract markets.

(a) Applications.

(b) Criteria for designation.

(c) Existing contract markets.

(d) Core principles for contract markets.

(e) Current agricultural commodities.

7a. Derivatives transaction execution facilities.

(a) In general.

(b) Requirements for trading.

(c) Criteria for registration.

(d) Core principles for registered derivatives

transaction execution facilities.

(e) Use of broker-dealers, depository institutions,

and farm credit system institutions as

intermediaries.

(f) Segregation of customer funds.

(g) Election to trade excluded and exempt

commodities.

7a-1. Derivatives clearing organizations.

(a) Registration requirement.

(b) Voluntary registration.

(c) Registration of derivatives clearing

organizations.

(d) Existing derivatives clearing organizations.

(e) Appointment of trustee.

(f) Linking of regulated clearing facilities.

7a-2. Common provisions applicable to registered entities.

(a) Acceptable business practices under core

principles.

(b) Delegation of functions under core principles.

(c) New contracts, new rules, and rule amendments.

(d) Violation of core principles.

(e) Reservation of emergency authority.

(f) Rules to avoid duplicative regulation of dual

registrants.

7a-3. Exempt boards of trade.

(a) Election to register with the Commission.

(b) Criteria for exemption.

(c) Antimanipulation requirements.

(d) Price discovery.

(e) Jurisdiction.

(f) Subsidiaries.

(g) Misrepresentation of status.

7b. Suspension or revocation of designation as registered entity.

7b-1. Designation of securities exchanges and associations as

contract markets.

7b-2. Privacy.

(a) Treatment as financial institutions.

(b) Treatment of CFTC as Federal functional

regulator.

8. Application for designation as contract market or derivatives

transaction execution facility; time; suspension or revocation of

designation; hearing; review by court of appeals.

9. Exclusion of persons from privilege of ''registered entities'';

procedure for exclusion; review by court of appeals.

9a. Assessment of money penalties.

9b. Rules prohibiting deceptive and other abusive telemarketing

acts or practices.

9c. Notice of investigations and enforcement actions.

10. Repealed.

10a. Cooperative associations and corporations, exclusion from

board of trade; rules of board inapplicable to payment of

compensation by association.

11. Vacation on request of designation or registration as

''registered entity''; redesignation or reregistration.

12. Public disclosure.

(a) Investigations respecting operations of boards of

trade and others subject to this chapter;

publication of results; restrictions;

information received from foreign futures

authorities; undercover operations; notice of

investigations and enforcement actions.

(b) Business matters; congressional, administrative,

judicial, and bankruptcy proceedings.

(c) Reports respecting conduct of registered entities

or transactions of violators; contents.

(d) Investigations respecting marketing conditions of

commodities and commodity products and

byproducts; reports.

(e) Names and addresses of traders of boards of trade

previously disclosed; disclosure to Congress

and agencies or departments of States or

foreign governments or foreign futures

authority.

(f) Compliance with subpoena after notice to

informant; congressional subpoenas and requests

for information excepted.

(g) Requests for information by State agencies or

subdivisions; volunteering of information by

Commission.

(h) Omitted.

(i) Review and audits by Comptroller General.

12-1 to 12-3. Omitted.

12a. Registration of commodity dealers and associated persons;

regulation of registered entities.

12b. Trading ban violations; prohibition.

12c. Disciplinary actions.

(a) Action taken; written notice of reasons for

action.

(b) Review by Commission.

(c) Affirmance, modification, set aside, or remand of

action.

(d) Stay of action.

(e) Major disciplinary rule violations.

12d. Commission action for noncompliance with export sales

reporting requirements.

12e. Repealed.

13. Violations generally; punishment; costs of prosecution.

(a) Felonies generally.

(b) Suspension of convicted felons.

(c) Transactions by Commissioners and Commission

employees prohibited.

(d) Use of information by Commissioners and

Commission employees prohibited.

(e) Redesignated (d).

(f) Insider trading prohibited.

13-1. Violations, prohibition against dealings in onion futures;

punishment.

13a. Nonenforcement of rules of government or other violations;

cease and desist orders; fines and penalties; imprisonment;

misdemeanor; separate offenses.

13a-1. Enjoining or restraining violations.

(a) Action to enjoin or restrain violations.

(b) Injunction or restraining order.

(c) Writs or other orders.

(d) Civil penalties.

(e) Venue and process.

(f) Action by Attorney General.

(g) Notice to Attorney General of action brought by

Commission.

(h) Notice of investigations and enforcement actions.

13a-2. Jurisdiction of States.

13b. Manipulations or other violations; cease and desist orders

against persons other than registered entities; punishment;

misdemeanor or felony; separate offenses.

13c. Responsibility as principal; minor violations.

14. Repealed.

15. Enforcement powers of Commission.

15a. Repealed.

15b. Cotton futures contracts.

(a) Short title.

(b) Repeal of tax on cotton futures.

(c) Definitions.

(d) Bona fide spot markets and commercial

differences.

(e) Form and validity of cotton futures contracts.

(f) Basis grade contracts.

(g) Tendered grade contracts.

(h) Specific grade contracts.

(i) Liability of principal for acts of agent.

(j) Regulations.

(k) Violations.

(l) Applicability to contracts prior to effective

date.

(m) Authorization.

16. Commission operations.

(a) Cooperation with other agencies.

(b) Employment of investigators, experts,

Administrative Law Judges, consultants, clerks,

and other personnel; contracts.

(c) Expenses.

(d) Authorization of appropriations.

(e) Relation to other law, departments, or agencies.

(f) Investigative assistance to foreign futures

authorities.

(g) Computerized futures trading.

16a. Service fees and National Futures Association study.

(a) Development and implementation of plan for user

fees; report to and approval by Congressional

committees.

(b) National Futures Association regulatory

experience; report; contents.

(c) Schedule of fees for services, activities and

functions; notice and hearing; actual cost

standard.

17. Separability.

17a. Separability of 1936 amendment.

17b. Separability of 1968 amendment.

18. Complaints against registered persons.

(a) Petition for actual damages.

(b) Rules and regulations; control over right of

appeal.

(c) Bond requirement when complainant is nonresident;

waiver.

(d) Enforcement of reparation award.

(e) Review.

(f) Automatic bar from trading and suspension for

noncompliance; effect of appeal.

(g) Predispute resolution agreements for

institutional customers.

19. Consideration of costs and benefits and antitrust laws.

(a) Costs and benefits.

(b) Antitrust laws.

20. Market reports.

(a) Information.

(b) Avoidance of duplication.

(c) Furnishing of information; confidentiality.

(d) Disclosure of business transactions, market

positions, trade secrets, or names of

customers.

(e) Application.

21. Registered futures associations.

(a) Registration statement.

(b) Standards for registration; Commission findings.

(c) Suspension of registration.

(d) Fees and charges.

(e) Registered persons not members of registered

associations.

(f) Denial of registration.

(g) Withdrawal from registration; notice of

withdrawal.

(h) Commission review of disciplinary actions taken

by registered futures associations.

(i) Notice; hearing; findings; cancellation,

reduction, or remission of penalties; review by

court of appeals.

(j) Changes or additions to association rules.

(k) Abrogation of association rules; requests to

associations by Commission to alter or

supplement rules.

(l) Suspension and revocation of registration;

expulsion of members; removal of association

officers or directors.

(m) Rules requiring membership in associations.

(n) Reports to Congress.

(o) Delegation to futures associations of

registrative functions; discretionary review by

Commission; judicial appeal.

(p) Establishment of rules for futures associations;

approval by Commission.

(q) Major disciplinary rule violations.

(q) Program for implementation of rules.

(r) Rules to avoid duplicative regulation of dual

registrants.

22. Research and information programs; reports to Congress.

23. Standardized contracts for certain commodities.

(a) Margin accounts or contracts and leverage

accounts or contracts prohibited except as

authorized.

(b) Permission to enter into contracts for delivery

of silver or gold bullion, bulk silver or gold

coins, or platinum; rules and regulations.

(c) Survey of persons interested in engaging in

transactions of silver and gold, etc.;

assistance of futures association; regulations.

(d) Savings provision.

24. Regulations respecting commodity broker debtors; definitions.

25. Private rights of action.

(a) Actual damages; actionable transactions;

exclusive remedy.

(b) Liabilities of organizations and individuals; bad

faith requirement; exclusive remedy.

(c) Jurisdiction; statute of limitations; venue;

process.

(d) Dates of application to actions.

26. Repealed.

27. Definitions.

(a) Bank.

(b) Identified banking product.

(c) Hybrid instrument.

(d) Covered swap agreement.

27a. Exclusion of identified banking products commonly offered on

or before December 5, 2000.

27b. Exclusion of certain identified banking products offered by

banks after December 5, 2000.

27c. Exclusion of certain other identified banking products.

(a) In general.

(b) Predominance test.

(c) Mark-to-market margining requirement.

27d. Administration of the predominance test.

(a) In general.

(b) Consultation.

(c) Objection to Commission regulation.

27e. Exclusion of covered swap agreements.

27f. Contract enforcement.

(a) Hybrid instruments.

(b) Covered swap agreements.

(c) Preemption.

-SECREF-

CHAPTER REFERRED TO IN OTHER SECTIONS

This chapter is referred to in sections 15b, 16a, 27a, 27b, 27c,

27d, 27e, 27f, 499n, 1502, 7331 of this title; title 2 section

1602; title 11 section 761; title 12 sections 4421, 4422; title 15

sections 78c, 78f, 78i, 78o, 78q-1, 80a-9, 80b-3, 431, 6809, 6827;

title 26 section 277; title 31 section 5312.

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7 USC Sec. 1 01/06/03

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TITLE 7 - AGRICULTURE

CHAPTER 1 - COMMODITY EXCHANGES

-HEAD-

Sec. 1. Short title

-STATUTE-

This chapter may be cited as the ''Commodity Exchange Act.''

-SOURCE-

(Sept. 21, 1922, ch. 369, Sec. 1, 42 Stat. 998; June 15, 1936, ch.

545, Sec. 1, 49 Stat. 1491.)

-MISC1-

PRIOR PROVISIONS

This chapter superseded act Aug. 24, 1921, ch. 86, 42 Stat. 187,

known as ''The Future Trading Act,'' which act was declared

unconstitutional, at least in part, in Hill v. Wallace, Ill. 1922,

42 S.Ct. 453, 259 U.S. 44, 66 L.Ed. 822. Section 3 of that act was

found unconstitutional as imposing a penalty in Trusler v. Crooks,

Mo. 1926, 46 S.Ct. 165, 269 U.S. 475, 70 L.Ed. 365.

AMENDMENTS

1936 - Act June 15, 1936, substituted ''Commodity Exchange Act''

for ''The Grain Futures Act''.

EFFECTIVE DATE OF 1936 AMENDMENT

Section 13 of act June 15, 1936, provided that: ''All provisions

of this Act (see Tables for classification) authorizing the

registration of futures commission merchants and floor brokers, the

fixing of fees and charges therefor, the promulgation of rules,

regulations and orders, and the holding of hearings precedent to

the promulgation of rules, regulations, and orders shall be

effective immediately. All other provisions of this Act shall take

effect ninety days after the enactment of this Act (June 15,

1936).''

SHORT TITLE OF 2000 AMENDMENT

Pub. L. 106-554, Sec. 1(a)(5) (Sec. 1(a)), Dec. 21, 2000, 114

Stat. 2763, 2763A-365, provided that: ''This Act (H.R. 5660, as

enacted by section 1(a)(5) of Pub. L. 106-554, enacting sections 5,

6o-1, 7 to 7a-3, 7b-1, 7b-2, 9c, and 27 to 27f of this title,

sections 781 to 784 of Title 11, Bankruptcy, sections 339a, 4421,

and 4422 of Title 12, Banks and Banking, and sections 77b-1 and

78c-1 of Title 15, Commerce and Trade, amending sections 1a, 2, 2a,

4, 4a, 6 to 6m, 6p, 7a-2, 7b, 8 to 9a, 10a, 11, 12, 12a to 12c, 13,

13a to 13b, 16, 18 to 21, and 25 of this title, sections 101, 103,

109, and 761 of Title 11, sections 624 and 4402 of Title 12, and

sections 77b, 77c, 77l, 77q, 78c, 78f, 78g, 78i, 78j, 78k-1, 78l,

78o, 78o-3, 78p, 78q, 78q-1, 78s, 78t, 78u, 78u-1, 78bb, 78ee,

78ccc, 78lll, 80a-2, 80b-2, and 80b-3 of Title 15, repealing

sections 5, 7, 7a, and 12e of this title, and enacting provisions

set out as notes under this section, section 2 of this title, and

section 78c of Title 15) may be cited as the 'Commodity Futures

Modernization Act of 2000'.''

Pub. L. 106-554, Sec. 1(a)(5) (title IV, Sec. 401), Dec. 21,

2000, 114 Stat. 2763, 2763A-457, provided that: ''This title (title

IV of H.R. 5660, as enacted by section 1(a)(5) of Pub. L. 106-554,

enacting sections 27 to 27f of this title) may be cited as the

'Legal Certainty for Bank Products Act of 2000'.''

SHORT TITLE OF 1995 AMENDMENT

Pub. L. 104-9, Sec. 1, Apr. 21, 1995, 109 Stat. 154, provided

that: ''This Act (amending section 16 of this title) may be cited

as the 'CFTC Reauthorization Act of 1995'.''

SHORT TITLE OF 1992 AMENDMENT

Pub. L. 102-546, Sec. 1(a), Oct. 28, 1992, 106 Stat. 3590,

provided that: ''This Act (enacting sections 1a and 12e of this

title, amending sections 2, 2a, 4, 4a, 6 to 6c, 6e to 6g, 6j, 6p, 7

to 9a, 10a, 12, 12a, 12c, 13 to 13c, 15, 16, 18, 19, 21, and 25 of

this title, repealing section 26 of this title, enacting provisions

set out as notes under sections 1a, 4a, 6c, 6e, 6j, 6p, 7a, 13,

16a, 21, and 22 of this title, and repealing provisions set out as

a note under section 4a of this title) may be cited as the 'Futures

Trading Practices Act of 1992'.''

SHORT TITLE OF 1986 AMENDMENT

Pub. L. 99-641, Sec. 1, Nov. 10, 1986, 100 Stat. 3556, provided

that: ''This Act (enacting section 2271a of this title, amending

sections 2a, 6b, 6c, 7a, 13, 13a-1, 15, 16, 21, 23, 74, 87b, 1444,

1445b-3, and 1445c-2 of this title, sections 590h and 3831 of Title

16, Conservation, sections 606, 609, 621, 671, and 676 of Title 21,

Food and Drugs, repealing section 14 of this title, and enacting

provisions set out as notes under sections 20, 71, 76, 87b, and

2271a of this title and sections 601, 606, 609, 621, 671, and 676

of Title 21) may be cited as the 'Futures Trading Act of 1986'.''

SHORT TITLE OF 1983 AMENDMENT

Pub. L. 97-444, Sec. 1, Jan. 11, 1983, 96 Stat. 2294, provided:

''That this Act (enacting sections 2a, 12d, 25, and 26 of this

title, amending sections 2, 4, 4a, 5, 6, 6a, 6c, 6d, 6f, 6g, 6h,

6i, 6k, 6m, 6n, 6o, 6p, 7a, 8, 9, 12, 12a, 13, 13a-1, 13a-2, 13c,

16, 16a, 18, 20, 21, 23, and 612c-3 of this title, and enacting

provisions set out as a note under section 2 of this title) may be

cited as the 'Futures Trading Act of 1982'.''

SHORT TITLE OF 1978 AMENDMENT

Pub. L. 95-405, Sec. 1, Sept. 30, 1978, 92 Stat. 865, provided:

''That this Act (enacting sections 13a-2, 16a, and 23 of this

title, amending sections 2, 4a, 6c, 6d, 6f, 6g, 6k, 6m, 6n, 6o, 7a,

8, 12, 12a, 12c, 13, 13a, 15, 16, 18, and 21 of this title and

section 6001 of Title 18, Crimes and Criminal Procedure, repealing

section 15a of this title, omitting sections 12-1 to 12-3 of this

title, and enacting provisions set out as notes under sections 2

and 20 of this title) may be cited as the 'Futures Trading Act of

1978'.''

SHORT TITLE OF 1974 AMENDMENT

Pub. L. 93-463, Sec. 1, Oct. 23, 1974, 88 Stat. 1389, provided:

''That this Act (enacting sections 4a, 6j, 6k, 6l, 6m, 6n, 6o, 6p,

9a, 12-2, 13-3, 12c, 13a-1, 15a, 18, 19, 20, 21, and 22 of this

title, amending sections 2, 4, 6, 6a, 6b, 6c, 6d, 6e, 6f, 6g, 6i,

7, 7a, 7b, 8, 9, 11, 12, 12-1, 12a, 12b, 13, 13a, 13b, 13c, 15, and

16 of this title and sections 5314, 5315, 5316, and 5108 of Title

5, Government Organization and Employees, and enacting provisions

set out as notes under sections 2, 4a, and 6a of this title) may be

cited as the 'Commodity Futures Trading Commission Act of 1974'.''

SAVINGS PROVISIONS FOR 2000 AMENDMENT

Pub. L. 106-554, Sec. 1(a)(5) (title III, Sec. 304), Dec. 21,

2000, 114 Stat. 2763, 2763A-457, provided that: ''Nothing in this

Act (see Short Title of 2000 Amendment note above) or the

amendments made by this Act shall be construed as finding or

implying that any swap agreement is or is not a security for any

purpose under the securities laws. Nothing in this Act or the

amendments made by this Act shall be construed as finding or

implying that any swap agreement is or is not a futures contract or

commodity option for any purpose under the Commodity Exchange Act

(7 U.S.C. 1 et seq.).''

CONSTRUCTION OF 2000 AMENDMENT

Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec. 122), Dec. 21, 2000,

114 Stat. 2763, 2763A-405, provided that: ''Except as expressly

provided in this Act (see Short Title of 2000 Amendment note above)

or an amendment made by this Act, nothing in this Act or an

amendment made by this Act supersedes, affects, or otherwise limits

or expands the scope and applicability of laws governing the

Securities and Exchange Commission.''

PURPOSES OF 2000 AMENDMENT

Pub. L. 106-554, Sec. 1(a)(5) (Sec. 2), Dec. 21, 2000, 114 Stat.

2763, 2763A-366, provided that:

''The purposes of this Act (see Short Title of 2000 Amendment

note above) are -

''(1) to reauthorize the appropriation for the Commodity

Futures Trading Commission;

''(2) to streamline and eliminate unnecessary regulation for

the commodity futures exchanges and other entities regulated

under the Commodity Exchange Act (7 U.S.C. 1 et seq.);

''(3) to transform the role of the Commodity Futures Trading

Commission to oversight of the futures markets;

''(4) to provide a statutory and regulatory framework for

allowing the trading of futures on securities;

''(5) to clarify the jurisdiction of the Commodity Futures

Trading Commission over certain retail foreign exchange

transactions and bucket shops that may not be otherwise

regulated;

''(6) to promote innovation for futures and derivatives and to

reduce systemic risk by enhancing legal certainty in the markets

for certain futures and derivatives transactions;

''(7) to reduce systemic risk and provide greater stability to

markets during times of market disorder by allowing the clearing

of transactions in over-the-counter derivatives through

appropriately regulated clearing organizations; and

''(8) to enhance the competitive position of United States

financial institutions and financial markets.''

REPORT TO CONGRESS

Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec. 125), Dec. 21, 2000,

114 Stat. 2763, 2763A-411, provided that:

''(a) The Commodity Futures Trading Commission (in this section

referred to as the 'Commission') shall undertake and complete a

study of the Commodity Exchange Act (7 U.S.C. 1 et seq.) (in this

section referred to as 'the Act') and the Commission's rules,

regulations and orders governing the conduct of persons required to

be registered under the Act, not later than 1 year after the date

of the enactment of this Act (Dec. 21, 2000). The study shall

identify -

''(1) the core principles and interpretations of acceptable

business practices that the Commission has adopted or intends to

adopt to replace the provisions of the Act and the Commission's

rules and regulations thereunder;

''(2) the rules and regulations that the Commission has

determined must be retained and the reasons therefor;

''(3) the extent to which the Commission believes it can effect

the changes identified in paragraph (1) of this subsection

through its exemptive authority under section 4(c) of the Act (7

U.S.C. 6(c)); and

''(4) the regulatory functions the Commission currently

performs that can be delegated to a registered futures

association (within the meaning of the Act) and the regulatory

functions that the Commission has determined must be retained and

the reasons therefor.

''(b) In conducting the study, the Commission shall solicit the

views of the public as well as Commission registrants, registered

entities, and registered futures associations (all within the

meaning of the Act).

''(c) The Commission shall transmit to the Committee on

Agriculture of the House of Representatives and the Committee on

Agriculture, Nutrition, and Forestry of the Senate a report of the

results of its study, which shall include an analysis of comments

received.''

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7 USC Sec. 1a 01/06/03

-EXPCITE-

TITLE 7 - AGRICULTURE

CHAPTER 1 - COMMODITY EXCHANGES

-HEAD-

Sec. 1a. Definitions

-STATUTE-

As used in this chapter:

(1) Alternative trading system

The term ''alternative trading system'' means an organization,

association, or group of persons that -

(A) is registered as a broker or dealer pursuant to section

15(b) of the Securities Exchange Act of 1934 (15 U.S.C. 78o(b))

(except paragraph (11) thereof);

(B) performs the functions commonly performed by an exchange

(as defined in section 3(a)(1) of the Securities Exchange Act

of 1934 (15 U.S.C. 78c(a)(1)));

(C) does not -

(i) set rules governing the conduct of subscribers other

than the conduct of such subscribers' trading on the

alternative trading system; or

(ii) discipline subscribers other than by exclusion from

trading; and

(D) is exempt from the definition of the term ''exchange''

under such section 3(a)(1) (15 U.S.C. 78c(a)(1)) by rule or

regulation of the Securities and Exchange Commission on terms

that require compliance with regulations of its trading

functions.

(2) Board of trade

The term ''board of trade'' means any organized exchange or

other trading facility.

(3) Commission

The term ''Commission'' means the Commodity Futures Trading

Commission established under section 2(a)(2) of this title.

(4) Commodity

The term ''commodity'' means wheat, cotton, rice, corn, oats,

barley, rye, flaxseed, grain sorghums, mill feeds, butter, eggs,

Solanum tuberosum (Irish potatoes), wool, wool tops, fats and

oils (including lard, tallow, cottonseed oil, peanut oil, soybean

oil, and all other fats and oils), cottonseed meal, cottonseed,

peanuts, soybeans, soybean meal, livestock, livestock products,

and frozen concentrated orange juice, and all other goods and

articles, except onions as provided in section 13-1 of this

title, and all services, rights, and interests in which contracts

for future delivery are presently or in the future dealt in.

(5) Commodity pool operator

The term ''commodity pool operator'' means any person engaged

in a business that is of the nature of an investment trust,

syndicate, or similar form of enterprise, and who, in connection

therewith, solicits, accepts, or receives from others, funds,

securities, or property, either directly or through capital

contributions, the sale of stock or other forms of securities, or

otherwise, for the purpose of trading in any commodity for future

delivery on or subject to the rules of any contract market or

derivatives transaction execution facility, except that the term

does not include such persons not within the intent of the

definition of the term as the Commission may specify by rule,

regulation, or order.

(6) Commodity trading advisor

(A) In general

Except as otherwise provided in this paragraph, the term

''commodity trading advisor'' means any person who -

(i) for compensation or profit, engages in the business of

advising others, either directly or through publications,

writings, or electronic media, as to the value of or the

advisability of trading in -

(I) any contract of sale of a commodity for future

delivery made or to be made on or subject to the rules of a

contract market or derivatives transaction execution

facility;

(II) any commodity option authorized under section 6c of

this title; or

(III) any leverage transaction authorized under section

23 of this title; or

(ii) for compensation or profit, and as part of a regular

business, issues or promulgates analyses or reports

concerning any of the activities referred to in clause (i).

(B) Exclusions

Subject to subparagraph (C), the term ''commodity trading

advisor'' does not include -

(i) any bank or trust company or any person acting as an

employee thereof;

(ii) any news reporter, news columnist, or news editor of

the print or electronic media, or any lawyer, accountant, or

teacher;

(iii) any floor broker or futures commission merchant;

(iv) the publisher or producer of any print or electronic

data of general and regular dissemination, including its

employees;

(v) the fiduciary of any defined benefit plan that is

subject to the Employee Retirement Income Security Act of

1974 (29 U.S.C. 1001 et seq.);

(vi) any contract market or derivatives transaction

execution facility; and

(vii) such other persons not within the intent of this

paragraph as the Commission may specify by rule, regulation,

or order.

(C) Incidental services

Subparagraph (B) shall apply only if the furnishing of such

services by persons referred to in subparagraph (B) is solely

incidental to the conduct of their business or profession.

(D) Advisors

The Commission, by rule or regulation, may include within the

term ''commodity trading advisor'', any person advising as to

the value of commodities or issuing reports or analyses

concerning commodities if the Commission determines that the

rule or regulation will effectuate the purposes of this

paragraph.

(7) Contract of sale

The term ''contract of sale'' includes sales, agreements of

sale, and agreements to sell.

(8) Cooperative association of producers

The term ''cooperative association of producers'' means any

cooperative association, corporate, or otherwise, not less than

75 percent in good faith owned or controlled, directly or

indirectly, by producers of agricultural products and otherwise

complying with sections 291 and 292 of this title, including any

organization acting for a group of such associations and owned or

controlled by such associations, except that business done for or

with the United States, or any agency thereof, shall not be

considered either member or nonmember business in determining the

compliance of any such association with this chapter.

(9) Derivatives clearing organization

(A) In general

The term ''derivatives clearing organization'' means a

clearinghouse, clearing association, clearing corporation, or

similar entity, facility, system, or organization that, with

respect to an agreement, contract, or transaction -

(i) enables each party to the agreement, contract, or

transaction to substitute, through novation or otherwise, the

credit of the derivatives clearing organization for the

credit of the parties;

(ii) arranges or provides, on a multilateral basis, for the

settlement or netting of obligations resulting from such

agreements, contracts, or transactions executed by

participants in the derivatives clearing organization; or

(iii) otherwise provides clearing services or arrangements

that mutualize or transfer among participants in the

derivatives clearing organization the credit risk arising

from such agreements, contracts, or transactions executed by

the participants.

(B) Exclusions

The term ''derivatives clearing organization'' does not

include an entity, facility, system, or organization solely

because it arranges or provides for -

(i) settlement, netting, or novation of obligations

resulting from agreements, contracts, or transactions, on a

bilateral basis and without a central counterparty;

(ii) settlement or netting of cash payments through an

interbank payment system; or

(iii) settlement, netting, or novation of obligations

resulting from a sale of a commodity in a transaction in the

spot market for the commodity.

(10) Electronic trading facility

The term ''electronic trading facility'' means a trading

facility that -

(A) operates by means of an electronic or telecommunications

network; and

(B) maintains an automated audit trail of bids, offers, and

the matching of orders or the execution of transactions on the

facility.

(11) Eligible commercial entity

The term ''eligible commercial entity'' means, with respect to

an agreement, contract or transaction in a commodity -

(A) an eligible contract participant described in clause (i),

(ii), (v), (vii), (viii), or (ix) of paragraph (12)(A) that, in

connection with its business -

(i) has a demonstrable ability, directly or through

separate contractual arrangements, to make or take delivery

of the underlying commodity;

(ii) incurs risks, in addition to price risk, related to

the commodity; or

(iii) is a dealer that regularly provides risk management

or hedging services to, or engages in market-making

activities with, the foregoing entities involving

transactions to purchase or sell the commodity or derivative

agreements, contracts, or transactions in the commodity;

(B) an eligible contract participant, other than a natural

person or an instrumentality, department, or agency of a State

or local governmental entity, that -

(i) regularly enters into transactions to purchase or sell

the commodity or derivative agreements, contracts, or

transactions in the commodity; and

(ii) either -

(I) in the case of a collective investment vehicle whose

participants include persons other than -

(aa) qualified eligible persons, as defined in

Commission rule 4.7(a) (17 CFR 4.7(a));

(bb) accredited investors, as defined in Regulation D

of the Securities and Exchange Commission under the

Securities Act of 1933 (15 U.S.C. 77a et seq.) (17 CFR

230.501(a)), with total assets of $2,000,000; or

(cc) qualified purchasers, as defined in section

2(a)(51)(A) of the Investment Company Act of 1940 (15

U.S.C. 80a-2(a)(51)(A));

in each case as in effect on December 21, 2000, has, or is one

of a group of vehicles under common control or management

having in the aggregate, $1,000,000,000 in total assets; or

(II) in the case of other persons, has, or is one of a

group of persons under common control or management having

in the aggregate, $100,000,000 in total assets; or

(C) such other persons as the Commission shall determine

appropriate and shall designate by rule, regulation, or order.

(12) Eligible contract participant

The term ''eligible contract participant'' means -

(A) acting for its own account -

(i) a financial institution;

(ii) an insurance company that is regulated by a State, or

that is regulated by a foreign government and is subject to

comparable regulation as determined by the Commission,

including a regulated subsidiary or affiliate of such an

insurance company;

(iii) an investment company subject to regulation under the

Investment Company Act of 1940 (15 U.S.C. 80a-1 et seq.) or a

foreign person performing a similar role or function subject

as such to foreign regulation (regardless of whether each

investor in the investment company or the foreign person is

itself an eligible contract participant);

(iv) a commodity pool that -

(I) has total assets exceeding $5,000,000; and

(II) is formed and operated by a person subject to

regulation under this chapter or a foreign person

performing a similar role or function subject as such to

foreign regulation (regardless of whether each investor in

the commodity pool or the foreign person is itself an

eligible contract participant);

(v) a corporation, partnership, proprietorship,

organization, trust, or other entity -

(I) that has total assets exceeding $10,000,000;

(II) the obligations of which under an agreement,

contract, or transaction are guaranteed or otherwise

supported by a letter of credit or keepwell, support, or

other agreement by an entity described in subclause (I), in

clause (i), (ii), (iii), (iv), or (vii), or in subparagraph

(C); or

(III) that -

(aa) has a net worth exceeding $1,000,000; and

(bb) enters into an agreement, contract, or transaction

in connection with the conduct of the entity's business

or to manage the risk associated with an asset or

liability owned or incurred or reasonably likely to be

owned or incurred by the entity in the conduct of the

entity's business;

(vi) an employee benefit plan subject to the Employee

Retirement Income Security Act of 1974 (29 U.S.C. 1001 et

seq.), a governmental employee benefit plan, or a foreign

person performing a similar role or function subject as such

to foreign regulation -

(I) that has total assets exceeding $5,000,000; or

(II) the investment decisions of which are made by -

(aa) an investment adviser or commodity trading advisor

subject to regulation under the Investment Advisers Act

of 1940 (15 U.S.C. 80b-1 et seq.) or this chapter;

(bb) a foreign person performing a similar role or

function subject as such to foreign regulation;

(cc) a financial institution; or

(dd) an insurance company described in clause (ii), or

a regulated subsidiary or affiliate of such an insurance

company;

(vii)(I) a governmental entity (including the United

States, a State, or a foreign government) or political

subdivision of a governmental entity;

(II) a multinational or supranational government entity; or

(III) an instrumentality, agency, or department of an

entity described in subclause (I) or (II);

except that such term does not include an entity,

instrumentality, agency, or department referred to in

subclause (I) or (III) of this clause unless (aa) the entity,

instrumentality, agency, or department is a person described

in clause (i), (ii), or (iii) of paragraph (11)(A) of this

section; (bb) the entity, instrumentality, agency, or

department owns and invests on a discretionary basis

$25,000,000 or more in investments; or (cc) the agreement,

contract, or transaction is offered by, and entered into

with, an entity that is listed in any of subclauses (I)

through (VI) of section 2(c)(2)(B)(ii) of this title;

(viii)(I) a broker or dealer subject to regulation under

the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.)

or a foreign person performing a similar role or function

subject as such to foreign regulation, except that, if the

broker or dealer or foreign person is a natural person or

proprietorship, the broker or dealer or foreign person shall

not be considered to be an eligible contract participant

unless the broker or dealer or foreign person also meets the

requirements of clause (v) or (xi);

(II) an associated person of a registered broker or dealer

concerning the financial or securities activities of which

the registered person makes and keeps records under section

15C(b) or 17(h) of the Securities Exchange Act of 1934 (15

U.S.C. 78o-5(b), 78q(h));

(III) an investment bank holding company (as defined in

section 17(i) of the Securities Exchange Act of 1934 (15

U.S.C. 78q(i)); (FOOTNOTE 1)

(FOOTNOTE 1) So in original. The semicolon probably should be

preceded by an additional closing parenthesis.

(ix) a futures commission merchant subject to regulation

under this chapter or a foreign person performing a similar

role or function subject as such to foreign regulation,

except that, if the futures commission merchant or foreign

person is a natural person or proprietorship, the futures

commission merchant or foreign person shall not be considered

to be an eligible contract participant unless the futures

commission merchant or foreign person also meets the

requirements of clause (v) or (xi);

(x) a floor broker or floor trader subject to regulation

under this chapter in connection with any transaction that

takes place on or through the facilities of a registered

entity or an exempt board of trade, or any affiliate thereof,

on which such person regularly trades; or

(xi) an individual who has total assets in an amount in

excess of -

(I) $10,000,000; or

(II) $5,000,000 and who enters into the agreement,

contract, or transaction in order to manage the risk

associated with an asset owned or liability incurred, or

reasonably likely to be owned or incurred, by the

individual;

(B)(i) a person described in clause (i), (ii), (iv), (v),

(viii), (ix), or (x) of subparagraph (A) or in subparagraph

(C), acting as broker or performing an equivalent agency

function on behalf of another person described in subparagraph

(A) or (C); or

(ii) an investment adviser subject to regulation under the

Investment Advisers Act of 1940 (15 U.S.C. 80b-1 et seq.), a

commodity trading advisor subject to regulation under this

chapter, a foreign person performing a similar role or function

subject as such to foreign regulation, or a person described in

clause (i), (ii), (iv), (v), (viii), (ix), or (x) of

subparagraph (A) or in subparagraph (C), in any such case

acting as investment manager or fiduciary (but excluding a

person acting as broker or performing an equivalent agency

function) for another person described in subparagraph (A) or

(C) and who is authorized by such person to commit such person

to the transaction; or

(C) any other person that the Commission determines to be

eligible in light of the financial or other qualifications of

the person.

(13) Excluded commodity

The term ''excluded commodity'' means -

(i) an interest rate, exchange rate, currency, security,

security index, credit risk or measure, debt or equity

instrument, index or measure of inflation, or other

macroeconomic index or measure;

(ii) any other rate, differential, index, or measure of

economic or commercial risk, return, or value that is -

(I) not based in substantial part on the value of a narrow

group of commodities not described in clause (i); or

(II) based solely on one or more commodities that have no

cash market;

(iii) any economic or commercial index based on prices,

rates, values, or levels that are not within the control of any

party to the relevant contract, agreement, or transaction; or

(iv) an occurrence, extent of an occurrence, or contingency

(other than a change in the price, rate, value, or level of a

commodity not described in clause (i)) that is -

(I) beyond the control of the parties to the relevant

contract, agreement, or transaction; and

(II) associated with a financial, commercial, or economic

consequence.

(14) Exempt commodity

The term ''exempt commodity'' means a commodity that is not an

excluded commodity or an agricultural commodity.

(15) Financial institution

The term ''financial institution'' means -

(A) a corporation operating under the fifth undesignated

paragraph of section 25 of the Federal Reserve Act (12 U.S.C.

603), commonly known as ''an agreement corporation'';

(B) a corporation organized under section 25A of the Federal

Reserve Act (12 U.S.C. 611 et seq.), commonly known as an

''Edge Act corporation'';

(C) an institution that is regulated by the Farm Credit

Administration;

(D) a Federal credit union or State credit union (as defined

in section 1752 of title 12);

(E) a depository institution (as defined in section 1813 of

title 12);

(F) a foreign bank or a branch or agency of a foreign bank

(each as defined in section 3101 of title 12);

(G) any financial holding company (as defined in section 1841

of title 12);

(H) a trust company; or

(I) a similarly regulated subsidiary or affiliate of an

entity described in any of subparagraphs (A) through (H).

(16) Floor broker

The term ''floor broker'' means any person who, in or

surrounding any pit, ring, post, or other place provided by a

contract market or derivatives transaction execution facility for

the meeting of persons similarly engaged, shall purchase or sell

for any other person any commodity for future delivery on or

subject to the rules of any contract market or derivatives

transaction execution facility.

(17) Floor trader

The term ''floor trader'' means any person who, in or

surrounding any pit, ring, post, or other place provided by a

contract market or derivatives transaction execution facility for

the meeting of persons similarly engaged, purchases, or sells

solely for such person's own account, any commodity for future

delivery on or subject to the rules of any contract market or

derivatives transaction execution facility.

(18) Foreign futures authority

The term ''foreign futures authority'' means any foreign

government, or any department, agency, governmental body, or

regulatory organization empowered by a foreign government to

administer or enforce a law, rule, or regulation as it relates to

a futures or options matter, or any department or agency of a

political subdivision of a foreign government empowered to

administer or enforce a law, rule, or regulation as it relates to

a futures or options matter.

(19) Future delivery

The term ''future delivery'' does not include any sale of any

cash commodity for deferred shipment or delivery.

(20) Futures commission merchant

The term ''futures commission merchant'' means an individual,

association, partnership, corporation, or trust that -

(A) is engaged in soliciting or in accepting orders for the

purchase or sale of any commodity for future delivery on or

subject to the rules of any contract market or derivatives

transaction execution facility; and

(B) in or in connection with such solicitation or acceptance

of orders, accepts any money, securities, or property (or

extends credit in lieu thereof) to margin, guarantee, or secure

any trades or contracts that result or may result therefrom.

(21) Hybrid instrument

The term ''hybrid instrument'' means a security having one or

more payments indexed to the value, level, or rate of, or

providing for the delivery of, one or more commodities.

(22) Interstate commerce

The term ''interstate commerce'' means commerce -

(A) between any State, territory, or possession, or the

District of Columbia, and any place outside thereof; or

(B) between points within the same state, (FOOTNOTE 2)

territory, or possession, or the District of Columbia, but

through any place outside thereof, or within any territory or

possession, or the District of Columbia.

(FOOTNOTE 2) So in original. Probably should be capitalized.

(23) Introducing broker

The term ''introducing broker'' means any person (except an

individual who elects to be and is registered as an associated

person of a futures commission merchant) engaged in soliciting or

in accepting orders for the purchase or sale of any commodity for

future delivery on or subject to the rules of any contract market

or derivatives transaction execution facility who does not accept

any money, securities, or property (or extend credit in lieu

thereof) to margin, guarantee, or secure any trades or contracts

that result or may result therefrom.

(24) Member of a registered entity; member of a derivatives

transaction execution facility

The term ''member'' means, with respect to a registered entity

or derivatives transaction execution facility, an individual,

association, partnership, corporation, or trust -

(A) owning or holding membership in, or admitted to

membership representation on, the registered entity or

derivatives transaction execution facility; or

(B) having trading privileges on the registered entity or

derivatives transaction execution facility.

A participant in an alternative trading system that is designated

as a contract market pursuant to section 7b-1 of this title is

deemed a member of the contract market for purposes of

transactions in security futures products through the contract

market.

(25) Narrow-based security index

(A) The term ''narrow-based security index'' means an index -

(i) that has 9 or fewer component securities;

(ii) in which a component security comprises more than 30

percent of the index's weighting;

(iii) in which the five highest weighted component securities

in the aggregate comprise more than 60 percent of the index's

weighting; or

(iv) in which the lowest weighted component securities

comprising, in the aggregate, 25 percent of the index's

weighting have an aggregate dollar value of average daily

trading volume of less than $50,000,000 (or in the case of an

index with 15 or more component securities, $30,000,000),

except that if there are two or more securities with equal

weighting that could be included in the calculation of the

lowest weighted component securities comprising, in the

aggregate, 25 percent of the index's weighting, such securities

shall be ranked from lowest to highest dollar value of average

daily trading volume and shall be included in the calculation

based on their ranking starting with the lowest ranked

security.

(B) Notwithstanding subparagraph (A), an index is not a

narrow-based security index if -

(i)(I) it has at least 9 component securities;

(II) no component security comprises more than 30 percent of

the index's weighting; and

(III) each component security is -

(aa) registered pursuant to section 12 of the Securities

Exchange Act of 1934 (15 U.S.C. 78l);

(bb) one of 750 securities with the largest market

capitalization; and

(cc) one of 675 securities with the largest dollar value of

average daily trading volume;

(ii) a board of trade was designated as a contract market by

the Commodity Futures Trading Commission with respect to a

contract of sale for future delivery on the index, before

December 21, 2000;

(iii)(I) a contract of sale for future delivery on the index

traded on a designated contract market or registered

derivatives transaction execution facility for at least 30 days

as a contract of sale for future delivery on an index that was

not a narrow-based security index; and

(II) it has been a narrow-based security index for no more

than 45 business days over 3 consecutive calendar months;

(iv) a contract of sale for future delivery on the index is

traded on or subject to the rules of a foreign board of trade

and meets such requirements as are jointly established by rule

or regulation by the Commission and the Securities and Exchange

Commission;

(v) no more than 18 months have passed since December 21,

2000, and -

(I) it is traded on or subject to the rules of a foreign

board of trade;

(II) the offer and sale in the United States of a contract

of sale for future delivery on the index was authorized

before December 21, 2000; and

(III) the conditions of such authorization continue to be

met; or

(vi) a contract of sale for future delivery on the index is

traded on or subject to the rules of a board of trade and meets

such requirements as are jointly established by rule,

regulation, or order by the Commission and the Securities and

Exchange Commission.

(C) Within 1 year after December 21, 2000, the Commission and

the Securities and Exchange Commission jointly shall adopt rules

or regulations that set forth the requirements under subparagraph

(B)(iv).

(D) An index that is a narrow-based security index solely

because it was a narrow-based security index for more than 45

business days over 3 consecutive calendar months pursuant to

clause (iii) of subparagraph (B) shall not be a narrow-based

security index for the 3 following calendar months.

(E) For purposes of subparagraphs (A) and (B) -

(i) the dollar value of average daily trading volume and the

market capitalization shall be calculated as of the preceding 6

full calendar months; and

(ii) the Commission and the Securities and Exchange

Commission shall, by rule or regulation, jointly specify the

method to be used to determine market capitalization and dollar

value of average daily trading volume.

(26) Option

The term ''option'' means an agreement, contract, or

transaction that is of the character of, or is commonly known to

the trade as, an ''option'', ''privilege'', ''indemnity'',

''bid'', ''offer'', ''put'', ''call'', ''advance guaranty'', or

''decline guaranty''.

(27) Organized exchange

The term ''organized exchange'' means a trading facility that -

(A) permits trading -

(i) by or on behalf of a person that is not an eligible

contract participant; or

(ii) by persons other than on a principal-to-principal

basis; or

(B) has adopted (directly or through another nongovernmental

entity) rules that -

(i) govern the conduct of participants, other than rules

that govern the submission of orders or execution of

transactions on the trading facility; and

(ii) include disciplinary sanctions other than the

exclusion of participants from trading.

(28) Person

The term ''person'' imports the plural or singular, and

includes individuals, associations, partnerships, corporations,

and trusts.

(29) Registered entity

The term ''registered entity'' means -

(A) a board of trade designated as a contract market under

section 7 of this title;

(B) a derivatives transaction execution facility registered

under section 7a of this title;

(C) a derivatives clearing organization registered under

section 7a-1 of this title; and

(D) a board of trade designated as a contract market under

section 7b-1 of this title.

(30) Security

The term ''security'' means a security as defined in section

2(a)(1) of the Securities Act of 1933 (15 U.S.C. 77b(a)(1)) or

section 3(a)(10) of the Securities Exchange Act of 1934 (15

U.S.C. 78c(a)(10)).

(31) Security future

The term ''security future'' means a contract of sale for

future delivery of a single security or of a narrow-based

security index, including any interest therein or based on the

value thereof, except an exempted security under section 3(a)(12)

of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(12)) as

in effect on January 11, 1983 (other than any municipal security

as defined in section 3(a)(29) of the Securities Exchange Act of

1934 (15 U.S.C. 78c(a)(29)) as in effect on January 11, 1983).

The term ''security future'' does not include any agreement,

contract, or transaction excluded from this chapter under section

2(c), 2(d), 2(f), or 2(g) of this title (as in effect on December

21, 2000) or sections 27 to 27f of this title.

(32) Security futures product

The term ''security futures product'' means a security future

or any put, call, straddle, option, or privilege on any security

future.

(33) Trading facility

(A) In general

The term ''trading facility'' means a person or group of

persons that constitutes, maintains, or provides a physical or

electronic facility or system in which multiple participants

have the ability to execute or trade agreements, contracts, or

transactions by accepting bids and offers made by other

participants that are open to multiple participants in the

facility or system.

(B) Exclusions

The term ''trading facility'' does not include -

(i) a person or group of persons solely because the person

or group of persons constitutes, maintains, or provides an

electronic facility or system that enables participants to

negotiate the terms of and enter into bilateral transactions

as a result of communications exchanged by the parties and

not from interaction of multiple bids and multiple offers

within a predetermined, nondiscretionary automated trade

matching and execution algorithm;

(ii) a government securities dealer or government

securities broker, to the extent that the dealer or broker

executes or trades agreements, contracts, or transactions in

government securities, or assists persons in communicating

about, negotiating, entering into, executing, or trading an

agreement, contract, or transaction in government securities

(as the terms ''government securities dealer'', ''government

securities broker'', and ''government securities'' are

defined in section 3(a) of the Securities Exchange Act of

1934 (15 U.S.C. 78c(a))); or

(iii) facilities on which bids and offers, and acceptances

of bids and offers effected on the facility, are not binding.

Any person, group of persons, dealer, broker, or facility

described in clause (i) or (ii) is excluded from the meaning of

the term ''trading facility'' for the purposes of this chapter

without any prior specific approval, certification, or other

action by the Commission.

(C) Special rule

A person or group of persons that would not otherwise

constitute a trading facility shall not be considered to be a

trading facility solely as a result of the submission to a

derivatives clearing organization of transactions executed on

or through the person or group of persons.

-SOURCE-

(Sept. 21, 1922, ch. 369, Sec. 1a, as added Pub. L. 102-546, title

IV, Sec. 404(a), Oct. 28, 1992, 106 Stat. 3625; amended Pub. L.

106-554, Sec. 1(a)(5) (title I, Sec. 101, 123(a)(1)), Dec. 21,

2000, 114 Stat. 2763, 2763A-366, 2763A-405.)

-REFTEXT-

REFERENCES IN TEXT

The Employee Retirement Income Security Act of 1974, referred to

in pars. (6)(B)(v) and (12)(A)(vi), is Pub. L. 93-406, Sept. 2,

1974, 88 Stat. 829, as amended, which is classified principally to

chapter 18 (Sec. 1001 et seq.) of Title 29, Labor. For complete

classification of this Act to the Code, see Short Title note set

out under section 1001 of Title 29 and Tables.

The Securities Act of 1933, referred to in par.

(11)(B)(ii)(I)(bb), is title I of act May 27, 1933, ch. 38, 48

Stat. 74, as amended, which is classified generally to subchapter I

(Sec. 77a et seq.) of chapter 2A of Title 15, Commerce and Trade.

For complete classification of this Act to the Code, see section

77a of Title 15 and Tables.

The Investment Company Act of 1940, referred to in par.

(12)(A)(iii), is title I of act Aug. 22, 1940, ch. 686, 54 Stat.

789, as amended, which is classified generally to subchapter I

(Sec. 80a-1 et seq.) of chapter 2D of Title 15, Commerce and Trade.

For complete classification of this Act to the Code, see section

80a-51 of Title 15 and Tables.

The Investment Advisers Act of 1940, referred to in par.

(12)(A)(vi)(II)(aa), (B)(ii), is title II of act Aug. 22, 1940, ch.

686, 54 Stat. 847, as amended, which is classified generally to

subchapter II (Sec. 80b-1 et seq.) of chapter 2D of Title 15,

Commerce and Trade. For complete classification of this Act to the

Code, see section 80b-20 of Title 15 and Tables.

The Securities Exchange Act of 1934, referred to in par.

(12)(A)(viii)(I), is act June 6, 1934, ch. 404, 48 Stat. 881, as

amended, which is classified principally to chapter 2B (Sec. 78a et

seq.) of Title 15, Commerce and Trade. For complete classification

of this Act to the Code, see section 78a of Title 15 and Tables.

Section 25A of the Federal Reserve Act, referred to in par.

(15)(B), popularly known as the Edge Act, is classified to

subchapter II (Sec. 611 et seq.) of chapter 6 of Title 12, Banks

and Banking. For complete classification of this Act to the Code,

see Short Title note set out under section 611 of Title 12 and

Tables.

-MISC2-

AMENDMENTS

2000 - Par. (1). Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec.

101(2)), added par. (1). Former par. (1) redesignated (2).

Par. (2). Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec. 101(3)),

added par. (2) and struck out heading and text of former par. (2).

Text read as follows: ''The term 'board of trade' means any

exchange or association, whether incorporated or unincorporated, of

persons who are engaged in the business of buying or selling any

commodity or receiving the same for sale on consignment.''

Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec. 101(1)),

redesignated par. (1) as (2). Former par. (2) redesignated (3).

Pars. (3), (4). Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec.

101(1)), redesignated pars. (2) and (3) as (3) and (4),

respectively. Former par. (4) redesignated (5).

Par. (5). Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec.

123(a)(1)(A)), inserted ''or derivatives transaction execution

facility'' after ''contract market''.

Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec. 101(1)),

redesignated par. (4) as (5). Former par. (5) redesignated (6).

Par. (6). Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec.

123(a)(1)(A)), inserted ''or derivatives transaction execution

facility'' after ''contract market'' in subpars. (A)(i)(I) and

(B)(vi).

Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec. 101(1)),

redesignated par. (5) as (6). Former par. (6) redesignated (7).

Pars. (7), (8). Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec.

101(1)), redesignated pars. (6) and (7) as (7) and (8),

respectively. Former par. (8) redesignated (16).

Pars. (9) to (15). Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec.

101(4)), added pars. (9) to (15). Former pars. (9) to (12) and (13)

to (15) redesignated (17) to (20) and (22) to (24), respectively.

Par. (16). Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec.

123(a)(1)(A)), inserted ''or derivatives transaction execution

facility'' after ''contract market'' in two places.

Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec. 101(1)),

redesignated par. (8) as (16). Former par. (16) redesignated (28).

Par. (17). Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec.

123(a)(1)(A)), inserted ''or derivatives transaction execution

facility'' after ''contract market'' in two places.

Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec. 101(1)),

redesignated par. (9) as (17).

Pars. (18), (19). Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec.

101(1)), redesignated pars. (10) and (11) as (18) and (19),

respectively.

Par. (20). Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec. 101(1)),

redesignated par. (12) as (20).

Par. (20)(A). Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec.

123(a)(1)(A)), inserted ''or derivatives transaction execution

facility'' after ''contract market''.

Par. (21). Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec. 101(5)),

added par. (21).

Par. (22). Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec. 101(1)),

redesignated par. (13) as (22).

Par. (23). Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec.

123(a)(1)(A)), inserted ''or derivatives transaction execution

facility'' after ''contract market''.

Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec. 101(1)),

redesignated par. (14) as (23).

Par. (24). Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec.

123(a)(1)(B)), substituted ''registered entity'' for ''contract

market'' wherever appearing in heading and text and inserted

concluding provisions.

Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec. 101(6)), added par.

(24) and struck out heading and text of former par. (24). Text read

as follows: ''The term 'member of a contract market' means an

individual, association, partnership, corporation, or trust owning

or holding membership in, or admitted to membership representation

on, a contract market or given members' trading privileges

thereon.''

Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec. 101(1)),

redesignated par. (15) as (24).

Pars. (25) to (27). Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec.

101(6)), added pars. (25) to (27).

Par. (28). Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec. 101(1)),

redesignated par. (16) as (28).

Pars. (29) to (33). Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec.

101(7)), added pars. (29) to (33).

EFFECTIVE DATE

Section 403 of Pub. L. 102-546 provided that: ''Except as

otherwise specifically provided in this Act (enacting this section

and section 12e of this title, amending sections 2, 2a, 4, 4a, 6 to

6c, 6e to 6g, 6j, 6p, 7 to 9a, 10a, 12, 12a, 12c, 13 to 13c, 15,

16, 18, 19, 21, and 25 of this title, repealing section 26 of this

title, enacting provisions set out as notes under sections 1a, 4a,

6c, 6e, 6j, 6p, 7a, 13, 16a, 21, and 22 of this title, and

repealing provisions set out as a note under section 4a of this

title), this Act and the amendments made by this Act shall become

effective on the date of enactment of this Act (Oct. 28, 1992).''

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 2, 6m, 6o-1, 7, 7a, 7a-1,

7a-2, 27, 27b of this title; title 15 section 78f.

-CITE-

7 USC Sec. 2 01/06/03

-EXPCITE-

TITLE 7 - AGRICULTURE

CHAPTER 1 - COMMODITY EXCHANGES

-HEAD-

Sec. 2. Jurisdiction of Commission; liability of principal for act

of agent; Commodity Futures Trading Commission; transaction in

interstate commerce

-STATUTE-

(a) Jurisdiction of Commission; Commodity Futures Trading

Commission

(1) Jurisdiction of Commission

(A) In general

The Commission shall have exclusive jurisdiction, except to

the extent otherwise provided in subparagraphs (C) and (D) of

this paragraph and subsections (c) through (i) of this section,

with respect to accounts, agreements (including any transaction

which is of the character of, or is commonly known to the trade

as, an ''option'', ''privilege'', ''indemnity'', ''bid'',

''offer'', ''put'', ''call'', ''advance guaranty'', or

''decline guaranty''), and transactions involving contracts of

sale of a commodity for future delivery, traded or executed on

a contract market designated or derivatives transaction

execution facility registered pursuant to section 7 or 7a of

this title or any other board of trade, exchange, or market,

and transactions subject to regulation by the Commission

pursuant to section 23 of this title. Except as hereinabove

provided, nothing contained in this section shall (I) supersede

or limit the jurisdiction at any time conferred on the

Securities and Exchange Commission or other regulatory

authorities under the laws of the United States or of any

State, or (II) restrict the Securities and Exchange Commission

and such other authorities from carrying out their duties and

responsibilities in accordance with such laws. Nothing in this

section shall supersede or limit the jurisdiction conferred on

courts of the United States or any State.

(B) Liability of principal for act of agent

The act, omission, or failure of any official, agent, or

other person acting for any individual, association,

partnership, corporation, or trust within the scope of his

employment or office shall be deemed the act, omission, or

failure of such individual, association, partnership,

corporation, or trust, as well as of such official, agent, or

other person.

(C) Designation of boards of trade as contract markets;

contracts for future delivery; security futures products;

filing with Board of Governors of Federal Reserve System;

judicial review

Notwithstanding any other provision of law -

(i) This chapter shall not apply to and the Commission

shall have no jurisdiction to designate a board of trade as a

contract market for any transaction whereby any party to such

transaction acquires any put, call, or other option on one or

more securities (as defined in section 77b(1) (FOOTNOTE 1) of

title 15 or section 3(a)(10) of the Securities Exchange Act

of 1934 (15 U.S.C. 78c(a)(10)) on January 11, 1983),

including any group or index of such securities, or any

interest therein or based on the value thereof.

(FOOTNOTE 1) See References in Text note below.

(ii) This chapter shall apply to and the Commission shall

have exclusive jurisdiction with respect to accounts,

agreements (including any transaction which is of the

character of, or is commonly known to the trade as, an

''option'', ''privilege'', ''indemnity'', ''bid'', ''offer'',

''put'', ''call'', ''advance guaranty'', or ''decline

guaranty'') and transactions involving, and may designate a

board of trade as a contract market in, or register a

derivatives transaction execution facility that trades or

executes, contracts of sale (or options on such contracts)

for future delivery of a group or index of securities (or any

interest therein or based upon the value thereof): Provided,

however, That no board of trade shall be designated as a

contract market with respect to any such contracts of sale

(or options on such contracts) for future delivery, and no

derivatives transaction execution facility shall trade or

execute such contracts of sale (or options on such contracts)

for future delivery, unless the board of trade or the

derivatives transaction execution facility, and the

applicable contract, meet the following minimum requirements:

(I) Settlement of or delivery on such contract (or option

on such contract) shall be effected in cash or by means

other than the transfer or receipt of any security, except

an exempted security under section 77c of title 15 or

section 3(a)(12) of the Securities Exchange Act of 1934 (15

U.S.C. 78c(a)(12)) as in effect on January 11, 1983, (other

than any municipal security, as defined in section 3(a)(29)

of the Securities Exchange Act of 1934 (15 U.S.C.

78c(a)(29)) on January 11, 1983);

(II) Trading in such contract (or option on such

contract) shall not be readily susceptible to manipulation

of the price of such contract (or option on such contract),

nor to causing or being used in the manipulation of the

price of any underlying security, option on such security

or option on a group or index including such securities;

and

(III) Such group or index of securities shall not

constitute a narrow-based security index.

(iii) If, in its discretion, the Commission determines that

a stock index futures contract, notwithstanding its

conformance with the requirements in clause (ii) of this

subparagraph, can reasonably be used as a surrogate for

trading a security (including a security futures product), it

may, by order, require such contract and any option thereon

be traded and regulated as security futures products as

defined in section 3(a)(56) of the Securities Exchange Act of

1934 (15 U.S.C. 78c(a)(56)) and section 1a of this title

subject to all rules and regulations applicable to security

futures products under this chapter and the securities laws

as defined in section 3(a)(47) of the Securities Exchange Act

of 1934 (15 U.S.C. 78c(a)(47)).

(iv) No person shall offer to enter into, enter into, or

confirm the execution of any contract of sale (or option on

such contract) for future delivery of any security, or

interest therein or based on the value thereof, except an

exempted security under or (FOOTNOTE 2) section 3(a)(12) of

the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(12)) as

in effect on January 11, 1983 (other than any municipal

security as defined in section 3(a)(29) of the Securities

Exchange Act of 1934 (15 U.S.C. 78c(a)(29)) on January 11,

1983), or except as provided in clause (ii) of this

subparagraph or subparagraph (D), any group or index of such

securities or any interest therein or based on the value

thereof.

(FOOTNOTE 2) So in original. The word ''or'' probably should

not appear.

(v)(I) Notwithstanding any other provision of this chapter,

any contract market in a stock index futures contract (or

option thereon) other than a security futures product, or any

derivatives transaction execution facility on which such

contract or option is traded, shall file with the Board of

Governors of the Federal Reserve System any rule establishing

or changing the levels of margin (initial and maintenance)

for such stock index futures contract (or option thereon)

other than security futures products.

(II) The Board may at any time request any contract market

or derivatives transaction execution facility to set the

margin for any stock index futures contract (or option

thereon), other than for any security futures product, at

such levels as the Board in its judgment determines are

appropriate to preserve the financial integrity of the

contract market or derivatives transaction execution

facility, or its clearing system, or to prevent systemic

risk. If the contract market or derivatives transaction

execution facility fails to do so within the time specified

by the Board in its request, the Board may direct the

contract market or derivatives transaction execution facility

to alter or supplement the rules of the contract market or

derivatives transaction execution facility as specified in

the request.

(III) Subject to such conditions as the Board may

determine, the Board may delegate any or all of its

authority, relating to margin for any stock index futures

contract (or option thereon), other than security futures

products, under this clause to the Commission.

(IV) It shall be unlawful for any futures commission

merchant to, directly or indirectly, extend or maintain

credit to or for, or collect margin from any customer on any

security futures product unless such activities comply with

the regulations prescribed pursuant to section 7(c)(2)(B) of

the Securities Exchange Act of 1934 (15 U.S.C. 78g(c)(2)(B)).

(V) Nothing in this clause shall supersede or limit the

authority granted to the Commission in section 12a(9) of this

title to direct a contract market or registered derivatives

transaction execution facility, on finding an emergency to

exist, to raise temporary margin levels on any futures

contract, or option on the contract covered by this clause,

or on any security futures product.

(VI) Any action taken by the Board, or by the Commission

acting under the delegation of authority under subclause III,

(FOOTNOTE 3) under this clause directing a contract market to

alter or supplement a contract market rule shall be subject

to review only in the Court of Appeals where the party

seeking review resides or has its principal place of

business, or in the United States Court of Appeals for the

District of Columbia Circuit. The review shall be based on

the examination of all information before the Board or the

Commission, as the case may be, at the time the determination

was made. The court reviewing the action of the Board or the

Commission shall not enter a stay or order of mandamus unless

the court has determined, after notice and a hearing before a

panel of the court, that the agency action complained of was

arbitrary, capricious, an abuse of discretion, or otherwise

not in accordance with law.

(FOOTNOTE 3) So in original. Probably should be subclause

''(III)''.

(D) Jurisdiction and authority of Securities and Exchange

Commission over security futures; requirements for security

futures trading; periodic or special examinations by

Commission representatives

(i) Notwithstanding any other provision of this chapter, the

Securities and Exchange Commission shall have jurisdiction and

authority over security futures as defined in section 3(a)(55)

of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(55)),

section 77b(a)(16) of title 15, section 80a-2(a)(52) of title

15, and section 80b-2(a)(27) of title 15, options on security

futures, and persons effecting transactions in security futures

and options thereon, and this chapter shall apply to and the

Commission shall have jurisdiction with respect to accounts,

agreements (including any transaction which is of the character

of, or is commonly known to the trade as, an ''option'',

''privilege'', ''indemnity'', ''bid'', ''offer'', ''put'',

''call'', ''advance guaranty'', or ''decline guaranty''),

contracts, and transactions involving, and may designate a

board of trade as a contract market in, or register a

derivatives transaction execution facility that trades or

executes, a security futures product as defined in section 1a

of this title: Provided, however, That, except as provided in

clause (vi) of this subparagraph, no board of trade shall be

designated as a contract market with respect to, or registered

as a derivatives transaction execution facility for, any such

contracts of sale for future delivery unless the board of trade

and the applicable contract meet the following criteria:

(I) Except as otherwise provided in a rule, regulation, or

order issued pursuant to clause (v) of this subparagraph, any

security underlying the security future, including each

component security of a narrow-based security index, is

registered pursuant to section 12 of the Securities Exchange

Act of 1934 (15 U.S.C. 78l).

(II) If the security futures product is not cash settled,

the board of trade on which the security futures product is

traded has arrangements in place with a clearing agency

registered pursuant to section 17A of the Securities Exchange

Act of 1934 (15 U.S.C. 78q-1) for the payment and delivery of

the securities underlying the security futures product.

(III) Except as otherwise provided in a rule, regulation,

or order issued pursuant to clause (v) of this subparagraph,

the security future is based upon common stock and such other

equity securities as the Commission and the Securities and

Exchange Commission jointly determine appropriate.

(IV) The security futures product is cleared by a clearing

agency that has in place provisions for linked and

coordinated clearing with other clearing agencies that clear

security futures products, which permits the security futures

product to be purchased on a designated contract market,

registered derivatives transaction execution facility,

national securities exchange registered under section 6(a) of

the Securities Exchange Act of 1934 (15 U.S.C. 78f(a)), or

national securities association registered pursuant to

section 15A(a) of the Securities Exchange Act of 1934 (15

U.S.C. 78o-3(a)) and offset on another designated contract

market, registered derivatives transaction execution

facility, national securities exchange registered under

section 6(a) of the Securities Exchange Act of 1934, or

national securities association registered pursuant to

section 15A(a) of the Securities Exchange Act of 1934.

(V) Only futures commission merchants, introducing brokers,

commodity trading advisors, commodity pool operators or

associated persons subject to suitability rules comparable to

those of a national securities association registered

pursuant to section 15A(a) of the Securities Exchange Act of

1934 (15 U.S.C. 78o-3(a)) solicit, accept any order for, or

otherwise deal in any transaction in or in connection with

the security futures product.

(VI) The security futures product is subject to a

prohibition against dual trading in section 6j of this title

and the rules and regulations thereunder or the provisions of

section 11(a) of the Securities Exchange Act of 1934 (15

U.S.C. 78k(a)) and the rules and regulations thereunder,

except to the extent otherwise permitted under the Securities

Exchange Act of 1934 (15 U.S.C. 78a et seq.) and the rules

and regulations thereunder.

(VII) Trading in the security futures product is not

readily susceptible to manipulation of the price of such

security futures product, nor to causing or being used in the

manipulation of the price of any underlying security, option

on such security, or option on a group or index including

such securities;

(VIII) The board of trade on which the security futures

product is traded has procedures in place for coordinated

surveillance among such board of trade, any market on which

any security underlying the security futures product is

traded, and other markets on which any related security is

traded to detect manipulation and insider trading, except

that, if the board of trade is an alternative trading system,

a national securities association registered pursuant to

section 15A(a) of the Securities Exchange Act of 1934 (15

U.S.C. 78o-3(a)) or national securities exchange registered

pursuant to section 6(a) of the Securities Exchange Act of

1934 (15 U.S.C. 78f(a)) of which such alternative trading

system is a member has in place such procedures.

(IX) The board of trade on which the security futures

product is traded has in place audit trails necessary or

appropriate to facilitate the coordinated surveillance

required in subclause (VIII), except that, if the board of

trade is an alternative trading system, a national securities

association registered pursuant to section 15A(a) of the

Securities Exchange Act of 1934 (15 U.S.C. 78o-3(a)) or

national securities exchange registered pursuant to section

6(a) of the Securities Exchange Act of 1934 (15 U.S.C.

78f(a)) of which such alternative trading system is a member

has rules to require such audit trails.

(X) The board of trade on which the security futures

product is traded has in place procedures to coordinate

trading halts between such board of trade and markets on

which any security underlying the security futures product is

traded and other markets on which any related security is

traded, except that, if the board of trade is an alternative

trading system, a national securities association registered

pursuant to section 15A(a) of the Securities Exchange Act of

1934 (15 U.S.C. 78o-3(a)) or national securities exchange

registered pursuant to section 6(a) of the Securities

Exchange Act of 1934 (15 U.S.C. 78f(a)) of which such

alternative trading system is a member has rules to require

such coordinated trading halts.

(XI) The margin requirements for a security futures product

comply with the regulations prescribed pursuant to section

7(c)(2)(B) of the Securities Exchange Act of 1934 (15 U.S.C.

78g(c)(2)(B)), except that nothing in this subclause shall be

construed to prevent a board of trade from requiring higher

margin levels for a security futures product when it deems

such action to be necessary or appropriate.

(ii) It shall be unlawful for any person to offer, to enter

into, to execute, to confirm the execution of, or to conduct

any office or business anywhere in the United States, its

territories or possessions, for the purpose of soliciting, or

accepting any order for, or otherwise dealing in, any

transaction in, or in connection with, a security futures

product unless -

(I) the transaction is conducted on or subject to the rules

of a board of trade that -

(aa) has been designated by the Commission as a contract

market in such security futures product; or

(bb) is a registered derivatives transaction execution

facility for the security futures product that has provided

a certification with respect to the security futures

product pursuant to clause (vii);

(II) the contract is executed or consummated by, through,

or with a member of the contract market or registered

derivatives transaction execution facility; and

(III) the security futures product is evidenced by a record

in writing which shows the date, the parties to such security

futures product and their addresses, the property covered,

and its price, and each contract market member or registered

derivatives transaction execution facility member shall keep

the record for a period of 3 years from the date of the

transaction, or for a longer period if the Commission so

directs, which record shall at all times be open to the

inspection of any duly authorized representative of the

Commission.

(iii)(I) Except as provided in subclause (II) but

notwithstanding any other provision of this chapter, no person

shall offer to enter into, enter into, or confirm the execution

of any option on a security future.

(II) After 3 years after December 21, 2000, the Commission

and the Securities and Exchange Commission may by order jointly

determine to permit trading of options on any security future

authorized to be traded under the provisions of this chapter

and the Securities Exchange Act of 1934 (15 U.S.C. 78a et

seq.).

(iv)(I) All relevant records of a futures commission merchant

or introducing broker registered pursuant to section 6f(a)(2)

of this title, floor broker or floor trader exempt from

registration pursuant to section 6f(a)(3) of this title,

associated person exempt from registration pursuant to section

6k(6) (FOOTNOTE 4) of this title, or board of trade designated

as a contract market in a security futures product pursuant to

section 7b-1 of this title shall be subject to such reasonable

periodic or special examinations by representatives of the

Commission as the Commission deems necessary or appropriate in

the public interest, for the protection of investors, or

otherwise in furtherance of the purposes of this chapter, and

the Commission, before conducting any such examination, shall

give notice to the Securities and Exchange Commission of the

proposed examination and consult with the Securities and

Exchange Commission concerning the feasibility and desirability

of coordinating the examination with examinations conducted by

the Securities and Exchange Commission in order to avoid

unnecessary regulatory duplication or undue regulatory burdens

for the registrant or board of trade.

(FOOTNOTE 4) Probably should refer to the second par. (5) of

section 6k.

(II) The Commission shall notify the Securities and Exchange

Commission of any examination conducted of any futures

commission merchant or introducing broker registered pursuant

to section 6f(a)(2) of this title, floor broker or floor trader

exempt from registration pursuant to section 6f(a)(3) of this

title, associated person exempt from registration pursuant to

section 6k(6) (FOOTNOTE 4) of this title, or board of trade

designated as a contract market in a security futures product

pursuant to section 7b-1 of this title, and, upon request,

furnish to the Securities and Exchange Commission any

examination report and data supplied to or prepared by the

Commission in connection with the examination.

(III) Before conducting an examination under subclause (I),

the Commission shall use the reports of examinations, unless

the information sought is unavailable in the reports, of any

futures commission merchant or introducing broker registered

pursuant to section 6f(a)(2) of this title, floor broker or

floor trader exempt from registration pursuant to section

6f(a)(3) of this title, associated person exempt from

registration pursuant to section 6k(6) (FOOTNOTE 4) of this

title, or board of trade designated as a contract market in a

security futures product pursuant to section 7b-1 of this title

that is made by the Securities and Exchange Commission, a

national securities association registered pursuant to section

15A(a) of the Securities Exchange Act of 1934 (15 U.S.C.

78o-3(a)), or a national securities exchange registered

pursuant to section 6(a) of the Securities Exchange Act of 1934

(15 U.S.C. 78f(a)).

(IV) Any records required under this subsection for a futures

commission merchant or introducing broker registered pursuant

to section 6f(a)(2) of this title, floor broker or floor trader

exempt from registration pursuant to section 6f(a)(3) of this

title, associated person exempt from registration pursuant to

section 6k(6) (FOOTNOTE 4) of this title, or board of trade

designated as a contract market in a security futures product

pursuant to section 7b-1 of this title, shall be limited to

records with respect to accounts, agreements, contracts, and

transactions involving security futures products.

(v)(I) The Commission and the Securities and Exchange

Commission, by rule, regulation, or order, may jointly modify

the criteria specified in subclause (I) or (III) of clause (i),

including the trading of security futures based on securities

other than equity securities, to the extent such modification

fosters the development of fair and orderly markets in security

futures products, is necessary or appropriate in the public

interest, and is consistent with the protection of investors.

(II) The Commission and the Securities and Exchange

Commission, by order, may jointly exempt any person from

compliance with the criterion specified in clause (i)(IV) to

the extent such exemption fosters the development of fair and

orderly markets in security futures products, is necessary or

appropriate in the public interest, and is consistent with the

protection of investors.

(vi)(I) Notwithstanding clauses (i) and (vii), until the

compliance date, a board of trade shall not be required to meet

the criterion specified in clause (i)(IV).

(II) The Commission and the Securities and Exchange

Commission shall jointly publish in the Federal Register a

notice of the compliance date no later than 165 days before the

compliance date.

(III) For purposes of this clause, the term ''compliance

date'' means the later of -

(aa) 180 days after the end of the first full calendar

month period in which the average aggregate comparable share

volume for all security futures products based on single

equity securities traded on all designated contract markets

and registered derivatives transaction execution facilities

equals or exceeds 10 percent of the average aggregate

comparable share volume of options on single equity

securities traded on all national securities exchanges

registered pursuant to section 6(a) of the Securities

Exchange Act of 1934 (15 U.S.C. 78f(a)) and any national

securities associations registered pursuant to section 15A(a)

of such Act (15 U.S.C. 78o-3(a)); or

(bb) 2 years after the date on which trading in any

security futures product commences under this chapter.

(vii) It shall be unlawful for a board of trade to trade or

execute a security futures product unless the board of trade

has provided the Commission with a certification that the

specific security futures product and the board of trade, as

applicable, meet the criteria specified in subclauses (I)

through (XI) of clause (i), except as otherwise provided in

clause (vi).

(E) Obligation to address security futures products traded on

foreign exchanges

(i) To the extent necessary or appropriate in the public

interest, to promote fair competition, and consistent with

promotion of market efficiency, innovation, and expansion of

investment opportunities, the protection of investors, and the

maintenance of fair and orderly markets, the Commission and the

Securities and Exchange Commission shall jointly issue such

rules, regulations, or orders as are necessary and appropriate

to permit the offer and sale of a security futures product

traded on or subject to the rules of a foreign board of trade

to United States persons.

(ii) The rules, regulations, or orders adopted under clause

(i) shall take into account, as appropriate, the nature and

size of the markets that the securities underlying the security

futures product reflects.

(F) Security futures products traded on foreign boards of trade

(i) Nothing in this chapter is intended to prohibit a futures

commission merchant from carrying security futures products

traded on or subject to the rules of a foreign board of trade

in the accounts of persons located outside of the United

States.

(ii) Nothing in this chapter is intended to prohibit any

eligible contract participant located in the United States from

purchasing or carrying securities futures products traded on or

subject to the rules of a foreign board of trade, exchange, or

market to the same extent such person may be authorized to

purchase or carry other securities traded on a foreign board of

trade, exchange, or market so long as any underlying security

for such security futures products is traded principally on,

by, or through any exchange or market located outside the

United States.

(2) Establishment of Commodity Futures Trading Commission;

composition; terms of Commissioners

(A) There is hereby established, as an independent agency of

the United States Government, a Commodity Futures Trading

Commission. The Commission shall be composed of five

Commissioners who shall be appointed by the President, by and

with the advice and consent of the Senate. In nominating persons

for appointment, the President shall -

(i) select persons who shall each have demonstrated knowledge

in futures trading or its regulation, or the production,

merchandising, processing or distribution of one or more of the

commodities or other goods and articles, services, rights, and

interests covered by this chapter; and

(ii) seek to ensure that the demonstrated knowledge of the

Commissioners is balanced with respect to such areas.

Not more than three of the members of the Commission shall be

members of the same political party. Each Commissioner shall

hold office for a term of five years and until his successor is

appointed and has qualified, except that he shall not so continue

to serve beyond the expiration of the next session of Congress

subsequent to the expiration of said fixed term of office, and

except (i) any Commissioner appointed to fill a vacancy occurring

prior to the expiration of the term for which his predecessor was

appointed shall be appointed for the remainder of such term, and

(ii) the terms of office of the Commissioners first taking office

after the enactment of this paragraph shall expire as designated

by the President at the time of nomination, one at the end of one

year, one at the end of two years, one at the end of three years,

one at the end of four years, and one at the end of five years.

(B) The President shall appoint, by and with the advice and

consent of the Senate, a member of the Commission as Chairman,

who shall serve as Chairman at the pleasure of the President. An

individual may be appointed as Chairman at the same time that

person is appointed as a Commissioner. The Chairman shall be the

chief administrative officer of the Commission and shall preside

at hearings before the Commission. At any time, the President may

appoint, by and with the advice and consent of the Senate, a

different Chairman, and the Commissioner previously appointed as

Chairman may complete that Commissioner's term as a Commissioner.

(3) Vacancies

A vacancy in the Commission shall not impair the right of the

remaining Commissioners to exercise all the powers of the

Commission.

(4) General Counsel

The Commission shall have a General Counsel, who shall be

appointed by the Commission and serve at the pleasure of the

Commission. The General Counsel shall report directly to the

Commission and serve as its legal advisor. The Commission shall

appoint such other attorneys as may be necessary, in the opinion

of the Commission, to assist the General Counsel, represent the

Commission in all disciplinary proceedings pending before it,

represent the Commission in courts of law whenever appropriate,

assist the Department of Justice in handling litigation

concerning the Commission in courts of law, and perform such

other legal duties and functions as the Commission may direct.

(5) Executive Director

The Commission shall have an Executive Director, who shall be

appointed by the Commission and serve at the pleasure of the

Commission. The Executive Director shall report directly to the

Commission and perform such functions and duties as the

Commission may prescribe.

(6) Powers and Functions of Chairman

(A) Except as otherwise provided in this paragraph and in

paragraphs (4) and (5) of this subsection, the executive and

administrative functions of the Commission, including functions

of the Commission with respect to the appointment and supervision

of personnel employed under the Commission, the distribution of

business among such personnel and among administrative units of

the Commission, and the use and expenditure of funds, according

to budget categories, plans, programs, and priorities established

and approved by the Commission, shall be exercised solely by the

Chairman.

(B) In carrying out any of his functions under the provisions

of this paragraph, the Chairman shall be governed by general

policies, plans, priorities, and budgets approved by the

Commission and by such regulatory decisions, findings, and

determination as the Commission may by law be authorized to make.

(C) The appointment by the Chairman of the heads of major

administrative units under the Commission shall be subject to the

approval of the Commission.

(D) Personnel employed regularly and full time in the immediate

offices of Commissioners other than the Chairman shall not be

affected by the provisions of this paragraph.

(E) There are hereby reserved to the Commission its functions

with respect to revising budget estimates and with respect to

determining the distribution of appropriated funds according to

major programs and purposes.

(F) The Chairman may from time to time make such provisions as

he shall deem appropriate authorizing the performance by any

officer, employee, or administrative unit under his jurisdiction

of any functions of the Chairman under this paragraph.

(7) Appointment and compensation

(A) In general

The Commission may appoint and fix the compensation of such

officers, attorneys, economists, examiners, and other employees

as may be necessary for carrying out the functions of the

Commission under this chapter.

(B) Rates of pay

Rates of basic pay for all employees of the Commission may be

set and adjusted by the Commission without regard to chapter 51

or subchapter III of chapter 53 of title 5.

(C) Comparability

(i) In general

The Commission may provide additional compensation and

benefits to employees of the Commission if the same type of

compensation or benefits are provided by any agency referred

to in section 1833b(a) of title 12 or could be provided by

such an agency under applicable provisions of law (including

rules and regulations).

(ii) Consultation

In setting and adjusting the total amount of compensation

and benefits for employees, the Commission shall consult

with, and seek to maintain comparability with, the agencies

referred to in section 1833b(a) of title 12.

(8) Conflict of interest

No Commissioner or employee of the Commission shall accept

employment or compensation from any person, exchange, or

clearinghouse subject to regulation by the Commission under this

chapter during his term of office, nor shall he participate,

directly or indirectly, in any registered entity operations or

transactions of a character subject to regulation by the

Commission.

(9) Liaison with Department of Agriculture; communications with

Department of the Treasury, Federal Reserve Board, and

Securities and Exchange Commission; application by a board of

trade for designation as a contract market for future

delivery of securities

(A) The Commission shall, in cooperation with the Secretary of

Agriculture, maintain a liaison between the Commission and the

Department of Agriculture. The Secretary shall take such steps as

may be necessary to enable the Commission to obtain information

and utilize such services and facilities of the Department of

Agriculture as may be necessary in order to maintain effectively

such liaison. In addition, the Secretary shall appoint a liaison

officer, who shall be an employee of the Office of the Secretary,

for the purpose of maintaining a liaison between the Department

of Agriculture and the Commission. The Commission shall furnish

such liaison officer appropriate office space within the offices

of the Commission and shall allow such liaison officer to attend

and observe all deliberations and proceedings of the Commission.

(B)(i) The Commission shall maintain communications with the

Department of the Treasury, the Board of Governors of the Federal

Reserve System, and the Securities and Exchange Commission for

the purpose of keeping such agencies fully informed of Commission

activities that relate to the responsibilities of those agencies,

for the purpose of seeking the views of those agencies on such

activities, and for considering the relationships between the

volume and nature of investment and trading in contracts of sale

of a commodity for future delivery and in securities and

financial instruments under the jurisdiction of such agencies.

(ii) When a board of trade applies for designation or

registration as a contract market or derivatives transaction

execution facility involving transactions for future delivery of

any security issued or guaranteed by the United States or any

agency thereof, the Commission shall promptly deliver a copy of

such application to the Department of the Treasury and the Board

of Governors of the Federal Reserve System. The Commission may

not designate or register a board of trade as a contract market

or derivatives transaction execution facility based on such

application until forty-five days after the date the Commission

delivers the application to such agencies or until the Commission

receives comments from each of such agencies on the application,

whichever period is shorter. Any comments received by the

Commission from such agencies shall be included as part of the

public record of the Commission's designation proceeding. In

designating, registering, or refusing, suspending, or revoking

the designation or registration of, a board of trade as a

contract market or derivatives transaction execution facility

involving transactions for future delivery referred to in this

clause or in considering any possible action under this chapter

(including without limitation emergency action under section

12a(9) of this title) with respect to such transactions, the

Commission shall take into consideration all comments it receives

from the Department of the Treasury and the Board of Governors of

the Federal Reserve System and shall consider the effect that any

such designation, registration, suspension, revocation, or action

may have on the debt financing requirements of the United States

Government and the continued efficiency and integrity of the

underlying market for government securities.

(iii) The provisions of this subparagraph shall not create any

rights, liabilities, or obligations upon which actions may be

brought against the Commission.

(10) Transmittal of budget requests and legislative

recommendations to congressional committees

(A) Whenever the Commission submits any budget estimate or

request to the President or the Office of Management and Budget,

it shall concurrently transmit copies of that estimate or request

to the House and Senate Appropriations Committees and the House

Committee on Agriculture and the Senate Committee on Agriculture,

Nutrition, and Forestry.

(B) Whenever the Commission transmits any legislative

recommendations, or testimony, or comments on legislation to the

President or the Office of Management and Budget, it shall

concurrently transmit copies thereof to the House Committee on

Agriculture and the Senate Committee on Agriculture, Nutrition,

and Forestry. No officer or agency of the United States shall

have any authority to require the Commission to submit its

legislative recommendations, or testimony, or comments on

legislation to any officer or agency of the United States for

approval, comments, or review, prior to the submission of such

recommendations, testimony, or comments to the Congress. In

instances in which the Commission voluntarily seeks to obtain the

comments or review of any officer or agency of the United States,

the Commission shall include a description of such actions in its

legislative recommendations, testimony, or comments on

legislation which it transmits to the Congress.

(C) Whenever the Commission issues for official publication any

opinion, release, rule, order, interpretation, or other

determination on a matter, the Commission shall provide that any

dissenting, concurring, or separate opinion by any Commissioner

on the matter be published in full along with the Commission

opinion, release, rule, order, interpretation, or determination.

(11) Seal

The Commission shall have an official seal, which shall be

judicially noticed.

(12) Rules and regulations

The Commission is authorized to promulgate such rules and

regulations as it deems necessary to govern the operating

procedures and conduct of the business of the Commission.

(b) Transaction in interstate commerce

For the purposes of this chapter (but not in any wise limiting

the foregoing definition of interstate commerce) a transaction in

respect to any article shall be considered to be in interstate

commerce if such article is part of that current of commerce usual

in the commodity trade whereby commodities and commodity products

and by-products thereof are sent from one State, with the

expectation that they will end their transit, after purchase, in

another, including in addition to cases within the above general

description, all cases where purchase or sale is either for

shipment to another State, or for manufacture within the State and

the shipment outside the State of the products resulting from such

manufacture. Articles normally in such current of commerce shall

not be considered out of such commerce through resort being had to

any means or device intended to remove transactions in respect

thereto from the provisions of this chapter. For the purpose of

this paragraph the word ''State'' includes Territory, the District

of Columbia, possession of the United States, and foreign nation.

(c) Agreements, contracts, and transactions in foreign currency,

government securities, and certain other commodities

(1) In general

Except as provided in paragraph (2), nothing in this chapter

(other than section 7a (to the extent provided in section 7a(g)

of this title), 7a-1, 7a-3, or 16(e)(2)(B) of this title) governs

or applies to an agreement, contract, or transaction in -

(A) foreign currency;

(B) government securities;

(C) security warrants;

(D) security rights;

(E) resales of installment loan contracts;

(F) repurchase transactions in an excluded commodity; or

(G) mortgages or mortgage purchase commitments.

(2) Commission jurisdiction

(A) Agreements, contracts, and transactions traded on an

organized exchange

This chapter applies to, and the Commission shall have

jurisdiction over, an agreement, contract, or transaction

described in paragraph (1) that is -

(i) a contract of sale of a commodity for future delivery

(or an option on such a contract), or an option on a

commodity (other than foreign currency or a security or a

group or index of securities), that is executed or traded on

an organized exchange; or

(ii) an option on foreign currency executed or traded on an

organized exchange that is not a national securities exchange

registered pursuant to section 6(a) of the Securities

Exchange Act of 1934 (15 U.S.C. 78f(a)).

(B) Agreements, contracts, and transactions in retail foreign

currency

This chapter applies to, and the Commission shall have

jurisdiction over, an agreement, contract, or transaction in

foreign currency that -

(i) is a contract of sale of a commodity for future

delivery (or an option on such a contract) or an option

(other than an option executed or traded on a national

securities exchange registered pursuant to section 6(a) of

the Securities Exchange Act of 1934 (15 U.S.C. 78f(a))); and

(ii) is offered to, or entered into with, a person that is

not an eligible contract participant, unless the

counterparty, or the person offering to be the counterparty,

of the person is -

(I) a financial institution;

(II) a broker or dealer registered under section 15(b) or

15C of the Securities Exchange Act of 1934 (15 U.S.C.

78o(b), 78o-5) or a futures commission merchant registered

under this chapter;

(III) an associated person of a broker or dealer

registered under section 15(b) or 15C of the Securities

Exchange Act of 1934 (15 U.S.C. 78o(b), 78o-5), or an

affiliated person of a futures commission merchant

registered under this chapter, concerning the financial or

securities activities of which the registered person makes

and keeps records under section 15C(b) or 17(h) of the

Securities Exchange Act of 1934 (15 U.S.C. 78o-5(b),

78q(h)) or section 6f(c)(2)(B) of this title;

(IV) an insurance company described in section

1a(12)(A)(ii) of this title, or a regulated subsidiary or

affiliate of such an insurance company;

(V) a financial holding company (as defined in section

1841 of title 12); or

(VI) an investment bank holding company (as defined in

section 17(i) of the Securities Exchange Act of 1934 (15

U.S.C. 78q(i))).

(C) Notwithstanding subclauses (II) and (III) of subparagraph

(B)(ii), agreements, contracts, or transactions described in

subparagraph (B) shall be subject to sections 6b, 6c(b), 9, 15,

and 13b (to the extent that sections 9, 15, and 13b of this

title prohibit manipulation of the market price of any

commodity, in interstate commerce, or for future delivery on or

subject to the rules of any market), 13a-1, 13a-2, and 12(a) of

this title if they are entered into by a futures commission

merchant or an affiliate of a futures commission merchant that

is not also an entity described in subparagraph (B)(ii) of this

paragraph.

(d) Excluded derivative transactions

(1) In general

Nothing in this chapter (other than section 7a-1 or 16(e)(2)(B)

of this title (FOOTNOTE 5) governs or applies to an agreement,

contract, or transaction in an excluded commodity if -

(FOOTNOTE 5) So in original. Probably should be followed by a

closing parenthesis.

(A) the agreement, contract, or transaction is entered into

only between persons that are eligible contract participants at

the time at which the persons enter into the agreement,

contract, or transaction; and

(B) the agreement, contract, or transaction is not executed

or traded on a trading facility.

(2) Electronic trading facility exclusion

Nothing in this chapter (other than section 7a (to the extent

provided in section 7a(g) of this title), 7a-1, 7a-3, or

16(e)(2)(B) of this title) governs or applies to an agreement,

contract, or transaction in an excluded commodity if -

(A) the agreement, contract, or transaction is entered into

on a principal-to-principal basis between parties trading for

their own accounts or as described in section 1a(12)(B)(ii) of

this title;

(B) the agreement, contract, or transaction is entered into

only between persons that are eligible contract participants

described in subparagraph (A), (B)(ii), or (C) of section

1a(12) of this title) (FOOTNOTE 6) at the time at which the

persons enter into the agreement, contract, or transaction; and

(FOOTNOTE 6) So in original. The closing parenthesis probably

should not appear.

(C) the agreement, contract, or transaction is executed or

traded on an electronic trading facility.

(e) Excluded electronic trading facilities

(1) In general

Nothing in this chapter (other than section 16(e)(2)(B) of this

title) governs or is applicable to an electronic trading facility

that limits transactions authorized to be conducted on its

facilities to those satisfying the requirements of subsection

(d)(2), (g), or (h)(3) of this section.

(2) Effect on authority to establish and operate

Nothing in this chapter shall prohibit a board of trade

designated by the Commission as a contract market or derivatives

transaction execution facility, or operating as an exempt board

of trade from establishing and operating an electronic trading

facility excluded under this chapter pursuant to paragraph (1).

(3) Effect on transactions

No failure by an electronic trading facility to limit

transactions as required by paragraph (1) of this subsection or

to comply with subsection (h)(5) of this section shall in itself

affect the legality, validity, or enforceability of an agreement,

contract, or transaction entered into or traded on the electronic

trading facility or cause a participant on the system to be in

violation of this chapter.

(4) Special rule

A person or group of persons that would not otherwise

constitute a trading facility shall not be considered to be a

trading facility solely as a result of the submission to a

derivatives clearing organization of transactions executed on or

through the person or group of persons.

(f) Exclusion for qualifying hybrid instruments

(1) In general

Nothing in this chapter (other than section 16(e)(2)(B) of this

title) governs or is applicable to a hybrid instrument that is

predominantly a security.

(2) Predominance

A hybrid instrument shall be considered to be predominantly a

security if -

(A) the issuer of the hybrid instrument receives payment in

full of the purchase price of the hybrid instrument,

substantially contemporaneously with delivery of the hybrid

instrument;

(B) the purchaser or holder of the hybrid instrument is not

required to make any payment to the issuer in addition to the

purchase price paid under subparagraph (A), whether as margin,

settlement payment, or otherwise, during the life of the hybrid

instrument or at maturity;

(C) the issuer of the hybrid instrument is not subject by the

terms of the instrument to mark-to-market margining

requirements; and

(D) the hybrid instrument is not marketed as a contract of

sale of a commodity for future delivery (or option on such a

contract) subject to this chapter.

(3) Mark-to-market margining requirements

For the purposes of paragraph (2)(C), mark-to-market margining

requirements do not include the obligation of an issuer of a

secured debt instrument to increase the amount of collateral held

in pledge for the benefit of the purchaser of the secured debt

instrument to secure the repayment obligations of the issuer

under the secured debt instrument.

(g) Excluded swap transactions

No provision of this chapter (other than section 7a (to the

extent provided in section 7a(g) of this title), 7a-1, 7a-3, or

16(e)(2) of this title) shall apply to or govern any agreement,

contract, or transaction in a commodity other than an agricultural

commodity if the agreement, contract, or transaction is -

(1) entered into only between persons that are eligible

contract participants at the time they enter into the agreement,

contract, or transaction;

(2) subject to individual negotiation by the parties; and

(3) not executed or traded on a trading facility.

(h) Legal certainty for certain transactions in exempt commodities

(1) Except as provided in paragraph (2), nothing in this chapter

shall apply to a contract, agreement, or transaction in an exempt

commodity which -

(A) is entered into solely between persons that are eligible

contract participants at the time the persons enter into the

agreement, contract, or transaction; and

(B) is not entered into on a trading facility.

(2) An agreement, contract, or transaction described in paragraph

(1) of this subsection shall be subject to -

(A) sections 7a-1 and 16(e)(2)(B) of this title;

(B) sections 6b, 6o, 9, 15, 13b, 13a-1, 13a-2, and 12a of this

title, and the regulations of the Commission pursuant to section

6c(b) of this title proscribing fraud in connection with

commodity option transactions, to the extent the agreement,

contract, or transaction is not between eligible commercial

entities (unless one of the entities is an instrumentality,

department, or agency of a State or local governmental entity)

and would otherwise be subject to such sections and regulations;

and

(C) sections 9, 15, 13b, 13a-1, 13a-2, 12a, and 13(a)(2) of

this title, to the extent such sections prohibit manipulation of

the market price of any commodity in interstate commerce and the

agreement, contract, or transaction would otherwise be subject to

such sections.

(3) Except as provided in paragraph (4), nothing in this chapter

shall apply to an agreement, contract, or transaction in an exempt

commodity which is -

(A) entered into on a principal-to-principal basis solely

between persons that are eligible commercial entities at the time

the persons enter into the agreement, contract, or transaction;

and

(B) executed or traded on an electronic trading facility.

(4) An agreement, contract, or transaction described in paragraph

(3) of this subsection shall be subject to -

(A) sections 7a (to the extent provided in section 7a(g) of

this title), 7a-1, 7a-3, and 16(e)(2)(B) of this title;

(B) sections 6b and 6o of this title and the regulations of the

Commission pursuant to section 6c(b) of this title proscribing

fraud in connection with commodity option transactions to the

extent the agreement, contract, or transaction would otherwise be

subject to such sections and regulations;

(C) sections 9, 15, and 13(a)(2) of this title, to the extent

such sections prohibit manipulation of the market price of any

commodity in interstate commerce and to the extent the agreement,

contract, or transaction would otherwise be subject to such

sections; and

(D) such rules and regulations as the Commission may prescribe

if necessary to ensure timely dissemination by the electronic

trading facility of price, trading volume, and other trading data

to the extent appropriate, if the Commission determines that the

electronic trading facility performs a significant price

discovery function for transactions in the cash market for the

commodity underlying any agreement, contract, or transaction

executed or traded on the electronic trading facility.

(5) An electronic trading facility relying on the exemption

provided in paragraph (3) shall -

(A) notify the Commission of its intention to operate an

electronic trading facility in reliance on the exemption set

forth in paragraph (3), which notice shall include -

(i) the name and address of the facility and a person

designated to receive communications from the Commission;

(ii) the commodity categories that the facility intends to

list or otherwise make available for trading on the facility in

reliance on the exemption set forth in paragraph (3);

(iii) certifications that -

(I) no executive officer or member of the governing board

of, or any holder of a 10 percent or greater equity interest

in, the facility is a person described in any of

subparagraphs (A) through (H) of section 12a(2) of this

title;

(II) the facility will comply with the conditions for

exemption under this paragraph; and

(III) the facility will notify the Commission of any

material change in the information previously provided by the

facility to the Commission pursuant to this paragraph; and

(iv) the identity of any derivatives clearing organization to

which the facility transmits or intends to transmit transaction

data for the purpose of facilitating the clearance and

settlement of transactions conducted on the facility in

reliance on the exemption set forth in paragraph (3);

(B)(i)(I) provide the Commission with access to the facility's

trading protocols and electronic access to the facility with

respect to transactions conducted in reliance on the exemption

set forth in paragraph (3); or

(II) provide such reports to the Commission regarding

transactions executed on the facility in reliance on the

exemption set forth in paragraph (3) as the Commission may from

time to time request to enable the Commission to satisfy its

obligations under this chapter;

(ii) maintain for 5 years, and make available for inspection by

the Commission upon request, records of activities related to its

business as an electronic trading facility exempt under paragraph

(3), including -

(I) information relating to data entry and transaction

details sufficient to enable the Commission to reconstruct

trading activity on the facility conducted in reliance on the

exemption set forth in paragraph (3); and

(II) the name and address of each participant on the facility

authorized to enter into transactions in reliance on the

exemption set forth in paragraph (3); and

(iii) upon special call by the Commission, provide to the

Commission, in a form and manner and within the period specified

in the special call, such information related to its business as

an electronic trading facility exempt under paragraph (3),

including information relating to data entry and transaction

details in respect of transactions entered into in reliance on

the exemption set forth in paragraph (3), as the Commission may

determine appropriate -

(I) to enforce the provisions specified in subparagraphs (B)

and (C) of paragraph (4);

(II) to evaluate a systemic market event; or

(III) to obtain information requested by a Federal financial

regulatory authority in order to enable the regulator to

fulfill its regulatory or supervisory responsibilities;

(C)(i) upon receipt of any subpoena issued by or on behalf of

the Commission to any foreign person who the Commission believes

is conducting or has conducted transactions in reliance on the

exemption set forth in paragraph (3) on or through the electronic

trading facility relating to the transactions, promptly notify

the foreign person of, and transmit to the foreign person, the

subpoena in a manner reasonable under the circumstances, or as

specified by the Commission; and

(ii) if the Commission has reason to believe that a person has

not timely complied with a subpoena issued by or on behalf of the

Commission pursuant to clause (i), and the Commission in writing

has directed that a facility relying on the exemption set forth

in paragraph (3) deny or limit further transactions by the

person, the facility shall deny that person further trading

access to the facility or, as applicable, limit that person's

access to the facility for liquidation trading only;

(D) comply with the requirements of this paragraph applicable

to the facility and require that each participant, as a condition

of trading on the facility in reliance on the exemption set forth

in paragraph (3), agree to comply with all applicable law;

(E) have a reasonable basis for believing that participants

authorized to conduct transactions on the facility in reliance on

the exemption set forth in paragraph (3) are eligible commercial

entities; and

(F) not represent to any person that the facility is registered

with, or designated, recognized, licensed, or approved by the

Commission.

(6) A person named in a subpoena referred to in paragraph (5)(C)

that believes the person is or may be adversely affected or

aggrieved by action taken by the Commission under this section,

shall have the opportunity for a prompt hearing after the

Commission acts under procedures that the Commission shall

establish by rule, regulation, or order.

(i) Application of commodity futures laws

(1) No provision of this chapter shall be construed as implying

or creating any presumption that -

(A) any agreement, contract, or transaction that is excluded

from this chapter under subsection (c), (d), (e), (f), or (g) of

this section or title IV of the Commodity Futures Modernization

Act of 2000 (7 U.S.C. 27 to 27f), or exempted under subsection

(h) of this section or section 6(c) of this title; or

(B) any agreement, contract, or transaction, not otherwise

subject to this chapter, that is not so excluded or exempted,

is or would otherwise be subject to this chapter.

(2) No provision of, or amendment made by, the Commodity Futures

Modernization Act of 2000 shall be construed as conferring

jurisdiction on the Commission with respect to any such agreement,

contract, or transaction, except as expressly provided in section

7a of this title (to the extent provided in section 7a(g) of this

title), 7a-1 of this title, or 7a-3 of this title.

-SOURCE-

(Sept. 21, 1922, ch. 369, Sec. 2, 42 Stat. 998; June 15, 1936, ch.

545, Sec. 2, 3, 49 Stat. 1491; Apr. 7, 1938, ch. 108, 52 Stat. 205;

Oct. 9, 1940, ch. 786, Sec. 1, 54 Stat. 1059; Aug. 28, 1954, ch.

1041, title VII, Sec. 710(a), 68 Stat. 913; July 26, 1955, ch. 382,

Sec. 1, 69 Stat. 375; Pub. L. 90-258, Sec. 1, Feb. 19, 1968, 82

Stat. 26; Pub. L. 90-418, July 23, 1968, 82 Stat. 413; Pub. L.

93-463, title I, Sec. 101(a), title II, Sec. 201, 202, Oct. 23,

1974, 88 Stat. 1389, 1395; Pub. L. 95-405, Sec. 2, Sept. 30, 1978,

92 Stat. 865; Pub. L. 97-444, title I, Sec. 101, title II, Sec.

201, 202, Jan. 11, 1983, 96 Stat. 2294, 2297, 2298; Pub. L. 99-641,

title I, Sec. 110(1), Nov. 10, 1986, 100 Stat. 3561; Pub. L.

102-546, title II, Sec. 209(b)(1), 215, 226, title IV, Sec. 404(b),

title V, Sec. 501, Oct. 28, 1992, 106 Stat. 3606, 3611, 3618, 3628;

Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec. 102 - 105(b), 106,

107, 123(a)(2), title II, Sec. 251(a), (b), (i), (j)), Dec. 21,

2000, 114 Stat. 2763, 2763A-376 to 2763A-379, 2763A-382, 2763A-405,

2763A-436, 2763A-441, 2763A-445; Pub. L. 107-171, title X, Sec.

10702(a), May 13, 2002, 116 Stat. 516.)

-REFTEXT-

REFERENCES IN TEXT

Section 77b(1) of title 15, referred to in subsec. (a)(1)(C)(i),

was redesignated section 77b(a)(1) of title 15 by Pub. L. 104-290,

title I, Sec. 106(a)(1), Oct. 11, 1996, 110 Stat. 3424.

The Securities Exchange Act of 1934, referred to in subsec.

(a)(1)(D)(i)(VI), (iii)(II), is act June 6, 1934, ch. 404, 48 Stat.

881, as amended, which is classified principally to chapter 2B

(Sec. 78a et seq.) of Title 15, Commerce and Trade. For complete

classification of this Act to the Code, see section 78a of Title 15

and Tables.

The Commodity Futures Modernization Act of 2000, referred to in

subsec. (i)(1)(A), (2), is H.R. 5660, as enacted by Pub. L.

106-554, Sec. 1(a)(5), Dec. 21, 2000, 114 Stat. 2763, 2763A-365.

Title IV of the Act, known as the Legal Certainty for Bank Products

Act of 2000, is classified to sections 27 to 27f of this title.

For complete classification of this Act to the Code, see Short

Title of 2000 Amendment note set out under section 1 of this title,

and Tables.

-COD-

CODIFICATION

Subsec. (a)(1)(B) of this section was formerly classified to

section 4 of this title. Subsec. (a)(1)(C) of this section was

formerly classified to section 2a of this title. Subsec. (a)(2) to

(11) of this section was formerly classified to section 4a of this

title. Subsec. (b) of this section was formerly classified to

section 3 of this title.

-MISC3-

AMENDMENTS

2002 - Subsec. (a)(7) to (12). Pub. L. 107-171 added par. (7) and

redesignated former pars. (7) to (11) as (8) to (12), respectively.

2000 - Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec.

123(a)(2)(A)), inserted section catchline.

Subsec. (a). Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec.

123(a)(2)(A)), inserted headings for subsec. (a) and par. (1).

Subsec. (a)(1)(A). Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec.

123(a)(2)(B)(i)(II)), substituted ''contract market designated or

derivatives transaction execution facility registered pursuant to

section 7 or 7a of this title'' for ''contract market designated

pursuant to section 7 of this title''.

Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec. 123(a)(2)(B)(i)(I)),

which directed substitution of ''subparagraphs (C) and (D) of this

paragraph and subsections (c) through (i) of this section'' for

''subparagraph (B) of this subparagraph'', was executed by making

the substitution for ''subparagraph (B) of this paragraph'' to

reflect the probable intent of Congress.

Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec. 123(a)(2)(A)),

inserted heading and struck out ''(i)'' before ''The Commission

shall have''.

Subsec. (a)(1)(A)(ii). Pub. L. 106-554, Sec. 1(a)(5) (title I,

Sec. 123(a)(2)(B)(i)(III)), struck out cl. (ii) which read as

follows: ''Nothing in this chapter shall be deemed to govern or in

any way be applicable to transactions in foreign currency, security

warrants, security rights, resales of installment loan contracts,

repurchase options, government securities, or mortgages and

mortgage purchase commitments, unless such transactions involve the

sale thereof for future delivery conducted on a board of trade.''

Subsec. (a)(1)(B). Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec.

123(a)(2)(B)(i)(IV)), redesignated subsec. (a)(1)(A)(iii) as

subsec. (a)(1)(B) and inserted heading. Former subsec. (a)(1)(B)

redesignated (a)(1)(C).

Subsec. (a)(1)(C). Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec.

123(a)(2)(B)(ii)(I)), redesignated subpar. (B) as (C).

Subsec. (a)(1)(C)(i). Pub. L. 106-554, Sec. 1(a)(5) (title I,

Sec. 123(a)(2)(B)(ii)(III)), adjusted margins.

Subsec. (a)(1)(C)(ii). Pub. L. 106-554, Sec. 1(a)(5) (title II,

Sec. 251(a)(1)(A)(iii)), substituted ''or the derivatives

transaction execution facility, and the applicable contract, meet''

for ''making such application demonstrates and the Commission

expressly finds that the specific contract (or option on such

contract) with respect to which the application has been made

meets'' in introductory provisions.

Pub. L. 106-554, Sec. 1(a)(5) (title II, Sec. 251(a)(1)(A)(ii)),

which directed insertion of '', and no derivatives transaction

execution facility shall trade or execute such contracts of sale

(or options on such contracts) for future delivery,'' after

''contracts) for future delivery'', was executed by making the

insertion in the proviso in introductory provisions to reflect the

probable intent of Congress.

Pub. L. 106-554, Sec. 1(a)(5) (title II, Sec. 251(a)(1)(A)(i)),

inserted ''or register a derivatives transaction execution facility

that trades or executes,'' after ''contract market in,'' in

introductory provisions.

Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec.

123(a)(2)(B)(ii)(III)), adjusted margins.

Subsec. (a)(1)(C)(ii)(III). Pub. L. 106-554, Sec. 1(a)(5) (title

II, Sec. 251(a)(1)(A)(iv)), added subcl. (III) and struck out

former subcl. (III) which read as follows: ''Such group or index of

securities shall be predominately composed of the securities of

unaffiliated issuers and shall be a widely published measure of,

and shall reflect, the market for all publicly traded equity or

debt securities or a substantial segment thereof, or shall be

comparable to such measure.''

Subsec. (a)(1)(C)(iii). Pub. L. 106-554, Sec. 1(a)(5) (title II,

Sec. 251(a)(1)(B), (C)), added cl. (iii) and struck out former cl.

(iii) which read as follows: ''Upon application by a board of trade

for designation as a contract market with respect to any contract

of sale (or option on such contract) for future delivery involving

a group or index of securities, the Commission shall provide an

opportunity for public comment on whether such contracts (or

options on such contracts) meet the minimum requirements set forth

in clause (ii) of this subparagraph.''

Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec.

123(a)(2)(B)(ii)(III)), adjusted margins.

Subsec. (a)(1)(C)(iv). Pub. L. 106-554, Sec. 1(a)(5) (title II,

Sec. 251(a)(1)(C), (D)), redesignated cl. (v) as (iv) and struck

out former cl. (iv) which related to consultation by the Commission

with, and the authority of, the Securities and Exchange Commission

with respect to approval of any application by a Board of Trade for

designation as a contract market with respect to any contract of

sale (or option of such contract) for future delivery of a group or

index of securities.

Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec.

123(a)(2)(B)(ii)(III)), adjusted margins.

Subsec. (a)(1)(C)(v). Pub. L. 106-554, Sec. 1(a)(5) (title II,

Sec. 251(b)(2)), redesignated cl. (vi) as (v), added subcls. (I) to

(V), and struck out former subcls. (I) to (IV) which required any

contract market in a stock index futures contract (or option

thereon) to file with the Board of Governors of the Federal Reserve

System any rule establishing or changing the levels of margin for

the stock index futures contract (or option thereon), authorized

the Board to request any contract market to set the margins at

certain levels, authorized the Board to delegate its authority

under this clause to the Commission, and preserved the authority of

the Commission to raise temporary emergency margin levels.

Pub. L. 106-554, Sec. 1(a)(5) (title II, Sec. 251(a)(1)(D)),

redesignated cl. (v) as (iv).

Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec.

123(a)(2)(B)(ii)(II), (III)), struck out ''section 77c of title

15'' after ''exempted security under'', inserted ''or subparagraph

(D)'' after ''subparagraph'', and adjusted margins.

Subsec. (a)(1)(C)(vi). Pub. L. 106-554, Sec. 1(a)(5) (title II,

Sec. 251(b)(2)), redesignated cl. (vi) as (v).

Pub. L. 106-554, Sec. 1(a)(5) (title II, Sec. 251(b)(1)),

redesignated subcl. (V) as (VI).

Subsec. (a)(1)(D). Pub. L. 106-554, Sec. 1(a)(5) (title II, Sec.

251(a)(2)), added subpar. (D).

Subsec. (a)(1)(E). Pub. L. 106-554, Sec. 1(a)(5) (title II, Sec.

251(i)), added subpar. (E).

Subsec. (a)(1)(F). Pub. L. 106-554, Sec. 1(a)(5) (title II, Sec.

251(j)), added subpar. (F).

Subsec. (a)(2) to (6). Pub. L. 106-554, Sec. 1(a)(5) (title I,

Sec. 123(a)(2)(E)), adjusted margins.

Subsec. (a)(7). Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec.

123(a)(2)(C), (E)), substituted ''registered entity'' for

''contract market'' and adjusted margins.

Subsec. (a)(8). Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec.

123(a)(2)(E)), adjusted margins.

Subsec. (a)(8)(B)(ii). Pub. L. 106-554, Sec. 1(a)(5) (title I,

Sec. 123(a)(2)(D)(iii)), in last sentence, substituted

''designating, registering, or refusing, suspending, or revoking

the designation or registration of, a board of trade as a contract

market or derivatives transaction execution facility involving

transactions for future delivery referred to in this clause or in

considering any possible action under this chapter (including

without limitation emergency action under section 12a(9) of this

title)'' for ''designating, or refusing, suspending, or revoking

the designation of, a board of trade as a contract market involving

transactions for future delivery referred to in this clause or in

considering possible emergency action under section 12a(9) of this

title'' and ''designation, registration, suspension, revocation, or

action'' for ''designation, suspension, revocation, or emergency

action''.

Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec. 123(a)(2)(D)(ii)),

substituted ''designate or register a board of trade as a contract

market or derivatives transaction execution facility'' for

''designate a board of trade as a contract market'' in second

sentence.

Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec. 123(a)(2)(D)(i)),

substituted ''designation or registration as a contract market or

derivatives transaction execution facility'' for ''designation as a

contract market'' in first sentence.

Subsec. (a)(9). Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec.

123(a)(2)(E)), adjusted margins.

Subsec. (c). Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec. 102),

added subsec. (c).

Subsec. (d). Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec. 103),

added subsec. (d).

Subsec. (e). Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec. 104),

added subsec. (e).

Subsec. (f). Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec.

105(a)), added subsec. (f).

Subsec. (g). Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec.

105(b)), added subsec. (g).

Subsec. (h). Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec. 106),

added subsec. (h).

Subsec. (i). Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec. 107),

added subsec. (i).

1992 - Subsec. (a)(1)(A). Pub. L. 102-546, Sec. 404(b)(2)-(7),

redesignated cls. (i) and (ii) of former third sentence as subcls.

(I) and (II), respectively, designated former fifth sentence as cl.

(ii), designated former eighth sentence as cl. (iii), and struck

out former sixth, seventh, and ninth through last sentences, which

included definitions of ''future delivery'', ''board of trade'',

''interstate commerce'', ''cooperative association of producers'',

''member of a contract market'', ''futures commission merchant'',

''introducing broker'', ''floor broker'', ''the Commission'',

''commodity trading advisor'', and ''commodity pool operator''.

See section 1a of this title.

Pub. L. 102-546, Sec. 404(b)(1), which directed the substitution

of ''(i) The Commission'' for the words ''For the purposes'' and

all that followed through ''; Provided, That the Commission'', was

executed by making the substitution for the first and second

sentences and the third sentence through the words '': Provided,

That the Commission'', to reflect the probable intent of Congress.

Prior to amendment, the first, second, and third sentences included

definitions of ''contract of sale'', ''person'', and ''commodity''.

See section 1a of this title.

Subsec. (a)(1)(B)(iv)(I). Pub. L. 102-546, Sec. 209(b)(1)(A),

made technical amendment to reference to section 9 of this title

appearing in penultimate sentence to reflect change in reference to

corresponding section of original act.

Subsec. (a)(1)(B)(iv)(II). Pub. L. 102-546, Sec. 209(b)(1)(B),

substituted ''section 8(b)'' for ''section 8''.

Subsec. (a)(1)(B)(vi). Pub. L. 102-546, Sec. 501, added cl. (vi).

Subsec. (a)(2)(A). Pub. L. 102-546, Sec. 215, substituted second

and third sentences for ''The Commission shall be composed of five

Commissioners, who shall be appointed by the President, by and with

the advice and consent of the Senate. In nominating persons for

appointment, the President shall seek to establish and maintain a

balanced Commission, including, but not limited to, persons of

demonstrated knowledge in futures trading or its regulation and

persons of demonstrated knowledge in the production, merchandising,

processing or distribution of one or more of the commodities or

other goods and articles, services, rights and interests covered by

this chapter.''

Subsec. (a)(9)(C). Pub. L. 102-546, Sec. 226, added subpar. (C).

1986 - Subsec. (a)(1)(B)(iv)(I). Pub. L. 99-641 substituted

''Securities and Exchange Commission'' for ''Securities Exchange

Commission'' before ''otherwise agree''.

1983 - Subsec. (a)(1). Pub. L. 97-444, Sec. 101, designated

existing provisions as subpar. (A), inserted in third sentence,

first proviso, '', except to the extent otherwise provided in

subparagraph (B) of this paragraph,'' after ''exclusive

jurisdiction'', and added subpar. (B).

Subsec. (a)(1)(A). Pub. L. 97-444, Sec. 201, inserted definition

of ''introducing broker'' and, in revising definition of

''commodity training advisor'', included any person advising others

through electronic media; substituted provision respecting advising

others ''as to the value of or the advisability of trading in any

contract of sale of a commodity for future delivery made or to be

made on or subject to the rules of a contract market, any commodity

option authorized under section 6c of this title, or any leverage

transaction authorized under section 23 of this title, or who, for

compensation or profit, and as part of a regular business, issues

or promulgates analyses or reports concerning any of the

foregoing'' for provision respecting advising others ''as to the

value of commodities or as to the advisability of trading in any

commodity for future delivery on or subject to the rules of any

market, or who for compensation or profit, and as part of a regular

business, issues or promulgates analyses or reports concerning

commodities''; excluded in item (i) any person acting as an

employee of any bank or trust company; substituted in cl. (ii)

''news reporter, news columnist, or news editor of the print or

electronic media'' for ''newspaper reporter, newspaper columnist,

newspaper editor''; substituted in cl. (iv) ''the publisher or

producer of any print or electronic data of general and regular

dissemination, including its employees'' for ''the publisher of any

bona fide newspaper magazine, or business or financial publication

of general and regular circulation including their employees'';

inserted item (v); redesignated as items (vi) and (vii) former

items (v) and (vi); and authorized Commission to effectuate

purposes of definition by rule or regulation by including within

definition any person advising as to the value of commodities or

issuing reports or analyses concerning commodities.

Subsec. (a)(7). Pub. L. 97-444, Sec. 202, struck out ''(A)''

after ''(7)'' and struck out subpar. (B) which prohibited any

representative activities before the Commission for a one year

period upon termination of employment occurring on a day more than

four months after Sept. 30, 1978, of any Commissioner or employee

of the Commission having a GS-16 or higher classified position

excepted from the competitive service because of its confidential

or policymaking character.

1978 - Subsec. (a)(1). Pub. L. 95-405, Sec. 2(1), substituted

''section 23 of this title'' for ''section 15a of this title''.

Subsec. (a)(2). Pub. L. 95-405, Sec. 2(2)-(5), designated

existing provisions as subpar. (A) and substituted ''five

Commissioners'' for ''a chairman and four other Commissioners'',

''(i)'' for ''(A)'', and ''(ii)'' for ''(B)'', and added subpar.

(B).

Subsec. (a)(5). Pub. L. 95-405, Sec. 2(6), struck out '', by and

with the advice and consent of the Senate,'' after ''by the

Commission''.

Subsec. (a)(6)(A). Pub. L. 95-405, Sec. 2(7), inserted

''according to budget categories, plans, programs, and priorities

established and approved by the Commission,'' after ''expenditure

of funds,''.

Subsec. (a)(6)(B). Pub. L. 95-405, Sec. 2(8), substituted '',

plans, priorities, and budgets approved by the Commission'' for

''of the Commission''.

Subsec. (a)(7). Pub. L. 95-405, Sec. 2(9), (10), designated

existing provisions as subpar. (A) and added subpar. (B).

Subsec. (a)(8). Pub. L. 95-405, Sec. 2(11)-(13), designated

existing provisions as subpar. (A), substituted ''maintain'' for

''establish a separate office within the Department of Agriculture

to be staffed with employees of the Commission for the purpose of

maintaining'', and added subpar. (B).

Subsec. (a)(9)(A), (B). Pub. L. 95-405, Sec. 2(14), (15),

substituted ''Senate Committee on Agriculture, Nutrition, and

Forestry'' for ''Senate Committee on Agriculture and Forestry''.

1974 - Subsec. (a). Pub. L. 93-463, Sec. 101(a), designated

existing provisions as par. (1), substituted ''Commodity Futures

Trading Commission established under paragraph (2) of this

subsection'' for ''Commodity Exchange Commission, consisting of the

Secretary of Agriculture, the Secretary of Commerce, and the

Attorney General, or an official or employee of each of the

executive departments concerned, designated by the Secretary of

Agriculture, the Secretary of Commerce, and the Attorney General,

respectively; and the Secretary of Agriculture or his designee

shall serve as Chairman'', and added pars. (2) to (11).

Subsec. (a)(1). Pub. L. 93-463, Sec. 201, 202, struck out

''onions,'' after ''eggs,'' in definition of ''commodity'' and

inserted provisions to that definition to include as commodities

all other goods and articles, except onions as provided in section

13-1 of this title, and all services, rights, and interests in

which contracts for the future delivery are presently or in the

future dealt in, and inserted definitions for ''commodity trading

advisor'' and ''commodity pool operator''.

1968 - Subsec. (a). Pub. L. 90-418 extended definition of

''commodity'' in third sentence to include frozen concentrated

orange juice.

Pub. L. 90-258, Sec. 1(c), provided in last sentence for

representation on the Commission of Secretary of Agriculture,

Secretary of Commerce, and Attorney General by an official or

employee designated from executive department concerned and for

service of Secretary of Agriculture or his designee as Chairman.

Pub. L. 90-258, Sec. 1(b), substituted in definition of ''floor

broker'' in penultimate sentence ''purchase or sell for any other

person'' for ''engage in executing for others any order for the

purchase or sale of'' and struck out provision for receipt or

acceptance of any commission or other compensation for services as

a floor broker.

Pub. L. 90-258, Sec. 1(a), extended definition of ''commodity''

in third sentence to include livestock and livestock products.

1955 - Subsec. (a). Act July 26, 1955, extended ''commodity'' to

onions.

1954 - Subsec. (a). Act Aug. 28, 1954, extended ''commodity'' to

wool.

1940 - Subsec. (a). Act Oct. 9, 1940, extended ''commodity'' to

fats and oils (including lard, tallow, cottonseed oil, peanut oil,

soybean oil, and all other fats and oils), cottonseed meal,

cottonseed, peanuts, soybeans and soybean meal.

1938 - Subsec. (a). Act Apr. 7, 1938, extended ''commodity'' to

wool tops.

1936 - Subsec. (a). Act June 15, 1936, substituted ''commodity'',

''any commodity'', or ''commodities'', as the case may require, for

''grain'' wherever appearing, and ''any cash commodity'' for ''cash

grain'', substituted sentence defining ''commodity'' for sentence

defining ''grain'', and inserted definitions of ''cooperative

association of producers,'', ''member of a contract market'',

''futures commission merchant'', ''floor broker'', and ''the

commission.''

Subsec. (b). Act June 15, 1936, Sec. 2, substituted ''commodity''

and ''commodities'', as the case may require, for ''grain''

wherever appearing.

EFFECTIVE DATE OF 1983 AMENDMENT

Section 239 of Pub. L. 97-444 provided that: ''This Act (see

Short Title of 1983 Amendment note set out under section 1 of this

title) shall be effective upon the date of enactment of this Act

(Jan. 11, 1983), except that sections 207, 212, and 231 of this Act

(amending sections 6d, 6k, and 18 of this title) shall be effective

one hundred and twenty days after the date of enactment of this

Act, or such earlier date as the Commodity Futures Trading

Commission shall prescribe by regulation.''

EFFECTIVE DATE OF 1978 AMENDMENT

Section 28 of Pub. L. 95-405 provided that: ''Except as otherwise

provided in this Act, the provisions of this Act (see Short Title

of 1978 Amendment note set out under section 1 of this title) shall

become effective October 1, 1978.''

EFFECTIVE DATE OF 1974 AMENDMENT

Pub. L. 93-463, title IV, Sec. 418, Oct. 23, 1974, 88 Stat. 1415,

provided that:

''(a) Except as otherwise provided specifically in this Act (see

Short Title of 1974 Amendment note set out under section 1 of this

title), the effective date of this Act shall be the 180th day after

enactment (Oct. 23, 1974). The Commission referred to in section

101 (Commodity Futures Trading Commission) is hereby established

effective immediately on enactment of this Act. Sections 102 and

410 (amending sections 5108, 5314, 5315, and 5316 of Title 5,

Government Organization and Employees) shall be effective

immediately on enactment of this Act. Activities necessary to

implement the changes effected by this Act may be carried out after

the date of enactment and before as well as after the 180th day

thereafter. Activities to be carried out after the date of

enactment and before the 180th day thereafter may include, but are

not limited to the following: Designation of boards of trade as

contract markets, registration of futures commission merchants,

floor brokers, and other persons required to be registered under

the Act (this chapter), approval or modification of bylaws, rules,

regulations, and resolutions of contract markets, and issuance of

regulations, effective on or after the 180th day after enactment;

appointment and compensation of the members of the Commission;

hiring and compensation of staff; and conducting of investigations

and hearings. Nothing in this Act shall limit the authority of the

Secretary of Agriculture or the Commodity Exchange Commission under

the Commodity Exchange Act (7 U.S.C. 1 et seq.), as amended, prior

to the 180th day after enactment of this Act.

''(b) Funds appropriated for the administration of the Commodity

Exchange Act, as amended (7 U.S.C. 1 et seq.), may be used to

implement this Act immediately after the date of enactment of this

Act (Oct. 23, 1974).''

EFFECTIVE DATE OF 1968 AMENDMENT

Section 28 of Pub. L. 90-258 provided that: ''This Act (enacting

sections 12b, 13b, 13c, and 17b, and amending this section and

sections 6a, 6b, 6d, 6f, 6g, 6i, 7, 7a, 7b, 8, 9, 12, 12-1, 12a,

13, and 13a of this title) shall become effective one hundred and

twenty days after enactment (Feb. 19, 1968).''

EFFECTIVE DATE OF 1955 AMENDMENT

Section 2 of act July 26, 1955, provided that: ''This Act

(amending this section) shall take effect sixty days after the date

of its enactment (July 26, 1955).''

EFFECTIVE DATE OF 1954 AMENDMENT

Section 710(b) of act Aug. 28, 1954, which provided that the

amendment of this section by act Aug. 28, 1954, was effective 60

days after Aug. 28, 1954, was repealed by Pub. L. 103-130, Sec.

3(a), Nov. 1, 1993, 107 Stat. 1369, eff. Dec. 31, 1995.

EFFECTIVE DATE OF 1940 AMENDMENT

Section 2 of act Oct. 9, 1940, provided that: ''This Act

(amending this section) shall take effect sixty days after the date

of its enactment (Oct. 9, 1940).''

EFFECTIVE DATE OF 1936 AMENDMENT

Amendment by act June 15, 1936, effective 90 days after June 15,

1936, see section 13 of that act, set out as a note under section 1

of this title.

SEPARABILITY OF 1974 AMENDMENT

Pub. L. 93-463, title IV, Sec. 413, Oct. 23, 1974, 88 Stat. 1414,

provided that: ''If any provision of this Act (see Short Title of

1974 Amendment note set out under section 1 of this title) or the

application thereof to any person or circumstances is held invalid,

the validity of the remainder of the Act and the application of

such provisions to other persons or circumstances shall not be

affected thereby.''

STUDY REGARDING RETAIL SWAPS

Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec. 105(c)), Dec. 21,

2000, 114 Stat. 2763, 2763A-379, provided that:

''(1) In general. - The Board of Governors of the Federal Reserve

System, the Secretary of the Treasury, the Commodity Futures

Trading Commission, and the Securities and Exchange Commission

shall conduct a study of issues involving the offering of swap

agreements to persons other than eligible contract participants (as

defined in section 1a of the Commodity Exchange Act (7 U.S.C. 1a)).

''(2) Matters to be addressed. - The study shall address -

''(A) the potential uses of swap agreements by persons other

than eligible contract participants;

''(B) the extent to which financial institutions are willing to

offer swap agreements to persons other than eligible contract

participants;

''(C) the appropriate regulatory structure to address customer

protection issues that may arise in connection with the offer of

swap agreements to persons other than eligible contract

participants; and

''(D) such other relevant matters deemed necessary or

appropriate to address.

''(3) Report. - Before the end of the 1-year period beginning on

the date of the enactment of this Act (Dec. 21, 2000), a report on

the findings and conclusions of the study required by paragraph (1)

shall be submitted to Congress, together with such recommendations

for legislative action as are deemed necessary and appropriate.''

EDUCATIONAL EVENTS AND SYMPOSIA

Pub. L. 106-78, title VI, Oct. 22, 1999, 113 Stat. 1160, provided

in part: ''That for fiscal year 2000 and thereafter, the Commission

(Commodity Futures Trading Commission) is authorized to charge

reasonable fees to attendees of Commission sponsored educational

events and symposia to cover the Commission's costs of providing

those events and symposia, and notwithstanding 31 U.S.C. 3302, said

fees shall be credited to this account, to be available without

further appropriation.''

Similar provisions were contained in the following prior

appropriations acts:

Pub. L. 105-277, div. A, Sec. 101(a) (title VI), Oct. 21, 1998,

112 Stat. 2681, 2681-24.

Pub. L. 105-86, title VI, Nov. 18, 1997, 111 Stat. 2104.

Pub. L. 104-180, title VI, Aug. 6, 1996, 110 Stat. 1596.

Pub. L. 104-37, title VI, Oct. 21, 1995, 109 Stat. 327.

Pub. L. 103-330, title VI, Sept. 30, 1994, 108 Stat. 2466.

NON-ABATEMENT OF PENDING PROCEEDINGS

Pub. L. 93-463, title IV, Sec. 412, Oct. 23, 1974, 88 Stat. 1414,

provided that: ''Pending proceedings under existing law shall not

be abated by reason of any provision of this Act (see Short Title

of 1974 Amendment note set out under section 1 of this title) but

shall be disposed of pursuant to the applicable provisions of the

Commodity Exchange Act, as amended (7 U.S.C. 1 et seq.), in effect

prior to the effective date of this Act (see Effective Date of 1974

Amendment note above).''

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 1a, 6, 6c, 6m, 7a, 7a-1,

7a-3, 16, 18, 21, 25 of this title; title 5 section 5373; title 12

section 4421; title 15 sections 78c, 78f.

-CITE-

7 USC Sec. 2a to 4a 01/06/03

-EXPCITE-

TITLE 7 - AGRICULTURE

CHAPTER 1 - COMMODITY EXCHANGES

-HEAD-

Sec. 2a to 4a. Transferred

-COD-

CODIFICATION

Section 2a, act Sept. 21, 1922, ch. 369, Sec. 2(a)(1)(C),

formerly Sec. 2(a)(1)(B), as added Pub. L. 97-444, title I, Sec.

101(a)(3), Jan. 11, 1983, 96 Stat. 2294, and amended and

renumbered, which related to designation of boards of trade as

contract markets and approval by and jurisdiction of Commodity

Futures Trading Commission and Securities and Exchange Commission,

was transferred to section 2(a)(1)(C) of this title.

Section 3, act Sept. 21, 1922, ch. 369, Sec. 2(b), 42 Stat. 998,

as amended, which related to transactions in interstate commerce,

was transferred to section 2(b) of this title.

Section 4, act Sept. 21, 1922, ch. 369, Sec. 2(a)(1)(B), formerly

Sec. 2(a), 42 Stat. 998, as amended and renumbered, which related

to liability of principal for act of agent, was transferred to

section 2(a)(1)(B) of this title.

Section 4a, act Sept. 21, 1922, ch. 369, Sec. 2(a)(2)-(11), as

added Pub. L. 93-463, title I, Sec. 101(a)(3), Oct. 23, 1974, 88

Stat. 1389, and amended, which related to the Commodity Futures

Trading Commission, was transferred to section 2(a)(2) to (11) of

this title.

-CITE-

7 USC Sec. 5 01/06/03

-EXPCITE-

TITLE 7 - AGRICULTURE

CHAPTER 1 - COMMODITY EXCHANGES

-HEAD-

Sec. 5. Findings and purpose

-STATUTE-

(a) Findings

The transactions subject to this chapter are entered into

regularly in interstate and international commerce and are affected

with a national public interest by providing a means for managing

and assuming price risks, discovering prices, or disseminating

pricing information through trading in liquid, fair and financially

secure trading facilities.

(b) Purpose

It is the purpose of this chapter to serve the public interests

described in subsection (a) of this section through a system of

effective self-regulation of trading facilities, clearing systems,

market participants and market professionals under the oversight of

the Commission. To foster these public interests, it is further the

purpose of this chapter to deter and prevent price manipulation or

any other disruptions to market integrity; to ensure the financial

integrity of all transactions subject to this chapter and the

avoidance of systemic risk; to protect all market participants from

fraudulent or other abusive sales practices and misuses of customer

assets; and to promote responsible innovation and fair competition

among boards of trade, other markets and market participants.

-SOURCE-

(Sept. 21, 1922, ch. 369, Sec. 3, as added Pub. L. 106-554, Sec.

1(a)(5) (title I, Sec. 108), Dec. 21, 2000, 114 Stat. 2763,

2763A-383.)

-MISC1-

PRIOR PROVISIONS

A prior section 5, acts Sept. 21, 1922, ch. 369, Sec. 3, 42 Stat.

999; June 15, 1936, ch. 545, Sec. 2, 49 Stat. 1491; Pub. L. 97-444,

title II, Sec. 203, Jan. 11, 1983, 96 Stat. 2298, stated

legislative findings, prior to repeal by Pub. L. 106-554, Sec.

1(a)(5) (title I, Sec. 108), Dec. 21, 2000, 114 Stat. 2763,

2763A-383.

-CITE-

7 USC Sec. 6 01/06/03

-EXPCITE-

TITLE 7 - AGRICULTURE

CHAPTER 1 - COMMODITY EXCHANGES

-HEAD-

Sec. 6. Regulation of futures trading and foreign transactions

-STATUTE-

(a) Restriction on futures trading

Unless exempted by the Commission pursuant to subsection (c) of

this section, it shall be unlawful for any person to offer to enter

into, to enter into, to execute, to confirm the execution of, or to

conduct any office or business anywhere in the United States, its

territories or possessions, for the purpose of soliciting or

accepting any order for, or otherwise dealing in, any transaction

in, or in connection with, a contract for the purchase or sale of a

commodity for future delivery (other than a contract which is made

on or subject to the rules of a board of trade, exchange, or market

located outside the United States, its territories or possessions)

unless -

(1) such transaction is conducted on or subject to the rules of

a board of trade which has been designated or registered by the

Commission as a contract market or derivatives transaction

execution facility for such commodity;

(2) such contract is executed or consummated by or through a

contract market; and

(3) such contract is evidenced by a record in writing which

shows the date, the parties to such contract and their addresses,

the property covered and its price, and the terms of delivery:

Provided, That each contract market or derivatives transaction

execution facility member shall keep such record for a period of

three years from the date thereof, or for a longer period if the

Commission shall so direct, which record shall at all times be

open to the inspection of any representative of the Commission or

the Department of Justice.

(b) Regulation of foreign transactions by United States persons

The Commission may adopt rules and regulations proscribing fraud

and requiring minimum financial standards, the disclosure of risk,

the filing of reports, the keeping of books and records, the

safeguarding of customers' funds, and registration with the

Commission by any person located in the United States, its

territories or possessions, who engages in the offer or sale of any

contract of sale of a commodity for future delivery that is made or

to be made on or subject to the rules of a board of trade,

exchange, or market located outside the United States, its

territories or possessions. Such rules and regulations may impose

different requirements for such persons depending upon the

particular foreign board of trade, exchange, or market involved.

No rule or regulation may be adopted by the Commission under this

subsection that (1) requires Commission approval of any contract,

rule, regulation, or action of any foreign board of trade,

exchange, or market, or clearinghouse for such board of trade,

exchange, or market, or (2) governs in any way any rule or contract

term or action of any foreign board of trade, exchange, or market,

or clearinghouse for such board of trade, exchange, or market.

(c) Public interest exemptions

(1) In order to promote responsible economic or financial

innovation and fair competition, the Commission by rule,

regulation, or order, after notice and opportunity for hearing, may

(on its own initiative or on application of any person, including

any board of trade designated or registered as a contract market or

derivatives transaction execution facility for transactions for

future delivery in any commodity under section 7 of this title)

exempt any agreement, contract, or transaction (or class thereof)

that is otherwise subject to subsection (a) of this section

(including any person or class of persons offering, entering into,

rendering advice or rendering other services with respect to, the

agreement, contract, or transaction), either unconditionally or on

stated terms or conditions or for stated periods and either

retroactively or prospectively, or both, from any of the

requirements of subsection (a) of this section, or from any other

provision of this chapter (except subparagraphs (C)(ii) and (D) of

section 2(a)(1) of this title, except that the Commission and the

Securities and Exchange Commission may by rule, regulation, or

order jointly exclude any agreement, contract, or transaction from

section 2(a)(1)(D) of this title), if the Commission determines

that the exemption would be consistent with the public interest.

(2) The Commission shall not grant any exemption under paragraph

(1) from any of the requirements of subsection (a) of this section

unless the Commission determines that -

(A) the requirement should not be applied to the agreement,

contract, or transaction for which the exemption is sought and

that the exemption would be consistent with the public interest

and the purposes of this chapter; and

(B) the agreement, contract, or transaction -

(i) will be entered into solely between appropriate persons;

and

(ii) will not have a material adverse effect on the ability

of the Commission or any contract market or derivatives

transaction execution facility to discharge its regulatory or

self-regulatory duties under this chapter.

(3) For purposes of this subsection, the term ''appropriate

person'' shall be limited to the following persons or classes

thereof:

(A) A bank or trust company (acting in an individual or

fiduciary capacity).

(B) A savings association.

(C) An insurance company.

(D) An investment company subject to regulation under the

Investment Company Act of 1940 (15 U.S.C. 80a-1 et seq.).

(E) A commodity pool formed or operated by a person subject to

regulation under this chapter.

(F) A corporation, partnership, proprietorship, organization,

trust, or other business entity with a net worth exceeding

$1,000,000 or total assets exceeding $5,000,000, or the

obligations of which under the agreement, contract or transaction

are guaranteed or otherwise supported by a letter of credit or

keepwell, support, or other agreement by any such entity or by an

entity referred to in subparagraph (A), (B), (C), (H), (I), or

(K) of this paragraph.

(G) An employee benefit plan with assets exceeding $1,000,000,

or whose investment decisions are made by a bank, trust company,

insurance company, investment adviser registered under the

Investment Advisers Act of 1940 (15 U.S.C. 80b-1 et seq.), or a

commodity trading advisor subject to regulation under this

chapter.

(H) Any governmental entity (including the United States, any

state, (FOOTNOTE 1) or any foreign government) or political

subdivision thereof, or any multinational or supranational entity

or any instrumentality, agency, or department of any of the

foregoing.

(FOOTNOTE 1) So in original. Probably should be capitalized.

(I) A broker-dealer subject to regulation under the Securities

Exchange Act of 1934 (15 U.S.C. 78a et seq.) acting on its own

behalf or on behalf of another appropriate person.

(J) A futures commission merchant, floor broker, or floor

trader subject to regulation under this chapter acting on its own

behalf or on behalf of another appropriate person.

(K) Such other persons that the Commission determines to be

appropriate in light of their financial or other qualifications,

or the applicability of appropriate regulatory protections.

(4) During the pendency of an application for an order granting

an exemption under paragraph (1), the Commission may limit the

public availability of any information received from the applicant

if the applicant submits a written request to limit disclosure

contemporaneous with the application, and the Commission determines

that -

(A) the information sought to be restricted constitutes a trade

secret; or

(B) public disclosure of the information would result in

material competitive harm to the applicant.

(5) The Commission may -

(A) promptly following October 28, 1992, or upon application by

any person, exercise the exemptive authority granted under

paragraph (1) with respect to classes of hybrid instruments that

are predominantly securities or depository instruments, to the

extent that such instruments may be regarded as subject to the

provisions of this chapter; or

(B) promptly following October 28, 1992, or upon application by

any person, exercise the exemptive authority granted under

paragraph (1) effective as of October 23, 1974, with respect to

classes of swap agreements (as defined in section 101 of title

11) that are not part of a fungible class of agreements that are

standardized as to their material economic terms, to the extent

that such agreements may be regarded as subject to the provisions

of this chapter.

Any exemption pursuant to this paragraph shall be subject to such

terms and conditions as the Commission shall determine to be

appropriate pursuant to paragraph (1).

(d) Effect of exemption on investigative authority of Commission

The granting of an exemption under this section shall not affect

the authority of the Commission under any other provision of this

chapter to conduct investigations in order to determine compliance

with the requirements or conditions of such exemption or to take

enforcement action for any violation of any provision of this

chapter or any rule, regulation or order thereunder caused by the

failure to comply with or satisfy such conditions or requirements.

-SOURCE-

(Sept. 21, 1922, ch. 369, Sec. 4, 42 Stat. 999; June 15, 1936, ch.

545, Sec. 2, 4, 49 Stat. 1491, 1492; Pub. L. 93-463, title I, Sec.

103(a), (f), Oct. 23, 1974, 88 Stat. 1392; Pub. L. 97-444, title

II, Sec. 204, Jan. 11, 1983, 96 Stat. 2299; Pub. L. 102-546, title

V, Sec. 502(a), Oct. 28, 1992, 106 Stat. 3629; Pub. L. 106-554,

Sec. 1(a)(5) (title I, Sec. 123(a)(3)), Dec. 21, 2000, 114 Stat.

2763, 2763A-406.)

-REFTEXT-

REFERENCES IN TEXT

The Investment Company Act of 1940, referred to in subsec.

(c)(3)(D), is title I of act Aug. 22, 1940, ch. 686, 54 Stat. 789,

as amended, which is classified generally to subchapter I (Sec.

80a-1 et seq.) of chapter 2D of Title 15, Commerce and Trade. For

complete classification of this Act to the Code, see section 80a-51

of Title 15 and Tables.

The Investment Advisers Act of 1940, referred to in subsec.

(c)(3)(G), is title II of act Aug. 22, 1940, ch. 686, 54 Stat. 847,

as amended, which is classified generally to subchapter II (Sec.

80b-1 et seq.) of chapter 2D of Title 15. For complete

classification of this Act to the Code, see section 80b-20 of Title

15 and Tables.

The Securities Exchange Act of 1934, referred to in subsec.

(c)(3)(I), is act June 6, 1934, ch. 404, 48 Stat. 881, as amended,

which is classified principally to chapter 2B (Sec. 78a et seq.) of

Title 15. For complete classification of this Act to the Code, see

section 78a of Title 15 and Tables.

-MISC2-

AMENDMENTS

2000 - Subsec. (a)(1). Pub. L. 106-554, Sec. 1(a)(5) (title I,

Sec. 123(a)(3)(A)(i)), substituted ''designated or registered by

the Commission as a contract market or derivatives transaction

execution facility for'' for ''designated by the Commission as a

'contract market' for''.

Subsec. (a)(2). Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec.

123(a)(3)(A)(ii)), struck out ''member of such'' after ''by or

through a''.

Subsec. (a)(3). Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec.

123(a)(3)(A)(iii)), inserted ''or derivatives transaction execution

facility'' after ''contract market''.

Subsec. (c)(1). Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec.

123(a)(3)(B)(i)), substituted ''designated or registered as a

contract market or derivatives transaction execution facility'' for

''designated as a contract market'' and ''subparagraphs (C)(ii) and

(D) of section 2(a)(1) of this title, except that the Commission

and the Securities and Exchange Commission may by rule, regulation,

or order jointly exclude any agreement, contract, or transaction

from section 2(a)(1)(D) of this title'' for ''section 2a of this

title''.

Subsec. (c)(2)(B)(ii). Pub. L. 106-554, Sec. 1(a)(5) (title I,

Sec. 123(a)(3)(B)(ii)), inserted ''or derivatives transaction

execution facility'' after ''contract market''.

1992 - Subsec. (a). Pub. L. 102-546, Sec. 502(a)(1), substituted

''Unless exempted by the Commission pursuant to subsection (c) of

this section, it shall be unlawful'' for ''It shall be unlawful''.

Subsecs. (c), (d). Pub. L. 102-546, Sec. 502(a)(2), added

subsecs. (c) and (d).

1983 - Pub. L. 97-444 amended section generally, combining into

subsec. (a) existing provisions of this section together with

provisions formerly contained in section 6h(1) of this title,

relating to the conduct of offices or places of business anywhere

in the United States or its territories that are used for dealing

in commodities for future delivery unless such dealings are

executed or consummated by or through a member of a contract

market, and adding subsec. (b).

1974 - Pub. L. 93-463 substituted ''Commission'' for ''Secretary

of Agriculture'' and ''United States Department of Agriculture''.

1936 - Act June 15, 1936, Sec. 2, substituted ''commodity'' for

''grain'' wherever appearing.

Act June 15, 1936, Sec. 4, struck out par. (a) and combined par.

(b) with first par.

EFFECTIVE DATE OF 1983 AMENDMENT

Amendment by Pub. L. 97-444 effective Jan. 11, 1983, see section

239 of Pub. L. 97-444, set out as a note under section 2 of this

title.

EFFECTIVE DATE OF 1974 AMENDMENT

For effective date of amendment by Pub. L. 93-463, see section

418 of Pub. L. 93-463, set out as a note under section 2 of this

title.

EFFECTIVE DATE OF 1936 AMENDMENT

Amendment by act June 15, 1936, effective 90 days after June 15,

1936, see section 13 of that act, set out as a note under section 1

of this title.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 2, 7a, 7a-1, 13, 16, 19

of this title; title 12 section 4421.

-CITE-

7 USC Sec. 6a 01/06/03

-EXPCITE-

TITLE 7 - AGRICULTURE

CHAPTER 1 - COMMODITY EXCHANGES

-HEAD-

Sec. 6a. Excessive speculation

-STATUTE-

(a) Burden on interstate commerce; trading or position limits

Excessive speculation in any commodity under contracts of sale of

such commodity for future delivery made on or subject to the rules

of contract markets or derivatives transaction execution facilities

causing sudden or unreasonable fluctuations or unwarranted changes

in the price of such commodity, is an undue and unnecessary burden

on interstate commerce in such commodity. For the purpose of

diminishing, eliminating, or preventing such burden, the Commission

shall, from time to time, after due notice and opportunity for

hearing, by rule, regulation, or order, proclaim and fix such

limits on the amounts of trading which may be done or positions

which may be held by any person under contracts of sale of such

commodity for future delivery on or subject to the rules of any

contract market or derivatives transaction execution facility as

the Commission finds are necessary to diminish, eliminate, or

prevent such burden. In determining whether any person has

exceeded such limits, the positions held and trading done by any

persons directly or indirectly controlled by such person shall be

included with the positions held and trading done by such person;

and further, such limits upon positions and trading shall apply to

positions held by, and trading done by, two or more persons acting

pursuant to an expressed or implied agreement or understanding, the

same as if the positions were held by, or the trading were done by,

a single person. Nothing in this section shall be construed to

prohibit the Commission from fixing different trading or position

limits for different commodities, markets, futures, or delivery

months, or for different number of days remaining until the last

day of trading in a contract, or different trading limits for

buying and selling operations, or different limits for the purposes

of paragraphs (1) and (2) of subsection (b) of this section, or

from exempting transactions normally known to the trade as

''spreads'' or ''straddles'' or ''arbitrage'' or from fixing limits

applying to such transactions or positions different from limits

fixed for other transactions or positions. The word ''arbitrage''

in domestic markets shall be defined to mean the same as ''spread''

or ''straddle''. The Commission is authorized to define the term

''international arbitrage''.

(b) Prohibition on trading or positions in excess of limits fixed

by Commission

The Commission shall, in such rule, regulation, or order, fix a

reasonable time (not to exceed ten days) after the promulgation of

the rule, regulation, or order; after which, and until such rule,

regulation, or order is suspended, modified, or revoked, it shall

be unlawful for any person -

(1) directly or indirectly to buy or sell, or agree to buy or

sell, under contracts of sale of such commodity for future

delivery on or subject to the rules of the contract market or

markets, or derivatives transaction execution facility or

facilities, to which the rule, regulation, or order applies, any

amount of such commodity during any one business day in excess of

any trading limit fixed for one business day by the Commission in

such rule, regulation, or order for or with respect to such

commodity; or

(2) directly or indirectly to hold or control a net long or a

net short position in any commodity for future delivery on or

subject to the rules of any contract market or derivatives

transaction execution facility in excess of any position limit

fixed by the Commission for or with respect to such commodity:

Provided, That such position limit shall not apply to a position

acquired in good faith prior to the effective date of such rule,

regulation, or order.

(c) Applicability to bona fide hedging transactions or positions

No rule, regulation, or order issued under subsection (a) of this

section shall apply to transactions or positions which are shown to

be bona fide hedging transactions or positions as such terms shall

be defined by the Commission by rule, regulation, or order

consistent with the purposes of this chapter. Such terms may be

defined to permit producers, purchasers, sellers, middlemen, and

users of a commodity or a product derived therefrom to hedge their

legitimate anticipated business needs for that period of time into

the future for which an appropriate futures contract is open and

available on an exchange. To determine the adequacy of this

chapter and the powers of the Commission acting thereunder to

prevent unwarranted price pressures by large hedgers, the

Commission shall monitor and analyze the trading activities of the

largest hedgers, as determined by the Commission, operating in the

cattle, hog, or pork belly markets and shall report its findings

and recommendations to the Senate Committee on Agriculture,

Nutrition, and Forestry and the House Committee on Agriculture in

its annual reports for at least two years following January 11,

1983.

(d) Persons subject to regulation; applicability to transactions

made by or on behalf of United States

This section shall apply to a person that is registered as a

futures commission merchant, an introducing broker, or a floor

broker under authority of this chapter only to the extent that

transactions made by such person are made on behalf of or for the

account or benefit of such person. This section shall not apply to

transactions made by, or on behalf of, or at the direction of, the

United States, or a duly authorized agency thereof.

(e) Rulemaking power and penalties for violation

Nothing in this section shall prohibit or impair the adoption by

any contract market, derivatives transaction execution facility, or

by any other board of trade licensed, designated, or registered by

the Commission of any bylaw, rule, regulation, or resolution fixing

limits on the amount of trading which may be done or positions

which may be held by any person under contracts of sale of any

commodity for future delivery traded on or subject to the rules of

such contract market or derivatives transaction execution facility,

or under options on such contracts or commodities traded on or

subject to the rules of such contract market, derivatives

transaction execution facility, or such board of trade: Provided,

That if the Commission shall have fixed limits under this section

for any contract or under section 6c of this title for any

commodity option, then the limits fixed by the bylaws, rules,

regulations, and resolutions adopted by such contract market,

derivatives transaction execution facility, or such board of trade

shall not be higher than the limits fixed by the Commission. It

shall be a violation of this chapter for any person to violate any

bylaw, rule, regulation, or resolution of any contract market,

derivatives transaction execution facility, or other board of trade

licensed, designated, or registered by the Commission fixing limits

on the amount of trading which may be done or positions which may

be held by any person under contracts of sale of any commodity for

future delivery or under options on such contracts or commodities,

if such bylaw, rule, regulation, or resolution has been approved by

the Commission: Provided, That the provisions of section 13(c)

(FOOTNOTE 1) of this title shall apply only to those who knowingly

violate such limits.

(FOOTNOTE 1) See References in Text note below.

-SOURCE-

(Sept. 21, 1922, ch. 369, Sec. 4a, as added June 15, 1936, ch. 545,

Sec. 5, 49 Stat. 1492; amended July 24, 1956, ch. 690, Sec. 1, 70

Stat. 630; Pub. L. 90-258, Sec. 2-4, Feb. 19, 1968, 82 Stat. 26,

27; Pub. L. 93-463, title IV, Sec. 403, 404, Oct. 23, 1974, 88

Stat. 1413; Pub. L. 94-16, Sec. 4, Apr. 16, 1975, 89 Stat. 78; Pub.

L. 97-444, title II, Sec. 205, Jan. 11, 1983, 96 Stat. 2299; Pub.

L. 102-546, title IV, Sec. 402(1)(A), (2), Oct. 28, 1992, 106 Stat.

3624; Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec. 123(a)(4)), Dec.

21, 2000, 114 Stat. 2763, 2763A-407.)

-REFTEXT-

REFERENCES IN TEXT

Section 13(c) of this title, referred to in subsec. (e), was

struck out and subsec. (d) of section 13 was redesignated (c) by

Pub. L. 102-546, title II, Sec. 212(a)(1)(A), (B), Oct. 28, 1992,

106 Stat. 3608.

-MISC2-

AMENDMENTS

2000 - Subsec. (a). Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec.

123(a)(4)(A)), inserted ''or derivatives transaction execution

facilities'' after ''contract markets'' in first sentence and ''or

derivatives transaction execution facility'' after ''contract

market'' in second sentence.

Subsec. (b)(1). Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec.

123(a)(4)(B)(i)), inserted '', or derivatives transaction execution

facility or facilities,'' after ''markets''.

Subsec. (b)(2). Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec.

123(a)(4)(B)(ii)), inserted ''or derivatives transaction execution

facility'' after ''contract market''.

Subsec. (e). Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec.

123(a)(4)(C)), substituted ''contract market, derivatives

transaction execution facility, or'' for ''contract market or''

wherever appearing, ''licensed, designated, or registered'' for

''licensed or designated'' in two places, and ''contract market or

derivatives transaction execution facility, or'' for ''contract

market, or''.

1992 - Subsec. (a). Pub. L. 102-546, Sec. 402(1)(A), (2)(A), (C),

redesignated par. (1) as subsec. (a), substituted ''Commission''

for ''commission'' wherever appearing except in last sentence, and

substituted ''paragraphs (1) and (2) of subsection (b) of this

section'' for ''subparagraphs (A) and (B) of paragraph (2)''.

Subsec. (b). Pub. L. 102-546, Sec. 402(1)(A), (2)(C), (D),

redesignated par. (2) as subsec. (b) and subpars. (A) and (B) as

pars. (1) and (2), respectively, and substituted ''Commission'' for

''commission'' wherever appearing.

Subsec. (c). Pub. L. 102-546, Sec. 402(2)(B), (C), redesignated

par. (3) as subsec. (c) and substituted ''subsection (a)'' for

''paragraph (1)''.

Subsecs. (d), (e). Pub. L. 102-546, Sec. 402(2)(C), redesignated

pars. (4) and (5) as subsecs. (d) and (e), respectively.

1983 - Par. (1). Pub. L. 97-444, Sec. 205(1), (2), substituted

''by rule, regulation, or order, proclaim'' for ''by order,

proclaim'' and inserted ''or for different number of days remaining

until the last day of trading in a contract,'' after ''delivery

months''.

Par. (2). Pub. L. 97-444, Sec. 205(1), (3), substituted ''after

the promulgation of the rule, regulation, or order'' for ''after

the order's promulgation'' in provisions before subpar. (A) and

substituted ''rule, regulation, or order'' for ''order'' in

provisions before subpar. (A) and in subpars. (A) and (B).

Par. (3). Pub. L. 97-444, Sec. 205(4), substituted ''No rule,

regulation, or order issued under paragraph (1) of this section

shall apply to transactions or positions which are shown to be bona

fide hedging transactions or positions as such terms shall be

defined by the Commission by rule, regulation, or order consistent

with the purposes of this chapter'' for ''No order issued under

paragraph (1) of this section shall apply to transactions or

positions which are shown to be bona fide hedging transactions or

positions as such terms shall be defined by the Commission within

one hundred and eighty days after the effective date of the

Commodity Futures Trading Commission Act of 1974 by order

consistent with the purposes of this chapter'' and inserted ''Such

terms may be defined to permit producers, purchasers, sellers,

middlemen, and users of a commodity or a product derived therefrom

to hedge their legitimate anticipated business needs for that

period of time into the future for which an appropriate futures

contract is open and available on an exchange. To determine the

adequacy of this chapter and the powers of the Commission acting

thereunder to prevent unwarranted price pressures by large hedgers,

the Commission shall monitor and analyze the trading activities of

the largest hedgers, as determined by the Commission, operating in

the cattle, hog, or pork belly markets and shall report its

findings and recommendations to the Senate Committee on

Agriculture, Nutrition, and Forestry and the House Committee on

Agriculture in its annual reports for at least two years following

January 11, 1983.''

Par. (4). Pub. L. 97-444, Sec. 205(5), substituted ''a futures

commission merchant, an introducing broker, or a floor broker'' for

''a futures commission merchant or as floor broker''.

Par. (5). Pub. L. 97-444, Sec. 205(6), added par. (5).

1975 - Par. (3). Pub. L. 94-16 substituted ''one hundred and

eighty days'' for ''ninety days''.

1974 - Par. (1). Pub. L. 93-463, Sec. 403, inserted ''or

'arbitrage' '' after ''or 'straddles' '', inserted definition of

''arbitrage'', and authorized Commission to define ''international

arbitrage''.

Par. (3). Pub. L. 93-463, Sec. 404, directed Commission to define

''bona fide hedging transactions or positions'' within 90 days

after the effective date of the Commodity Futures Trading

Commission Act of 1974 and struck out provisions which enumerated

the factors to be taken into account in determining whether a

hedging transaction or position was a bona fide transaction or

position.

1968 - Par. (1). Pub. L. 90-258, Sec. 2, substituted in second

sentence ''amounts of trading'' for ''amount of trading'', inserted

''which may be done or positions which may be held by any person''

before ''under contracts of sale'', and struck out ''which may be

done'' after ''rules of any contract market'', inserted third

sentence providing for inclusion of controlled positions and

trading in determining whether prescribed position or trading

limits have been exceeded and for application of such position and

trading limits to activities of two or more persons acting pursuant

to agreement or understanding as if the activities of a single

person, and included in fourth, formerly third, sentence references

to position limits and to positions, substituted ''normally'' for

''commonly'', and struck out ''trading'' from ''from fixing trading

limits'' and ''from trading limits''.

Par. (2)(B). Pub. L. 90-258, Sec. 3, substituted prohibition

against holding of net long or net short positions in excess of any

position limit fixed by the Commission for former prohibition of

purchases or sales which result in net long or net short positions

in excess of trading limits fixed by the Commission and provided

that the position limit shall not apply to a position acquired in

good faith prior to the effective date of the order.

Par. (3). Pub. L. 90-258, Sec. 4, included references to

positions, made hedging applicable to short and long positions,

substituted ''contract market'' for ''board of trade'', and

required the activities to be those of the same person to

constitute hedging.

1956 - Par. (3)(C). Act July 24, 1956, added subpar. (C).

EFFECTIVE DATE OF 1983 AMENDMENT

Amendment by Pub. L. 97-444 effective Jan. 11, 1983, see section

239 of Pub. L. 97-444, set out as a note under section 2 of this

title.

EFFECTIVE DATE OF 1974 AMENDMENT

Section 404 of Pub. L. 93-463 provided that the amendment of par.

(3) which struck out provisions that enumerated the factors to be

taken into account in determining whether a hedging transaction or

position was a bona fide transaction or position, was effective

immediately upon the enactment of Pub. L. 93-463, which was

approved Oct. 23, 1974.

Amendment by Pub. L. 93-463 of par. (1) and that part of par. (3)

directing the Commission to define ''bona fide hedging transactions

or positions'' effective so as to allow implementation of all

changes effected by this amendment to be carried out after Oct. 23,

1974, and before as well as after the 180th day thereafter, see

section 418 of Pub. L. 93-463, set out as a note under section 2 of

this title.

EFFECTIVE DATE OF 1968 AMENDMENT

Amendment by Pub. L. 90-258 effective 120 days after Feb. 19,

1968, see section 28 of Pub. L. 90-258, set out as a note under

section 2 of this title.

EFFECTIVE DATE OF 1956 AMENDMENT

Section 2 of act July 24, 1956, provided that: ''This Act

(amending this section) shall take effect sixty days after the date

of its enactment (July 24, 1956).''

EFFECTIVE DATE

For effective date of section, see section 13 of act June 15,

1936, set out as an Effective Date of 1936 Amendment note under

section 1 of this title.

REGULATIONS DEFINING BONA FIDE HEDGING TRANSACTIONS AND POSITIONS

Section 404 of Pub. L. 93-463 provided in part: ''That

notwithstanding any other provision of law, the Secretary of

Agriculture, immediately upon the enactment of the Commodity

Futures Trading Commission Act of 1974 (which was approved on Oct.

23, 1974), is authorized and directed to promulgate regulations

defining bona fide hedging transactions and positions: And provided

further, That until the Secretary issues such regulations defining

bona fide hedging transactions and positions and such regulations

are in full force and effect, such terms shall continue to be

defined as set forth in the Commodity Exchange Act (par. (3) of

this section) prior to its amendment by the Commodity Futures

Trading Commission Act of 1974 (Pub. L. 93-463).''

-CITE-

7 USC Sec. 6b 01/06/03

-EXPCITE-

TITLE 7 - AGRICULTURE

CHAPTER 1 - COMMODITY EXCHANGES

-HEAD-

Sec. 6b. Fraud, false reporting, or deception prohibited

-STATUTE-

(a) Contracts designed to defraud or mislead; bucketing orders

It shall be unlawful (1) for any member of a registered entity,

or for any correspondent, agent, or employee of any member, in or

in connection with any order to make, or the making of, any

contract of sale of any commodity in interstate commerce, made, or

to be made, on or subject to the rules of any registered entity,

for or on behalf of any other person, or (2) for any person, in or

in connection with any order to make, or the making of, any

contract of sale of any commodity for future delivery made, or to

be made, for or on behalf of any other person if such contract for

future delivery is or may be used for (A) hedging any transaction

in interstate commerce in such commodity or the products or

byproducts thereof, or (B) determining the price basis of any

transaction in interstate commerce in such commodity, or (C)

delivering any such commodity sold, shipped, or received in

interstate commerce for the fulfillment thereof -

(i) to cheat or defraud or attempt to cheat or defraud such

other person;

(ii) willfully to make or cause to be made to such other person

any false report or statement thereof, or willfully to enter or

cause to be entered for such person any false record thereof;

(iii) willfully to deceive or attempt to deceive such other

person by any means whatsoever in regard to any such order or

contract or the disposition or execution of any such order or

contract, or in regard to any act of agency performed with

respect to such order or contract for such person; or

(iv) to bucket such order, or to fill such order by offset

against the order or orders of any other person, or willfully and

knowingly and without the prior consent of such person to become

the buyer in respect to any selling order of such person, or

become the seller in respect to any buying order of such person.

(b) Buying and selling orders for commodity

Nothing in this section or in any other section of this chapter

shall be construed to prevent a futures commission merchant or

floor broker who shall have in hand, simultaneously, buying and

selling orders at the market for different principals for a like

quantity of a commodity for future delivery in the same month

executing such buying and selling orders at the market price:

Provided, That any such execution shall take place on the floor of

the exchange where such orders are to be executed at public outcry

across the ring and shall be duly reported, recorded, and cleared

in the same manner as other orders executed on such exchange: And

provided further, That such transactions shall be made in

accordance with such rules and regulations as the Commission may

promulgate regarding the manner of the execution of such

transactions.

(c) Inapplicability to transactions on foreign exchanges

Nothing in this section shall apply to any activity that occurs

on a board of trade, exchange, or market, or clearinghouse for such

board of trade, exchange, or market, located outside the United

States, or territories or possessions of the United States,

involving any contract of sale of a commodity for future delivery

that is made, or to be made, on or subject to the rules of such

board of trade, exchange, or market.

-SOURCE-

(Sept. 21, 1922, ch. 369, Sec. 4b, as added June 15, 1936, ch. 545,

Sec. 5, 49 Stat. 1493; amended Pub. L. 90-258, Sec. 5, Feb. 19,

1968, 82 Stat. 27; Pub. L. 93-463, title IV, Sec. 405, Oct. 23,

1974, 88 Stat. 1413; Pub. L. 99-641, title I, Sec. 101, Nov. 10,

1986, 100 Stat. 3557; Pub. L. 102-546, title IV, Sec. 402(3), Oct.

28, 1992, 106 Stat. 3624; Pub. L. 106-554, Sec. 1(a)(5) (title I,

Sec. 123(a)(5)), Dec. 21, 2000, 114 Stat. 2763, 2763A-407.)

-MISC1-

AMENDMENTS

2000 - Subsec. (a)(1). Pub. L. 106-554 substituted ''registered

entity'' for ''contract market'' in two places.

1992 - Pub. L. 102-546 designated first par. as subsec. (a),

redesignated cls. (a) to (c) as subpars. (A) to (C), respectively,

and subpars. (A) to (D) as cls. (i) to (iv), respectively, and

designated second and third undesignated pars. as subsecs. (b) and

(c), respectively.

1986 - Pub. L. 99-641 struck out ''on or subject to the rules of

any contract market,'' after ''to be made'' in cl. (2) of first

par. and added concluding paragraph that this section not apply to

activity on board of trade, exchange, market, or clearinghouse

located outside United States involving contract of sale of

commodity for future delivery.

1974 - Pub. L. 93-463 substituted ''a commodity'' for ''cotton''

in provisions following subpar. (D) and inserted requirement that

execution of buying and selling orders for commodities held

simultaneously by the same merchant or broker be carried out in

accordance with such rules and regulations as the Commission may

promulgate regarding the manner of the execution of such

transactions.

1968 - Pub. L. 90-258 relocated cl. (1) designation in first par.

to follow ''unlawful'' rather than to precede ''any contract of

sale'', provided in such cl. (1) for orders to make or making of

contracts of sale ''made, or to be made on or subject to the rules

of any contract market, for or on behalf of any other person'' and

in cl. (2) ''for any person, in or in connection with any order to

make, or the making of,'' any contract of sale of any commodity for

future delivery for or on behalf of any ''other'' person; and

inserted ''other'' before ''person'' in subpar. (A) and in subpars.

(B) and (C) where appearing for first time, respectively.

EFFECTIVE DATE OF 1974 AMENDMENT

For effective date of amendment by Pub. L. 93-463, see section

418 of Pub. L. 93-463, set out as a note under section 2 of this

title.

EFFECTIVE DATE OF 1968 AMENDMENT

Amendment by Pub. L. 90-258 effective 120 days after Feb. 19,

1968, see section 28 of Pub. L. 90-258, set out as a note under

section 2 of this title.

EFFECTIVE DATE

For effective date of section, see section 13 of act June 15,

1936, set out as an Effective Date of 1936 Amendment note under

section 1 of this title.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 2, 7a-3, 13 of this

title.

-CITE-

7 USC Sec. 6c 01/06/03

-EXPCITE-

TITLE 7 - AGRICULTURE

CHAPTER 1 - COMMODITY EXCHANGES

-HEAD-

Sec. 6c. Prohibited transactions

-STATUTE-

(a) In general

(1) Prohibition

It shall be unlawful for any person to offer to enter into,

enter into, or confirm the execution of a transaction described

in paragraph (2) involving the purchase or sale of any commodity

for future delivery (or any option on such a transaction or

option on a commodity) if the transaction is used or may be used

to -

(A) hedge any transaction in interstate commerce in the

commodity or the product or byproduct of the commodity;

(B) determine the price basis of any such transaction in

interstate commerce in the commodity; or

(C) deliver any such commodity sold, shipped, or received in

interstate commerce for the execution of the transaction.

(2) Transaction

A transaction referred to in paragraph (1) is a transaction

that -

(A)(i) is, of the character of, or is commonly known to the

trade as, a ''wash sale'' or ''accommodation trade''; or

(ii) is a fictitious sale; or

(B) is used to cause any price to be reported, registered, or

recorded that is not a true and bona fide price.

(b) Regulated option trading

No person shall offer to enter into, enter into or confirm the

execution of, any transaction involving any commodity regulated

under this chapter which is of the character of, or is commonly

known to the trade as, an ''option'', ''privilege'', ''indemnity'',

''bid'', ''offer'', ''put'', ''call'', ''advance guaranty'', or

''decline guaranty'', contrary to any rule, regulation, or order of

the Commission prohibiting any such transaction or allowing any

such transaction under such terms and conditions as the Commission

shall prescribe. Any such order, rule, or regulation may be made

only after notice and opportunity for hearing, and the Commission

may set different terms and conditions for different markets.

(c) Regulations for elimination of pilot status of commodity option

transactions; terms and conditions of options trading

Not later than 90 days after November 10, 1986, the Commission

shall issue regulations -

(1) to eliminate the pilot status of its program for commodity

option transactions involving the trading of options on contract

markets, including any numerical restrictions on the number of

commodities or option contracts for which a contract market may

be designated; and

(2) otherwise to continue to permit the trading of such

commodity options under such terms and conditions that the

Commission from time to time may prescribe.

(d) Dealer options exempt from subsections (b) and (c)

prohibitions; requirements

Notwithstanding the provisions of subsection (c) of this section

-

(1) any person domiciled in the United States who on May 1,

1978, was in the business of granting an option on a physical

commodity, other than a commodity specifically set forth in

section 2(a) of this title prior to October 23, 1974, and was in

the business of buying, selling, producing, or otherwise using

that commodity, may continue to grant or issue options on that

commodity in accordance with Commission regulations in effect on

August 17, 1978, until thirty days after the effective date of

regulations issued by the Commission under clause (2) of this

subsection: Provided, That if such person files an application

for registration under the regulations issued under clause (2) of

this subsection within thirty days after the effective date of

such regulations, that person may continue to grant or issue

options pending a final determination by the Commission on the

application; and

(2) the Commission shall issue regulations that permit grantors

and futures commission merchants to offer to enter into, enter

into, or confirm the execution of, any commodity option

transaction on a physical commodity subject to the provisions of

subsection (b) of this section, other than a commodity

specifically set forth in section 2(a) of this title prior to

October 23, 1974, if -

(A) the grantor is a person domiciled in the United States

who -

(i) is in the business of buying, selling, producing, or

otherwise using the underlying commodity;

(ii) at all times has a net worth of at least $5,000,000

certified annually by an independent public accountant using

generally accepted accounting principles;

(iii) notifies the Commission and every futures commission

merchant offering the grantor's option if the grantor knows

or has reason to believe that the grantor's net worth has

fallen below $5,000,000;

(iv) segregates daily, exclusively for the benefit of

purchasers, money, exempted securities (within the meaning of

section 78c(a)(12) of title 15), commercial paper, bankers'

acceptances, commercial bills, or unencumbered warehouse

receipts, equal to an amount by which the value of each

transaction exceeds the amount received or to be received by

the grantor for such transaction;

(v) provides an identification number for each transaction;

and

(vi) provides confirmation of all orders for such

transactions executed, including the execution price and a

transaction identification number;

(B) the futures commission merchant is a person who -

(i) has evidence that the grantor meets the requirements

specified in subclause (A) of this clause;

(ii) treats and deals with all money, securities, or

property received from its customers as payment of the

purchase price in connection with such transactions, as

belonging to such customers until the expiration of the term

of the option, or, if the customer exercises the option,

until all rights of the customer under the commodity option

transaction have been fulfilled;

(iii) records each transaction in its customer's name by

the transaction identification number provided by the

grantor;

(iv) provides a disclosure statement to its customers,

under regulations of the Commission, that discloses, among

other things, all costs, including any markups or commissions

involved in such transaction; and

(C) the grantor and futures commission merchant comply with

any additional uniform and reasonable terms and conditions the

Commission may prescribe, including registration with the

Commission.

The Commission may permit persons not domiciled in the United

States to grant options under this subsection, other than options

on a commodity specifically set forth in section 2(a) of this title

prior to October 23, 1974, under such additional rules,

regulations, and orders as the Commission may adopt to provide

protection to purchasers that are substantially the equivalent of

those applicable to grantors domiciled in the United States. The

Commission may terminate the right of any person to grant, offer,

or sell options under this subsection only after a hearing,

including a finding that the continuation of such right is contrary

to the public interest: Provided, That pending the completion of

such termination proceedings, the Commission may suspend the right

to grant, offer, or sell options of any person whose activities in

the Commission's judgment present a substantial risk to the public

interest.

(e) Rules and regulations

The Commission may adopt rules and regulations, after public

notice and opportunity for a hearing on the record, prohibiting the

granting, issuance, or sale of options permitted under subsection

(d) of this section if the Commission determines that such options

are contrary to the public interest.

(f) Nonapplicability to foreign currency options

Nothing in this chapter shall be deemed to govern or in any way

be applicable to any transaction in an option on foreign currency

traded on a national securities exchange.

(g) Oral orders

The Commission shall adopt rules requiring that a contemporaneous

written record be made, as practicable, of all orders for execution

on the floor or subject to the rules of each contract market or

derivatives transaction execution facility placed by a member of

the contract market or derivatives transaction execution facility

who is present on the floor at the time such order is placed.

-SOURCE-

(Sept. 21, 1922, ch. 369, Sec. 4c, as added June 15, 1936, ch. 545,

Sec. 5, 49 Stat. 1494; amended Pub. L. 93-463, title I, Sec.

103(a), title IV, Sec. 402, Oct. 23, 1974, 88 Stat. 1392, 1412;

Pub. L. 95-405, Sec. 3, Sept. 30, 1978, 92 Stat. 867; Pub. L.

97-444, title I, Sec. 102, title II, Sec. 206, Jan. 11, 1983, 96

Stat. 2296, 2301; Pub. L. 99-641, title I, Sec. 102, Nov. 10, 1986,

100 Stat. 3557; Pub. L. 102-546, title II, Sec. 203(a), title IV,

Sec. 402(4), Oct. 28, 1992, 106 Stat. 3600, 3624; Pub. L. 106-554,

Sec. 1(a)(5) (title I, Sec. 109, 123(a)(6)), Dec. 21, 2000, 114

Stat. 2763, 2763A-383, 2763A-407.)

-MISC1-

AMENDMENTS

2000 - Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec. 109),

inserted section catchline.

Subsec. (a). Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec. 109),

added subsec. (a) and struck out former subsec. (a) which read as

follows: ''It shall be unlawful for any person to offer to enter

into, enter into, or confirm the execution of, any transaction

involving any commodity, which is or may be used for (1) hedging

any transaction in interstate commerce in such commodity or the

products or byproducts thereof, or (2) determining the price basis

of any such transaction in interstate commerce in such commodity,

or (3) delivering any such commodity sold, shipped, or received in

interstate commerce for the fulfillment thereof -

''(A) if such transaction is, is of the character of, or is

commonly known to the trade as, a 'wash sale,' 'cross trade,' or

'accommodation trade,' or is a fictitious sale; or

''(B) if such transaction is used to cause any price to be

reported, registered, or recorded which is not a true and bona

fide price.

Nothing in this section shall be construed to prevent the exchange

of futures in connection with cash commodity transactions or of

futures for cash commodities, or of transfer trades or office

trades if made in accordance with board of trade rules applying to

such transactions and such rules shall have been approved by the

Commission.''

Subsec. (g). Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec.

123(a)(6)), inserted ''or derivatives transaction execution

facility'' after ''contract market'' in two places.

1992 - Subsec. (d)(2). Pub. L. 102-546, Sec. 402(4), made

technical amendments to references to section 78c(a)(12) of title

15 in subpar. (A)(iv) and to section 2(a) of this title in

concluding provisions.

Subsec. (g). Pub. L. 102-546, Sec. 203(a), added subsec. (g).

1986 - Subsec. (c). Pub. L. 99-641, amended subsec. (c)

generally, substituting provisions relating to regulations to

eliminate pilot status of program for commodity option transactions

for provisions relating to commodity option transactions, pilot

program and permanent authorization, conditions ending prohibition,

and excepted persons.

1983 - Subsec. (a)(B), (C). Pub. L. 97-444, Sec. 206(1),

redesignated par. (C) as (B). Former par. (B), relating to

transactions involving any commodity specifically set forth in

section 2(a) of this title, prior to October 23, 1974, if such

transactions were of the character of, or were commonly known to

the trade as, an ''option'', ''privilege'', ''indemnity'', ''bid'',

''offer'', ''put'', ''call'', ''advance guaranty'', or ''decline

guaranty'', was struck out.

Subsec. (b). Pub. L. 97-444, Sec. 206(2), in revising section

generally, struck out references to any transaction subject to

provisions of subsection (a) of this section and to any commodity

not specifically set forth in section 2(a) of this title, prior to

October 23, 1974, and struck out ''within one year after the

effective date of the Commodity Futures Trading Commission Act of

1974 unless the Commission determines and notifies the Senate

Committee on Agriculture, Nutrition, and Forestry and the House

Committee on Agriculture that it is unable to prescribe such terms

and conditions within such period of time:'' after ''such terms and

conditions as the Commission shall prescribe''.

Subsec. (c). Pub. L. 97-444, Sec. 206(3), inserted ''With respect

to any commodity regulated under this chapter and specifically set

forth in section 2(a) of this title prior to October 23, 1974, the

Commission may, pursuant to the procedures set forth in this

subsection, establish a pilot program for a period not to exceed

three years to permit such commodity option transactions. The

Commission may authorize commodity option transactions during the

pilot program in as many commodities as will provide an adequate

test of the trading of such option transactions. After completion

of the pilot program, the Commission may authorize commodity option

transactions without regard to the restrictions in the pilot

program after the Commission transmits to the House Committee on

Agriculture and the Senate Committee on Agriculture, Nutrition, and

Forestry the documentation required under clause (1) of the first

sentence of this subsection and the expiration of thirty calendar

days of continuous session of Congress after the date of such

transmittal.''

Subsec. (d)(1). Pub. L. 97-444, Sec. 206(4)(A), inserted '',

other than a commodity specifically set forth in section 2(a) of

this title prior to October 23, 1974,'' after ''physical

commodity''.

Subsec. (d)(2). Pub. L. 97-444, Sec. 206(4)(B), inserted '',

other than a commodity specifically set forth in section 2(a) of

this title prior to October 23, 1974,'' after ''subsection (b) of

this section'' in provisions preceding subpar. (A).

Pub. L. 97-444, Sec. 206(4)(C), inserted '', other than options

on a commodity specifically set forth in section 2(a) of this title

prior to October 23, 1974,'' after ''The Commission may permit

persons not domiciled in the United States to grant options under

this subsection'' in provisions following par. (2).

Subsec. (f). Pub. L. 97-444, Sec. 102, added subsec. (f).

1978 - Subsec. (a). Pub. L. 95-405, Sec. 3(1), in provisions

following par. (C) substituted ''have been approved'' for ''not

have been disapproved''.

Subsec. (b). Pub. L. 95-405, Sec. 3(2), substituted ''Senate

Committee on Agriculture, Nutrition, and Forestry'' for ''Senate

Committee on Agriculture and Forestry''.

Subsecs. (c) to (e). Pub. L. 95-405, Sec. 3(3), added subsecs.

(c) to (e).

1974 - Subsec. (a). Pub. L. 93-463, Sec. 103(a), 402(a), (b),

(d), designated existing provisions as subsec. (a), in par. (B) of

subsec. (a) as so designated inserted ''if such transaction

involves any commodity specifically set forth in section 2(a) of

this title, prior to the enactment of the Commodity Futures Trading

Commission Act of 1974, and'' and ''option'', and in provisions

following par. (C), struck out provisions prohibiting a

construction of this section or section 6b of this title which

would impair any State law applicable to any transaction enumerated

or described in this section or section 6b of this title and

substituted ''Commission'' for ''Secretary of Agriculture''.

Subsec. (b). Pub. L. 93-463, Sec. 402(c), added subsec. (b).

EFFECTIVE DATE OF 1992 AMENDMENT

Section 203(b) of Pub. L. 102-546 provided that: ''The Commission

shall adopt the rules required by the amendment made under

subsection (a) (amending this section) within two hundred and

seventy days after the date of enactment of this Act (Oct. 28,

1992).''

EFFECTIVE DATE OF 1983 AMENDMENT

Amendment by Pub. L. 97-444 effective Jan. 11, 1983, see section

239 of Pub. L. 97-444, set out as a note under section 2 of this

title.

EFFECTIVE DATE OF 1978 AMENDMENT

Amendment by Pub. L. 95-405 effective Oct. 1, 1978, see section

28 of Pub. L. 95-405, set out as a note under section 2 of this

title.

EFFECTIVE DATE OF 1974 AMENDMENT

For effective date of amendment by Pub. L. 93-463, see section

418 of Pub. L. 93-463, set out as a note under section 2 of this

title.

EFFECTIVE DATE

For effective date of section, see section 13 of act June 15,

1936, set out as an Effective Date of 1936 Amendment note under

section 1 of this title.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 1a, 2, 6a, 6f, 6k, 7a-3,

7b-1, 12a, 13, 16, 19, 25 of this title; title 11 section 761.

-CITE-

7 USC Sec. 6d 01/06/03

-EXPCITE-

TITLE 7 - AGRICULTURE

CHAPTER 1 - COMMODITY EXCHANGES

-HEAD-

Sec. 6d. Dealing by unregistered futures commission merchants or

introducing brokers prohibited; duties in handling customer

receipts; rules to avoid duplicative regulations

-STATUTE-

(a) Registration requirements; duties of merchants in handling

customer receipts

It shall be unlawful for any person to engage as futures

commission merchant or introducing broker in soliciting orders or

accepting orders for the purchase or sale of any commodity for

future delivery, or involving any contracts of sale of any

commodity for future delivery, on or subject to the rules of any

contract market or derivatives transaction execution facility

unless -

(1) such person shall have registered, under this chapter, with

the Commission as such futures commission merchant or introducing

broker and such registration shall not have expired nor been

suspended nor revoked; and

(2) such person shall, if a futures commission merchant,

whether a member or nonmember of a contract market or derivatives

transaction execution facility, treat and deal with all money,

securities, and property received by such person to margin,

guarantee, or secure the trades or contracts of any customer of

such person, or accruing to such customer as the result of such

trades or contracts, as belonging to such customer. Such money,

securities, and property shall be separately accounted for and

shall not be commingled with the funds of such commission

merchant or be used to margin or guarantee the trades or

contracts, or to secure or extend the credit, of any customer or

person other than the one for whom the same are held: Provided,

however, That such money, securities, and property of the

customers of such futures commission merchant may, for

convenience, be commingled and deposited in the same account or

accounts with any bank or trust company or with the clearing

house organization of such contract market or derivatives

transaction execution facility, and that such share thereof as in

the normal course of business shall be necessary to margin,

guarantee, secure, transfer, adjust, or settle the contracts or

trades of such customers, or resulting market positions, with the

clearinghouse organization of such contract market or derivatives

transaction execution facility or with any member of such

contract market or derivatives transaction execution facility,

may be withdrawn and applied to such purposes, including the

payment of commissions, brokerage, interest, taxes, storage, and

other charges, lawfully accruing in connection with such

contracts and trades: Provided further, That in accordance with

such terms and conditions as the Commission may prescribe by

rule, regulation, or order, such money, securities, and property

of the customers of such futures commission merchant may be

commingled and deposited as provided in this section with any

other money, securities, and property received by such futures

commission merchant and required by the Commission to be

separately accounted for and treated and dealt with as belonging

to the customers of such futures commission merchant: Provided

further, That such money may be invested in obligations of the

United States, in general obligations of any State or of any

political subdivision thereof, and in obligations fully

guaranteed as to principal and interest by the United States,

such investments to be made in accordance with such rules and

regulations and subject to such conditions as the Commission may

prescribe.

(b) Duties of clearing agencies, depositories, and others in

handling customer receipts

It shall be unlawful for any person, including but not limited to

any clearing agency of a contract market or derivatives transaction

execution facility and any depository, that has received any money,

securities, or property for deposit in a separate account as

provided in paragraph (2) of this section, (FOOTNOTE 1) to hold,

dispose of, or use any such money, securities, or property as

belonging to the depositing futures commission merchant or any

person other than the customers of such futures commission

merchant.

(FOOTNOTE 1) So in original. Probably means subsection (a)(2)

of this section.

(c) Rules to avoid duplicative regulation of dual registrants

Consistent with this chapter, the Commission, in consultation

with the Securities and Exchange Commission, shall issue such

rules, regulations, or orders as are necessary to avoid duplicative

or conflicting regulations applicable to any futures commission

merchant registered with the Commission pursuant to section 6f(a)

of this title (except paragraph (2) thereof), that is also

registered with the Securities and Exchange Commission pursuant to

section 78o(b) of title 15 (except paragraph (11) thereof),

involving the application of -

(1) section 78h, section 78o(c)(3), and section 78q of title 15

and the rules and regulations thereunder related to the treatment

of customer funds, securities, or property, maintenance of books

and records, financial reporting or other financial

responsibility rules (as defined in section 78c(a)(40) of title

15), involving security futures products; and

(2) similar provisions of this chapter and the rules and

regulations thereunder involving security futures products.

-SOURCE-

(Sept. 21, 1922, ch. 369, Sec. 4d, as added June 15, 1936, ch. 545,

Sec. 5, 49 Stat. 1494; amended Pub. L. 90-258, Sec. 6, Feb. 19,

1968, 82 Stat. 27; Pub. L. 93-463, title I, Sec. 103(a), Oct. 23,

1974, 88 Stat. 1392; Pub. L. 95-405, Sec. 4, Sept. 30, 1978, 92

Stat. 869; Pub. L. 97-444, title II, Sec. 207, Jan. 11, 1983, 96

Stat. 2302; Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec. 123(a)(6),

title II, Sec. 251(f)), Dec. 21, 2000, 114 Stat. 2763, 2763A-407,

2763A-443.)

-MISC1-

AMENDMENTS

2000 - Pub. L. 106-554, Sec. 1(a)(5) (title II, Sec. 251(f)),

designated first undesignated par. as subsec. (a), designated

second undesignated par. as subsec. (b), and added subsec. (c).

Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec. 123(a)(6)), inserted

''or derivatives transaction execution facility'' after ''contract

market'' wherever appearing.

1983 - Pub. L. 97-444, Sec. 207(1), inserted reference to

introducing brokers in provisions preceding par. (1).

Par. (1). Pub. L. 97-444, Sec. 207(2), inserted ''or introducing

broker'' after ''futures commission merchant''.

Par. (2). Pub. L. 97-444, Sec. 207(3), inserted ''if a futures

commission merchant,'' after ''such person shall,''.

1978 - Pub. L. 95-405 in par. (2) inserted provisions authorizing

Commission to prescribe terms and conditions under which funds and

property commingled and deposited as permitted by par. (2) may be

commingled and deposited with other funds and property received by

a futures commission merchant and required by Commission to be

separately accounted for and treated as belonging to its customers.

1974 - Pub. L. 93-463 substituted ''Commission'' for ''Secretary

of Agriculture'' in pars. (1) and (2).

1968 - Pub. L. 90-258 struck out from second proviso of first

par. authorization for investment of customer funds in investment

securities of the kind national banking associations may buy or in

loans secured by negotiable warehouse receipts conveying or

securing title to readily marketable commodities to the extent of

the current loan value of such receipts and added second par.,

making it unlawful for any person, including a clearing agency of a

contract market or any depository, to treat customer funds as

belonging to any person other than the customer, respectively.

EFFECTIVE DATE OF 1983 AMENDMENT

Amendment by Pub. L. 97-444 effective 120 days after Jan. 11,

1983, or such earlier date as the Commission shall prescribe by

regulation, see section 239 of Pub. L. 97-444, set out as a note

under section 2 of this title.

EFFECTIVE DATE OF 1978 AMENDMENT

Amendment by Pub. L. 95-405 effective Oct. 1, 1978, see section

28 of Pub. L. 95-405, set out as a note under section 2 of this

title.

EFFECTIVE DATE OF 1974 AMENDMENT

For effective date of amendment by Pub. L. 93-463, see section

418 of Pub. L. 93-463, set out as a note under section 2 of this

title.

EFFECTIVE DATE OF 1968 AMENDMENT

Amendment by Pub. L. 90-258 effective 120 days after Feb. 19,

1968, see section 28 of Pub. L. 90-258, set out as a note under

section 2 of this title.

EFFECTIVE DATE

For effective date of section, see section 13 of act June 15,

1936, set out as an Effective Date of 1936 Amendment note under

section 1 of this title.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 6f, 6k, 7a-2, 21 of this

title.

-CITE-

7 USC Sec. 6e 01/06/03

-EXPCITE-

TITLE 7 - AGRICULTURE

CHAPTER 1 - COMMODITY EXCHANGES

-HEAD-

Sec. 6e. Dealings by unregistered floor trader or broker prohibited

-STATUTE-

It shall be unlawful for any person to act as floor trader in

executing purchases and sales, or as floor broker in executing any

orders for the purchase or sale, of any commodity for future

delivery, or involving any contracts of sale of any commodity for

future delivery, on or subject to the rules of any contract market

or derivatives transaction execution facility unless such person

shall have registered, under this chapter, with the Commission as

such floor trader or floor broker and such registration shall not

have expired nor been suspended nor revoked.

-SOURCE-

(Sept. 21, 1922, ch. 369, Sec. 4e, as added June 15, 1936, ch. 545,

Sec. 5, 49 Stat. 1495; amended Pub. L. 93-463, title I, Sec.

103(a), Oct. 23, 1974, 88 Stat. 1392; Pub. L. 102-546, title II,

Sec. 207(a), Oct. 28, 1992, 106 Stat. 3604; Pub. L. 106-554, Sec.

1(a)(5) (title I, Sec. 123(a)(6)), Dec. 21, 2000, 114 Stat. 2763,

2763A-407.)

-MISC1-

AMENDMENTS

2000 - Pub. L. 106-554 inserted ''or derivatives transaction

execution facility'' after ''contract market''.

1992 - Pub. L. 102-546 amended section generally. Prior to

amendment, section read as follows: ''It shall be unlawful for any

person to act as floor broker in executing any orders for the

purchase or sale of any commodity for future delivery, or involving

any contracts of sale of any commodity for future delivery, on or

subject to the rules of any contract market unless such person

shall have registered, under this chapter, with the Commission as

such floor broker and such registration shall not have expired nor

been suspended nor revoked.''

1974 - Pub. L. 93-463 substituted ''Commission'' for ''Secretary

of Agriculture''.

EFFECTIVE DATE OF 1992 AMENDMENT

Section 207(c) of Pub. L. 102-546 provided that: ''The amendments

made by this section (amending this section and sections 6f, 6g,

12a, and 13a-2 of this title) shall become effective one hundred

and eighty days after the date of enactment of this Act (Oct. 28,

1992), and the Commodity Futures Trading Commission shall issue any

regulations necessary to implement the amendments made by this

section no later than one hundred and eighty days after the date of

enactment of this Act.''

EFFECTIVE DATE OF 1974 AMENDMENT

For effective date of amendment by Pub. L. 93-463, see section

418 of Pub. L. 93-463, set out as a note under section 2 of this

title.

EFFECTIVE DATE

For effective date of section, see section 13 of act June 15,

1936, set out as an Effective Date of 1936 Amendment note under

section 1 of this title.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 6f, 6k of this title.

-CITE-

7 USC Sec. 6f 01/06/03

-EXPCITE-

TITLE 7 - AGRICULTURE

CHAPTER 1 - COMMODITY EXCHANGES

-HEAD-

Sec. 6f. Registration and financial requirements; risk assessment

-STATUTE-

(a) Registration of futures commission merchants, introducing

brokers, and floor brokers and traders

(1) Any person desiring to register as a futures commission

merchant, introducing broker, floor broker, or floor trader

hereunder shall be registered upon application to the Commission.

The application shall be made in such form and manner as prescribed

by the Commission, giving such information and facts as the

Commission may deem necessary concerning the business in which the

applicant is or will be engaged, including in the case of an

application of a futures commission merchant or an introducing

broker, the names and addresses of the managers of all branch

offices, and the names of such officers and partners, if a

partnership, and of such officers, directors, and stockholders, if

a corporation, as the Commission may direct. Such person, when

registered hereunder, shall likewise continue to report and furnish

to the Commission the above-mentioned information and such other

information pertaining to such person's business as the Commission

may require. Each registration shall expire on December 31 of the

year for which issued or at such other time, not less than one year

from the date of issuance, as the Commission may by rule,

regulation, or order prescribe, and shall be renewed upon

application therefor unless the registration has been suspended

(and the period of such suspension has not expired) or revoked

pursuant to the provisions of this chapter.

(2) Notwithstanding paragraph (1), and except as provided in

paragraph (3), any broker or dealer that is registered with the

Securities and Exchange Commission shall be registered as a futures

commission merchant or introducing broker, as applicable, if -

(A) the broker or dealer limits its solicitation of orders,

acceptance of orders, or execution of orders, or placing of

orders on behalf of others involving any contracts of sale of any

commodity for future delivery, on or subject to the rules of any

contract market or registered derivatives transaction execution

facility to security futures products;

(B) the broker or dealer files written notice with the

Commission in such form as the Commission, by rule, may prescribe

containing such information as the Commission, by rule, may

prescribe as necessary or appropriate in the public interest or

for the protection of investors;

(C) the registration of the broker or dealer is not suspended

pursuant to an order of the Securities and Exchange Commission;

and

(D) the broker or dealer is a member of a national securities

association registered pursuant to section 78o-3(a) of title 15.

The registration shall be effective contemporaneously with the

submission of notice, in written or electronic form, to the

Commission.

(3) A floor broker or floor trader shall be exempt from the

registration requirements of section 6e of this title and paragraph

(1) of this subsection if -

(A) the floor broker or floor trader is a broker or dealer

registered with the Securities and Exchange Commission;

(B) the floor broker or floor trader limits its solicitation of

orders, acceptance of orders, or execution of orders, or placing

of orders on behalf of others involving any contracts of sale of

any commodity for future delivery, on or subject to the rules of

any contract market to security futures products; and

(C) the registration of the floor broker or floor trader is not

suspended pursuant to an order of the Securities and Exchange

Commission.

(4)(A) A broker or dealer that is registered as a futures

commission merchant or introducing broker pursuant to paragraph

(2), or that is a floor broker or floor trader exempt from

registration pursuant to paragraph (3), shall be exempt from the

following provisions of this chapter and the rules thereunder:

(i) Subsections (b), (d), (e), and (g) of section 6c of this

title.

(ii) Sections 6d, 6e, and 6h of this title.

(iii) Subsections (b) and (c) of this section.

(iv) Section 6j of this title.

(v) Section 6k(1) of this title.

(vi) Section 6p (FOOTNOTE 1) of this title.

(FOOTNOTE 1) See References in Text note below.

(vii) Section 13a-2 of this title.

(viii) Subsections (d) and (g) of section 12 of this title.

(ix) Section 20 of this title.

(B)(i) Except as provided in clause (ii) of this subparagraph,

but notwithstanding any other provision of this chapter, the

Commission, by rule, regulation, or order, may conditionally or

unconditionally exempt any broker or dealer subject to the

registration requirement of paragraph (2), or any broker or dealer

exempt from registration pursuant to paragraph (3), from any

provision of this chapter or of any rule or regulation thereunder,

to the extent the exemption is necessary or appropriate in the

public interest and is consistent with the protection of investors.

(ii) The Commission shall, by rule or regulation, determine the

procedures under which an exemptive order under this section shall

be granted and may, in its sole discretion, decline to entertain

any application for an order of exemption under this section.

(C)(i) A broker or dealer that is registered as a futures

commission merchant or introducing broker pursuant to paragraph (2)

or an associated person thereof, or that is a floor broker or floor

trader exempt from registration pursuant to paragraph (3), shall

not be required to become a member of any futures association

registered under section 21 of this title.

(ii) No futures association registered under section 21 of this

title shall limit its members from carrying an account, accepting

an order, or transacting business with a broker or dealer that is

registered as a futures commission merchant or introducing broker

pursuant to paragraph (2) or an associated person thereof, or that

is a floor broker or floor trader exempt from registration pursuant

to paragraph (3).

(b) Financial requirements for futures commission merchants and

introducing brokers

Notwithstanding any other provisions of this chapter, no person

desiring to register as futures commission merchant or as

introducing broker shall be so registered unless he meets such

minimum financial requirements as the Commission may by regulation

prescribe as necessary to insure his meeting his obligation as a

registrant, and each person so registered shall at all times

continue to meet such prescribed minimum financial requirements:

Provided, That such minimum financial requirements will be

considered met if the applicant for registration or registrant is a

member of a contract market or derivatives transaction execution

facility and conforms to minimum financial standards and related

reporting requirements set by such contract market or derivatives

transaction execution facility in its bylaws, rules, regulations,

or resolutions and approved by the Commission as adequate to

effectuate the purposes of this subsection.

(c) Risk assessment for holding company systems

(1) As used in this subsection:

(i) The term ''affiliated person'' means any person directly or

indirectly controlling, controlled by, or under common control

with a futures commission merchant, as the Commission, by rule or

regulation, may determine will effectuate the purposes of this

subsection.

(ii) The term ''Federal banking agency'' shall have the same

meaning as the term ''appropriate Federal banking agency'' in

section 1813(q) of title 12.

(2)(A) Each registered futures commission merchant shall obtain

such information and make and keep such records as the Commission,

by rule or regulation, prescribes concerning the registered futures

commission merchant's policies, procedures, or systems for

monitoring and controlling financial and operational risks to it

resulting from the activities of any of its affiliated persons,

other than a natural person.

(B) The records required under subparagraph (A) shall describe,

in the aggregate, each of the futures and other financial

activities conducted by, and the customary sources of capital and

funding of, those of its affiliated persons whose business

activities are reasonably likely to have a material impact on the

financial or operational condition of the futures commission

merchant, including its adjusted net capital, its liquidity, or its

ability to conduct or finance its operations.

(C) The Commission, by rule or regulation, may require summary

reports of such information to be filed by the futures commission

merchant with the Commission no more frequently than quarterly.

(3)(A), (FOOTNOTE 2) If, as a result of adverse market conditions

or based on reports provided to the Commission pursuant to

paragraph (2) or other available information, the Commission

reasonably concludes that the Commission has concerns regarding the

financial or operational condition of any registered futures

commission merchant, the Commission may require the futures

commission merchant to make reports concerning the futures and

other financial activities of any of such person's affiliated

persons, other than a natural person, whose business activities are

reasonably likely to have a material impact on the financial or

operational condition of the futures commission merchant.

(FOOTNOTE 2) So in original. The comma probably should not

appear.

(B) The Commission, in requiring reports pursuant to this

paragraph, shall specify the information required, the period for

which it is required, the time and date on which the information

must be furnished, and whether the information is to be furnished

directly to the Commission or to a contract market or derivatives

transaction execution facility or other self-regulatory

organization with primary responsibility for examining the

registered futures commission merchant's financial and operational

condition.

(4)(A) in (FOOTNOTE 3) developing and implementing reporting

requirements pursuant to paragraph (2) with respect to affiliated

persons subject to examination by or reporting requirements of a

Federal banking agency, the Commission shall consult with and

consider the views of each such Federal banking agency. If a

Federal banking agency comments in writing on a proposed rule of

the Commission under this subsection that has been published for

comment, the Commission shall respond in writing to the written

comment before adopting the proposed rule. The Commission shall,

at the request of the Federal banking agency, publish the comment

and response in the Federal Register at the time of publishing the

adopted rule.

(FOOTNOTE 3) So in original. Probably should be capitalized.

(B)(i) Except as provided in clause (ii), a registered futures

commission merchant shall be considered to have compiled (FOOTNOTE

4) with a recordkeeping or reporting requirement adopted pursuant

to paragraph (2) concerning an affiliated person that is subject to

examination by, or reporting requirements of, a Federal banking

agency if the futures commission merchant utilizes for the

recordkeeping or reporting requirement copies of reports filed by

the affiliated person with the Federal banking agency pursuant to

section 161 of title 12, section 9 of the Federal Reserve Act (12

U.S.C. 321 et seq.), section 1817(a) of title 12, section 1467a(b)

of title 12, or section 1844 of title 12.

(FOOTNOTE 4) So in original. Probably should be ''complied''.

(ii) The Commission may, by rule adopted pursuant to paragraph

(2), require any futures commission merchant filing the reports

with the Commission to obtain, maintain, or report supplemental

information if the Commission makes an explicit finding that the

supplemental information is necessary to inform the Commission

regarding potential risks to the futures commission merchant.

Prior to requiring any such supplemental information, the

Commission shall first request the Federal banking agency to expand

its reporting requirements to include the information.

(5) Prior to making a request pursuant to paragraph (3) for

information with respect to an affiliated person that is subject to

examination by or reporting requirements of a Federal banking

agency, the Commission shall -

(A) notify the agency of the information required with respect

to the affiliated person; and

(B) consult with the agency to determine whether the

information required is available from the agency and for other

purposes, unless the Commission determines that any delay

resulting from the consultation would be inconsistent with

ensuring the financial and operational condition of the futures

commission merchant or the stability or integrity of the futures

markets.

(6) Nothing in this subsection shall be construed to permit the

Commission to require any futures commission merchant to obtain,

maintain, or furnish any examination report of any Federal banking

agency or any supervisory recommendations or analysis contained in

the report.

(7) No information provided to or obtained by the Commission from

any Federal banking agency pursuant to a request under paragraph

(5) regarding any affiliated person that is subject to examination

by or reporting requirements of a Federal banking agency may be

disclosed to any other person (other than as provided in section 12

of this title or section 12a(6) of this title), without the prior

written approval of the Federal banking agency.

(8) The Commission shall notify a Federal banking agency of any

concerns of the Commission regarding significant financial or

operational risks resulting from the activities of any futures

commission merchant to any affiliated person thereof that is

subject to examination by or reporting requirements of the Federal

banking agency.

(9) The Commission, by rule, regulation, or order, may exempt any

person or class of persons under such terms and conditions and for

such periods as the Commission shall provide in the rule,

regulation, or order, from this subsection and the rules and

regulations issued under this subsection. In granting the

exemption, the Commission shall consider, among other factors -

(A) whether information of the type required under this

subsection is available from a supervisory agency (as defined in

section 3401(7) of title 12), a State insurance commission or

similar State agency, the Securities and Exchange Commission, or

a similar foreign regulator;

(B) the primary business of any affiliated person;

(C) the nature and extent of domestic or foreign regulation of

the affiliated person's activities;

(D) the nature and extent of the registered futures commission

merchant's commodity futures and options activities; and

(E) with respect to the registered futures commission merchant

and its affiliated persons, on a consolidated basis, the amount

and proportion of assets devoted to, and revenues derived from

activities in the United States futures markets.

(10) Information required to be provided pursuant to this

subsection shall be subject to section 12 of this title. Except as

specifically provided in section 12 of this title and

notwithstanding any other provision of law, the Commission shall

not be compelled to disclose any information required to be

reported under this subsection, or any information supplied to the

Commission by any domestic or foreign regulatory agency that

relates to the financial or operational condition of any affiliated

person of a registered futures commission merchant.

(11) Nothing in paragraphs (1) through (10) shall be construed to

supersede or to limit in any way the authority or powers of the

Commission pursuant to any other provision of this chapter or

regulations issued under this chapter.

-SOURCE-

(Sept. 21, 1922, ch. 369, Sec. 4f, as added June 15, 1936, ch. 545,

Sec. 5, 49 Stat. 1495; amended Pub. L. 90-258, Sec. 7, Feb. 19,

1968, 82 Stat. 28; Pub. L. 93-463, title I, Sec. 103(a), Oct. 23,

1974, 88 Stat. 1392; Pub. L. 95-405, Sec. 5, Sept. 30, 1978, 92

Stat. 869; Pub. L. 97-444, title II, Sec. 208, Jan. 11, 1983, 96

Stat. 2302; Pub. L. 102-546, title II, Sec. 207(b)(1), 229, Oct.

28, 1992, 106 Stat. 3604, 3619; Pub. L. 106-554, Sec. 1(a)(5)

(title I, Sec. 123(a)(6), title II, Sec. 252(b), (c)), Dec. 21,

2000, 114 Stat. 2763, 2763A-407, 2763A-447.)

-REFTEXT-

REFERENCES IN TEXT

Section 6p of this title, referred to in subsec. (a)(4)(A)(vi),

was in the original ''Section 4p'' which was translated as meaning

the section 4p of the Commodity Exchange Act which is classified to

section 6p of this title, rather than to the section 4p of that Act

which is classified to section 6o-1 of this title, to reflect the

probable intent of Congress.

Section 9 of the Federal Reserve Act, referred to in subsec.

(c)(4)(B)(i), is section 9 of act Dec. 23, 1913, ch. 6, 38 Stat.

251, as amended, which is classified generally to subchapter VIII

(Sec. 321 et seq.) of chapter 3 of Title 12, Banks and Banking.

-MISC2-

AMENDMENTS

2000 - Subsec. (a). Pub. L. 106-554, Sec. 1(a)(5) (title II, Sec.

252(b)), designated existing provisions as par. (1) and added pars.

(2) and (3).

Subsec. (a)(4). Pub. L. 106-554, Sec. 1(a)(5) (title II, Sec.

252(c)), added par. (4).

Subsecs. (b), (c)(3)(B). Pub. L. 106-554, Sec. 1(a)(5) (title I,

Sec. 123(a)(6)), inserted ''or derivatives transaction execution

facility'' after ''contract market'' wherever appearing.

1992 - Subsec. (a). Pub. L. 102-546, Sec. 207(b)(1), 229(1),

redesignated par. (1) as subsec. (a) and substituted ''floor

broker, or floor trader'' for ''or floor broker''.

Subsec. (b). Pub. L. 102-546, Sec. 229(1), (2), redesignated par.

(2) as subsec. (b) and substituted ''this subsection'' for ''this

paragraph (2)''.

Subsec. (c). Pub. L. 102-546, Sec. 229(3), added subsec. (c).

1983 - Par. (1). Pub. L. 97-444, Sec. 208(1), made grammatical

changes, made registration provisions applicable to introducing

brokers, and substituted ''revoked pursuant to the provisions of

this chapter'' for ''revoked after notice and hearing as prescribed

in this chapter''.

Par. (2). Pub. L. 97-444, Sec. 208(2), made financial

requirements applicable to introducing brokers.

1978 - Par. (1). Pub. L. 95-405 substituted ''Each registration

shall expire on December 31 of the year for which issued or at such

other time, not less than one year from the date of issuance, as

the Commission may by rule, regulation, or order prescribe'' for

''All registrations shall expire on the 31st day of December of the

year for which issued''.

1974 - Pub. L. 93-463 substituted ''Commission'' for ''Secretary

of Agriculture''.

1968 - Par. (1). Pub. L. 90-258, Sec. 7(a), substituted ''this

chapter'' for ''section 6g of this title''.

Par. (2). Pub. L. 90-258, Sec. 7(b), substituted provisions that

prescribed financial requirements for registration as futures

commission merchant be met and continued at all times and that such

requirements will be considered met by membership in a contract

market and compliance with its minimum financial standards and

related reporting requirements for former provisions for display of

futures commission merchants' registration certificates.

EFFECTIVE DATE OF 1992 AMENDMENT

Amendment by section 207(b)(1) of Pub. L. 102-546 effective 180

days after Oct. 28, 1992, with Commodity Futures Trading Commission

to issue any regulations necessary to implement such amendment no

later than 180 days after Oct. 28, 1992, see section 207(c) of Pub.

L. 102-546, set out as a note under section 6e of this title.

EFFECTIVE DATE OF 1983 AMENDMENT

Amendment by Pub. L. 97-444 effective Jan. 11, 1983, see section

239 of Pub. L. 97-444, set out as a note under section 2 of this

title.

EFFECTIVE DATE OF 1978 AMENDMENT

Amendment by Pub. L. 95-405 effective Oct. 1, 1978, see section

28 of Pub. L. 95-405, set out as a note under section 2 of this

title.

EFFECTIVE DATE OF 1974 AMENDMENT

For effective date of amendment by Pub. L. 93-463, see section

418 of Pub. L. 93-463, set out as a note under section 2 of this

title.

EFFECTIVE DATE OF 1968 AMENDMENT

Amendment by Pub. L. 90-258 effective 120 days after Feb. 19,

1968, see section 28 of Pub. L. 90-258, set out as a note under

section 2 of this title.

EFFECTIVE DATE

For effective date of section, see section 13 of act June 15,

1936, set out as an Effective Date of 1936 Amendment note under

section 1 of this title.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 2, 6d, 6k, 7a-2, 9c, 12,

13a-1, 21 of this title; title 15 sections 78f, 78o, 78o-3.

-CITE-

7 USC Sec. 6g 01/06/03

-EXPCITE-

TITLE 7 - AGRICULTURE

CHAPTER 1 - COMMODITY EXCHANGES

-HEAD-

Sec. 6g. Reporting and recordkeeping

-STATUTE-

(a) In general

Every person registered hereunder as futures commission merchant,

introducing broker, floor broker, or floor trader shall make such

reports as are required by the Commission regarding the

transactions and positions of such person, and the transactions and

positions of the customer thereof, in commodities for future

delivery on any board of trade in the United States or elsewhere;

shall keep books and records pertaining to such transactions and

positions in such form and manner and for such period as may be

required by the Commission; and shall keep such books and records

open to inspection by any representative of the Commission or the

United States Department of Justice.

(b) Daily trading records: registered entities

Every registered entity shall maintain daily trading records.

The daily trading records shall include such information as the

Commission shall prescribe by rule.

(c) Daily trading records: floor brokers, introducing brokers, and

futures commission merchants

Floor brokers, introducing brokers, and futures commission

merchants shall maintain daily trading records for each customer in

such manner and form as to be identifiable with the trades referred

to in subsection (b) of this section.

(d) Daily trading records: form and reports

Daily trading records shall be maintained in a form suitable to

the Commission for such period as may be required by the

Commission. Reports shall be made from the records maintained at

such times and at such places and in such form as the Commission

may prescribe by rule, order, or regulation in order to protect the

public interest and the interest of persons trading in commodity

futures.

(e) Disclosure of information

Before the beginning of trading each day, the exchange shall,

insofar as is practicable and under terms and conditions specified

by the Commission, make public the volume of trading on each type

of contract for the previous day and such other information as the

Commission deems necessary in the public interest and prescribes by

rule, order, or regulation.

(f) Authority of Commission to make separate determinations

unimpaired

Nothing contained in this section shall be construed to prohibit

the Commission from making separate determinations for different

registered entities when such determinations are warranted in the

judgment of the Commission.

-SOURCE-

(Sept. 21, 1922, ch. 369, Sec. 4g, as added June 15, 1936, ch. 545,

Sec. 5, 49 Stat. 1496; amended Pub. L. 90-258, Sec. 8, Feb. 19,

1968, 82 Stat. 28; Pub. L. 93-463, title I, Sec. 103(a), (f), title

IV, Sec. 415, Oct. 23, 1974, 88 Stat. 1392, 1415; Pub. L. 95-405,

Sec. 6, Sept. 30, 1978, 92 Stat. 869; Pub. L. 97-444, title II,

Sec. 209, Jan. 11, 1983, 96 Stat. 2302; Pub. L. 102-546, title II,

Sec. 207(b)(1), title IV, Sec. 402(5), Oct. 28, 1992, 106 Stat.

3604, 3624; Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec.

123(a)(7)), Dec. 21, 2000, 114 Stat. 2763, 2763A-407.)

-MISC1-

AMENDMENTS

2000 - Subsec. (b). Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec.

123(a)(7)(A)), substituted ''registered entity'' for

''clearinghouse and contract market''.

Subsec. (f). Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec.

123(a)(7)(B)), substituted ''registered entities'' for

''clearinghouses, contract markets, and exchanges''.

1992 - Subsec. (a). Pub. L. 102-546, Sec. 207(b)(1), 402(5)(A),

redesignated par. (1) as subsec. (a) and substituted ''floor

broker, or floor trader'' for ''or floor broker''.

Subsec. (b). Pub. L. 102-546, Sec. 402(5)(A), redesignated par.

(2) as subsec. (b).

Subsec. (c). Pub. L. 102-546, Sec. 402(5), redesignated par. (3)

as subsec. (c) and substituted ''subsection (b)'' for ''paragraph

(2)''.

Subsecs. (d) to (f). Pub. L. 102-546, Sec. 402(5)(A),

redesignated pars. (4) to (6) as subsecs. (d) to (f), respectively.

1983 - Par. (1). Pub. L. 97-444, Sec. 209(1), made reporting and

recordkeeping requirements applicable to introducing brokers.

Par. (2). Pub. L. 97-444, Sec. 209(2), made customer daily

trading records requirement applicable to introducing brokers.

1978 - Par. (3). Pub. L. 95-405 substituted ''Floor brokers'' for

''Brokers''.

1974 - Par. (1). Pub. L. 93-463, Sec. 103(a), (f), 415,

designated existing provisions as par. (1) and substituted

''Commission'' for ''Secretary of Agriculture'' and ''United States

Department of Agriculture''.

Pars. (2) to (6). Pub. L. 93-463, Sec. 415, added pars. (2) to

(6).

1968 - Pub. L. 90-258 rephrased existing provisions to express

reporting and recordkeeping requirements as a positive obligation

of futures commission merchants and floor brokers, rather than as a

ground for revoking or suspending registration and struck out

provisions for revocation or suspension of registration. See

section 9 of this title.

EFFECTIVE DATE OF 1992 AMENDMENT

Amendment by section 207(b)(1) of Pub. L. 102-546 effective 180

days after Oct. 28, 1992, with Commodity Futures Trading Commission

to issue any regulations necessary to implement such amendment no

later than 180 days after Oct. 28, 1992, see section 207(c) of Pub.

L. 102-546, set out as a note under section 6e of this title.

EFFECTIVE DATE OF 1983 AMENDMENT

Amendment by Pub. L. 97-444 effective Jan. 11, 1983, see section

239 of Pub. L. 97-444, set out as a note under section 2 of this

title.

EFFECTIVE DATE OF 1978 AMENDMENT

Amendment by Pub. L. 95-405 effective Oct. 1, 1978, see section

28 of Pub. L. 95-405, set out as a note under section 2 of this

title.

EFFECTIVE DATE OF 1974 AMENDMENT

For effective date of amendment by Pub. L. 93-463 see section 418

of Pub. L. 93-463, set out as a note under section 2 of this title.

EFFECTIVE DATE OF 1968 AMENDMENT

Amendment by Pub. L. 90-258 effective 120 days after Feb. 19,

1968, see section 28 of Pub. L. 90-258, set out as a note under

section 2 of this title.

EFFECTIVE DATE

For effective date of section, see section 13 of act June 15,

1936, set out as an Effective Date of 1936 Amendment note under

section 1 of this title.

-CITE-

7 USC Sec. 6h 01/06/03

-EXPCITE-

TITLE 7 - AGRICULTURE

CHAPTER 1 - COMMODITY EXCHANGES

-HEAD-

Sec. 6h. False self-representation as registered entity member

prohibited

-STATUTE-

It shall be unlawful for any person falsely to represent such

person to be a member of a registered entity or the representative

or agent of such member, or to be a registrant under this chapter

or the representative or agent of any registrant, in soliciting or

handling any order or contract for the purchase or sale of any

commodity in interstate commerce or for future delivery, or falsely

to represent in connection with the handling of any such order or

contract that the same is to be or has been executed on, or by or

through a member of, any registered entity.

-SOURCE-

(Sept. 21, 1922, ch. 369, Sec. 4h, as added June 15, 1936, ch. 545,

Sec. 5, 49 Stat. 1496; amended Pub. L. 97-444, title II, Sec. 210,

Jan. 11, 1983, 96 Stat. 2302; Pub. L. 106-554, Sec. 1(a)(5) (title

I, Sec. 123(a)(8)), Dec. 21, 2000, 114 Stat. 2763, 2763A-407.)

-MISC1-

AMENDMENTS

2000 - Pub. L. 106-554 substituted ''registered entity'' for

''contract market'' in two places.

1983 - Pub. L. 97-444 struck out provisions formerly designated

as par. (1) relating to conduct of offices or places of business

anywhere in the United States or its territories that were used for

dealing in commodities for future delivery unless such dealings

were executed or consummated by or through a member of a contract

market, which provisions were transferred to section 6(a) of this

title, and broadened remaining provisions, formerly designated as

par. (2), to prohibit false representations that a person is

registered with the Commission in any capacity, and not only as a

futures commission merchant, as previously provided.

EFFECTIVE DATE OF 1983 AMENDMENT

Amendment by Pub. L. 97-444 effective Jan. 11, 1983, see section

239 of Pub. L. 97-444, set out as a note under section 2 of this

title.

EFFECTIVE DATE

For effective date of section, see section 13 of act June 15,

1936, set out as an Effective Date of 1936 Amendment note under

section 1 of this title.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 6f, 6k, 13 of this title.

-CITE-

7 USC Sec. 6i 01/06/03

-EXPCITE-

TITLE 7 - AGRICULTURE

CHAPTER 1 - COMMODITY EXCHANGES

-HEAD-

Sec. 6i. Reports of deals equal to or in excess of trading limits;

books and records; cash and controlled transactions

-STATUTE-

It shall be unlawful for any person to make any contract for the

purchase or sale of any commodity for future delivery on or subject

to the rules of any contract market or derivatives transaction

execution facility -

(1) if such person shall directly or indirectly make such

contracts with respect to any commodity or any future of such

commodity during any one day in an amount equal to or in excess

of such amount as shall be fixed from time to time by the

Commission, and

(2) if such person shall directly or indirectly have or obtain

a long or short position in any commodity or any future of such

commodity equal to or in excess of such amount as shall be fixed

from time to time by the Commission,

unless such person files or causes to be filed with the properly

designated officer of the Commission such reports regarding any

transactions or positions described in clauses (1) and (2) hereof

as the Commission may by rule or regulation require and unless, in

accordance with rules and regulations of the Commission, such

person shall keep books and records of all such transactions and

positions and transactions and positions in any such commodity

traded on or subject to the rules of any other board of trade, and

of cash or spot transactions in, and inventories and purchase and

sale commitments of such commodity. Such books and records shall

show complete details concerning all such transactions, positions,

inventories, and commitments, including the names and addresses of

all persons having any interest therein, and shall be open at all

times to inspection by any representative of the Commission or the

Department of Justice. For the purposes of this section, the

futures and cash or spot transactions and positions of any person

shall include such transactions and positions of any persons

directly or indirectly controlled by such person.

-SOURCE-

(Sept. 21, 1922, ch. 369, Sec. 4i, as added June 15, 1936, ch. 545,

Sec. 5, 49 Stat. 1496; amended Pub. L. 90-258, Sec. 9, Feb. 19,

1968, 82 Stat. 28; Pub. L. 93-463, title I, Sec. 103(a), (f), Oct.

23, 1974, 88 Stat. 1392; Pub. L. 97-444, title II, Sec. 211, Jan.

11, 1983, 96 Stat. 2303; Pub. L. 106-554, Sec. 1(a)(5) (title I,

Sec. 123(a)(9)), Dec. 21, 2000, 114 Stat. 2763, 2763A-407.)

-MISC1-

AMENDMENTS

2000 - Pub. L. 106-554 inserted ''or derivatives transaction

execution facility'' after ''contract market'' in introductory

provisions.

1983 - Pub. L. 97-444 amended section generally by substantially

restating provisions and inserting requirement that persons whose

transactions and positions in any cash commodity or commodity

future are equal to or in excess of amounts fixed by the

Commission, must keep books and records of such transactions and

positions as well as books and records of any such commodity traded

on or subject to rules of any other board of trade, whether or not

such person is required to file reports with the Commission

concerning such transactions and positions.

1974 - Pub. L. 93-463 substituted ''Commission'' for ''Secretary

of Agriculture'' and ''United States Department of Agriculture''.

1968 - Pub. L. 90-258 required recordkeeping of positions and of

cash or spot transactions in commodities entered into, and

inventories and purchase and sale commitments of commodities held,

in any month in which reports are required to be kept, including

details concerning positions, inventories, and commitments, and

included controlled transactions and positions in the futures and

cash or spot transactions and positions of any person.

EFFECTIVE DATE OF 1983 AMENDMENT

Amendment by Pub. L. 97-444 effective Jan. 11, 1983, see section

239 of Pub. L. 97-444, set out as a note under section 2 of this

title.

EFFECTIVE DATE OF 1974 AMENDMENT

For effective date of amendment by Pub. L. 93-463, see section

418 of Pub. L. 93-463, set out as a note under section 2 of this

title.

EFFECTIVE DATE OF 1968 AMENDMENT

Amendment by Pub. L. 90-258 effective 120 days after Feb. 19,

1968, see section 28 of Pub. L. 90-258, set out as a note under

section 2 of this title.

EFFECTIVE DATE

For effective date of section, see section 13 of act June 15,

1936, set out as an Effective Date of 1936 Amendment note under

section 1 of this title.

-CITE-

7 USC Sec. 6j 01/06/03

-EXPCITE-

TITLE 7 - AGRICULTURE

CHAPTER 1 - COMMODITY EXCHANGES

-HEAD-

Sec. 6j. Restrictions on dual trading in security futures products

on designated contract markets and registered derivatives

transaction execution facilities

-STATUTE-

(a) Issuance of regulations

The Commission shall issue regulations to prohibit the privilege

of dual trading in security futures products on each contract

market and registered derivatives transaction execution facility.

The regulations issued by the Commission under this section -

(1) shall provide that the prohibition of dual trading

thereunder shall take effect upon issuance of the regulations;

and

(2) shall provide exceptions, as the Commission determines

appropriate, to ensure fairness and orderly trading in security

futures product markets, including -

(A) exceptions for spread transactions and the correction of

trading errors;

(B) allowance for a customer to designate in writing not less

than once annually a named floor broker to execute orders for

such customer, notwithstanding the regulations to prohibit the

privilege of dual trading required under this section; and

(C) other measures reasonably designed to accommodate unique

or special characteristics of individual boards of trade or

contract markets, to address emergency or unusual market

conditions, or otherwise to further the public interest

consistent with the promotion of market efficiency, innovation,

and expansion of investment opportunities, the protection of

investors, and with the purposes of this section.

(b) ''Dual trading'' defined

As used in this section, the term ''dual trading'' means the

execution of customer orders by a floor broker during the same

trading session in which the floor broker executes any trade in the

same contract market or registered derivatives transaction

execution facility for -

(1) the account of such floor broker;

(2) an account for which such floor broker has trading

discretion; or

(3) an account controlled by a person with whom such floor

broker has a relationship through membership in a broker

association.

(c) ''Broker association'' defined

As used in this section, the term ''broker association'' shall

include two or more contract market members or registered

derivatives transaction execution facility members with floor

trading privileges of whom at least one is acting as a floor

broker, who -

(1) engage in floor brokerage activity on behalf of the same

employer,

(2) have an employer and employee relationship which relates to

floor brokerage activity,

(3) share profits and losses associated with their brokerage or

trading activity, or

(4) regularly share a deck of orders.

-SOURCE-

(Sept. 21, 1922, ch. 369, Sec. 4j, as added Pub. L. 93-463, title

II, Sec. 203, Oct. 23, 1974, 88 Stat. 1396; amended Pub. L. 94-16,

Sec. 2, Apr. 16, 1975, 89 Stat. 77; Pub. L. 102-546, title I, Sec.

101, 102(a), Oct. 28, 1992, 106 Stat. 3591, 3594; Pub. L. 106-554,

Sec. 1(a)(5) (title II, Sec. 251(c)), Dec. 21, 2000, 114 Stat.

2763, 2763A-442.)

-MISC1-

AMENDMENTS

2000 - Pub. L. 106-554 amended section generally. Prior to

amendment, section required Commission to issue regulations to

prohibit the privilege of dual trading on contract markets, allowed

for certain exemptions, required Commission to make determinations

relating to trading by floor brokers and futures commission

merchants, and restricted trading among members of broker

associations.

1992 - Subsec. (a). Pub. L. 102-546, Sec. 101(a)(3), added

subsec. (a).

Subsec. (b). Pub. L. 102-546, Sec. 101(a)(1), (2), redesignated

par. (1) as subsec. (b) and substituted ''If, in addition to the

regulations issued pursuant to subsection (a) of this section, the

Commission has reason to believe that dual trading-related or

facilitated abuses are not being or cannot be effectively addressed

by subsection (a) of this section, the Commission shall'' for ''The

Commission shall within nine months after the effective date of the

Commodity Futures Trading Commission Act of 1974, and subsequently

when it determines that changes are required,''.

Subsec. (c). Pub. L. 102-546, Sec. 101(a)(1), redesignated par.

(2) as subsec. (c).

Subsec. (d). Pub. L. 102-546, Sec. 102(a), added subsec. (d).

1975 - Pub. L. 94-16 substituted ''nine months'' for ''six

months'' in pars. (1) and (2).

EFFECTIVE DATE OF 1992 AMENDMENT

Section 102(b) of Pub. L. 102-546 provided that: ''The amendment

made by subsection (a) (amending this section) shall become

effective two hundred and seventy days after the date of enactment

of this Act (Oct. 28, 1992).''

EFFECTIVE DATE

For effective date of section, see section 418 of Pub. L. 93-463,

set out as an Effective Date of 1974 Amendment note under section 2

of this title.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 2, 6f, 6k, 7b-1 of this

title; title 15 section 78f.

-CITE-

7 USC Sec. 6k 01/06/03

-EXPCITE-

TITLE 7 - AGRICULTURE

CHAPTER 1 - COMMODITY EXCHANGES

-HEAD-

Sec. 6k. Registration of associates of futures commission

merchants, commodity pool operators, and commodity trading

advisors; required disclosure of disqualifications; exemptions

for associated persons

-STATUTE-

(1) It shall be unlawful for any person to be associated with a

futures commission merchant as a partner, officer, or employee, or

to be associated with an introducing broker as a partner, officer,

employee, or agent (or any person occupying a similar status or

performing similar functions), in any capacity that involves (i)

the solicitation or acceptance of customers' orders (other than in

a clerical capacity) or (ii) the supervision of any person or

persons so engaged, unless such person is registered with the

Commission under this chapter as an associated person of such

futures commission merchant or of such introducing broker and such

registration shall not have expired, been suspended (and the period

of suspension has not expired), or been revoked. It shall be

unlawful for a futures commission merchant or introducing broker to

permit such a person to become or remain associated with the

futures commission merchant or introducing broker in any such

capacity if such futures commission merchant or introducing broker

knew or should have known that such person was not so registered or

that such registration had expired, been suspended (and the period

of suspension has not expired), or been revoked. Any individual

who is registered as a floor broker, futures commission merchant,

or introducing broker (and such registration is not suspended or

revoked) need not also register under this paragraph.

(2) It shall be unlawful for any person to be associated with a

commodity pool operator as a partner, officer, employee,

consultant, or agent (or any person occupying a similar status or

performing similar functions), in any capacity that involves (i)

the solicitation of funds, securities, or property for a

participation in a commodity pool or (ii) the supervision of any

person or persons so engaged, unless such person is registered with

the Commission under this chapter as an associated person of such

commodity pool operator and such registration shall not have

expired, been suspended (and the period of suspension has not

expired), or been revoked. It shall be unlawful for a commodity

pool operator to permit such a person to become or remain

associated with the commodity pool operator in any such capacity if

the commodity pool operator knew or should have known that such

person was not so registered or that such registration had expired,

been suspended (and the period of suspension has not expired), or

been revoked. Any individual who is registered as a floor broker,

futures commission merchant, introducing broker, commodity pool

operator, or as an associated person of another category of

registrant under this section (and such registration is not

suspended or revoked) need not also register under this paragraph.

The Commission may exempt any person or class of persons from

having to register under this paragraph by rule, regulation, or

order.

(3) It shall be unlawful for any person to be associated with a

commodity trading advisor as a partner, officer, employee,

consultant, or agent (or any person occupying a similar status or

performing similar functions), in any capacity which involves (i)

the solicitation of a client's or prospective client's

discretionary account or (ii) the supervision of any person or

persons so engaged, unless such person is registered with the

Commission under this chapter as an associated person of such

commodity trading advisor and such registration shall not have

expired, been suspended (and the period of suspension has not

expired), or been revoked. It shall be unlawful for a commodity

trading advisor to permit such a person to become or remain

associated with the commodity trading advisor in any such capacity

if the commodity trading advisor knew or should have known that

such person was not so registered or that such registration had

expired, been suspended (and the period of suspension has not

expired), or been revoked. Any individual who is registered as a

floor broker, futures commission merchant, introducing broker,

commodity trading advisor, or as an associated person of another

category of registrant under this section (and such registration is

not suspended or revoked) need not also register under this

paragraph. The Commission may exempt any person or class of

persons from having to register under this paragraph by rule,

regulation, or order.

(4) Any person desiring to be registered as an associated person

of a futures commission merchant, of an introducing broker, of a

commodity pool operator, or of a commodity trading advisor shall

make application to the Commission in the form and manner

prescribed by the Commission, giving such information and facts as

the Commission may deem necessary concerning the applicant. Such

person, when registered hereunder, shall likewise continue to

report and furnish to the Commission such information as the

Commission may require. Such registration shall expire at such

time as the Commission may by rule, regulation, or order prescribe.

(5) (FOOTNOTE 1) It shall be unlawful for any registrant to

permit a person to become or remain an associated person of such

registrant, if the registrant knew or should have known of facts

regarding such associated person that are set forth as statutory

disqualifications in section 12a(2) of this title, unless such

registrant has notified the Commission of such facts and the

Commission has determined that such person should be registered or

temporarily licensed.

(FOOTNOTE 1) So in original. Two pars.(5) have been enacted.

(5) (FOOTNOTE 1) Any associated person of a broker or dealer that

is registered with the Securities and Exchange Commission, and who

limits its solicitation of orders, acceptance of orders, or

execution of orders, or placing of orders on behalf of others

involving any contracts of sale of any commodity for future

delivery or any option on such a contract, on or subject to the

rules of any contract market or registered derivatives transaction

execution facility to security futures products, shall be exempt

from the following provisions of this chapter and the rules

thereunder:

(A) Subsections (b), (d), (e), and (g) of section 6c of this

title.

(B) Sections 6d, 6e, and 6h of this title.

(C) Subsections (b) and (c) of section 6f of this title.

(D) Section 6j of this title.

(E) Paragraph (1) of this section.

(F) Section 6p (FOOTNOTE 2) of this title.

(FOOTNOTE 2) See References in Text note below.

(G) Section 13a-2 of this title.

(H) Subsections (d) and (g) of section 12 of this title.

(I) Section 20 of this title.

-SOURCE-

(Sept. 21, 1922, ch. 369, Sec. 4k, as added Pub. L. 93-463, title

II, Sec. 204(a), Oct. 23, 1974, 88 Stat. 1396; amended Pub. L.

95-405, Sec. 7, Sept. 30, 1978, 92 Stat. 869; Pub. L. 97-444, title

II, Sec. 212, Jan. 11, 1983, 96 Stat. 2303; Pub. L. 106-554, Sec.

1(a)(5) (title II, Sec. 252(d)), Dec. 21, 2000, 114 Stat. 2763,

2763A-448.)

-REFTEXT-

REFERENCES IN TEXT

Section 6p of this title, referred to in par. (5)(F), was in the

original ''Section 4p'' which was translated as meaning the section

4p of the Commodity Exchange Act which is classified to section 6p

of this title, rather than to the section 4p of that Act which is

classified to section 6o-1 of this title, to reflect the probable

intent of Congress.

-MISC2-

AMENDMENTS

2000 - Par. (5). Pub. L. 106-554, Sec. 1(a)(5) (title II, Sec.

252(d)), which directed amendment of this section by ''inserting

after paragraph (4), as added by subsection (c) of this section'' a

new par. (5) relating to exempting associated persons or dealers

from provisions of this chapter, was executed by adding that par.

(5) at the end. Section 1(a)(5)(title II, Sec. 252(c)) did not add

a par. (4) to this section.

1983 - Par. (1). Pub. L. 97-444 amended par. (1) generally to

apply to introducing brokers and persons associated with

introducing brokers.

Par. (2). Pub. L. 97-444 added par. (2). Former par. (2)

redesignated (4).

Par. (3). Pub. L. 97-444 added par. (3). Former par. (3), which

empowered Commission to authorize a registered futures association

to perform any portion of the registration functions under this

section, in accordance with rules approved by the Commission, and

subject to the provisions of this chapter applicable to

registrations granted by the Commission, was struck out.

Par. (4). Pub. L. 97-444 redesignated former par. (2) as (4) and

substituted ''Any person desiring to be registered as an associated

person of a futures commission merchant, of an introducing broker,

of a commodity pool operator, or of a commodity trading advisor

shall make application to the Commission in the form and manner

prescribed by the Commission, giving such information and facts as

the Commission may deem necessary concerning the applicant. Such

person, when registered hereunder, shall likewise continue to

report and furnish to the Commission such information as the

Commission may require. Such registration shall expire at such

time as the Commission may by rule, regulation, or order

prescribe'' for ''Any such person desiring to be registered shall

make application to the Commission in the form and manner

prescribed by the Commission, giving such information and facts as

the Commission may deem necessary concerning the applicant. Such

person, when registered hereunder, shall likewise continue to

report and furnish to the Commission such information as the

Commission may require. Such registration shall expire two years

after the effective date thereof or at such other time, not less

than one year from the date of issuance thereof, as the Commission

may by rule, regulation, or order prescribe and shall be renewed

upon application therefor, unless the registration has been

suspended (and the period of such suspension has not expired) or

revoked after notice and hearing as prescribed in section 9 of this

title: Provided, That upon initial registration, unless the

Commission otherwise prescribes by rule, regulation, or order, the

effective period of such registration shall be not more than two

years nor less than one year from the effective date thereof''.

Par. (5). Pub. L. 97-444 added par. (5).

1978 - Par. (2). Pub. L. 95-405, Sec. 7(1), inserted provisions

authorizing the Commission to prescribe the period of registration

of not less than one year for associated persons.

Par. (3). Pub. L. 95-405, Sec. 7(2), added par. (3).

EFFECTIVE DATE OF 1983 AMENDMENT

Amendment by Pub. L. 97-444 effective 120 days after Jan. 11,

1983, or such earlier date as the Commission shall prescribe by

regulation, see section 239 of Pub. L. 97-444, set out as a note

under section 2 of this title.

EFFECTIVE DATE OF 1978 AMENDMENT

Amendment by Pub. L. 95-405 effective Oct. 1, 1978, see section

28 of Pub. L. 95-405, set out as a note under section 2 of this

title.

EFFECTIVE DATE

For effective date of section, see section 418 of Pub. L. 93-463,

set out as an Effective Date of 1974 Amendment note under section 2

of this title.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 2, 6f, 9c, 12, 13a-1, 21

of this title.

-CITE-

7 USC Sec. 6l 01/06/03

-EXPCITE-

TITLE 7 - AGRICULTURE

CHAPTER 1 - COMMODITY EXCHANGES

-HEAD-

Sec. 6l. Commodity trading advisors and commodity pool operators;

Congressional finding

-STATUTE-

It is hereby found that the activities of commodity trading

advisors and commodity pool operators are affected with a national

public interest in that, among other things -

(1) their advice, counsel, publications, writings, analyses,

and reports are furnished and distributed, and their contracts,

solicitations, subscriptions, agreements, and other arrangements

with clients take place and are negotiated and performed by the

use of the mails and other means and instrumentalities of

interstate commerce;

(2) their advice, counsel, publications, writings, analyses,

and reports customarily relate to and their operations are

directed toward and cause the purchase and sale of commodities

for future delivery on or subject to the rules of contract

markets or derivatives transaction execution facilities; and

(3) the foregoing transactions occur in such volume as to

affect substantially transactions on contract markets or

derivatives transaction execution facilities.

-SOURCE-

(Sept. 21, 1922, ch. 369, Sec. 4l, as added Pub. L. 93-463, title

II, Sec. 205(a), Oct. 23, 1974, 88 Stat. 1397; Pub. L. 106-554,

Sec. 1(a)(5) (title I, Sec. 123(a)(10)), Dec. 21, 2000, 114 Stat.

2763, 2763A-408.)

-MISC1-

AMENDMENTS

2000 - Pars. (2), (3). Pub. L. 106-554 inserted ''or derivatives

transaction execution facilities'' after ''contract markets''.

EFFECTIVE DATE

For effective date of section, see section 418 of Pub. L. 93-463,

set out as an Effective Date of 1974 Amendment note under section 2

of this title.

-CITE-

7 USC Sec. 6m 01/06/03

-EXPCITE-

TITLE 7 - AGRICULTURE

CHAPTER 1 - COMMODITY EXCHANGES

-HEAD-

Sec. 6m. Use of mails or other means or instrumentalities of

interstate commerce by commodity trading advisors and commodity

pool operators; relation to other law

-STATUTE-

(1) It shall be unlawful for any commodity trading advisor or

commodity pool operator, unless registered under this chapter, to

make use of the mails or any means or instrumentality of interstate

commerce in connection with his business as such commodity trading

advisor or commodity pool operator: Provided, That the provisions

of this section shall not apply to any commodity trading advisor

who, during the course of the preceding twelve months, has not

furnished commodity trading advice to more than fifteen persons and

who does not hold himself out generally to the public as a

commodity trading advisor. The provisions of this section shall

not apply to any commodity trading advisor who is a (1) dealer,

processor, broker, or seller in cash market transactions of any

commodity specifically set forth in section 2(a) of this title

prior to October 23, 1974, (or products thereof) or (2) nonprofit,

voluntary membership, general farm organization, who provides

advice on the sale or purchase of any commodity specifically set

forth in section 2(a) of this title prior to October 23, 1974; if

the advice by the person described in clause (1) or (2) of this

sentence as a commodity trading advisor is solely incidental to the

conduct of that person's business: Provided, That such person shall

be subject to proceedings under section 18 of this title.

(2) Nothing in this chapter shall relieve any person of any

obligation or duty, or affect the availability of any right or

remedy available to the Securities and Exchange Commission or any

private party arising under the Securities Act of 1933 (15 U.S.C.

77a et seq.) or the Securities Exchange Act of 1934 (15 U.S.C. 78a

et seq.) governing the issuance, offer, purchase, or sale of

securities of a commodity pool, or of persons engaged in

transactions with respect to such securities, or reporting by a

commodity pool.

(3) Subsection (1) of this section shall not apply to any

commodity trading advisor that is registered with the Securities

and Exchange Commission as an investment adviser whose business

does not consist primarily of acting as a commodity trading

advisor, as defined in section 1a(6) of this title, and that does

not act as a commodity trading advisor to any investment trust,

syndicate, or similar form of enterprise that is engaged primarily

in trading in any commodity for future delivery on or subject to

the rules of any contract market or registered derivatives

transaction execution facility.

-SOURCE-

(Sept. 21, 1922, ch. 369, Sec. 4m, as added Pub. L. 93-463, title

II, Sec. 205(a), Oct. 23, 1974, 88 Stat. 1398; amended Pub. L.

95-405, Sec. 8, Sept. 30, 1978, 92 Stat. 870; Pub. L. 97-444, title

I, Sec. 103, Jan. 11, 1983, 96 Stat. 2296; Pub. L. 106-554, Sec.

1(a)(5) (title II, Sec. 251(d)), Dec. 21, 2000, 114 Stat. 2763,

2763A-443.)

-REFTEXT-

REFERENCES IN TEXT

The Securities Act of 1933, referred to in par. (2), is title I

of act May 27, 1933, ch. 38, 48 Stat. 74, as amended, which is

classified generally to subchapter I (Sec. 77a et seq.) of chapter

2A of Title 15, Commerce and Trade. For complete classification of

this Act to the Code, see section 77a of Title 15 and Tables.

The Securities Exchange Act of 1934, referred to in par. (2), is

act June 6, 1934, ch. 404, 48 Stat. 881, as amended, which is

classified principally to chapter 2B (Sec. 78a et seq.) of Title

15. For complete classification of this Act to the Code, see

section 78a of Title 15 and Tables.

-MISC2-

AMENDMENTS

2000 - Par. (3). Pub. L. 106-554 added par. (3).

1983 - Pub. L. 97-444 designated existing provisions as par. (1)

and added par. (2).

1978 - Pub. L. 95-405 inserted provisions relating to

applicability of this section to commodity trading advisors who are

dealers, processors, brokers, or sellers in cash market

transactions of specifically listed commodities or nonprofit,

voluntary membership, general farm organizations who provide advice

on sale or purchase of specifically listed commodities if the

advice by the person described in cl. (1) or (2) of this sentence

is incidental solely to the conduct to the person's business and

that such person be subject to proceedings under section 18 of this

title.

EFFECTIVE DATE OF 1983 AMENDMENT

Amendment by Pub. L. 97-444 effective Jan. 11, 1983, see section

239 of Pub. L. 97-444, set out as a note under section 2 of this

title.

EFFECTIVE DATE OF 1978 AMENDMENT

Amendment by Pub. L. 95-405 effective Oct. 1, 1978, see section

28 of Pub. L. 95-405, set out as a note under section 2 of this

title.

EFFECTIVE DATE

For effective date of section, see section 418 of Pub. L. 93-463,

set out as an Effective Date of 1974 Amendment note under section 2

of this title.

-CITE-

7 USC Sec. 6n 01/06/03

-EXPCITE-

TITLE 7 - AGRICULTURE

CHAPTER 1 - COMMODITY EXCHANGES

-HEAD-

Sec. 6n. Registration of commodity trading advisors and commodity

pool operators; application; expiration and renewal; record

keeping and reports; disclosure; statements of account

-STATUTE-

(1) Any commodity trading advisor or commodity pool operator, or

any person who contemplates becoming a commodity trading advisor or

commodity pool operator, may register under this chapter by filing

an application with the Commission. Such application shall contain

such information, in such form and detail, as the Commission may,

by rules and regulations, prescribe as necessary or appropriate in

the public interest, including the following:

(A) the name and form of organization, including capital

structure, under which the applicant engages or intends to engage

in business; the name of the State under the laws of which he is

organized; the location of his principal business office and

branch offices, if any; the names and addresses of all partners,

officers, directors, and persons performing similar functions or,

if the applicant be an individual, of such individual; and the

number of employees;

(B) the education, the business affiliations for the past ten

years, and the present business affiliations of the applicant and

of his partners, officers, directors, and persons performing

similar functions and of any controlling person thereof;

(C) the nature of the business of the applicant, including the

manner of giving advice and rendering of analyses or reports;

(D) the nature and scope of the authority of the applicant with

respect to clients' funds and accounts;

(E) the basis upon which the applicant is or will be

compensated; and

(F) such other information as the Commission may require to

determine whether the applicant is qualified for registration.

(2) Each registration under this section shall expire on the 30th

day of June of each year, or at such other time, not less than one

year from the effective date thereof, as the Commission may by

rule, regulation, or order prescribe, and shall be renewed upon

application therefor subject to the same requirements as in the

case of an original application.

(3)(A) Every commodity trading advisor and commodity pool

operator registered under this chapter shall maintain books and

records and file such reports in such form and manner as may be

prescribed by the Commission. All such books and records shall be

kept for a period of at least three years, or longer if the

Commission so directs, and shall be open to inspection by any

representative of the Commission or the Department of Justice. Upon

the request of the Commission, a registered commodity trading

advisor or commodity pool operator shall furnish the name and

address of each client, subscriber, or participant, and submit

samples or copies of all reports, letters, circulars, memorandums,

publications, writings, or other literature or advice distributed

to clients, subscribers, or participants, or prospective clients,

subscribers, or participants.

(B) Unless otherwise authorized by the Commission by rule or

regulation, all commodity trading advisors and commodity pool

operators shall make a full and complete disclosure to their

subscribers, clients, or participants of all futures market

positions taken or held by the individual principals of their

organization.

(4) Every commodity pool operator shall regularly furnish

statements of account to each participant in his operations. Such

statements shall be in such form and manner as may be prescribed by

the Commission and shall include complete information as to the

current status of all trading accounts in which such participant

has an interest.

-SOURCE-

(Sept. 21, 1922, ch. 369, Sec. 4n, as added Pub. L. 93-463, title

II, Sec. 205(a), Oct. 23, 1974, 88 Stat. 1398; amended Pub. L.

95-405, Sec. 9, Sept. 30, 1978, 92 Stat. 870; Pub. L. 97-444, title

II, Sec. 213, Jan. 11, 1983, 96 Stat. 2305.)

-MISC1-

AMENDMENTS

1983 - Par. (5). Pub. L. 97-444 struck out par. (5) which

authorized Commission, without hearing, to deny registration to any

person as a commodity trading advisor or commodity pool operator if

such person was subject to an outstanding order under this chapter

denying to such person trading privileges on any contract market,

or suspending or revoking the registration of such person as a

commodity trading advisor, commodity pool operator, futures

commission merchant, or floor broker, or suspending or expelling

such person from membership on any contract market.

Par. (6). Pub. L. 97-444 struck out par. (6) which authorized

Commission to deny registration or revoke or suspend the

registration of any commodity trading advisor or commodity pool

operator if the Commission found that such denial, revocation, or

suspension was in the public interest and that such person had been

guilty of certain specified activities. See section 12a(2), (3),

and (4) of this title.

1978 - Par. (2). Pub. L. 95-405, Sec. 9(1)-(3), redesignated par.

(3) as (2) and substituted ''Each registration'' for ''All

registrations'' and inserted ''or at such other time, not less than

one year from the effective date thereof, as the Commission may

rule, regulation, or order prescribe,'' after ''June of each

year,''. Former par. (2), which provided that registration under

this section becomes effective thirty days after the receipt of

such application by the Commission, or within such shorter period

of time as the Commission may determine, was struck out.

Pars. (3) to (6). Pub. L. 95-405, Sec. 9(1), redesignated pars.

(4) to (7) as (3) to (6), respectively. Former par. (3)

redesignated (2).

EFFECTIVE DATE OF 1983 AMENDMENT

Amendment by Pub. L. 97-444 effective Jan. 11, 1983, see section

239 of Pub. L. 97-444, set out as a note under section 2 of this

title.

EFFECTIVE DATE OF 1978 AMENDMENT

Amendment by Pub. L. 95-405 effective Oct. 1, 1978, see section

28 of Pub. L. 95-405, set out as a note under section 2 of this

title.

EFFECTIVE DATE

For effective date of section, see section 418 of Pub. L. 93-463,

set out as an Effective Date of 1974 Amendment note under section 2

of this title.

-CITE-

7 USC Sec. 6o 01/06/03

-EXPCITE-

TITLE 7 - AGRICULTURE

CHAPTER 1 - COMMODITY EXCHANGES

-HEAD-

Sec. 6o. Fraud and misrepresentation by commodity trading advisors,

commodity pool operators, and associated persons

-STATUTE-

(1) It shall be unlawful for a commodity trading advisor,

associated person of a commodity trading advisor, commodity pool

operator, or associated person of a commodity pool operator, by use

of the mails or any means or instrumentality of interstate

commerce, directly or indirectly -

(A) to employ any device, scheme, or artifice to defraud any

client or participant or prospective client or participant; or

(B) to engage in any transaction, practice, or course of

business which operates as a fraud or deceit upon any client or

participant or prospective client or participant.

(2) It shall be unlawful for any commodity trading advisor,

associated person of a commodity trading advisor, commodity pool

operator, or associated person of a commodity pool operator

registered under this chapter to represent or imply in any manner

whatsoever that such person has been sponsored, recommended, or

approved, or that such person's abilities or qualifications have in

any respect been passed upon, by the United States or any agency or

officer thereof. This section shall not be construed to prohibit a

statement that a person is registered under this chapter as a

commodity trading advisor, associated person of a commodity trading

advisor, commodity pool operator, or associated person of a

commodity pool operator, if such statement is true in fact and if

the effect of such registration is not misrepresented.

-SOURCE-

(Sept. 21, 1922, ch. 369, Sec. 4o, as added Pub. L. 93-463, title

II, Sec. 205(a), Oct. 23, 1974, 88 Stat. 1399; amended Pub. L.

95-405, Sec. 10, Sept. 30, 1978, 92 Stat. 870; Pub. L. 97-444,

title II, Sec. 214, Jan. 11, 1983, 96 Stat. 2305.)

-MISC1-

AMENDMENTS

1983 - Par. (1). Pub. L. 97-444 made the antifraud prohibition

applicable to an associated person of a commodity trading advisor

or a commodity pool operator.

Par. (2). Pub. L. 97-444 made the misrepresentation prohibition

applicable to an associated person of a commodity training advisor

or a commodity pool operator, authorized registration statements of

such persons, and substituted ''such person'' and ''such person's

abilities'' for ''he'' before ''has been sponsored'' and ''his

abilities'', respectively.

1978 - Par. (1). Pub. L. 95-405 struck out ''registered under

this chapter'' after ''pool operator''.

EFFECTIVE DATE OF 1983 AMENDMENT

Amendment by Pub. L. 97-444 effective Jan. 11, 1983, see section

239 of Pub. L. 97-444, set out as a note under section 2 of this

title.

EFFECTIVE DATE OF 1978 AMENDMENT

Amendment by Pub. L. 95-405 effective Oct. 1, 1978, see section

28 of Pub. L. 95-405, set out as a note under section 2 of this

title.

EFFECTIVE DATE

For effective date of section, see section 418 of Pub. L. 93-463,

set out as an Effective Date of 1974 Amendment note under section 2

of this title.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 2, 7a-3, 13 of this

title.

-CITE-

7 USC Sec. 6o-1 01/06/03

-EXPCITE-

TITLE 7 - AGRICULTURE

CHAPTER 1 - COMMODITY EXCHANGES

-HEAD-

Sec. 6o-1. Special procedures to encourage and facilitate bona fide

hedging by agricultural producers

-STATUTE-

(a) Authority

The Commission shall consider issuing rules or orders which -

(1) prescribe procedures under which each contract market is to

provide for orderly delivery, including temporary storage costs,

of any agricultural commodity enumerated in section 1a(4) of this

title which is the subject of a contract for purchase or sale for

future delivery;

(2) increase the ease with which domestic agricultural

producers may participate in contract markets, including by

addressing cost and margin requirements, so as to better enable

the producers to hedge price risk associated with their

production;

(3) provide flexibility in the minimum quantities of such

agricultural commodities that may be the subject of a contract

for purchase or sale for future delivery that is traded on a

contract market, to better allow domestic agricultural producers

to hedge such price risk; and

(4) encourage contract markets to provide information and

otherwise facilitate the participation of domestic agricultural

producers in contract markets.

(b) Report

Within 1 year after December 21, 2000, the Commission shall

submit to the Committee on Agriculture of the House of

Representatives and the Committee on Agriculture, Nutrition, and

Forestry of the Senate a report on the steps it has taken to

implement this section and on the activities of contract markets

pursuant to this section.

-SOURCE-

(Sept. 21, 1922, ch. 369, Sec. 4p, as added Pub. L. 106-554, Sec.

1(a)(5) (title I, Sec. 121), Dec. 21, 2000, 114 Stat. 2763,

2763A-404.)

-COD-

CODIFICATION

Another section 4p of act Sept. 21, 1922, is classified to

section 6p of this title.

-CITE-

7 USC Sec. 6p 01/06/03

-EXPCITE-

TITLE 7 - AGRICULTURE

CHAPTER 1 - COMMODITY EXCHANGES

-HEAD-

Sec. 6p. Standards and examinations

-STATUTE-

(a) The Commission may specify by rules and regulations

appropriate standards with respect to training, experience, and

such other qualifications as the Commission finds necessary or

desirable to insure the fitness of persons required to be

registered with the Commission. In connection therewith, the

Commission may prescribe by rules and regulations the adoption of

written proficiency examinations to be given to applicants for

registration and the establishment of reasonable fees to be charged

to such applicants to cover the administration of such

examinations. The Commission may further prescribe by rules and

regulations that, in lieu of examinations administered by the

Commission, futures associations registered under section 21 of

this title, contract markets, or derivatives transaction execution

facilities may adopt written proficiency examinations to be given

to applicants for registration and charge reasonable fees to such

applicants to cover the administration of such examinations.

Notwithstanding any other provision of this section, the Commission

may specify by rules and regulations such terms and conditions as

it deems appropriate to protect the public interest wherein

exception to any written proficiency examination shall be made with

respect to individuals who have demonstrated, through training and

experience, the degree of proficiency and skill necessary to

protect the interests of customers, clients, pool participants, or

other members of the public with whom such individuals deal.

(b) The Commission shall issue regulations to require new

registrants, within six months after receiving such registration,

to attend a training session, and all other registrants to attend

periodic training sessions, to ensure that registrants understand

their responsibilities to the public under this chapter, including

responsibilities to observe just and equitable principles of trade,

any rule or regulation of the Commission, any rule of any

appropriate contract market, derivatives transaction execution

facility, registered futures association, or other self-regulatory

organization, or any other applicable Federal or state (FOOTNOTE 1)

law, rule or regulation.

(FOOTNOTE 1) So in original. Probably should be capitalized.

-SOURCE-

(Sept. 21, 1922, ch. 369, Sec. 4p, as added Pub. L. 93-463, title

II, Sec. 206, Oct. 23, 1974, 88 Stat. 1400; amended Pub. L. 97-444,

title II, Sec. 215, Jan. 11, 1983, 96 Stat. 2305; Pub. L. 102-546,

title II, Sec. 210(a), Oct. 28, 1992, 106 Stat. 3607; Pub. L.

106-554, Sec. 1(a)(5) (title I, Sec. 123(a)(11)), Dec. 21, 2000,

114 Stat. 2763, 2763A-408.)

-COD-

CODIFICATION

Another section 4p of act Sept. 21, 1922, is classified to

section 6o-1 of this title.

-MISC3-

AMENDMENTS

2000 - Subsec. (a). Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec.

123(a)(11)(A)), substituted ''title, contract markets, or

derivatives transaction execution facilities'' for ''title or

contract markets''.

Subsec. (b). Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec.

123(a)(11)(B)), inserted ''derivatives transaction execution

facility,'' after ''contract market,''.

1992 - Pub. L. 102-546 designated existing provisions as subsec.

(a) and added subsec. (b).

1983 - Pub. L. 97-444 substituted ''persons required to be

registered with the Commission'' for ''futures commission

merchants, floor brokers, and those persons associated with futures

commission merchants or floor brokers'' in first sentence,

''customers, clients, pool participants, or other members of the

public with whom such individuals deal'' for ''the customers of

futures commission merchants and floor brokers'' in last sentence,

and in second and third sentences struck out ''as futures

commission merchants, floor brokers, and those persons associated

with futures commission merchants or floor brokers,'' after

''applicants for registration''.

EFFECTIVE DATE OF 1983 AMENDMENT

Amendment by Pub. L. 97-444 effective Jan. 11, 1983, see section

239 of Pub. L. 97-444, set out as a note under section 2 of this

title.

EFFECTIVE DATE

For effective date of section, see section 418 of Pub. L. 93-463,

set out as an Effective Date of 1974 Amendment note under section 2

of this title.

REGULATIONS

Section 210(b) of Pub. L. 102-546 provided that: ''The Commodity

Futures Trading Commission shall issue the regulations required by

section 4p(b) of the Commodity Exchange Act (7 U.S.C. 6p(b)), as

added by subsection (a), no later than one hundred and eighty days

after the date of enactment of this Act (Oct. 28, 1992).''

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 6f, 6k of this title.

-CITE-

7 USC Sec. 7 01/06/03

-EXPCITE-

TITLE 7 - AGRICULTURE

CHAPTER 1 - COMMODITY EXCHANGES

-HEAD-

Sec. 7. Designation of boards of trade as contract markets

-STATUTE-

(a) Applications

A board of trade applying to the Commission for designation as a

contract market shall submit an application to the Commission that

includes any relevant materials and records the Commission may

require consistent with this chapter.

(b) Criteria for designation

(1) In general

To be designated as a contract market, the board of trade shall

demonstrate to the Commission that the board of trade meets the

criteria specified in this subsection.

(2) Prevention of market manipulation

The board of trade shall have the capacity to prevent market

manipulation through market surveillance, compliance, and

enforcement practices and procedures, including methods for

conducting real-time monitoring of trading and comprehensive and

accurate trade reconstructions.

(3) Fair and equitable trading

The board of trade shall establish and enforce trading rules to

ensure fair and equitable trading through the facilities of the

contract market, and the capacity to detect, investigate, and

discipline any person that violates the rules. The rules may

authorize -

(A) transfer trades or office trades;

(B) an exchange of -

(i) futures in connection with a cash commodity

transaction;

(ii) futures for cash commodities; or

(iii) futures for swaps; or

(C) a futures commission merchant, acting as principal or

agent, to enter into or confirm the execution of a contract for

the purchase or sale of a commodity for future delivery if the

contract is reported, recorded, or cleared in accordance with

the rules of the contract market or a derivatives clearing

organization.

(4) Trade execution facility

The board of trade shall -

(A) establish and enforce rules defining, or specifications

detailing, the manner of operation of the trade execution

facility maintained by the board of trade, including rules or

specifications describing the operation of any electronic

matching platform; and

(B) demonstrate that the trade execution facility operates in

accordance with the rules or specifications.

(5) Financial integrity of transactions

The board of trade shall establish and enforce rules and

procedures for ensuring the financial integrity of transactions

entered into by or through the facilities of the contract market,

including the clearance and settlement of the transactions with a

derivatives clearing organization.

(6) Disciplinary procedures

The board of trade shall establish and enforce disciplinary

procedures that authorize the board of trade to discipline,

suspend, or expel members or market participants that violate the

rules of the board of trade, or similar methods for performing

the same functions, including delegation of the functions to

third parties.

(7) Public access

The board of trade shall provide the public with access to the

rules, regulations, and contract specifications of the board of

trade.

(8) Ability to obtain information

The board of trade shall establish and enforce rules that will

allow the board of trade to obtain any necessary information to

perform any of the functions described in this subsection,

including the capacity to carry out such international

information-sharing agreements as the Commission may require.

(c) Existing contract markets

A board of trade that is designated as a contract market on

December 21, 2000, shall be considered to be a designated contract

market under this section.

(d) Core principles for contract markets

(1) In general

To maintain the designation of a board of trade as a contract

market, the board of trade shall comply with the core principles

specified in this subsection. The board of trade shall have

reasonable discretion in establishing the manner in which it

complies with the core principles.

(2) Compliance with rules

The board of trade shall monitor and enforce compliance with

the rules of the contract market, including the terms and

conditions of any contracts to be traded and any limitations on

access to the contract market.

(3) Contracts not readily subject to manipulation

The board of trade shall list on the contract market only

contracts that are not readily susceptible to manipulation.

(4) Monitoring of trading

The board of trade shall monitor trading to prevent

manipulation, price distortion, and disruptions of the delivery

or cash-settlement process.

(5) Position limitations or accountability

To reduce the potential threat of market manipulation or

congestion, especially during trading in the delivery month, the

board of trade shall adopt position limitations or position

accountability for speculators, where necessary and appropriate.

(6) Emergency authority

The board of trade shall adopt rules to provide for the

exercise of emergency authority, in consultation or cooperation

with the Commission, where necessary and appropriate, including

the authority to -

(A) liquidate or transfer open positions in any contract;

(B) suspend or curtail trading in any contract; and

(C) require market participants in any contract to meet

special margin requirements.

(7) Availability of general information

The board of trade shall make available to market authorities,

market participants, and the public information concerning -

(A) the terms and conditions of the contracts of the contract

market; and

(B) the mechanisms for executing transactions on or through

the facilities of the contract market.

(8) Daily publication of trading information

The board of trade shall make public daily information on

settlement prices, volume, open interest, and opening and closing

ranges for actively traded contracts on the contract market.

(9) Execution of transactions

The board of trade shall provide a competitive, open, and

efficient market and mechanism for executing transactions.

(10) Trade information

The board of trade shall maintain rules and procedures to

provide for the recording and safe storage of all identifying

trade information in a manner that enables the contract market to

use the information for purposes of assisting in the prevention

of customer and market abuses and providing evidence of any

violations of the rules of the contract market.

(11) Financial integrity of contracts

The board of trade shall establish and enforce rules providing

for the financial integrity of any contracts traded on the

contract market (including the clearance and settlement of the

transactions with a derivatives clearing organization), and rules

to ensure the financial integrity of any futures commission

merchants and introducing brokers and the protection of customer

funds.

(12) Protection of market participants

The board of trade shall establish and enforce rules to protect

market participants from abusive practices committed by any party

acting as an agent for the participants.

(13) Dispute resolution

The board of trade shall establish and enforce rules regarding

and provide facilities for alternative dispute resolution as

appropriate for market participants and any market

intermediaries.

(14) Governance fitness standards

The board of trade shall establish and enforce appropriate

fitness standards for directors, members of any disciplinary

committee, members of the contract market, and any other persons

with direct access to the facility (including any parties

affiliated with any of the persons described in this paragraph).

(15) Conflicts of interest

The board of trade shall establish and enforce rules to

minimize conflicts of interest in the decisionmaking process of

the contract market and establish a process for resolving such

conflicts of interest.

(16) Composition of boards of mutually owned contract markets

In the case of a mutually owned contract market, the board of

trade shall ensure that the composition of the governing board

reflects market participants.

(17) Recordkeeping

The board of trade shall maintain records of all activities

related to the business of the contract market in a form and

manner acceptable to the Commission for a period of 5 years.

(18) Antitrust considerations

Unless necessary or appropriate to achieve the purposes of this

chapter, the board of trade shall endeavor to avoid -

(A) adopting any rules or taking any actions that result in

any unreasonable restraints of trade; or

(B) imposing any material anticompetitive burden on trading

on the contract market.

(e) Current agricultural commodities

(1) Subject to paragraph (2) of this subsection, a contract for

purchase or sale for future delivery of an agricultural commodity

enumerated in section 1a(4) of this title that is available for

trade on a contract market, as of December 21, 2000, may be traded

only on a contract market designated under this section.

(2) In order to promote responsible economic or financial

innovation and fair competition, the Commission, on application by

any person, after notice and public comment and opportunity for

hearing, may prescribe rules and regulations to provide for the

offer and sale of contracts for future delivery or options on such

contracts to be conducted on a derivatives transaction execution

facility.

-SOURCE-

(Sept. 21, 1922, ch. 369, Sec. 5, as added Pub. L. 106-554, Sec.

1(a)(5) (title I, Sec. 110(2)), Dec. 21, 2000, 114 Stat. 2763,

2763A-384.)

-MISC1-

PRIOR PROVISIONS

A prior section 7, acts Sept. 21, 1922, ch. 369, Sec. 5, 42 Stat.

1000; June 15, 1936, ch. 545, Sec. 2, 6, 49 Stat. 1491, 1497; Pub.

L. 90-258, Sec. 10, 11, Feb. 19, 1968, 82 Stat. 29; Pub. L. 93-463,

title I, Sec. 103(a), (f), (g), title II, Sec. 207, Oct. 23, 1974,

88 Stat. 1392, 1400; Pub. L. 102-546, title II, Sec. 201(c),

209(b)(2), Oct. 28, 1992, 106 Stat. 3597, 3606, related to

conditions and requirements for designation of boards of trade as

contract markets, prior to repeal by Pub. L. 106-554, Sec. 1(a)(5)

(title I, Sec. 110(2)), Dec. 21, 2000, 114 Stat. 2763, 2763A-384.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 1a, 2, 6, 7a, 7a-2, 7b-1,

8, 13a, 25 of this title; title 15 section 78c; title 26 section

408.

-CITE-

7 USC Sec. 7a 01/06/03

-EXPCITE-

TITLE 7 - AGRICULTURE

CHAPTER 1 - COMMODITY EXCHANGES

-HEAD-

Sec. 7a. Derivatives transaction execution facilities

-STATUTE-

(a) In general

In lieu of compliance with the contract market designation

requirements of sections 6(a) and 7 of this title, a board of trade

may elect to operate as a registered derivatives transaction

execution facility if the facility is -

(1) designated as a contract market and meets the requirements

of this section; or

(2) registered as a derivatives transaction execution facility

under subsection (c) of this section.

(b) Requirements for trading

(1) In general

A registered derivatives transaction execution facility under

subsection (a) of this section may trade any contract of sale of

a commodity for future delivery (or option on such a contract) on

or through the facility only by satisfying the requirements of

this section.

(2) Requirements for underlying commodities

A registered derivatives transaction execution facility may

trade any contract of sale of a commodity for future delivery (or

option on such a contract) only if -

(A) the underlying commodity has a nearly inexhaustible

deliverable supply;

(B) the underlying commodity has a deliverable supply that is

sufficiently large that the contract is highly unlikely to be

susceptible to the threat of manipulation;

(C) the underlying commodity has no cash market;

(D)(i) the contract is a security futures product, and (ii)

the registered derivatives transaction execution facility is a

national securities exchange registered under the Securities

Exchange Act of 1934 (15 U.S.C. 78a et seq.);

(E) the Commission determines, based on the market

characteristics, surveillance history, self-regulatory record,

and capacity of the facility that trading in the contract (or

option) is highly unlikely to be susceptible to the threat of

manipulation; or

(F) except as provided in section 7(e)(2) of this title, the

underlying commodity is a commodity other than an agricultural

commodity enumerated in section 1a(4) of this title, and

trading access to the facility is limited to eligible

commercial entities trading for their own account.

(3) Eligible traders

To trade on a registered derivatives transaction execution

facility, a person shall -

(A) be an eligible contract participant; or

(B) be a person trading through a futures commission merchant

that -

(i) is registered with the Commission;

(ii) is a member of a futures self-regulatory organization

or, if the person trades only security futures products on

the facility, a national securities association registered

under section 15A(a) of the Securities Exchange Act of 1934

(15 U.S.C. 78o-3(a));

(iii) is a clearing member of a derivatives clearing

organization; and

(iv) has net capital of at least $20,000,000.

(4) Trading by contract markets

A board of trade that is designated as a contract market shall,

to the extent that the contract market also operates a registered

derivatives transaction execution facility -

(A) provide a physical location for the contract market

trading of the board of trade that is separate from trading on

the derivatives transaction execution facility of the board of

trade; or

(B) if the board of trade uses the same electronic trading

system for trading on the contract market and derivatives

transaction execution facility of the board of trade, identify

whether the electronic trading is taking place on the contract

market or the derivatives transaction execution facility.

(c) Criteria for registration

(1) In general

To be registered as a registered derivatives transaction

execution facility, the board of trade shall be required to

demonstrate to the Commission only that the board of trade meets

the criteria specified in subsection (b) of this section and this

subsection.

(2) Deterrence of abuses

The board of trade shall establish and enforce trading and

participation rules that will deter abuses and has the capacity

to detect, investigate, and enforce those rules, including means

to -

(A) obtain information necessary to perform the functions

required under this section; or

(B) use technological means to -

(i) provide market participants with impartial access to

the market; and

(ii) capture information that may be used in establishing

whether rule violations have occurred.

(3) Trading procedures

The board of trade shall establish and enforce rules or terms

and conditions defining, or specifications detailing, trading

procedures to be used in entering and executing orders traded on

the facilities of the board of trade. The rules may authorize -

(A) transfer trades or office trades;

(B) an exchange of -

(i) futures in connection with a cash commodity

transaction;

(ii) futures for cash commodities; or

(iii) futures for swaps; or

(C) a futures commission merchant, acting as principal or

agent, to enter into or confirm the execution of a contract for

the purchase or sale of a commodity for future delivery if the

contract is reported, recorded, or cleared in accordance with

the rules of the registered derivatives transaction execution

facility or a derivatives clearing organization.

(4) Financial integrity of transactions

The board of trade shall establish and enforce rules or terms

and conditions providing for the financial integrity of

transactions entered on or through the facilities of the board of

trade, and rules or terms and conditions to ensure the financial

integrity of any futures commission merchants and introducing

brokers and the protection of customer funds.

(d) Core principles for registered derivatives transaction

execution facilities

(1) In general

To maintain the registration of a board of trade as a

derivatives transaction execution facility, a board of trade

shall comply with the core principles specified in this

subsection. The board of trade shall have reasonable discretion

in establishing the manner in which the board of trade complies

with the core principles.

(2) Compliance with rules

The board of trade shall monitor and enforce the rules of the

facility, including any terms and conditions of any contracts

traded on or through the facility and any limitations on access

to the facility.

(3) Monitoring of trading

The board of trade shall monitor trading in the contracts of

the facility to ensure orderly trading in the contract and to

maintain an orderly market while providing any necessary trading

information to the Commission to allow the Commission to

discharge the responsibilities of the Commission under the

(FOOTNOTE 1) chapter.

(FOOTNOTE 1) So in original. Probably should be ''this''.

(4) Disclosure of general information

The board of trade shall disclose publicly and to the

Commission information concerning -

(A) contract terms and conditions;

(B) trading conventions, mechanisms, and practices;

(C) financial integrity protections; and

(D) other information relevant to participation in trading on

the facility.

(5) Daily publication of trading information

The board of trade shall make public daily information on

settlement prices, volume, open interest, and opening and closing

ranges for contracts traded on the facility if the Commission

determines that the contracts perform a significant price

discovery function for transactions in the cash market for the

commodity underlying the contracts.

(6) Fitness standards

The board of trade shall establish and enforce appropriate

fitness standards for directors, members of any disciplinary

committee, members, and any other persons with direct access to

the facility, including any parties affiliated with any of the

persons described in this paragraph.

(7) Conflicts of interest

The board of trade shall establish and enforce rules to

minimize conflicts of interest in the decision making process of

the derivatives transaction execution facility and establish a

process for resolving such conflicts of interest.

(8) Recordkeeping

The board of trade shall maintain records of all activities

related to the business of the derivatives transaction execution

facility in a form and manner acceptable to the Commission for a

period of 5 years.

(9) Antitrust considerations

Unless necessary or appropriate to achieve the purposes of this

chapter, the board of trade shall endeavor to avoid -

(A) adopting any rules or taking any actions that result in

any unreasonable restraint of trade; or

(B) imposing any material anticompetitive burden on trading

on the derivatives transaction execution facility.

(e) Use of broker-dealers, depository institutions, and farm credit

system institutions as intermediaries

(1) In general

With respect to transactions other than transactions in

security futures products, a registered derivatives transaction

execution facility may by rule allow a broker-dealer, depository

institution, or institution of the Farm Credit System that meets

the requirements of paragraph (2) to -

(A) act as an intermediary in transactions executed on the

facility on behalf of customers of the broker-dealer,

depository institution, or institution of the Farm Credit

System; and

(B) receive funds of customers to serve as margin or security

for the transactions.

(2) Requirements

The requirements referred to in paragraph (1) are that -

(A) the broker-dealer be in good standing with the Securities

and Exchange Commission, or the depository institution or

institution of the Farm Credit System be in good standing with

Federal bank regulatory agencies (including the Farm Credit

Administration), as applicable; and

(B) if the broker-dealer, depository institution, or

institution of the Farm Credit System carries or holds customer

accounts or funds for transactions on the derivatives

transaction execution facility for more than 1 business day,

the broker-dealer, depository institution, or institution of

the Farm Credit System is registered as a futures commission

merchant and is a member of a registered futures association.

(3) Implementation

The Commission shall cooperate and coordinate with the

Securities and Exchange Commission, the Secretary of the

Treasury, and Federal banking regulatory agencies (including the

Farm Credit Administration) in adopting rules and taking any

other appropriate action to facilitate the implementation of this

subsection.

(f) Segregation of customer funds

Not later than 180 days after December 21, 2000, consistent with

regulations adopted by the Commission, a registered derivatives

transaction execution facility may authorize a futures commission

merchant to offer any customer of the futures commission merchant

that is an eligible contract participant the right to not segregate

the customer funds of the customer that are carried with the

futures commission merchant for purposes of trading on or through

the facilities of the registered derivatives transaction execution

facility.

(g) Election to trade excluded and exempt commodities

(1) In general

Notwithstanding subsection (b)(2) of this section, a board of

trade that is or elects to become a registered derivatives

transaction execution facility may trade on the facility any

agreements, contracts, or transactions involving excluded or

exempt commodities other than securities, except contracts of

sale for future delivery of exempt securities under section

3(a)(12) of the Securities Exchange Act of 1934 (15 U.S.C.

78c(a)(12)) as in effect on January 11, 1983, that are otherwise

excluded from this chapter under section 2(c), 2(d), or 2(g) of

this title, or exempt under section 2(h) of this title.

(2) Exclusive jurisdiction of the Commission

The Commission shall have exclusive jurisdiction over

agreements, contracts, or transactions described in paragraph (1)

to the extent that the agreements, contracts, or transactions are

traded on a derivatives transaction execution facility.

-SOURCE-

(Sept. 21, 1922, ch. 369, Sec. 5a, as added Pub. L. 106-554, Sec.

1(a)(5) (title I, Sec. 111), Dec. 21, 2000, 114 Stat. 2763,

2763A-387.)

-REFTEXT-

REFERENCES IN TEXT

The Securities Exchange Act of 1934, referred to in subsec.

(b)(2)(D)(ii), is act June 6, 1934, ch. 404, 48 Stat. 881, as

amended, which is classified principally to chapter 2B (Sec. 78a et

seq.) of Title 15, Commerce and Trade. For complete classification

of this Act to the Code, see section 78a of Title 15 and Tables.

-MISC2-

PRIOR PROVISIONS

A prior section 7a, act Sept. 21, 1922, ch. 369, Sec. 5a, as

added June 15, 1936, ch. 545, Sec. 7, 49 Stat. 1497; amended Pub.

L. 90-258, Sec. 12, Feb. 19, 1968, 82 Stat. 29; Pub. L. 93-463,

title I, Sec. 103(a), (e), (f), title II, Sec. 208-210, title IV,

Sec. 406, 407, Oct. 23, 1974, 88 Stat. 1392, 1400, 1401, 1413; Pub.

L. 95-405, Sec. 11, 12, Sept. 30, 1978, 92 Stat. 870, 871; Pub. L.

97-444, title II, Sec. 216, 217(a), Jan. 11, 1983, 96 Stat. 2306,

2307; Pub. L. 99-641, title I, Sec. 110(2), Nov. 10, 1986, 100

Stat. 3561; Pub. L. 102-546, title I, Sec. 103, title II, Sec.

201(a), 206(a)(1), 213(a), 217, 222(a), Oct. 28, 1992, 106 Stat.

3594, 3595, 3601, 3609, 3611, 3615, related to duties of contract

markets prior to repeal by Pub. L. 106-554, Sec. 1(a)(5) (title I,

Sec. 110(2)), Dec. 21, 2000, 114 Stat. 2763, 2763A-384.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 1a, 2, 7a-2, 8, 13a, 25

of this title; title 15 section 78f.

-CITE-

7 USC Sec. 7a-1 01/06/03

-EXPCITE-

TITLE 7 - AGRICULTURE

CHAPTER 1 - COMMODITY EXCHANGES

-HEAD-

Sec. 7a-1. Derivatives clearing organizations

-STATUTE-

(a) Registration requirement

It shall be unlawful for a derivatives clearing organization,

unless registered with the Commission, directly or indirectly to

make use of the mails or any means or instrumentality of interstate

commerce to perform the functions of a derivatives clearing

organization described in section 1a(9) of this title with respect

to a contract of sale of a commodity for future delivery (or option

on such a contract) or option on a commodity, in each case unless

the contract or option -

(1) is excluded from this chapter by section 2(a)(1)(C)(i),

2(c), 2(d), 2(f), or 2(g) of this title or sections 27 to 27f of

this title, or exempted under section 2(h) or 6(c) of this title;

or

(2) is a security futures product cleared by a clearing agency

registered under the Securities Exchange Act of 1934 (15 U.S.C.

78a et seq.).

(b) Voluntary registration

A derivatives clearing organization that clears agreements,

contracts, or transactions excluded from this chapter by section

2(c), 2(d), 2(f), or 2(g) of this title or sections 27 to 27f of

this title, or exempted under section 2(h) or 6(c) of this title,

or other over-the-counter derivative instruments (as defined in the

Federal Deposit Insurance Corporation Improvement Act of 1991) may

register with the Commission as a derivatives clearing

organization.

(c) Registration of derivatives clearing organizations

(1) Application

A person desiring to register as a derivatives clearing

organization shall submit to the Commission an application in

such form and containing such information as the Commission may

require for the purpose of making the determinations required for

approval under paragraph (2).

(2) Core principles

(A) In general

To be registered and to maintain registration as a

derivatives clearing organization, an applicant shall

demonstrate to the Commission that the applicant complies with

the core principles specified in this paragraph. The applicant

shall have reasonable discretion in establishing the manner in

which it complies with the core principles.

(B) Financial resources

The applicant shall demonstrate that the applicant has

adequate financial, operational, and managerial resources to

discharge the responsibilities of a derivatives clearing

organization.

(C) Participant and product eligibility

The applicant shall establish -

(i) appropriate admission and continuing eligibility

standards (including appropriate minimum financial

requirements) for members of and participants in the

organization; and

(ii) appropriate standards for determining eligibility of

agreements, contracts, or transactions submitted to the

applicant.

(D) Risk management

The applicant shall have the ability to manage the risks

associated with discharging the responsibilities of a

derivatives clearing organization through the use of

appropriate tools and procedures.

(E) Settlement procedures

The applicant shall have the ability to -

(i) complete settlements on a timely basis under varying

circumstances;

(ii) maintain an adequate record of the flow of funds

associated with each transaction that the applicant clears;

and

(iii) comply with the terms and conditions of any permitted

netting or offset arrangements with other clearing

organizations.

(F) Treatment of funds

The applicant shall have standards and procedures designed to

protect and ensure the safety of member and participant funds.

(G) Default rules and procedures

The applicant shall have rules and procedures designed to

allow for efficient, fair, and safe management of events when

members or participants become insolvent or otherwise default

on their obligations to the derivatives clearing organization.

(H) Rule enforcement

The applicant shall -

(i) maintain adequate arrangements and resources for the

effective monitoring and enforcement of compliance with rules

of the applicant and for resolution of disputes; and

(ii) have the authority and ability to discipline, limit,

suspend, or terminate a member's or participant's activities

for violations of rules of the applicant.

(I) System safeguards

The applicant shall demonstrate that the applicant -

(i) has established and will maintain a program of

oversight and risk analysis to ensure that the automated

systems of the applicant function properly and have adequate

capacity and security; and

(ii) has established and will maintain emergency procedures

and a plan for disaster recovery, and will periodically test

backup facilities sufficient to ensure daily processing,

clearing, and settlement of transactions.

(J) Reporting

The applicant shall provide to the Commission all information

necessary for the Commission to conduct the oversight function

of the applicant with respect to the activities of the

derivatives clearing organization.

(K) Recordkeeping

The applicant shall maintain records of all activities

related to the business of the applicant as a derivatives

clearing organization in a form and manner acceptable to the

Commission for a period of 5 years.

(L) Public information

The applicant shall make information concerning the rules and

operating procedures governing the clearing and settlement

systems (including default procedures) available to market

participants.

(M) Information-sharing

The applicant shall -

(i) enter into and abide by the terms of all appropriate

and applicable domestic and international information-sharing

agreements; and

(ii) use relevant information obtained from the agreements

in carrying out the clearing organization's risk management

program.

(N) Antitrust considerations

Unless appropriate to achieve the purposes of this chapter,

the derivatives clearing organization shall avoid -

(i) adopting any rule or taking any action that results in

any unreasonable restraint of trade; or

(ii) imposing any material anticompetitive burden on

trading on the contract market.

(3) Orders concerning competition

A derivatives clearing organization may request the Commission

to issue an order concerning whether a rule or practice of the

applicant is the least anticompetitive means of achieving the

objectives, purposes, and policies of this chapter.

(d) Existing derivatives clearing organizations

A derivatives clearing organization shall be deemed to be

registered under this section to the extent that the derivatives

clearing organization clears agreements, contracts, or transactions

for a board of trade that has been designated by the Commission as

a contract market for such agreements, contracts, or transactions

before December 21, 2000.

(e) Appointment of trustee

(1) In general

If a proceeding under section 7b of this title results in the

suspension or revocation of the registration of a derivatives

clearing organization, or if a derivatives clearing organization

withdraws from registration, the Commission, on notice to the

derivatives clearing organization, may apply to the appropriate

United States district court where the derivatives clearing

organization is located for the appointment of a trustee.

(2) Assumption of jurisdiction

If the Commission applies for appointment of a trustee under

paragraph (1) -

(A) the court may take exclusive jurisdiction over the

derivatives clearing organization and the records and assets of

the derivatives clearing organization, wherever located; and

(B) if the court takes jurisdiction under subparagraph (A),

the court shall appoint the Commission, or a person designated

by the Commission, as trustee with power to take possession and

continue to operate or terminate the operations of the

derivatives clearing organization in an orderly manner for the

protection of participants, subject to such terms and

conditions as the court may prescribe.

(f) Linking of regulated clearing facilities

(1) In general

The Commission shall facilitate the linking or coordination of

derivatives clearing organizations registered under this chapter

with other regulated clearance facilities for the coordinated

settlement of cleared transactions.

(2) Coordination

In carrying out paragraph (1), the Commission shall coordinate

with the Federal banking agencies and the Securities and Exchange

Commission.

-SOURCE-

(Sept. 21, 1922, ch. 369, Sec. 5b, as added Pub. L. 106-554, Sec.

1(a)(5) (title I, Sec. 112(f)), Dec. 21, 2000, 114 Stat. 2763,

2763A-396.)

-REFTEXT-

REFERENCES IN TEXT

The Securities Exchange Act of 1934, referred to in subsec.

(a)(2), is act June 6, 1934, ch. 404, 48 Stat. 881, as amended,

which is classified principally to chapter 2B (Sec. 78a et seq.) of

Title 15, Commerce and Trade. For complete classification of this

Act to the Code, see section 78a of Title 15 and Tables.

The Federal Deposit Insurance Corporation Improvement Act of

1991, referred to in subsec. (b), is Pub. L. 102-242, Dec. 19,

1991, 105 Stat. 2236, as amended. For definition of

over-the-counter derivative instrument, see section 4421 of Title

12, Banks and Banking. For complete classification of this Act to

the Code, see Short Title of 1991 Amendment note set out under

section 1811 of Title 12 and Tables.

-MISC2-

PRIOR PROVISIONS

A prior section 5b of act Sept. 21, 1922, was renumbered section

5e, and is classified to section 7b of this title.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 1a, 2, 7a-2, 8, 13a, 25,

27e of this title; title 12 section 4402.

-CITE-

7 USC Sec. 7a-2 01/06/03

-EXPCITE-

TITLE 7 - AGRICULTURE

CHAPTER 1 - COMMODITY EXCHANGES

-HEAD-

Sec. 7a-2. Common provisions applicable to registered entities

-STATUTE-

(a) Acceptable business practices under core principles

(1) In general

Consistent with the purposes of this chapter, the Commission

may issue interpretations, or approve interpretations submitted

to the Commission, of sections 7(d), 7a(d), and 7a-1(d)(2)

(FOOTNOTE 1) of this title to describe what would constitute an

acceptable business practice under such sections.

(FOOTNOTE 1) So in original. Reference to section 7a-1(d)(2)

probably should be a reference to section 7a-1(c)(2).

(2) Effect of interpretation

An interpretation issued under paragraph (1) shall not provide

the exclusive means for complying with such sections.

(b) Delegation of functions under core principles

(1) In general

A contract market or derivatives transaction execution facility

may comply with any applicable core principle through delegation

of any relevant function to a registered futures association or

another registered entity.

(2) Responsibility

A contract market or derivatives transaction execution facility

that delegates a function under paragraph (1) shall remain

responsible for carrying out the function.

(3) Noncompliance

If a contract market or derivatives transaction execution

facility that delegates a function under paragraph (1) becomes

aware that a delegated function is not being performed as

required under this chapter, the contract market or derivatives

transaction execution facility shall promptly take steps to

address the noncompliance.

(c) New contracts, new rules, and rule amendments

(1) In general

Subject to paragraph (2), a registered entity may elect to list

for trading or accept for clearing any new contract or other

instrument, or may elect to approve and implement any new rule or

rule amendment, by providing to the Commission (and the Secretary

of the Treasury, in the case of a contract of sale of a

government security for future delivery (or option on such a

contract) or a rule or rule amendment specifically related to

such a contract) a written certification that the new contract or

instrument or clearing of the new contract or instrument, new

rule, or rule amendment complies with this chapter (including

regulations under this chapter).

(2) Prior approval

(A) In general

A registered entity may request that the Commission grant

prior approval to any new contract or other instrument, new

rule, or rule amendment.

(B) Prior approval required

Notwithstanding any other provision of this section, a

designated contract market shall submit to the Commission for

prior approval each rule amendment that materially changes the

terms and conditions, as determined by the Commission, in any

contract of sale for future delivery of a commodity

specifically enumerated in section 1a(4) of this title (or any

option thereon) traded through its facilities if the rule

amendment applies to contracts and delivery months which have

already been listed for trading and have open interest.

(C) Deadline

If prior approval is requested under subparagraph (A), the

Commission shall take final action on the request not later

than 90 days after submission of the request, unless the person

submitting the request agrees to an extension of the time

limitation established under this subparagraph.

(3) Approval

The Commission shall approve any such new contract or

instrument, new rule, or rule amendment unless the Commission

finds that the new contract or instrument, new rule, or rule

amendment would violate this chapter.

(d) Violation of core principles

(1) In general

If the Commission determines, on the basis of substantial

evidence, that a registered entity is violating any applicable

core principle specified in section 7(d), 7a(d), or 7a-1(d)(2)

(FOOTNOTE 1) of this title, the Commission shall -

(A) notify the registered entity in writing of the

determination; and

(B) afford the registered entity an opportunity to make

appropriate changes to bring the registered entity into

compliance with the core principles.

(2) Failure to make changes

If, not later than 30 days after receiving a notification under

paragraph (1), a registered entity fails to make changes that, in

the opinion of the Commission, are necessary to comply with the

core principles, the Commission may take further action in

accordance with this chapter.

(e) Reservation of emergency authority

Nothing in this section shall limit or in any way affect the

emergency powers of the Commission provided in section 12a(9) of

this title.

(f) Rules to avoid duplicative regulation of dual registrants

Consistent with this chapter, each designated contract market and

registered derivatives transaction execution facility shall issue

such rules as are necessary to avoid duplicative or conflicting

rules applicable to any futures commission merchant registered with

the Commission pursuant to section 6f(a) of this title (except

paragraph (2) thereof), that is also registered with the Securities

and Exchange Commission pursuant to section 78o(b) of title 15

(except paragraph (11) thereof) with respect to the application of

-

(1) rules of such designated contract market or registered

derivatives transaction execution facility of the type specified

in section 6d(3) of this title involving security futures

products; and

(2) similar rules of national securities associations

registered pursuant to section 78o-3(a) of title 15 and national

securities exchanges registered pursuant to section 78f(g) of

title 15 involving security futures products.

-SOURCE-

(Sept. 21, 1922, ch. 369, Sec. 5c, as added and amended Pub. L.

106-554, Sec. 1(a)(5) (title I, Sec. 113, title II, Sec. 251(h)),

Dec. 21, 2000, 114 Stat. 2763, 2763A-399, 2763A-444.)

-MISC1-

AMENDMENTS

2000 - Subsec. (f). Pub. L. 106-554, Sec. 1(a)(5) (title II, Sec.

251(h)), added subsec. (f).

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 7b-1, 13a, 25 of this

title; title 15 section 78s.

-CITE-

7 USC Sec. 7a-3 01/06/03

-EXPCITE-

TITLE 7 - AGRICULTURE

CHAPTER 1 - COMMODITY EXCHANGES

-HEAD-

Sec. 7a-3. Exempt boards of trade

-STATUTE-

(a) Election to register with the Commission

A board of trade that meets the requirements of subsection (b) of

this section may operate as an exempt board of trade on receipt

from the board of trade of a notice, provided in such manner as the

Commission may by rule or regulation prescribe, that the board of

trade elects to operate as an exempt board of trade. Except as

otherwise provided in this section, no provision of this chapter

(other than subparagraphs (C) and (D) of sections 2(a)(1) and

16(e)(2)(B) of this title) shall apply with respect to a contract

of sale of a commodity for future delivery (or option on such a

contract) traded on or through the facilities of an exempt board of

trade.

(b) Criteria for exemption

To qualify for an exemption under subsection (a) of this section,

a board of trade shall limit trading on or through the facilities

of the board of trade to contracts of sale of a commodity for

future delivery (or options on such contracts or on a commodity) -

(1) for which the underlying commodity has -

(A) a nearly inexhaustible deliverable supply;

(B) a deliverable supply that is sufficiently large, and a

cash market sufficiently liquid, to render any contract traded

on the commodity highly unlikely to be susceptible to the

threat of manipulation; or

(C) no cash market;

(2) that are entered into only between persons that are

eligible contract participants at the time at which the persons

enter into the contract; and

(3) that are not contracts of sale (or options on such a

contract or on a commodity) for future delivery of any security,

including any group or index of securities or any interest in, or

based on the value of, any security or any group or index of

securities.

(c) Antimanipulation requirements

A party to a contract of sale of a commodity for future delivery

(or option on such a contract or on a commodity) that is traded on

an exempt board of trade shall be subject to sections 6b, 6c(b),

6o, 9, 15, and 13(a)(2) of this title, and the Commission shall

enforce those provisions with respect to any such trading.

(d) Price discovery

If the Commission finds that an exempt board of trade is a

significant source of price discovery for transactions in the cash

market for the commodity underlying any contract, agreement, or

transaction traded on or through the facilities of the board of

trade, the board of trade shall disseminate publicly on a daily

basis trading volume, opening and closing price ranges, open

interest, and other trading data as appropriate to the market.

(e) Jurisdiction

The Commission shall have exclusive jurisdiction over any

account, agreement, contract, or transaction involving a contract

of sale of a commodity for future delivery, or option on such a

contract or on a commodity, to the extent that the account,

agreement, contract, or transaction is traded on an exempt board of

trade.

(f) Subsidiaries

A board of trade that is designated as a contract market or

registered as a derivatives transaction execution facility may

operate an exempt board of trade by establishing a separate

subsidiary or other legal entity and otherwise satisfying the

requirements of this section.

(g) Misrepresentation of status

An exempt board of trade that meets the requirements of

subsection (b) of this section shall not represent to any person

that the board of trade is registered with, or designated,

recognized, licensed, or approved by the Commission.

-SOURCE-

(Sept. 21, 1922, ch. 369, Sec. 5d, as added Pub. L. 106-554, Sec.

1(a)(5) (title I, Sec. 114), Dec. 21, 2000, 114 Stat. 2763,

2763A-401.)

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in section 2 of this title.

-CITE-

7 USC Sec. 7b 01/06/03

-EXPCITE-

TITLE 7 - AGRICULTURE

CHAPTER 1 - COMMODITY EXCHANGES

-HEAD-

Sec. 7b. Suspension or revocation of designation as registered

entity

-STATUTE-

The failure of a registered entity to comply with any provision

of this chapter, or any regulation or order of the Commission under

this chapter, shall be cause for the suspension of the registered

entity for a period not to exceed 180 days, or revocation of

designation as a registered entity in accordance with the

procedures and subject to the judicial review provided in section

8(b) of this title.

-SOURCE-

(Sept. 21, 1922, ch. 369, Sec. 5e, formerly Sec. 5b, as added June

15, 1936, ch. 545, Sec. 7, 49 Stat. 1498; amended Pub. L. 90-258,

Sec. 13, Feb. 19, 1968, 82 Stat. 30; Pub. L. 93-463, title I, Sec.

103(a), (b), Oct. 23, 1974, 88 Stat. 1392; Pub. L. 102-546, title

II, Sec. 209(b)(3), Oct. 28, 1992, 106 Stat. 3607; renumbered Sec.

5e and amended Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec. 110(1),

115), Dec. 21, 2000, 114 Stat. 2763, 2763A-384, 2763A-402.)

-MISC1-

AMENDMENTS

2000 - Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec. 115), amended

section generally. Prior to amendment, section read as follows:

''The failure or refusal of any board of trade to comply with any

of the provisions of this chapter, or any of the rules,

regulations, or orders of the Commission or the commission

thereunder, shall be cause for suspending for a period not to

exceed six months or revoking the designation of such board of

trade as a 'contract market' in accordance with the procedure and

subject to the judicial review provided in section 8(b) of this

title.''

1992 - Pub. L. 102-546 substituted reference to section 8(b) of

this title for reference to section 8 of this title.

1974 - Pub. L. 93-463, Sec. 103(a), provided for substitution of

''Commission'' for ''Secretary of Agriculture'' except where such

words would be stricken by section 103(b), which directed striking

the words ''the Secretary of Agriculture or'' where they appeared

in the phrase ''the Secretary of Agriculture or the Commission''.

Because the word ''commission'' was not capitalized in the text of

this section, section 103(b) did not apply to this section and

therefore section 103(a) was executed, resulting in the

substitution of ''the Commission or the commission'' for ''the

Secretary of Agriculture or the commission''.

1968 - Pub. L. 90-258 substituted ''rules, regulations, or orders

of the Secretary of Agriculture or the commission'' for ''rules and

regulations of the Secretary of Agriculture''.

EFFECTIVE DATE OF 1974 AMENDMENT

For effective date of amendment by Pub. L. 93-463, see section

418 of Pub. L. 93-463, set out as a note under section 2 of this

title.

EFFECTIVE DATE OF 1968 AMENDMENT

Amendment by Pub. L. 90-258 effective 120 days after Feb. 19,

1968, see section 28 of Pub. L. 90-258, set out as a note under

section 2 of this title.

EFFECTIVE DATE

For effective date of section, see section 13 of act June 15,

1936, set out as an Effective Date of 1936 Amendment note under

section 1 of this title.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in section 7a-1 of this title.

-CITE-

7 USC Sec. 7b-1 01/06/03

-EXPCITE-

TITLE 7 - AGRICULTURE

CHAPTER 1 - COMMODITY EXCHANGES

-HEAD-

Sec. 7b-1. Designation of securities exchanges and associations as

contract markets

-STATUTE-

(a) Any board of trade that is registered with the Securities and

Exchange Commission as a national securities exchange, is a

national securities association registered pursuant to section

78o-3(a) of title 15, or is an alternative trading system shall be

a designated contract market in security futures products if -

(1) such national securities exchange, national securities

association, or alternative trading system lists or trades no

other contracts of sale for future delivery, except for security

futures products;

(2) such national securities exchange, national securities

association, or alternative trading system files written notice

with the Commission in such form as the Commission, by rule, may

prescribe containing such information as the Commission, by rule,

may prescribe as necessary or appropriate in the public interest

or for the protection of customers; and

(3) the registration of such national securities exchange,

national securities association, or alternative trading system is

not suspended pursuant to an order by the Securities and Exchange

Commission.

Such designation shall be effective contemporaneously with the

submission of notice, in written or electronic form, to the

Commission.

(b)(1) A national securities exchange, national securities

association, or alternative trading system that is designated as a

contract market pursuant to this section shall be exempt from the

following provisions of this chapter and the rules thereunder:

(A) Subsections (c), (e), and (g) of section 6c of this title.

(B) Section 6j of this title.

(C) Section 7 of this title.

(D) Section 7a-2 of this title.

(E) Section 10a of this title.

(F) Section 12(d) of this title.

(G) Section 13(f) of this title.

(H) Section 20 of this title.

(2) An alternative trading system that is a designated contract

market under this section shall be required to be a member of a

futures association registered under section 21 of this title and

shall be exempt from any provision of this chapter that would

require such alternative trading system to -

(A) set rules governing the conduct of subscribers other than

the conduct of such subscribers' trading on such alternative

trading system; or

(B) discipline subscribers other than by exclusion from

trading.

(3) To the extent that an alternative trading system is exempt

from any provision of this chapter pursuant to paragraph (2) of

this subsection, the futures association registered under section

21 of this title of which the alternative trading system is a

member shall set rules governing the conduct of subscribers to the

alternative trading system and discipline the subscribers.

(4)(A) Except as provided in subparagraph (B), but

notwithstanding any other provision of this chapter, the

Commission, by rule, regulation, or order, may conditionally or

unconditionally exempt any designated contract market in security

futures subject to the designation requirement of this section from

any provision of this chapter or of any rule or regulation

thereunder, to the extent such exemption is necessary or

appropriate in the public interest and is consistent with the

protection of investors.

(B) The Commission shall, by rule or regulation, determine the

procedures under which an exemptive order under this section is

granted and may, in its sole discretion, decline to entertain any

application for an order of exemption under this section.

(C) An alternative trading system shall not be deemed to be an

exchange for any purpose as a result of the designation of such

alternative trading system as a contract market under this section.

-SOURCE-

(Sept. 21, 1922, ch. 369, Sec. 5f, as added Pub. L. 106-554, Sec.

1(a)(5) (title II, Sec. 252(a)), Dec. 21, 2000, 114 Stat. 2763,

2763A-445.)

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 1a, 2, 8, 9c, 12, 13a-1

of this title.

-CITE-

7 USC Sec. 7b-2 01/06/03

-EXPCITE-

TITLE 7 - AGRICULTURE

CHAPTER 1 - COMMODITY EXCHANGES

-HEAD-

Sec. 7b-2. Privacy

-STATUTE-

(a) Treatment as financial institutions

Notwithstanding section 509(3)(B) of the Gramm-Leach-Bliley Act

(15 U.S.C. 6809(3)(B)), any futures commission merchant, commodity

trading advisor, commodity pool operator, or introducing broker

that is subject to the jurisdiction of the Commission under this

chapter with respect to any financial activity shall be treated as

a financial institution for purposes of title V of such Act (15

U.S.C. 6801 et seq.) with respect to such financial activity.

(b) Treatment of CFTC as Federal functional regulator

For purposes of title V of such Act (15 U.S.C. 6801 et seq.), the

Commission shall be treated as a Federal functional regulator

within the meaning of section 509(2) of such Act (15 U.S.C.

6809(2)) and shall prescribe regulations under such title within 6

months after December 21, 2000.

-SOURCE-

(Sept. 21, 1922, ch. 369, Sec. 5g, as added Pub. L. 106-554, Sec.

1(a)(5) (title I, Sec. 124), Dec. 21, 2000, 114 Stat. 2763,

2763A-411.)

-REFTEXT-

REFERENCES IN TEXT

The Gramm-Leach-Bliley Act, referred to in text, is Pub. L.

106-102, Nov. 12, 1999, 113 Stat. 1338. Title V of the Act is

classified principally to chapter 94 (Sec. 6801 et seq.) of Title

15, Commerce and Trade. For complete classification of this Act to

the Code, see Short Title of 1999 Amendment note set out under

section 1811 of Title 12, Banks and Banking, and Tables.

-CITE-

7 USC Sec. 8 01/06/03

-EXPCITE-

TITLE 7 - AGRICULTURE

CHAPTER 1 - COMMODITY EXCHANGES

-HEAD-

Sec. 8. Application for designation as contract market or

derivatives transaction execution facility; time; suspension or

revocation of designation; hearing; review by court of appeals

-STATUTE-

(a) Any person desiring to be designated or registered as a

contract market or derivatives transaction execution facility shall

make application to the Commission for the designation or

registration and accompany the same with a showing that it complies

with the conditions set forth in this chapter, and with a

sufficient assurance that it will continue to comply with the the

(FOOTNOTE 1) requirements of this chapter. The Commission shall

approve or deny an application for designation or registration as a

contract market or derivatives transaction execution facility

within 180 days of the filing of the application. If the

Commission notifies the person that its application is materially

incomplete and specifies the deficiencies in the application, the

running of the 180-day period shall be stayed from the time of such

notification until the application is resubmitted in completed

form: Provided, That the Commission shall have not less than sixty

days to approve or deny the application from the time the

application is resubmitted in completed form. If the Commission

denies an application, it shall specify the grounds for the

denial. In the event of a refusal to designate or register as a

contract market or derivatives transaction execution facility any

person that has made application therefor, the person shall be

afforded an opportunity for a hearing on the record before the

Commission, with the right to appeal an adverse decision after such

hearing to the court of appeals as provided for in other cases in

subsection (b) of this section.

(FOOTNOTE 1) So in original.

(b) The Commission is authorized to suspend for a period not to

exceed six months or to revoke the designation or registration of

any contract market or derivatives transaction execution facility

on a showing that such contract market or derivatives transaction

execution facility is not enforcing or has not enforced its rules

of government made a condition of its designation or registration

as set forth in sections 7 through 7a-1 of this title or section

7b-1 of this title or that such contract market or derivatives

transaction execution facility, or any director, officer, agent, or

employee thereof, otherwise is violating or has violated any of the

provisions of this chapter or any of the rules, regulations, or

orders of the Commission or the Commission (FOOTNOTE 2)

thereunder. Such suspension or revocation shall only be after a

notice to the officers of the contract market or derivatives

transaction execution facility affected and upon a hearing on the

record: Provided, That such suspension or revocation shall be final

and conclusive, unless within fifteen days after such suspension or

revocation by the Commission such person appeals to the court of

appeals for the circuit in which it has its principal place of

business, by filing with the clerk of such court a written petition

praying that the order of the Commission be set aside or modified

in the manner stated in the petition, together with a bond in such

sum as the court may determine, conditioned that such person will

pay the costs of the proceedings if the court so directs. The

clerk of the court in which such a petition is filed shall

immediately cause a copy thereof to be delivered to the Commission

and file in the court the record in such proceedings, as provided

in section 2112 of title 28. The testimony and evidence taken or

submitted before the Commission, duly filed as aforesaid as a part

of the record, shall be considered by the court of appeals as the

evidence in the case. Such a court may affirm or set aside the

order of the Commission or may direct it to modify its order. No

such order of the Commission shall be modified or set aside by the

court of appeals unless it is shown by the person that the order is

unsupported by the weight of the evidence or was issued without due

notice and a reasonable opportunity having been afforded to such

person for a hearing, or infringes the Constitution of the United

States, or is beyond the jurisdiction of the Commission.

(FOOTNOTE 2) So in original. The words ''or the Commission''

probably should not appear.

-SOURCE-

(Sept. 21, 1922, ch. 369, Sec. 6(a), (b), formerly Sec. 6(a), 42

Stat. 1001; June 25, 1948, ch. 646, Sec. 32(a), 62 Stat. 991; May

24, 1949, ch. 139, Sec. 127, 63 Stat. 107; Pub. L. 85-791, Sec.

7(a), Aug. 28, 1958, 72 Stat. 944; Pub. L. 90-258, Sec. 14, 15,

Feb. 19, 1968, 82 Stat. 30; Pub. L. 93-463, title I, Sec.

103(a)-(c), Oct. 23, 1974, 88 Stat. 1392; Pub. L. 95-405, Sec.

13(1), (2), Sept. 30, 1978, 92 Stat. 871; Pub. L. 97-444, title II,

Sec. 218, Jan. 11, 1983, 96 Stat. 2308; Pub. L. 98-620, title IV,

Sec. 402(3), Nov. 8, 1984, 98 Stat. 3357; renumbered Sec. 6(a), (b)

and amended Pub. L. 102-546, title II, Sec. 209(a)(1)-(3), title

IV, Sec. 402(1)(B), (9)(A), Oct. 28, 1992, 106 Stat. 3606, 3624,

3625; Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec. 123(a)(12)(A),

(B)), Dec. 21, 2000, 114 Stat. 2763, 2763A-408.)

-COD-

CODIFICATION

Section is comprised of subsecs. (a) and (b) of section 6 of act

Sept. 21, 1922. Subsec. (c) of section 6 is classified to sections

9 and 15 of this title. Subsecs. (d), (e), (f), and (g) of section

6 are classified to sections 13b, 9a, 9b, and 9c of this title,

respectively.

-MISC3-

AMENDMENTS

2000 - Subsec. (a). Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec.

123(a)(12)(A)(iv)), substituted ''designate or register as a

contract market or derivatives transaction execution facility any

person that has made application therefor, the person'' for

''designate as a 'contract market' any board of trade that has made

application therefor, such board of trade'' in last sentence.

Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec. 123(a)(12)(A)(iii)),

in third sentence, substituted ''person'' for ''board of trade''

and ''180-day period'' for ''one-year period''.

Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec. 123(a)(12)(A)(ii)),

substituted ''designation or registration as a contract market or

derivatives transaction execution facility within 180 days'' for

''designation as a contract market within one year'' in second

sentence.

Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec. 123(a)(12)(A)(i)),

in first sentence, substituted ''person desiring to be designated

or registered as a contract market or derivatives transaction

execution facility shall make application to the Commission for the

designation or registration'' for ''board of trade desiring to be

designated a 'contract market' shall make application to the

Commission for such designation'', ''conditions set forth in this

chapter'' for ''above conditions'', and ''the requirements of this

chapter'' for ''above requirements''.

Subsec. (b). Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec.

123(a)(12)(B)(iii)), substituted ''person'' for ''board of trade''

in two places in last sentence.

Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec. 123(a)(12)(B)(ii)),

in second sentence, substituted ''contract market or derivatives

transaction execution facility affected'' for ''board of trade

affected'', ''person appeals'' for ''board of trade appeals'' and

''person will'' for ''board of trade will''.

Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec. 123(a)(12)(B)(i)),

in first sentence, substituted ''designation or registration of any

contract market or derivatives transaction execution facility on''

for ''designation of any board of trade as a 'contract market'

upon'', ''contract market or derivatives transaction execution

facility'' for ''board of trade'' in two places, and ''designation

or registration as set forth in sections 7 through 7a-1 of this

title or section 7b-1 of this title'' for ''designation as set

forth in section 7 of this title''.

1992 - Pub. L. 102-546, Sec. 209(a)(1), (2), designated first

par. as subsec. (a) and redesignated former par. (a) as subsec.

(b).

Subsec. (a). Pub. L. 102-546, Sec. 209(a)(3), substituted

''subsection (b)'' for ''paragraph (a)''.

Subsec. (b). Pub. L. 102-546, Sec. 402(9)(A), which directed

amendment of first sentence by striking ''the Secretary of

Agriculture or'', could not be executed because of amendment by

Pub. L. 93-463, Sec. 103(a). See 1974 Amendment note below.

Pub. L. 102-546, Sec. 402(1)(B), substituted ''Commission'' for

''commission'' wherever appearing.

1984 - Par. (a). Pub. L. 98-620 struck out provisions requiring

proceedings in such cases in the court of appeals to be made a

preferred cause and expedited in every way.

1983 - Pub. L. 97-444 required approval or denial of application

within one year period of filing of application, stay of such

period following notification that application was incomplete and

deficient until resubmission of application, minimum period prior

to acting upon resubmitted application, and specification of

grounds for denial of application.

1978 - Pub. L. 95-405, Sec. 13(1), in provisions before par. (a)

inserted ''on the record'' after ''opportunity for a hearing''.

Par. (a). Pub. L. 95-405, Sec. 13(2), inserted ''on the record''

after ''upon a hearing''.

1974 - Pub. L. 93-463, Sec. 103(a), substituted ''Commission''

for ''Secretary of Agriculture'' in first par.

Par. (a). Pub. L. 93-463, Sec. 103(c), struck out ''the Secretary

of Agriculture, who shall thereupon notify the other members of''

after ''The clerk of the court in which such a petition is filed

shall immediately cause a copy thereof to be delivered to''.

Pub. L. 93-463, Sec. 103(a), provided for substitution of

''Commission'' for ''Secretary of Agriculture'' except where such

words would be stricken by section 103(b), which directed striking

the words ''the Secretary of Agriculture or'' where they appeared

in the phrase ''the Secretary of Agriculture or the Commission''.

Because the word ''commission'' was not capitalized in that phrase

in par. (a), section 103(b) did not apply to par. (a) and therefore

section 103(a) was executed, resulting in the substitution of ''the

Commission or the commission'' for ''the Secretary of Agriculture

or the commission''.

1968 - Pub. L. 90-258, Sec. 14, inserted provision affording any

board of trade refused a contract market designation a hearing

before the Commission with right to appeal in adverse decision to

the court of appeals as provided for in par. (a) of this section at

end of first par.

Par. (a). Pub. L. 90-258, Sec. 15, amended par. (a) generally,

striking out such parts both of first sentence and of proviso of

last sentence as described the commission as made up of the

Secretary of Agriculture, Secretary of Commerce, and Attorney

General (covered in definition of ''Commission'' in section 2 of

this title, including representation of such officials by their

designees), extending grounds for suspension or revocation of

designation to include violations of any provisions of this chapter

or rules, regulations, or orders of the Secretary of Agriculture or

commission, requiring delivery of appeal petitions to Secretary of

Agriculture rather than any member of the commission, who would

notify the other members, and filing of commission records of

proceedings on appeal by the Secretary of Agriculture and not the

commission, striking out provisions describing Secretary of

Agriculture as Chairman (now found in section 2 of this title),

superseding such part of proviso of seventh sentence as authorized

appeals to the commission from Secretary of Agriculture's refusal

of a contract market designation by provisions of first par. of

this section, and striking out such other part as made decision of

court on appeal from commission final and binding on the parties.

1958 - Pub. L. 85-791 substituted ''thereupon file in the court

the record in such proceedings, as provided in section 2112 of

title 28'' for ''forthwith prepare, certify, and file in the court

a full and accurate transcript of the record in such proceedings

including the notice to the board of trade, a copy of the charges,

the evidence, and the report and order'' in third notice, and

struck out ''certified and'' after ''duly'' in fourth sentence.

-CHANGE-

CHANGE OF NAME

Act June 25, 1948, as amended by act May 24, 1949, substituted

''court of appeals'' for ''circuit court of appeals'' wherever

appearing in this section.

-MISC4-

EFFECTIVE DATE OF 1984 AMENDMENT

Amendment by Pub. L. 98-620 not applicable to cases pending on

Nov. 8, 1984, see section 403 of Pub. L. 98-620, set out as an

Effective Date note under section 1657 of Title 28, Judiciary and

Judicial Procedure.

EFFECTIVE DATE OF 1983 AMENDMENT

Amendment by Pub. L. 97-444 effective Jan. 11, 1983, see section

239 of Pub. L. 97-444, set out as a note under section 2 of this

title.

EFFECTIVE DATE OF 1978 AMENDMENT

Amendment by Pub. L. 95-405 effective Oct. 1, 1978, see section

28 of Pub. L. 95-405, set out as a note under section 2 of this

title.

EFFECTIVE DATE OF 1974 AMENDMENT

For effective date of amendment by Pub. L. 93-463, see section

418 of Pub. L. 93-463, set out as a note under section 2 of this

title.

EFFECTIVE DATE OF 1968 AMENDMENT

Amendment by Pub. L. 90-258 effective 120 days after Feb. 19,

1968, see section 28 of Pub. L. 90-258, set out as a note under

section 2 of this title.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 7b, 10a, 12, 12a, 13a of

this title.

-CITE-

7 USC Sec. 9 01/06/03

-EXPCITE-

TITLE 7 - AGRICULTURE

CHAPTER 1 - COMMODITY EXCHANGES

-HEAD-

Sec. 9. Exclusion of persons from privilege of ''registered

entities''; procedure for exclusion; review by court of appeals

-STATUTE-

If the Commission has reason to believe that any person (other

than a registered entity) is manipulating or attempting to

manipulate or has manipulated or attempted to manipulate the market

price of any commodity, in interstate commerce, or for future

delivery on or subject to the rules of any registered entity, or

has willfully made any false or misleading statement of a material

fact in any registration application or any report filed with the

Commission under this chapter, or willfully omitted to state in any

such application or report any material fact which is required to

be stated therein, or otherwise is violating or has violated any of

the provisions of this chapter or of the rules, regulations, or

orders of the Commission or the Commission (FOOTNOTE 1) thereunder,

it may serve upon such person a complaint stating its charges in

that respect, which complaint shall have attached or shall contain

therein a notice of hearing, specifying a day and place not less

than three days after the service thereof, requiring such person to

show cause why an order should not be made prohibiting him from

trading on or subject to the rules of any registered entity, and

directing that all registered entities refuse all privileges to

such person, until further notice of the Commission, and to show

cause why the registration of such person, if registered with the

Commission in any capacity, should not be suspended or revoked.

Said hearing may be held in Washington, District of Columbia, or

elsewhere, before the Commission, or before an Administrative Law

Judge designated by the Commission, which Administrative Law Judge

shall cause all evidence to be reduced to writing and forthwith

transmit the same to the Commission. Upon evidence received, the

Commission may (1) prohibit such person from trading on or subject

to the rules of any registered entity and require all registered

entities to refuse such person all trading privileges thereon for

such period as may be specified in the order, (2) if such person is

registered with the Commission in any capacity, suspend, for a

period not to exceed six months, or revoke, the registration of

such person, (3) assess such person a civil penalty of not more

than the higher of $100,000 or triple the monetary gain to such

person for each such violation (FOOTNOTE 2) and (4) require

restitution to customers of damages proximately caused by

violations of such persons. Notice of such order shall be sent

forthwith by registered mail or by certified mail or delivered to

the offending person and to the governing boards of said registered

entities. After the issuance of the order by the Commission, the

person against whom it is issued may obtain a review of such order

or such other equitable relief as to the court may seem just by

filing in the United States court of appeals of the circuit in

which the petitioner is doing business, or in the case of an order

denying registration, the circuit in which the petitioner's

principal place of business listed on petitioner's application for

registration is located, a written petition, within fifteen days

after the notice of such order is given to the offending person

praying that the order of the Commission be set aside. A copy of

such petition shall be forthwith transmitted by the clerk of the

court to the Commission and thereupon the Commission shall file in

the court the record theretofore made, as provided in section 2112

of title 28. Upon the filing of the petition the court shall have

jurisdiction to affirm, to set aside, or modify the order of the

Commission, and the findings of the Commission as to the facts, if

supported by the weight of evidence, shall in like manner be

conclusive.

(FOOTNOTE 1) So in original. The words ''or the Commission''

probably should not appear.

(FOOTNOTE 2) So in original. Probably should be followed by a

comma.

-SOURCE-

(Sept. 21, 1922, ch. 369, Sec. 6(c), formerly Sec. 6(b), 42 Stat.

1002; June 15, 1936, ch. 545, Sec. 8(a)-(d), (h)-(j), 49 Stat.

1498, 1499; June 25, 1948, ch. 646, Sec. 32(a), 62 Stat. 991; May

24, 1949, ch. 139, Sec. 127, 63 Stat. 107; Pub. L. 85-791, Sec.

7(b), Aug. 28, 1958, 72 Stat. 944; Pub. L. 86-507, Sec. 1(2), June

11, 1960, 74 Stat. 200; Pub. L. 90-258, Sec. 16, Feb. 19, 1968, 82

Stat. 30; Pub. L. 93-463, title I, Sec. 103(a), (b), (e), title II,

Sec. 204(b), 205(b), 212(a)(1), (2), title IV, Sec. 408, Oct. 23,

1974, 88 Stat. 1392, 1397, 1400, 1403, 1414; Pub. L. 97-444, title

II, Sec. 219, Jan. 11, 1983, 96 Stat. 2308; renumbered Sec. 6(c)

and amended Pub. L. 102-546, title II, Sec. 209(a)(1), 212(b), 223,

title IV, Sec. 402(1)(C), (6), (9)(B), Oct. 28, 1992, 106 Stat.

3606, 3609, 3617, 3624, 3625; Pub. L. 106-554, Sec. 1(a)(5) (title

I, Sec. 123(a)(12)(C)), Dec. 21, 2000, 114 Stat. 2763, 2763A-409.)

-COD-

CODIFICATION

Section is comprised of part of subsec. (c) of section 6 of act

Sept. 21, 1922. A further provision of subsec. (c) is contained in

section 15 of this title. Subsecs. (a) and (b) of section 6 are

classified to section 8 of this title. Subsecs. (d), (e), (f), and

(g) of section 6 are classified to sections 13b, 9a, 9b, and 9c of

this title, respectively.

-MISC3-

AMENDMENTS

2000 - Pub. L. 106-554 substituted ''registered entity'' for

''contract market'' wherever appearing, ''registered entities'' for

''contract markets'' wherever appearing, and ''privileges'' for

''trading privileges'' in two places.

1992 - Pub. L. 102-546, Sec. 402(9)(B), which directed amendment

of first sentence by striking ''the Secretary of Agriculture or'',

could not be executed because of amendment by Pub. L. 93-463, Sec.

103(a). See 1974 Amendment note below.

Pub. L. 102-546, Sec. 209(a)(1), 212(b), 223, 402(1)(C), (6),

substituted, in first sentence, ''Commission thereunder'' for

''commission thereunder'', in sentence beginning ''Upon evidence

received'', inserted ''(1)'', substituted ''(2) if'' for ''and,

if'', ''suspend'' for ''may suspend'', ''(3)'' for ''and may'',

''the higher of $100,000 or triple the monetary gain to such

person'' for ''$100,000'', and inserted before period ''and (4)

require restitution to customers of damages proximately caused by

violations of such persons'', and in sentence beginning ''After the

issuance'', substituted ''offending person'' for ''offending

person.''.

1983 - Pub. L. 97-444 struck out ''as futures commission merchant

or any person associated therewith as described in section 6k of

this title, commodity trading advisor, commodity pool operator, or

as floor broker hereunder'' after ''such person, if registered''

and also after ''such person is registered'' and inserted '', or in

the case of an order denying registration, the circuit in which the

petitioner's principal place of business listed on petitioner's

application for registration is located,'' after ''court of appeals

of the circuit in which the petitioner is doing business''.

1974 - Pub. L. 93-463, Sec. 103(e), 204(b), 205(b), 212(a)(1),

(2), 408, substituted ''it'' for ''he'', inserted ''or any person

associated therewith as described in section 6k of this title,''

after ''futures commission merchant'' wherever appearing, inserted

''commodity trading advisor, commodity pool operator'' before ''or

as floor broker'' wherever appearing, inserted provision for the

assessment of civil penalties of not more than $100,000 for each

violation, set a limit of fifteen days after the issuance of an

order within which period the person against whom the order was

issued must file with the court of appeals his petition that the

order be set aside, and substituted ''an Administrative Law Judge''

and ''Administrative Law Judge'' for ''a referee'' and ''referee'',

respectively.

Pub. L. 93-463, Sec. 103(a), provided for substitution of

''Commission'' for ''Secretary of Agriculture'' except where such

words would be stricken by section 103(b), which directed striking

the words ''the Secretary of Agriculture or'' where they appeared

in the phrase ''the Secretary of Agriculture or the Commission''.

Section 103(a) was executed wherever the term ''Secretary of

Agriculture'' appeared in this section including in the phrase

''the Secretary of Agriculture or the commission'' in the first

sentence. Because the word ''commission'' was not capitalized in

that phrase in the first sentence, section 103(b) did not apply to

that phrase and therefore section 103(a) was executed, resulting in

the substitution of ''the Commission or the commission'' for ''the

Secretary of Agriculture or the commission''.

1968 - Pub. L. 90-258 amended first sentence generally, providing

for denial of trading privileges to persons other than contract

markets and suspension or revocation of registration of futures

commission merchants and floor brokers, who are manipulating or

have attempted to manipulate prices, for willful, material,

misstatements in, or omissions from, reports or registration

statements, and for violations of orders of Secretary of

Agriculture or commission, and authorizing the Secretary to

prohibit such persons from trading on or subject to rules of any

contract market.

1960 - Pub. L. 86-507 inserted ''or by certified mail'' after

''registered mail''.

1958 - Pub. L. 85-791 substituted ''transmitted by the clerk of

the court to the Secretary of Agriculture and thereupon the

Secretary of Agriculture shall file in the court the record

theretofore made, as provided in section 2112 of Title 28'' for

''served upon the Secretary of Agriculture by delivering such copy

to him and thereupon the Secretary of Agriculture shall forthwith

certify and file in the court a transcript of the record

theretofore made, including evidence received'' in seventh

sentence, and substituted ''petition'' for ''transcript'' in eighth

sentence.

1936 - Act June 15, 1936, among other changes, amended section by

inserting provisions relating to the service of complaints and

penalties for violations of this chapter.

-CHANGE-

CHANGE OF NAME

Act June 25, 1948, as amended by act May 24, 1949, substituted

''court of appeals'' for ''circuit court of appeals'' wherever

appearing in this section.

-MISC4-

EFFECTIVE DATE OF 1983 AMENDMENT

Amendment by Pub. L. 97-444 effective Jan. 11, 1983, see section

239 of Pub. L. 97-444, set out as a note under section 2 of this

title.

EFFECTIVE DATE OF 1974 AMENDMENT

For effective date of amendment by Pub. L. 93-463, see section

418 of Pub. L. 93-463, set out as a note under section 2 of this

title.

EFFECTIVE DATE OF 1968 AMENDMENT

Amendment by Pub. L. 90-258 effective 120 days after Feb. 19,

1968, see section 28 of Pub. L. 90-258, set out as a note under

section 2 of this title.

EFFECTIVE DATE OF 1936 AMENDMENT

Amendment by act June 15, 1936, effective 90 days after June 15,

1936, see section 13 of act June 15, 1936, set out as a note under

section 1 of this title.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 2, 7a-3, 9a, 9c, 12, 12a,

13b, 18, 21, 27d of this title.

-CITE-

7 USC Sec. 9a 01/06/03

-EXPCITE-

TITLE 7 - AGRICULTURE

CHAPTER 1 - COMMODITY EXCHANGES

-HEAD-

Sec. 9a. Assessment of money penalties

-STATUTE-

(1) In determining the amount of the money penalty assessed under

sections 9 and 15 of this title, the Commission shall consider the

appropriateness of such penalty to the gravity of the violation.

(2) Unless the person against whom a money penalty is assessed

under sections 9 and 15 of this title shows to the satisfaction of

the Commission within fifteen days from the expiration of the

period allowed for payment of such penalty that either an appeal as

authorized by sections 9 and 15 of this title has been taken or

payment of the full amount of the penalty then due has been made,

at the end of such fifteen-day period and until such person shows

to the satisfaction of the Commission that payment of such amount

with interest thereon to date of payment has been made -

(A) such person shall be prohibited automatically from the

privileges of all registered entities; and

(B) if such person is registered with the Commission, such

registration shall be suspended automatically.

(3) If a person against whom a money penalty is assessed under

sections 9 and 15 of this title takes an appeal and if the

Commission prevails or the appeal is dismissed, unless such person

shows to the satisfaction of the Commission that payment of the

full amount of the penalty then due has been made by the end of

thirty days from the date of entry of judgment on the appeal -

(A) such person shall be prohibited automatically from the

privileges of all registered entities; and

(B) if such person is registered with the Commission, such

registration shall be suspended automatically.

If the person against whom the money penalty is assessed fails to

pay such penalty after the lapse of the period allowed for appeal

or after the affirmance of such penalty, the Commission may refer

the matter to the Attorney General who shall recover such penalty

by action in the appropriate United States district court.

-SOURCE-

(Sept. 21, 1922, ch. 369, Sec. 6(e), formerly Sec. 6(d), as added

Pub. L. 93-463, title II, Sec. 212(a)(3), Oct. 23, 1974, 88 Stat.

1403; renumbered Sec. 6(e) and amended Pub. L. 102-546, title II,

Sec. 209(a)(1), (5), Oct. 28, 1992, 106 Stat. 3606; Pub. L.

106-554, Sec. 1(a)(5) (title I, Sec. 123(a)(12)(E)), Dec. 21, 2000,

114 Stat. 2763, 2763A-409.)

-COD-

CODIFICATION

Section is comprised of subsec. (e) of section 6 of act Sept. 21,

1922. Subsecs. (a) and (b) of section 6 are classified to section 8

of this title. Subsec. (c) of section 6 is classified to sections

9 and 15 of this title. Subsecs. (d), (f), and (g) of section 6

are classified to sections 13b, 9b, and 9c of this title,

respectively.

-MISC3-

AMENDMENTS

2000 - Pars. (2)(A), (3)(A). Pub. L. 106-554 substituted ''the

privileges of all registered entities'' for ''trading on all

contract markets''.

1992 - Pub. L. 102-546 amended section generally. Prior to

amendment, section read as follows: ''In determining the amount of

the money penalty assessed under sections 9 and 15 of this title,

the Commission shall consider, in the case of a person whose

primary business involves the use of the commodity futures market -

the appropriateness of such penalty to the size of the business of

the person charged, the extent of such person's ability to continue

in business, and the gravity of the violation; and in the case of a

person whose primary business does not involve the use of the

commodity futures market - the appropriateness of such penalty to

the net worth of the person charged, and the gravity of the

violation. If the offending person upon whom such penalty is

imposed, after the lapse of the period allowed for appeal or after

the affirmance of such penalty, shall fail to pay such penalty the

Commission shall refer the matter to the Attorney General who shall

recover such penalty by action in the appropriate United States

district court.''

EFFECTIVE DATE

For effective date of section, see section 418 of Pub. L. 93-463,

set out as an Effective Date of 1974 Amendment note under section 2

of this title.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in section 12 of this title.

-CITE-

7 USC Sec. 9b 01/06/03

-EXPCITE-

TITLE 7 - AGRICULTURE

CHAPTER 1 - COMMODITY EXCHANGES

-HEAD-

Sec. 9b. Rules prohibiting deceptive and other abusive

telemarketing acts or practices

-STATUTE-

(1) Except as provided in paragraph (2), not later than six

months after the effective date of rules promulgated by the Federal

Trade Commission under section 6102(a) of title 15, the Commission

shall promulgate, or require each registered futures association to

promulgate, rules substantially similar to such rules to prohibit

deceptive and other abusive telemarketing acts or practices by any

person registered or exempt from registration under this chapter in

connection with such person's business as a futures commission

merchant, introducing broker, commodity trading advisor, commodity

pool operator, leverage transaction merchant, floor broker, or

floor trader, or a person associated with any such person.

(2) The Commission is not required to promulgate rules under

paragraph (1) if it determines that -

(A) rules adopted by the Commission under this chapter provide

protection from deceptive and abusive telemarketing by persons

described under paragraph (1) substantially similar to that

provided by rules promulgated by the Federal Trade Commission

under section 6102(a) of title 15; or

(B) such a rule promulgated by the Commission is not necessary

or appropriate in the public interest, or for the protection of

customers in the futures and options markets, or would be

inconsistent with the maintenance of fair and orderly markets.

If the Commission determines that an exception described in

subparagraph (A) or (B) applies, the Commission shall publish in

the Federal Register its determination with the reasons for it.

-SOURCE-

(Sept. 21, 1922, ch. 369, Sec. 6(f), as added Pub. L. 103-297, Sec.

3(e)(2), Aug. 16, 1994, 108 Stat. 1547.)

-COD-

CODIFICATION

Section is comprised of subsec. (f) of section 6 of act Sept. 21,

1922. Subsecs. (a) and (b) of section 6 are classified to section 8

of this title. Subsec. (c) of section 6 is classified to sections

9 and 15 of this title. Subsecs. (d), (e), and (g) of section 6

are classified to sections 13b, 9a, and 9c of this title,

respectively.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in section 12 of this title; title 15

section 6102.

-CITE-

7 USC Sec. 9c 01/06/03

-EXPCITE-

TITLE 7 - AGRICULTURE

CHAPTER 1 - COMMODITY EXCHANGES

-HEAD-

Sec. 9c. Notice of investigations and enforcement actions

-STATUTE-

The Commission shall provide the Securities and Exchange

Commission with notice of the commencement of any proceeding and a

copy of any order entered by the Commission pursuant to sections 9,

15, and 13b of this title against any futures commission merchant

or introducing broker registered pursuant to section 6f(a)(2) of

this title, any floor broker or floor trader exempt from

registration pursuant to section 6f(a)(3) of this title, any

associated person exempt from registration pursuant to section

6k(6) (FOOTNOTE 1) of this title, or any board of trade designated

as a contract market pursuant to section 7b-1 of this title.

(FOOTNOTE 1) So in original. Probably should refer to the

second par. (5) of section 6k.

-SOURCE-

(Sept. 21, 1922, ch. 369, Sec. 6(g), as added Pub. L. 106-554, Sec.

1(a)(5) (title II, Sec. 253(b)), Dec. 21, 2000, 114 Stat. 2763,

2763A-449.)

-COD-

CODIFICATION

Section is comprised of subsec. (g) of section 6 of act Sept. 21,

1922. Subsecs. (a) and (b) of section 6 are classified to section 8

of this title. Subsec. (c) of section 6 is classified to sections

9 and 15 of this title. Subsecs. (d), (e), and (f) of section 6

are classified to sections 13b, 9a, and 9b of this title,

respectively.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in section 12 of this title.

-CITE-

7 USC Sec. 10 01/06/03

-EXPCITE-

TITLE 7 - AGRICULTURE

CHAPTER 1 - COMMODITY EXCHANGES

-HEAD-

Sec. 10. Repealed. June 25, 1948, ch. 646, Sec. 39, 62 Stat. 992,

eff. Sept. 1, 1948

-MISC1-

Section, acts Sept. 21, 1922, ch. 369, Sec. 6(b), 42 Stat. 1001;

June 15, 1936, ch. 545, Sec. 8(k), 49 Stat. 1499, related to review

by Supreme Court on certiorari. See section 1254 of Title 28,

Judiciary and Judicial Procedure.

-CITE-

7 USC Sec. 10a 01/06/03

-EXPCITE-

TITLE 7 - AGRICULTURE

CHAPTER 1 - COMMODITY EXCHANGES

-HEAD-

Sec. 10a. Cooperative associations and corporations, exclusion from

board of trade; rules of board inapplicable to payment of

compensation by association

-STATUTE-

(a) No board of trade which has been designated or registered as

a contract market or a derivatives transaction execution facility

exclude (FOOTNOTE 1) from membership in, and all privileges on,

such board of trade, any association or corporation engaged in cash

commodity business having adequate financial responsibility which

is organized under the cooperative laws of any State, or which has

been recognized as a cooperative association of producers by the

United States Government or by any agency thereof, if such

association or corporation complies and agrees to comply with such

terms and conditions as are or may be imposed lawfully upon other

members of such board, and as are or may be imposed lawfully upon a

cooperative association of producers engaged in cash commodity

business, unless such board of trade is authorized by the

commission to exclude such association or corporation from

membership and privileges after hearing held upon at least three

days' notice subsequent to the filing of complaint by the board of

trade: Provided, however, That if any such association or

corporation shall fail to meet its obligations with any established

clearing house or clearing agency of any contract market, such

association or corporation shall be ipso facto debarred from

further trading on such contract market, except such trading as may

be necessary to close open trades and to discharge existing

contracts in accordance with the rules of such contract market

applicable in such cases. Such commission may prescribe that such

association or corporation shall have and retain membership and

privileges, with or without imposing conditions, or it may permit

such board of trade immediately to bar such association or

corporation from membership and privileges. Any order of said

commission entered hereunder shall be reviewable by the court of

appeals for the circuit in which such association or corporation,

or such board of trade, has its principal place of business, on

written petition either of such association or corporation, or of

such board of trade, under the procedure provided in section 8(b)

of this title, but such order shall not be stayed by the court

pending review.

(FOOTNOTE 1) So in original. Probably should read ''shall

exclude''.

(b) No rule of any board of trade designated or registered as a

contract market or a derivatives transaction execution facility

shall forbid or be construed to forbid the payment of compensation

on a commodity-unit basis, or otherwise, by any federated

cooperative association to its regional member-associations for

services rendered or to be rendered in connection with any

organization work, educational activity, or procurement of

patronage, provided no part of any such compensation is returned to

patrons (whether members or nonmembers) of such cooperative

association, or of its regional or local member-associations,

otherwise than as a dividend on capital stock or as a patronage

dividend out of the net earnings or surplus of such federated

cooperative association.

-SOURCE-

(Sept. 21, 1922, ch. 369, Sec. 6a, as added June 15, 1936, ch. 545,

Sec. 9, 49 Stat. 1499; amended June 25, 1948, ch. 646, Sec. 32(a),

62 Stat. 991; May 24, 1949, ch. 139, Sec. 127, 63 Stat. 107; Pub.

L. 102-546, title II, Sec. 209(b)(4), title IV, Sec. 402(8), Oct.

28, 1992, 106 Stat. 3607, 3625; Pub. L. 106-554, Sec. 1(a)(5)

(title I, Sec. 123(a)(13)), Dec. 21, 2000, 114 Stat. 2763,

2763A-409.)

-MISC1-

AMENDMENTS

2000 - Subsec. (a). Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec.

123(a)(13)(A)), substituted ''designated or registered as a

contract market or a derivatives transaction execution facility''

for ''designated as a 'contract market' shall''.

Subsec. (b). Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec.

123(a)(13)(B)), substituted ''designated or registered as a

contract market or a derivatives transaction execution facility''

for ''designated as a contract market''.

1992 - Pub. L. 102-546 redesignated subsecs. (1) and (2) as (a)

and (b), respectively, and in subsec. (a) substituted reference to

section 8(b) of this title for reference to section 8 of this

title.

-CHANGE-

CHANGE OF NAME

Act June 25, 1948, as amended by act May 24, 1949, substituted

''court of appeals'' for ''circuit court of appeals'' wherever

appearing.

-MISC4-

EFFECTIVE DATE

For effective date of section, see section 13 of act June 15,

1936, set out as an Effective Date of 1936 Amendment note under

section 1 of this title.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in section 7b-1 of this title.

-CITE-

7 USC Sec. 11 01/06/03

-EXPCITE-

TITLE 7 - AGRICULTURE

CHAPTER 1 - COMMODITY EXCHANGES

-HEAD-

Sec. 11. Vacation on request of designation or registration as

''registered entity''; redesignation or reregistration

-STATUTE-

Any person that has been designated or registered a registered

entity in the manner provided in this chapter may have such

designation or registration vacated and set aside by giving notice

in writing to the Commission requesting that its designation or

registration as a registered entity be vacated, which notice shall

be served at least ninety days prior to the date named therein as

the date when the vacation of designation or registration shall

take effect. Upon receipt of such notice the Commission shall

forthwith order the vacation of the designation or registration of

the registered entity, effective upon the day named in the notice,

and shall forthwith send a copy of the notice and its order to all

other registered entities. From and after the date upon which the

vacation became effective the said person can thereafter be

designated or registered again a registered entity by making

application to the Commission in the manner in this chapter

provided for an original application.

-SOURCE-

(Sept. 21, 1922, ch. 369, Sec. 7, 42 Stat. 1002; Pub. L. 93-463,

title I, Sec. 103(a), (e), Oct. 23, 1974, 88 Stat. 1392; Pub. L.

106-554, Sec. 1(a)(5) (title I, Sec. 123(a)(17)), Dec. 21, 2000,

114 Stat. 2763, 2763A-409.)

-MISC1-

AMENDMENTS

2000 - Pub. L. 106-554, in first sentence, substituted ''person''

for ''board of trade'', inserted ''or registered'' after

''designated'', inserted ''or registration'' after ''designation''

wherever appearing, and substituted ''registered entity'' for

''contract market'' in two places, in second sentence, substituted

''designation or registration of the registered entity'' for

''designation of such board of trade as a contract market'' and

''registered entities'' for ''contract markets'', and, in last

sentence, substituted ''person'' for ''board of trade'' and

''designated or registered again a registered entity'' for

''designated again a contract market''.

1974 - Pub. L. 93-463 substituted ''Commission'' for ''Secretary

of Agriculture'' and ''its order'' for ''his order''.

EFFECTIVE DATE OF 1974 AMENDMENT

For effective date of amendment by Pub. L. 93-463, see section

418 of Pub. L. 93-463, set out as a note under section 2 of this

title.

-CITE-

7 USC Sec. 12 01/06/03

-EXPCITE-

TITLE 7 - AGRICULTURE

CHAPTER 1 - COMMODITY EXCHANGES

-HEAD-

Sec. 12. Public disclosure

-STATUTE-

(a) Investigations respecting operations of boards of trade and

others subject to this chapter; publication of results;

restrictions; information received from foreign futures

authorities; undercover operations; notice of investigations

and enforcement actions

(1) For the efficient execution of the provisions of this

chapter, and in order to provide information for the use of

Congress, the Commission may make such investigations as it deems

necessary to ascertain the facts regarding the operations of boards

of trade and other persons subject to the provisions of this

chapter. The Commission may publish from time to time the results

of any such investigation and such general statistical information

gathered therefrom as it deems of interest to the public: Provided,

That except as otherwise specifically authorized in this chapter,

the Commission may not publish data and information that would

separately disclose the business transactions or market positions

of any person and trade secrets or names of customers: Provided

further, That the Commission may withhold from public disclosure

any data or information concerning or obtained in connection with

any pending investigation of any person. The Commission shall not

be compelled to disclose any information or data obtained from a

foreign futures authority if -

(A) the foreign futures authority has in good faith determined

and represented to the Commission that disclosure of such

information or data by that foreign futures authority would

violate the laws applicable to that foreign futures authority;

and

(B) the Commission obtains such information pursuant to -

(i) such procedure as the Commission may authorize for use in

connection with the administration or enforcement of this

chapter; or

(ii) a memorandum of understanding with that foreign futures

authority;

except that nothing in this subsection shall prevent the Commission

from disclosing publicly any information or data obtained by the

Commission from a foreign futures authority when such disclosure is

made in connection with a congressional proceeding, an

administrative or judicial proceeding commenced by the United

States or the Commission, in any receivership proceeding commenced

involving a receiver appointed in a judicial proceeding by the

United States or the Commission, or in any proceeding under title

11 in which the Commission has intervened or in which the

Commission has the right to appear and be heard. Nothing in this

subsection shall be construed to authorize the Commission to

withhold information or data from Congress. For purposes of section

552 of title 5, this subsection shall be considered a statute

described in subsection (b)(3)(B) of section 552.

(2) In conducting investigations authorized under this subsection

or any other provision of this chapter, the Commission shall

continue, as the Commission determines necessary, to request the

assistance of and cooperate with the appropriate Federal agencies

in the conduct of such investigations, including undercover

operations by such agencies. The Commission and the Department of

Justice shall assess the effectiveness of such undercover

operations and, within two years of October 28, 1992, shall

recommend to Congress any additional undercover or other authority

for the Commission that the Commission or the Department of Justice

believes to be necessary.

(3) The Commission shall provide the Securities and Exchange

Commission with notice of the commencement of any proceeding and a

copy of any order entered by the Commission against any futures

commission merchant or introducing broker registered pursuant to

section 6f(a)(2) of this title, any floor broker or floor trader

exempt from registration pursuant to section 6f(a)(3) of this

title, any associated person exempt from registration pursuant to

section 6k(6) (FOOTNOTE 1) of this title, or any board of trade

designated as a contract market pursuant to section 7b-1 of this

title.

(FOOTNOTE 1) So in original. Probably should refer to the

second par. (5) of section 6k.

(b) Business matters; congressional, administrative, judicial, and

bankruptcy proceedings

The Commission may disclose publicly any data or information that

would separately disclose the market positions, business

transactions, trade secrets, or names of customers of any person

when such disclosure is made in connection with a congressional

proceeding, in an administrative or judicial proceeding brought

under this chapter, in any receivership proceeding involving a

receiver appointed in a judicial proceeding brought under this

chapter, or in any bankruptcy proceeding in which the Commission

has intervened or in which the Commission has the right to appear

and be heard under title 11. This subsection shall not apply to the

disclosure of data or information obtained by the Commission from a

foreign futures authority.

(c) Reports respecting conduct of registered entities or

transactions of violators; contents

The Commission may make or issue such reports as it deems

necessary, or such opinions or orders as may be required under

other provisions of law, relative to the conduct of any registered

entity or to the transactions of any person found guilty of

violating the provisions of this chapter or the rules, regulations,

or orders of the Commission thereunder in proceedings brought under

sections 8, 9, 9a, 9b, 9c, 13b, and 15 of this title. In any such

report or opinion, the Commission may set forth the facts as to any

actual transaction or any information referred to in subsection (b)

of this section, if such facts or information have previously been

disclosed publicly in connection with a congressional proceeding,

or in an administrative or judicial proceeding brought under this

chapter.

(d) Investigations respecting marketing conditions of commodities

and commodity products and byproducts; reports

The Commission, upon its own initiative or in cooperation with

existing governmental agencies, shall investigate the marketing

conditions of commodities and commodity products and byproducts,

including supply and demand for these commodities, cost to the

consumer, and handling and transportation charges. It shall also

compile and furnish to producers, consumers, and distributors, by

means of regular or special reports, or by such other methods as it

deems most effective, information respecting the commodity markets,

together with information on supply, demand, prices, and other

conditions in this and other countries that affect the markets.

(e) Names and addresses of traders of boards of trade previously

disclosed; disclosure to Congress and agencies or departments

of States or foreign governments or foreign futures authority

The Commission may disclose and make public, where such

information has previously been disclosed publicly in accordance

with the provisions of this section, the names and addresses of all

traders on the boards of trade on the commodity markets with

respect to whom the Commission has information, and any other

information in the possession of the Commission relating to the

amount of commodities purchased or sold by each such trader. Upon

the request of any committee of either House of Congress, acting

within the scope of its jurisdiction, the Commission shall furnish

to such committee the names and addresses of all traders on such

boards of trade with respect to whom the Commission has

information, and any other information in the possession of the

Commission relating to the amount of any commodity purchased or

sold by each such trader. Upon the request of any department or

agency of the Government of the United States, acting within the

scope of its jurisdiction, the Commission may furnish to such

department or agency any information in the possession of the

Commission obtained in connection with the administration of this

chapter. However, any information furnished under this subsection

to any Federal department or agency shall not be disclosed by such

department or agency except in any action or proceeding under the

laws of the United States to which it, the Commission, or the

United States is a party. Upon the request of any department or

agency of any State or any political subdivision thereof, acting

within the scope of its jurisdiction, any foreign futures

authority, or any department or agency of any foreign government or

any political subdivision thereof, acting within the scope of its

jurisdiction, the Commission may furnish to such foreign futures

authority, department or agency any information in the possession

of the Commission obtained in connection with the administration of

this chapter. Any information furnished to any department or

agency of any State or political subdivision thereof shall not be

disclosed by such department or agency except in connection with an

adjudicatory action or proceeding brought under this chapter or the

laws of such State or political subdivision to which such State or

political subdivision or any department or agency thereof is a

party. The Commission shall not furnish any information to a

foreign futures authority or to a department or agency of a foreign

government or political subdivision thereof unless the Commission

is satisfied that the information will not be disclosed by such

foreign futures authority, department or agency except in

connection with an adjudicatory action or proceeding brought under

the laws of such foreign government or political subdivision to

which such foreign government or political subdivision or any

department or agency thereof, or foreign futures authority.

(FOOTNOTE 2) is a party.

(FOOTNOTE 2) So in original. The period probably should be a

comma.

(f) Compliance with subpoena after notice to informant;

congressional subpoenas and requests for information excepted

The Commission shall disclose information in its possession

pursuant to a subpoena or summons only if -

(1) a copy of the subpoena or summons has been mailed to the

last known home or business address of the person who submitted

the information that is the subject of the subpoena or summons,

if the address is known to the Commission, or, if such mailing

would be unduly burdensome, the Commission provides other

appropriate notice of the subpoena or summons to such person, and

(2) at least fourteen days have expired from the date of such

mailing of the subpoena or summons, or such other notice.

This subsection shall not apply to congressional subpoenas or

congressional requests for information.

(g) Requests for information by State agencies or subdivisions;

volunteering of information by Commission

The Commission shall provide any registration information

maintained by the Commission on any registrant upon reasonable

request made by any department or agency of any State or any

political subdivision thereof. Whenever the Commission determines

that such information may be appropriate for use by any department

or agency of a State or political subdivision thereof, the

Commission shall provide such information without request.

(h) Omitted

(i) Review and audits by Comptroller General

The Comptroller General of the United States shall conduct

reviews and audits of the Commission and make reports thereon. For

the purpose of conducting such reviews and audits, the Comptroller

General shall be furnished such information regarding the powers,

duties, organizations, transactions, operations, and activities of

the Commission as the Comptroller General may require and the

Comptroller General and the duly authorized representatives of the

Comptroller General shall, for the purpose of securing such

information, have access to and the right to examine any books,

documents, papers, or records of the Commission, except that in

reports the Comptroller General shall not include data and

information that would separately disclose the business

transactions of any person and trade secrets or names of customers,

although such data shall be provided upon request by any committee

of either House of Congress acting within the scope of its

jurisdiction.

-SOURCE-

(Sept. 21, 1922, ch. 369, Sec. 8, 42 Stat. 1003; June 15, 1936, ch.

545, Sec. 2, 49 Stat. 1491; Pub. L. 90-258, Sec. 19(a), Feb. 19,

1968, 82 Stat. 32; Pub. L. 93-463, title I, Sec. 103(a), (e), Oct.

23, 1974, 88 Stat. 1392; Pub. L. 95-405, Sec. 16, Sept. 30, 1978,

92 Stat. 873; Pub. L. 97-444, title II, Sec. 222, Jan. 11, 1983, 96

Stat. 2309; Pub. L. 102-546, title II, Sec. 205, title III, Sec.

304, 305, title IV, Sec. 402(7), Oct. 28, 1992, 106 Stat. 3600,

3623, 3624; Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec.

123(a)(18), title II, Sec. 253(a)), Dec. 21, 2000, 114 Stat. 2763,

2763A-410, 2763A-449.)

-COD-

CODIFICATION

Section is based on section 8 of Act Sept. 21, 1922, as amended

generally by Pub. L. 95-405, Sec. 16. Prior to such general

amendment, section was comprised of the first paragraph of section

8, and the second, third, and fourth pars. of section 8 were

classified to sections 12-1, 12-2, and 12-3 of this title,

respectively.

Subsection (h), which required the Commodity Futures Trading

Commission to submit an annual report to Congress detailing the

operations of the Commission, terminated, effective May 15, 2000,

pursuant to section 3003 of Pub. L. 104-66, as amended, set out as

a note under section 1113 of Title 31, Money and Finance. See,

also, page 158 of House Document No. 103-7.

-MISC3-

AMENDMENTS

2000 - Subsec. (a)(3). Pub. L. 106-554, Sec. 1(a)(5) (title II,

Sec. 253(a)), added par. (3).

Subsec. (c). Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec.

123(a)(18)), in first sentence, substituted ''registered entity''

for ''board of trade''.

1992 - Subsec. (a). Pub. L. 102-546, Sec. 205, 304(1), designated

existing provisions as par. (1), inserted provisions at end

relating to disclosure of information received from foreign futures

authorities, and added par. (2).

Subsec. (b). Pub. L. 102-546, Sec. 304(2), inserted at end ''This

subsection shall not apply to the disclosure of data or information

obtained by the Commission from a foreign futures authority.''

Subsec. (e). Pub. L. 102-546, Sec. 305, inserted references to

foreign futures authority in fifth and last sentences.

Subsec. (f). Pub. L. 102-546, Sec. 402(7), substituted

''subpoena'' for ''subpena'' wherever appearing and ''subpoenas''

for ''subpenas'' in last sentence.

1983 - Subsec. (a). Pub. L. 97-444, Sec. 222(1), inserted proviso

authorizing Commission to withhold from public disclosure any data

or information concerning or obtained in connection with any

pending investigation of any person.

Subsec. (b). Pub. L. 97-444, Sec. 222(2), inserted references to

receivership proceedings involving a receiver appointed in a

judicial proceeding brought under this chapter and to bankruptcy

proceedings in which the Commission has intervened or in which

Commission has right to appear and be heard under title 11.

Subsec. (e). Pub. L. 97-444, Sec. 222(3), struck out ''of the

Executive Branch'' after ''Upon the request of any department or

agency'' and inserted ''Upon the request of any department or

agency of any State or any political subdivision thereof, acting

within the scope of its jurisdiction, or any department or agency

of any foreign government or any political subdivision thereof,

acting within the scope of its jurisdiction, the Commission may

furnish to such department or agency any information in the

possession of the Commission obtained in connection with the

administration of this chapter. Any information furnished to any

department or agency of any State or political subdivision thereof

shall not be disclosed by such department or agency except in

connection with an adjudicatory action or proceeding brought under

this chapter or the laws of such State or political subdivision to

which such State or political subdivision or any department or

agency thereof is a party. The Commission shall not furnish any

information to a department or agency of a foreign government or

political subdivision thereof unless the Commission is satisfied

that the information will not be disclosed by such department or

agency except in connection with an adjudicatory action or

proceeding brought under the laws of such foreign government or

political subdivision to which such foreign government or political

subdivision or any department or agency thereof is a party.''

Subsecs. (f), (g). Pub. L. 97-444, Sec. 222(5), added subsecs.

(f) and (g). Former subsecs. (f) and (g) were redesignated (h) and

(i), respectively.

Subsecs. (h), (i). Pub. L. 97-444, Sec. 222(4), redesignated

former subsecs. (f) and (g) as (h) and (i), respectively.

1978 - Pub. L. 95-405 consolidated under this section provisions

formerly contained in this section and sections 12-1, 12-2, and

12-3 of this title, generally revised provisions thus consolidated

to clarify and expand disclosure to public of traders and their

positions on boards of trade, and divided provisions thus

consolidated and revised into subsecs. (a) to (g).

1974 - Pub. L. 93-463 substituted ''Commission'' for ''Secretary

of Agriculture'', ''it'' for ''he'', ''its'' for ''his'', and

''It'' for ''He''.

1968 - Pub. L. 90-258 authorized investigations to ascertain

facts regarding operations of other persons subject to any

provisions of this chapter.

1936 - Act June 15, 1936, substituted ''commodity'' for ''grain''

wherever appearing.

EFFECTIVE DATE OF 1983 AMENDMENT

Amendment by Pub. L. 97-444 effective Jan. 11, 1983, see section

239 of Pub. L. 97-444, set out as a note under section 2 of this

title.

EFFECTIVE DATE OF 1978 AMENDMENT

Amendment by Pub. L. 95-405 effective Oct. 1, 1978, see section

28 of Pub. L. 95-405, set out as a note under section 2 of this

title.

EFFECTIVE DATE OF 1974 AMENDMENT

For effective date of amendment by Pub. L. 93-463, see section

418 of Pub. L. 93-463, set out as a note under section 2 of this

title.

EFFECTIVE DATE OF 1968 AMENDMENT

Amendment by Pub. L. 90-258 effective 120 days after Feb. 19,

1968, see section 28 of Pub. L. 90-258, set out as a note under

section 2 of this title.

EFFECTIVE DATE OF 1936 AMENDMENT

Amendment by act June 15, 1936, effective 90 days after June 15,

1936, see section 13 of act June 15, 1936, set out as a note under

section 1 of this title.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 2, 6f, 6k, 7b-1, 12a, 20

of this title.

-CITE-

7 USC Sec. 12-1 to 12-3 01/06/03

-EXPCITE-

TITLE 7 - AGRICULTURE

CHAPTER 1 - COMMODITY EXCHANGES

-HEAD-

Sec. 12-1 to 12-3. Omitted

-COD-

CODIFICATION

Sections 12-1 to 12-3 comprised the second, third, and fourth

pars., respectively, of section 8 of the Commodity Exchange Act,

Sept. 21, 1922, ch. 369, Sec. 8, 42 Stat. 1003. Such section 8 was

amended generally by Pub. L. 95-405, Sec. 16, Sept. 30, 1978, 92

Stat. 873, and is classified in its entirety to section 12 of this

title.

Section 12-1, as added Dec. 19, 1947, ch. 523, 61 Stat. 941;

amended Feb. 19, 1968, Pub. L. 90-258, Sec. 19(b), 82 Stat. 32;

Oct. 23, 1974, Pub. L. 93-463, title I, Sec. 103(a), (e), (f), 88

Stat. 1392, related to disclosure of names of traders on commodity

markets by Commission. See section 12(e) of this title.

Section 12-2, as added Oct. 23, 1974, Pub. L. 93-463, title I,

Sec. 105, 88 Stat. 1392, required an annual report to Congress. See

Codification note under section 12 of this title.

Section 12-3, as added Oct. 23, 1974, Pub. L. 93-463, title I,

Sec. 105, 88 Stat. 1392, related to reviews and audits by

Comptroller General. See section 12(i) of this title.

-CITE-

7 USC Sec. 12a 01/06/03

-EXPCITE-

TITLE 7 - AGRICULTURE

CHAPTER 1 - COMMODITY EXCHANGES

-HEAD-

Sec. 12a. Registration of commodity dealers and associated persons;

regulation of registered entities

-STATUTE-

The Commission is authorized -

(1) to register futures commission merchants, associated

persons of futures commission merchants, introducing brokers,

associated persons of introducing brokers, commodity trading

advisors, associated persons of commodity trading advisors,

commodity pool operators, associated persons of commodity pool

operators, floor brokers, and floor traders upon application in

accordance with rules and regulations and in the form and manner

to be prescribed by the Commission, which may require the

applicant, and such persons associated with the applicant as the

Commission may specify, to be fingerprinted and to submit, or

cause to be submitted, such fingerprints to the Attorney General

for identification and appropriate processing, and in connection

therewith to fix and establish from time to time reasonable fees

and charges for registrations and renewals thereof: Provided,

That notwithstanding any provision of this chapter, the

Commission may grant a temporary license to any applicant for

registration with the Commission pursuant to such rules,

regulations, or orders as the Commission may adopt, except that

the term of any such temporary license shall not exceed six

months from the date of its issuance;

(2) upon notice, but without a hearing and pursuant to such

rules, regulations, or orders as the Commission may adopt, to

refuse to register, to register conditionally, or to suspend or

place restrictions upon the registration of, any person and with

such a hearing as may be appropriate to revoke the registration

of any person -

(A) if a prior registration of such person in any capacity

has been suspended (and the period of such suspension has not

expired) or has been revoked;

(B) if registration of such person in any capacity has been

refused under the provisions of paragraph (3) of this section

within five years preceding the filing of the application for

registration or at any time thereafter;

(C) if such person is permanently or temporarily enjoined by

order, judgment, or decree of any court of competent

jurisdiction (except that registration may not be revoked

solely on the basis of such temporary order, judgment, or

decree), including an order entered pursuant to an agreement of

settlement to which the Commission or any Federal or State

agency or other governmental body is a party, from (i) acting

as a futures commission merchant, introducing broker, floor

broker, floor trader, commodity trading advisor, commodity pool

operator, associated person of any registrant under this

chapter, securities broker, securities dealer, municipal

securities broker, municipal securities dealer, transfer agent,

clearing agency, securities information processor, investment

adviser, investment company, or affiliated person or employee

of any of the foregoing or (ii) engaging in or continuing any

activity where such activity involves embezzlement, theft,

extortion, fraud, fraudulent conversion, misappropriation of

funds, securities or property, forgery, counterfeiting, false

pretenses, bribery, gambling, or any transaction in or advice

concerning contracts of sale of a commodity for future

delivery, concerning matters subject to Commission regulation

under section 6c or 23 of this title, or concerning securities;

(D) if such person has been convicted within ten years

preceding the filing of the application for registration or at

any time thereafter of any felony that (i) involves any

transactions or advice concerning any contract of sale of a

commodity for future delivery, or any activity subject to

Commission regulation under section 6c or 23 of this title, or

concerning a security, (ii) arises out of the conduct of the

business of a futures commission merchant, introducing broker,

floor broker, floor trader, commodity trading advisor,

commodity pool operator, associated person of any registrant

under this chapter, securities broker, securities dealer,

municipal securities broker, municipal securities dealer,

transfer agent, clearing agency, securities information

processor, investment adviser, investment company, or an

affiliated person or employee of any of the foregoing, (iii)

involves embezzlement, theft, extortion, fraud, fraudulent

conversion, misappropriation of funds, securities or property,

forgery, counterfeiting, false pretenses, bribery, or gambling,

or (iv) involves the violation of section 152, 1001, 1341,

1342, 1343, 1503, 1623, 1961, 1962, 1963, or 2314, or chapter

25, 47, 95, or 96 of title 18, or section 7201 or 7206 of title

26;

(E) if such person, within ten years preceding the filing of

the application or at any time thereafter, has been found in a

proceeding brought by the Commission or any Federal or State

agency or other governmental body, or by agreement of

settlement to which the Commission or any Federal or State

agency or other governmental body is a party, (i) to have

violated any provision of this chapter, the Securities Act of

1933 (15 U.S.C. 77a et seq.), the Securities Exchange Act of

1934 (15 U.S.C. 78a et seq.), the Public Utility Holding

Company Act of 1935 (15 U.S.C. 79 et seq.), the Trust Indenture

Act of 1939 (15 U.S.C. 77aaa et seq.), the Investment Advisers

Act of 1940 (15 U.S.C. 80b-1 et seq.), the Investment Company

Act of 1940 (15 U.S.C. 80a-1 et seq.), the Securities Investors

(FOOTNOTE 1) Protection Act of 1970 (15 U.S.C. 78aaa et seq.),

the Foreign Corrupt Practices Act of 1977, chapter 96 of title

18, or any similar statute of a State or foreign jurisdiction,

or any rule, regulation, or order under any such statutes, or

the rules of the Municipal Securities Rulemaking Board where

such violation involves embezzlement, theft, extortion, fraud,

fraudulent conversion, misappropriation of funds, securities or

property, forgery, counterfeiting, false pretenses, bribery, or

gambling, or (ii) to have willfully aided, abetted, counseled,

commanded, induced, or procured such violation by any other

person;

(FOOTNOTE 1) So in original. Probably should be ''Investor''.

(F) if such person is subject to an outstanding order of the

Commission denying privileges on any registered entity to such

person, denying, suspending, or revoking such person's

membership in any registered entity or registered futures

association, or barring or suspending such person from being

associated with a registrant under this chapter or with a

member of a registered entity or with a member of a registered

futures association;

(G) if, as to any of the matters set forth in this paragraph

and paragraph (3), such person willfully made any materially

false or misleading statement or omitted to state any material

fact in such person's application or any update thereto; or

(H) if refusal, suspension, or revocation of the registration

of any principal of such person would be warranted because of a

statutory disqualification listed in this paragraph:

Provided, That such person may appeal from a decision to refuse

registration, condition registration, suspend, revoke or to place

restrictions upon registration made pursuant to the provisions of

this paragraph in the manner provided in sections 9 and 15 of

this title; and

Provided, further, That for the purposes of paragraphs (2) and

(3) of this section, ''principal'' shall mean, if the person is a

partnership, any general partner or, if the person is a

corporation, any officer, director, or beneficial owner of at

least 10 per centum of the voting shares of the corporation, and

any other person that the Commission by rule, regulation, or

order determines has the power, directly or indirectly, through

agreement or otherwise, to exercise a controlling influence over

the activities of such person which are subject to regulation by

the Commission;

(3) to refuse to register or to register conditionally any

person, if it is found, after opportunity for hearing, that -

(A) such person has been found by the Commission or by any

court of competent jurisdiction to have violated, or has

consented to findings of a violation of, any provision of this

chapter, or any rule, regulation, or order thereunder (other

than a violation set forth in paragraph (2) of this section),

or to have willfully aided, abetted, counseled, commanded,

induced, or procured the violation by any other person of any

such provision;

(B) such person has been found by any court of competent

jurisdiction or by any Federal or State agency or other

governmental body, or by agreement of settlement to which any

Federal or State agency or other governmental body is a party,

(i) to have violated any provision of the Securities Act of

1933 (15 U.S.C. 77a et seq.), the Securities Exchange Act of

1934 (15 U.S.C. 78a et seq.), the Public Utility Holding

Company Act of 1935 (15 U.S.C. 79 et seq.), the Trust Indenture

Act of 1939 (15 U.S.C. 77aaa et seq.), the Investment Advisers

Act of 1940 (15 U.S.C. 80b-1 et seq.), the Investment Company

Act of 1940 (15 U.S.C. 80a-1 et seq.), the Securities Investors

(FOOTNOTE 2) Protection Act of 1970 (15 U.S.C. 78aaa et seq.),

the Foreign Corrupt Practices Act of 1977, or any similar

statute of a State or foreign jurisdiction, or any rule,

regulation, or order under any such statutes, or the rules of

the Municipal Securities Rulemaking Board or (ii) to have

willfully aided, abetted, counseled, commanded, induced, or

procured such violation by any other person;

(FOOTNOTE 2) So in original. Probably should be ''Investor''.

(C) such person failed reasonably to supervise another

person, who is subject to such person's supervision, with a

view to preventing violations of this chapter, or of any of the

statutes set forth in subparagraph (B) of this paragraph, or of

any of the rules, regulations, or orders thereunder, and the

person subject to supervision committed such a violation:

Provided, That no person shall be deemed to have failed

reasonably to supervise another person, within the meaning of

this subparagraph if (i) there have been established

procedures, and a system for applying such procedures, which

would reasonably be expected to prevent and detect, insofar as

practicable, any such violation by such other person and (ii)

such person has reasonably discharged the duties and

obligations incumbent upon that person, as supervisor, by

reason of such procedures and system, without reasonable cause

to believe that such procedures and system were not being

complied with;

(D) such person pleaded guilty to or was convicted of a

felony other than a felony of the type specified in paragraph

(2)(D) of this section, or was convicted of a felony of the

type specified in paragraph (2)(D) of this section more than

ten years preceding the filing of the application;

(E) such person pleaded guilty to or was convicted of any

misdemeanor which (i) involves any transaction or advice

concerning any contract of sale of a commodity for future

delivery or any activity subject to Commission regulation under

section 6c or 23 of this title or concerning a security, (ii)

arises out of the conduct of the business of a futures

commission merchant, introducing broker, floor broker, floor

trader, commodity trading advisor, commodity pool operator,

associated person of any registrant under this chapter,

securities broker, securities dealer, municipal securities

broker, municipal securities dealer, transfer agent, clearing

agency, securities information processor, investment adviser,

investment company, or an affiliated person or employee of any

of the foregoing, (iii) involves embezzlement, theft,

extortion, fraud, fraudulent conversion, misappropriation of

funds, securities or property, forgery, counterfeiting, false

pretenses, bribery, or gambling, (iv) involves the violation of

section 152, 1341, 1342, or 1343 or chapter 25, 47, 95, or 96

of title 18, or section 7203, 7204, 7205, or 7207 of title 26;

(F) such person was debarred by any agency of the United

States from contracting with the United States;

(G) such person willfully made any materially false or

misleading statement or willfully omitted to state any material

fact in such person's application or any update thereto, in any

report required to be filed with the Commission by this chapter

or the regulations thereunder, in any proceeding before the

Commission or in any registration disqualification proceeding;

(H) such person has pleaded nolo contendere to criminal

charges of felonious conduct, or has been convicted in a State

court, in a United States military court, or in a foreign court

of conduct which would constitute a felony under Federal law if

the offense had been committed under Federal jurisdiction;

(I) in the case of an applicant for registration in any

capacity for which there are minimum financial requirements

prescribed under this chapter or under the rules or regulations

of the Commission, such person has not established that such

person meets such minimum financial requirements;

(J) such person is subject to an outstanding order denying,

suspending, or expelling such person from membership in a

registered entity, a registered futures association, any other

self-regulatory organization, or any foreign regulatory body

that the Commission recognizes as having a comparable

regulatory program or barring or suspending such person from

being associated with any member or members of such registered

entity, association, self-regulatory organization, or foreign

regulatory body;

(K) such person has been found by any court of competent

jurisdiction or by any Federal or State agency or other

governmental body, or by agreement of settlement to which any

Federal or State agency or other governmental body is a party,

(i) to have violated any statute or any rule, regulation, or

order thereunder which involves embezzlement, theft, extortion,

fraud, fraudulent conversion, misappropriation of funds,

securities or property, forgery, counterfeiting, false

pretenses, bribery, or gambling or (ii) to have willfully

aided, abetted, counseled, commanded, induced or procured such

violation by any other person;

(L) such person has associated with such person any other

person and knows, or in the exercise of reasonable care should

know, of facts regarding such other person that are set forth

as statutory disqualifications in paragraph (2) of this

section, unless such person has notified the Commission of such

facts and the Commission has determined that such other person

should be registered or temporarily licensed;

(M) there is other good cause; or

(N) any principal, as defined in paragraph (2) of this

section, of such person has been or could be refused

registration:

Provided, That pending final determination under this paragraph,

registration shall not be granted: Provided further, That such

person may appeal from a decision to refuse registration or to

condition registration made pursuant to this paragraph in the

manner provided in sections 9 and 15 of this title;

(4) in accordance with the procedure provided for in sections 9

and 15 of this title, to suspend, revoke, or place restrictions

upon the registration of any person registered under this chapter

if cause exists under paragraph (3) of this section which would

warrant a refusal of registration of such person, and to suspend

or revoke the registration of any futures commission merchant or

introducing broker who shall knowingly accept any order for the

purchase or sale of any commodity for future delivery on or

subject to the rules of any registered entity from any person if

such person has been denied trading privileges on any registered

entity by order of the Commission under sections 9 and 15 of this

title and the period of denial specified in such order shall not

have expired: Provided, That such person may appeal from a

decision to suspend, revoke, or place restrictions upon

registration made pursuant to this paragraph in the manner

provided in sections 9 and 15 of this title;

(5) to make and promulgate such rules and regulations as, in

the judgment of the Commission, are reasonably necessary to

effectuate any of the provisions or to accomplish any of the

purposes of this chapter;

(6) to communicate to the proper committee or officer of any

registered entity, registered futures association, or

self-regulatory organization as defined in section 3(a)(26) of

the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(26)),

notwithstanding the provisions of section 12 of this title, the

full facts concerning any transaction or market operation,

including the names of parties thereto, which in the judgment of

the Commission disrupts or tends to disrupt any market or is

otherwise harmful or against the best interests of producers,

consumers, or investors, or which is necessary or appropriate to

effectuate the purposes of this chapter: Provided, That any

information furnished by the Commission under this paragraph

shall not be disclosed by such registered entity, registered

futures association, or self-regulatory organization except in

any self-regulatory action or proceeding;

(7) to alter or supplement the rules of a registered entity

insofar as necessary or appropriate by rule or regulation or by

order, if after making the appropriate request in writing to a

registered entity that such registered entity effect on its own

behalf specified changes in its rules and practices, and after

appropriate notice and opportunity for hearing, the Commission

determines that such registered entity has not made the changes

so required, and that such changes are necessary or appropriate

for the protection of persons producing, handling, processing, or

consuming any commodity traded for future delivery on such

registered entity, or the product or byproduct thereof, or for

the protection of traders or to insure fair dealing in

commodities traded for future delivery on such registered

entity. Such rules, regulations, or orders may specify changes

with respect to such matters as -

(A) terms or conditions in contracts of sale to be executed

on or subject to the rules of such registered entity;

(B) the form or manner of execution of purchases and sales

for future delivery;

(C) other trading requirements, excepting the setting of

levels of margin;

(D) safeguards with respect to the financial responsibility

of members;

(E) the manner, method, and place of soliciting business,

including the content of such solicitations; and

(F) the form and manner of handling, recording, and

accounting for customers' orders, transactions, and accounts;

(8) to make and promulgate such rules and regulations with

respect to those persons registered under this chapter, who are

not members of a registered entity, as in the judgment of the

Commission are reasonably necessary to protect the public

interest and promote just and equitable principles of trade,

including but not limited to the manner, method, and place of

soliciting business, including the content of such solicitation;

(9) to direct the registered entity, whenever it has reason to

believe that an emergency exists, to take such action as in the

Commission's judgment is necessary to maintain or restore orderly

trading in or liquidation of any futures contract, including, but

not limited to, the setting of temporary emergency margin levels

on any futures contract, and the fixing of limits that may apply

to a market position acquired in good faith prior to the

effective date of the Commission's action. The term

''emergency'' as used herein shall mean, in addition to

threatened or actual market manipulations and corners, any act of

the United States or a foreign government affecting a commodity

or any other major market disturbance which prevents the market

from accurately reflecting the forces of supply and demand for

such commodity. Any action taken by the Commission under this

paragraph shall be subject to review only in the United States

Court of Appeals for the circuit in which the party seeking

review resides or has its principal place of business, or in the

United States Court of Appeals for the District of Columbia

Circuit. Such review shall be based upon an examination of all

the information before the Commission at the time the

determination was made. The court reviewing the Commission's

action shall not enter a stay or order of mandamus unless it has

determined, after notice and hearing before a panel of the court,

that the agency action complained of was arbitrary, capricious,

an abuse of discretion, or otherwise not in accordance with law.

Nothing herein shall be deemed to limit the meaning or

interpretation given by a registered entity to the terms ''market

emergency'', ''emergency'', or equivalent language in its own

bylaws, rules, regulations, or resolutions;

(10) to authorize any person to perform any portion of the

registration functions under this chapter, in accordance with

rules, notwithstanding any other provision of law, adopted by

such person and submitted to the Commission for approval or, if

applicable, for review pursuant to section 21(j) of this title,

and subject to the provisions of this chapter applicable to

registrations granted by the Commission; and

(11)(A) by written notice served on the person and pursuant to

such rules, regulations, and orders as the Commission may adopt,

to suspend or modify the registration of any person registered

under this chapter who is charged (in any information,

indictment, or complaint authorized by a United States attorney

or an appropriate official of any State) with the commission of

or participation in a crime involving a violation of this

chapter, or a violation of any other provision of Federal or

State law that would reflect on the honesty or the fitness of the

person to act as a fiduciary (including an offense specified in

subparagraph (D) or (E) of paragraph (2)) that is punishable by

imprisonment for a term exceeding one year, if the Commission

determines that continued registration of the person may pose a

threat to the public interest or may threaten to impair public

confidence in any market regulated by the Commission.

(B) Prior to the suspension or modification of the registration

of a person under this paragraph, the person shall be afforded an

opportunity for a hearing at which the Commission shall have the

burden of showing that the continued registration of the person

does, or is likely to, pose a threat to the public interest or

threaten to impair public confidence in any market regulated by

the Commission.

(C) Any notice of suspension or modification issued under this

paragraph shall remain in effect until such information,

indictment, or complaint is disposed of or until terminated by

the Commission.

(D) On disposition of such information, indictment, or

complaint, the Commission may issue and serve on such person an

order pursuant to paragraph (2) or (4) to suspend, restrict, or

revoke the registration of such person.

(E) A finding of not guilty or other disposition of the charge

shall not preclude the Commission from thereafter instituting any

other proceedings under this chapter.

(F) A person aggrieved by an order issued under this paragraph

may obtain review of such order in the same manner and on the

same terms and conditions as are provided in section 8(b) of this

title.

-SOURCE-

(Sept. 21, 1922, ch. 369, Sec. 8a, as added June 15, 1936, ch. 545,

Sec. 10, 49 Stat. 1500; amended Aug. 5, 1955, ch. 574, 69 Stat.

535; Pub. L. 90-258, Sec. 20-23, Feb. 19, 1968, 82 Stat. 32, 33;

Pub. L. 93-463, title I, Sec. 103(a), title II, Sec. 204(c),

205(c), 213-215, Oct. 23, 1974, 88 Stat. 1392, 1397, 1400, 1404;

Pub. L. 95-405, Sec. 17, Sept. 30, 1978, 92 Stat. 874; Pub. L.

97-444, title I, Sec. 104, title II, Sec. 223-225, Jan. 11, 1983,

96 Stat. 2297, 2310-2315; Pub. L. 102-546, title II, Sec.

207(b)(3), (4), 208, 209(b)(6), 227, title IV, Sec. 402(10), Oct.

28, 1992, 106 Stat. 3604, 3607, 3618, 3625; Pub. L. 106-554, Sec.

1(a)(5) (title I, Sec. 123(a)(19)), Dec. 21, 2000, 114 Stat. 2763,

2763A-410.)

-REFTEXT-

REFERENCES IN TEXT

The Securities Act of 1933, referred to in pars. (2)(E) and

(3)(B), is title I of act May 27, 1933, ch. 38, 48 Stat. 74, as

amended, which is classified generally to subchapter I (Sec. 77a et

seq.) of chapter 2A of Title 15, Commerce and Trade. For complete

classification of this Act to the Code, see section 77a of Title 15

and Tables.

The Securities Exchange Act of 1934, referred to in pars. (2)(E)

and (3)(B), is act June 6, 1934, ch. 404, 48 Stat. 881, as amended,

which is classified principally to chapter 2B (Sec. 78a et seq.) of

Title 15. For complete classification of this Act to the Code, see

section 78a of Title 15 and Tables.

The Public Utility Holding Company Act of 1935, referred to in

pars. (2)(E) and (3)(B), is title I of act Aug. 26, 1935, ch. 687,

49 Stat. 838, as amended, which is classified generally to chapter

2C (Sec. 79 et seq.) of Title 15. For complete classification of

this Act to the Code, see section 79 of Title 15 and Tables.

The Trust Indenture Act of 1939, referred to in pars. (2)(E) and

(3)(B), is title III of act May 27, 1933, ch. 38, as added Aug. 3,

1939, ch. 411, 53 Stat. 1149, as amended, which is classified

generally to subchapter III (Sec. 77aaa et seq.) of chapter 2A of

Title 15. For complete classification of this Act to the Code, see

section 77aaa of Title 15 and Tables.

The Investment Advisers Act of 1940, referred to in pars. (2)(E)

and (3)(B), is title II of act Aug. 22, 1940, ch. 686, 54 Stat.

847, as amended, which is classified generally to subchapter II

(Sec. 80b-1 et seq.) of chapter 2D of Title 15. For complete

classification of this Act to the Code, see section 80b-20 of Title

15 and Tables.

The Investment Company Act of 1940, referred to in pars. (2)(E)

and (3)(B), is title I of act Aug. 22, 1940, ch. 686, 54 Stat. 789,

as amended, which is classified generally to subchapter I (Sec.

80a-1 et seq.) of chapter 2D of Title 15. For complete

classification of this Act to the Code, see section 80a-51 of Title

15 and Tables.

The Securities Investor Protection Act of 1970, referred to in

pars. (2)(E) and (3)(B), is Pub. L. 91-598, Dec. 30, 1970, 84 Stat.

1636, as amended, which is classified generally to chapter 2B-1

(Sec. 78aaa et seq.) of Title 15. For complete classification of

this Act to the Code, see section 78aaa of Title 15 and Tables.

The Foreign Corrupt Practices Act of 1977, referred to in pars.

(2)(E) and (3)(B), is title I of Pub. L. 95-213, Dec. 19, 1977, 91

Stat. 1494, as amended, which enacted sections 78dd-1 and 78dd-2 of

Title 15, and amended sections 78m and 78ff of Title 15. For

complete classification of this Act to the Code, see Short Title of

1977 Amendment note set out under section 78a of Title 15 and

Tables.

-MISC2-

AMENDMENTS

2000 - Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec.

123(a)(19)(A)), substituted ''registered entity'' for ''contract

market'' wherever appearing.

Par. (2)(F). Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec.

123(a)(19)(B)), substituted ''privileges'' for ''trading

privileges''.

1992 - Par. (1). Pub. L. 102-546, Sec. 207(b)(3), substituted

''floor brokers, and floor traders'' for ''and floor brokers''.

Par. (2). Pub. L. 102-546, Sec. 209(b)(6)(A), made technical

amendment to reference to sections 9 and 15 of this title in

concluding provisions to reflect change in reference to

corresponding section of original act.

Par. (2)(C)(i). Pub. L. 102-546, Sec. 207(b)(4), inserted ''floor

trader,'' after ''floor broker,''.

Par. (2)(C)(ii). Pub. L. 102-546, Sec. 208(a), amended cl. (ii)

generally. Prior to amendment, cl. (ii) read as follows:

''engaging in or continuing any activity involving any transaction

in or advice concerning contracts of sale of a commodity for future

delivery, concerning matters subject to Commission regulation under

section 6c or 23 of this title, or concerning securities''.

Par. (2)(D)(ii). Pub. L. 102-546, Sec. 207(b)(4), inserted

''floor trader,'' after ''floor broker,''.

Par. (2)(D)(iv). Pub. L. 102-546, Sec. 208(b), inserted

references to sections 1001, 1503, 1623, 1961 to 1963, and 2314 of

title 18 and sections 7201 and 7206 of title 26.

Par. (2)(E). Pub. L. 102-546, Sec. 208(c), substituted ''in a

proceeding brought'' for ''by any court of competent

jurisdiction,'' and in cl. (i) inserted reference to chapter 96 of

title 18.

Par. (2)(G). Pub. L. 102-546, Sec. 208(d), substituted ''this

paragraph and paragraph (3)'' for ''subparagraphs (A) through (F)

of this paragraph'', ''materially false'' for ''material false'',

and ''application or any update thereto'' for ''application''.

Par. (3). Pub. L. 102-546, Sec. 209(b)(6)(B), made technical

amendment to reference to sections 9 and 15 of this title in

concluding provisions to reflect change in reference to

corresponding section of original act.

Par. (3)(D). Pub. L. 102-546, Sec. 208(e), inserted ''pleaded

guilty to or'' after ''person'', substituted ''section,'' for

''section within ten years preceding the filing of the application

or at any time thereafter,'' and ''felony of the type specified in

paragraph (2)(D) of this section more'' for ''felony, including a

felony of the type specified in paragraph (2)(D) of this section,

more''.

Par. (3)(E). Pub. L. 102-546, Sec. 208(f)(1), (2), inserted

''pleaded guilty to or'' after ''person'' and struck out ''within

ten years preceding the filing of the application for registration

or at any time thereafter'' before ''of any misdemeanor''.

Par. (3)(E)(ii). Pub. L. 102-546, Sec. 207(b)(4), inserted

''floor trader,'' after ''floor broker,''.

Par. (3)(E)(iv). Pub. L. 102-546, Sec. 208(f)(3), inserted

reference to sections 7203 to 7205 and 7207 of title 26.

Par. (3)(G). Pub. L. 102-546, Sec. 208(g)(5), which directed the

insertion of ''or in any registration disqualification proceeding''

after ''Commission'', was executed by making the insertion after

''Commission'' the second time it appeared to reflect the probable

intent of Congress.

Pub. L. 102-546, Sec. 208(g)(1)-(4), substituted ''materially

false'' for ''material false'', ''application or any update

thereto,'' for ''application,'' and struck out ''or'' after

''thereunder,''.

Par. (3)(H). Pub. L. 102-546, Sec. 208(h), inserted '', in a

United States military court,'' after ''State court''.

Par. (3)(J). Pub. L. 102-546, Sec. 208(i), struck out ''or''

before ''any other self-regulatory'', inserted ''or any foreign

regulatory body that the Commission recognizes as having a

comparable regulatory program'', and substituted ''association,

self-regulatory organization, or foreign regulatory body'' for

''association, or self-regulatory organization''.

Par. (4). Pub. L. 102-546, Sec. 209(b)(6)(C), made technical

amendment to references to sections 9 and 15 of this title in

concluding provisions to reflect change in references to

corresponding section of original act.

Par. (5). Pub. L. 102-546, Sec. 402(10)(A), struck out ''and'' at

end.

Par. (7). Pub. L. 102-546, Sec. 402(10)(B), substituted ''matters

as - '' for ''matters as:'' in introductory provisions.

Par. (11). Pub. L. 102-546, Sec. 227, added par. (11).

1983 - Par. (1). Pub. L. 97-444, Sec. 223, substituted

authorization for registration of ''associated persons of futures

commission merchants'' for ''and persons associated therewith as

described in section 6k of this title''; authorized registration of

introducing brokers, associated persons of introducing brokers,

associated persons of commodity trading advisors and associated

persons of commodity pool operators, substituted ''such persons''

for ''any persons'' before ''associated with the applicant'', and

authorized establishment of registration and renewal fees and

charges and granting of temporary licenses for terms not exceeding

six months from date of issuance.

Par. (2). Pub. L. 97-444, Sec. 224(1), added par. (2) and struck

out prior par. (2) which authorized Commission ''to refuse to

register any person -

''(A) if the prior registration of such person has been

suspended (and the period of such suspension shall not have

expired) or has been revoked;

''(B) if it is found, after opportunity for hearing, that the

applicant is unfit to engage in the business for which the

application for registration is made, (i) because such applicant,

or, if the applicant is a partnership, any general partner, or,

if the applicant is a corporation, any officer or holder of more

than 10 per centum of the stock, at any time engaged in any

practice of the character prohibited by this chapter or was

convicted of a felony in any State or Federal court, or was

debarred by any agency of the United States from contracting with

the United States, or the applicant willfully made any material

false or misleading statement in his application or willfully

omitted to state any material fact in connection with the

application, or (ii) for other good cause shown; or

''(C) in the case of an applicant for registration as futures

commission merchant, if it is found after opportunity for hearing

that the applicant has not established that he meets the minimum

financial requirements under section 6f of this title: Provided,

That pending final determination under subparagraph (B) or (C),

registration shall not be granted: And provided further, That the

applicant may appeal from the refusal of registration under

subparagraph (B) or (C) in the manner provided in sections 9 and

15 of this title; and''.

Par. (3). Pub. L. 97-444, Sec. 224(3), added par. (3). Former

par. (3) redesignated (4).

Par. (4). Pub. L. 97-444, Sec. 224(2), (4), struck out par. (4)

provision for establishment of registration and renewal fees and

charges, covered in par. (1), redesignated par. (3) as (4), and in

redesignated par. (4), authorized placing of restrictions on

registrations, suspension or revocation of registration of an

introducing broker and appeals from registration decisions made

pursuant to this paragraph as provided in sections 9 and 15 of this

title, and substituted ''if cause exists under paragraph (3) of

this section'' for ''if cause exists under paragraph (2)(B) or (C)

of this section''.

Par. (6). Pub. L. 97-444, Sec. 104, authorized communication of

full facts respecting transactions or market operations to

registered futures associations and self-regulatory organizations,

included concern for investors, provided for communications when

necessary or appropriate to effectuate purposes of this chapter,

and prohibited disclosure of furnished information except in

self-regulatory actions or proceedings.

Pars. (6) to (8). Pub. L. 97-444, Sec. 224(5), struck out ''and''

at end of pars. (6), (7), and (8).

Par. (9). Pub. L. 97-444, Sec. 225, authorized Commission to

direct the contract market to take certain action, including, but

not limited to, setting of temporary emergency margin levels on any

futures contract, and fixing of limits that may apply to a market

position acquired in good faith prior to the effective date of

Commission's action and inserted provisions respecting judicial

review.

Par. (10). Pub. L. 97-444, Sec. 224(6), added par. (10).

1978 - Par. (1). Pub. L. 95-405, Sec. 17(1), inserted '', which

may require the applicant, and any persons associated with the

applicant as the Commission may specify, to be fingerprinted and to

submit, or cause to be submitted, such fingerprints to the Attorney

General for identification and appropriate processing'' after ''by

the Commission''.

Par. (6). Pub. L. 95-405, Sec. 17(2), struck out ''and to

publish'' after ''any contract market''.

1974 - Pub. L. 93-463, Sec. 103(a), substituted ''Commission''

for ''Secretary of Agriculture'' in provisions preceding par. (1).

Par. (1). Pub. L. 93-463, Sec. 103(a), 204(c), 205(c),

substituted ''Commission'' for ''Secretary of Agriculture'',

inserted ''and persons associated therewith as described in section

6k of this title,'' after ''futures commission merchants'', and

inserted ''commodity trading advisors, commodity pool operators''

before ''and floor brokers''.

Pars. (3), (5), (6). Pub. L. 93-463, Sec. 103(a), substituted

''Commission'' for ''Secretary of Agriculture''.

Par. (7). Pub. L. 93-463, Sec. 213, amended par. (7) generally,

substituting provisions covering the altering or supplementing of

the rules of a contract market for provisions covering the

disapproval of bylaws, rules, regulations, and resolutions made,

issued, or proposed by a contract market.

Par. (8). Pub. L. 93-463, Sec. 214, added par. (8).

Par. (9). Pub. L. 93-463, Sec. 215, added par. (9).

1968 - Par. (2). Pub. L. 90-258, Sec. 20, designated existing

provisions as subpar. (A), substituted ''if the prior registration

of such person'' for ''if such person has violated any of the

provisions of this chapter or any of the rules or regulations

promulgated by the Secretary of Agriculture hereunder for which the

registration of such person'' and added subpars. (B) and (C).

Par. (3). Pub. L. 90-258, Sec. 21, authorized Secretary of

Agriculture, in accordance with procedure provided for in sections

9 and 15 of this title, to suspend or revoke the registration of

any person registered under this chapter if cause exists under par.

(2)(B) or (C) of this section which would warrant a refusal of

registration of such person.

Par. (4). Pub. L. 90-258, Sec. 22, struck out authorization for

establishment of fees for copies of registration certificates.

Par. (7). Pub. L. 90-258, Sec. 23, added par. (7).

1955 - Par. (4). Act Aug. 5, 1955, authorized Secretary to fix

and establish reasonable fees for registrations and renewals, and

struck out provisions which set the fee for each registration and

renewal at not more than $10.

EFFECTIVE DATE OF 1992 AMENDMENT

Amendment by section 207(b)(3), (4) of Pub. L. 102-546 effective

180 days after Oct. 28, 1992, with Commodity Futures Trading

Commission to issue any regulations necessary to implement such

amendment no later than 180 days after Oct. 28, 1992, see section

207(c) of Pub. L. 102-546, set out as a note under section 6e of

this title.

EFFECTIVE DATE OF 1983 AMENDMENT

Amendment by Pub. L. 97-444 effective Jan. 11, 1983, see section

239 of Pub. L. 97-444, set out as a note under section 2 of this

title.

EFFECTIVE DATE OF 1978 AMENDMENT

Amendment by Pub. L. 95-405 effective Oct. 1, 1978, see section

28 of Pub. L. 95-405, set out as a note under section 2 of this

title.

EFFECTIVE DATE OF 1974 AMENDMENT

For effective date of amendment by Pub. L. 93-463, see section

418 of Pub. L. 93-463, set out as a note under section 2 of this

title.

EFFECTIVE DATE OF 1968 AMENDMENT

Amendment by Pub. L. 90-258 effective 120 days after Feb. 19,

1968, see section 28 of Pub. L. 90-258, set out as a note under

section 2 of this title.

EFFECTIVE DATE

For effective date of section, see section 13 of act June 15,

1936, set out as an Effective Date of 1936 Amendment note under

section 1 of this title.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 2, 6f, 6k, 7a-2, 21 of

this title.

-CITE-

7 USC Sec. 12b 01/06/03

-EXPCITE-

TITLE 7 - AGRICULTURE

CHAPTER 1 - COMMODITY EXCHANGES

-HEAD-

Sec. 12b. Trading ban violations; prohibition

-STATUTE-

It shall be unlawful for any person, against whom there is

outstanding any order of the Commission prohibiting him from

trading on or subject to the rules of any registered entity, to

make or cause to be made in contravention of such order, any

contract for future delivery of any commodity, on or subject to the

rules of any registered entity.

-SOURCE-

(Sept. 21, 1922, ch. 369, Sec. 8b, as added Pub. L. 90-258, Sec.

24, Feb. 19, 1968, 82 Stat. 33; amended Pub. L. 93-463, title I,

Sec. 103(a), Oct. 23, 1974, 88 Stat. 1392; Pub. L. 106-554, Sec.

1(a)(5) (title I, Sec. 123(a)(20)), Dec. 21, 2000, 114 Stat. 2763,

2763A-410.)

-MISC1-

AMENDMENTS

2000 - Pub. L. 106-554 substituted ''registered entity'' for

''contract market'' in two places.

1974 - Pub. L. 93-463 substituted ''Commission'' for ''Secretary

of Agriculture''.

EFFECTIVE DATE OF 1974 AMENDMENT

For effective date of amendment by Pub. L. 93-463 see section 418

of Pub. L. 93-463, set out as a note under section 2 of this title.

EFFECTIVE DATE

Section effective 120 days after Feb. 19, 1968, see section 28 of

Pub. L. 90-258, set out as an Effective Date of 1968 Amendment note

under section 2 of this title.

-CITE-

7 USC Sec. 12c 01/06/03

-EXPCITE-

TITLE 7 - AGRICULTURE

CHAPTER 1 - COMMODITY EXCHANGES

-HEAD-

Sec. 12c. Disciplinary actions

-STATUTE-

(a) Action taken; written notice of reasons for action

(1) Any exchange or the Commission if the exchange fails to act,

may suspend, expel, or otherwise discipline any person who is a

member of that exchange, or deny any person access to the

exchange. Any such action shall be taken solely in accordance with

the rules of that exchange.

(2) Any suspension, expulsion, disciplinary, or access denial

procedure established by an exchange rule shall provide for written

notice to the Commission and to the person who is suspended,

expelled, or disciplined, or denied access, within thirty days,

which includes the reasons for the exchange action in the form and

manner the Commission prescribes. An exchange shall make public

its findings and the reasons for the exchange action in any such

proceeding, including the action taken or the penalty imposed, but

shall not disclose the evidence therefor, except to the person who

is suspended, expelled, or disciplined, or denied access, and to

the Commission.

(b) Review by Commission

The Commission may, in its discretion and in accordance with such

standards and procedures as it deems appropriate, review any

decision by an exchange whereby a person is suspended, expelled,

otherwise disciplined, or denied access to the exchange. In

addition, the Commission may, in its discretion and upon

application of any person who is adversely affected by any other

exchange action, review such action.

(c) Affirmance, modification, set aside, or remand of action

The Commission may affirm, modify, set aside, or remand any

exchange decision it reviews pursuant to subsection (b) of this

section, after a determination on the record whether the action of

the exchange was in accordance with the policies of this chapter.

Subject to judicial review, any order of the Commission entered

pursuant to subsection (b) of this section shall govern the

exchange in its further treatment of the matter.

(d) Stay of action

The Commission, in its discretion, may order a stay of any action

taken pursuant to subsection (a) of this section pending review

thereof.

(e) Major disciplinary rule violations

(1) The Commission shall issue regulations requiring each

registered entity to establish and make available to the public a

schedule of major violations of any rule within the disciplinary

jurisdiction of such registered entity.

(2) The regulations issued by the Commission pursuant to this

subsection shall prohibit, for a period of time to be determined by

the Commission, any individual who is found to have committed any

major violation from service on the governing board of any

registered entity or registered futures association, or on any

disciplinary committee thereof.

-SOURCE-

(Sept. 21, 1922, ch. 369, Sec. 8c, as added Pub. L. 93-463, title

II, Sec. 216, Oct. 23, 1974, 88 Stat. 1405; amended Pub. L. 95-405,

Sec. 18, Sept. 30, 1978, 92 Stat. 874; Pub. L. 102-546, title II,

Sec. 206(a)(2), Oct. 28, 1992, 106 Stat. 3602; Pub. L. 106-554,

Sec. 1(a)(5) (title I, Sec. 123(a)(20)), Dec. 21, 2000, 114 Stat.

2763, 2763A-410.)

-MISC1-

AMENDMENTS

2000 - Subsec. (e). Pub. L. 106-554 substituted ''registered

entity'' for ''contract market'' wherever appearing.

1992 - Pub. L. 102-546 redesignated pars. (1) to (4) as subsecs.

(a) to (d), respectively, in subsec. (a) redesignated subpars. (A)

and (B) as pars. (1) and (2), respectively, in subsec. (c)

substituted references to subsection (b) for references to

paragraph (2), in subsec. (d) substituted reference to subsection

(a) for reference to paragraph (1), and added subsec. (e).

1978 - Par. (1)(B). Pub. L. 95-405 substituted ''An exchange

shall make public its findings and the reasons for the exchange

action in any such proceeding, including the action taken or the

penalty imposed, but shall not disclose the evidence therefor,

except to the person who is suspended, expelled, or disciplined or

denied access, and to the Commission'' for ''Otherwise the notice

and reasons shall be kept confidential''.

EFFECTIVE DATE OF 1978 AMENDMENT

Amendment by Pub. L. 95-405 effective Oct. 1, 1978, see section

28 of Pub. L. 95-405, set out as a note under section 2 of this

title.

EFFECTIVE DATE

For effective date of section, see section 418 of Pub. L. 93-463,

set out as an Effective Date of 1968 Amendment note under section 2

of this title.

-CITE-

7 USC Sec. 12d 01/06/03

-EXPCITE-

TITLE 7 - AGRICULTURE

CHAPTER 1 - COMMODITY EXCHANGES

-HEAD-

Sec. 12d. Commission action for noncompliance with export sales

reporting requirements

-STATUTE-

The Commission may, in accordance with the procedures provided

for in this chapter, refuse to register, register conditionally, or

suspend, place restrictions upon, or revoke the registration of,

any person, and may bar for any period as it deems appropriate any

person from using or participating in any manner in any market

regulated by the Commission, if such person is subject to a final

decision or order of any court of competent jurisdiction or agency

of the United States finding such person to have knowingly violated

any provision of the export sales reporting requirements of section

612c-3 (FOOTNOTE 1) of this title, or of any regulation issued

thereunder.

(FOOTNOTE 1) See References in Text note below.

-SOURCE-

(Sept. 21, 1922, ch. 369, Sec. 8d, as added Pub. L. 97-444, title

II, Sec. 226, Jan. 11, 1983, 96 Stat. 2316.)

-REFTEXT-

REFERENCES IN TEXT

Section 612c-3 of this title, referred to in text, was repealed

by Pub. L. 101-624, title XV, Sec. 1578, Nov. 28, 1990, 104 Stat.

3702.

-MISC2-

EFFECTIVE DATE

Section effective Jan. 11, 1983, see section 239 of Pub. L.

97-444, set out as an Effective Date of 1983 Amendment note under

section 2 of this title.

-CITE-

7 USC Sec. 12e 01/06/03

-EXPCITE-

TITLE 7 - AGRICULTURE

CHAPTER 1 - COMMODITY EXCHANGES

-HEAD-

Sec. 12e. Repealed. Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec.

123(a)(21)), Dec. 21, 2000, 114 Stat. 2763, 2763A-410

-MISC1-

Section, act Sept. 21, 1922, ch. 369, Sec. 8e, as added Pub. L.

102-546, title II, Sec. 202(a), Oct. 28, 1992, 106 Stat. 3598,

related to Commission oversight and deficiency orders.

-CITE-

7 USC Sec. 13 01/06/03

-EXPCITE-

TITLE 7 - AGRICULTURE

CHAPTER 1 - COMMODITY EXCHANGES

-HEAD-

Sec. 13. Violations generally; punishment; costs of prosecution

-STATUTE-

(a) Felonies generally

It shall be a felony punishable by a fine of not more than

$1,000,000 (or $500,000 in the case of a person who is an

individual) or imprisonment for not more than five years, or both,

together with the costs of prosecution, for:

(1) Any person registered or required to be registered under

this chapter, or any employee or agent thereof, to embezzle,

steal, purloin, or with criminal intent convert to such person's

use or to the use of another, any money, securities, or property

having a value in excess of $100, which was received by such

person or any employee or agent thereof to margin, guarantee, or

secure the trades or contracts of any customer or accruing to

such customer as a result of such trades or contracts or which

otherwise was received from any customer, client, or pool

participant in connection with the business of such person. The

word ''value'' as used in this paragraph means face, par, or

market value, or cost price, either wholesale or retail,

whichever is greater.

(2) Any person to manipulate or attempt to manipulate the price

of any commodity in interstate commerce, or for future delivery

on or subject to the rules of any registered entity, or to corner

or attempt to corner any such commodity or knowingly to deliver

or cause to be delivered for transmission through the mails or

interstate commerce by telegraph, telephone, wireless, or other

means of communication false or misleading or knowingly

inaccurate reports concerning crop or market information or

conditions that affect or tend to affect the price of any

commodity in interstate commerce, or knowingly to violate the

provisions of section 6, section 6b, subsections (a) through (e)

of subsection (FOOTNOTE 1) 6c, section 6h, section 6o(1), or

section 23 of this title.

(FOOTNOTE 1) So in original. Probably should be ''section''.

(3) Any person knowingly to make, or cause to be made, any

statement in any application, report, or document required to be

filed under this chapter or any rule or regulation thereunder or

any undertaking contained in a registration statement required

under this chapter, or by any registered entity or registered

futures association in connection with an application for

membership or participation therein or to become associated with

a member thereof, which statement was false or misleading with

respect to any material fact, or knowingly to omit any material

fact required to be stated therein or necessary to make the

statements therein not misleading.

(4) Any person willfully to falsify, conceal, or cover up by

any trick, scheme, or artifice a material fact, make any false,

fictitious, or fraudulent statements or representations, or make

or use any false writing or document knowing the same to contain

any false, fictitious, or fraudulent statement or entry to a

registered entity, board of trade, or futures association

designated or registered under this chapter acting in furtherance

of its official duties under this chapter.

(5) Any person willfully to violate any other provision of this

chapter, or any rule or regulation thereunder, the violation of

which is made unlawful or the observance of which is required

under the terms of this chapter, but no person shall be subject

to imprisonment under this paragraph for the violation of any

rule or regulation if such person proves that he had no knowledge

of such rule or regulation.

(b) Suspension of convicted felons

Any person convicted of a felony under this section shall be

suspended from registration under this chapter and shall be denied

registration or reregistration for five years or such longer period

as the Commission may determine, and barred from using, or

participating in any manner in, any market regulated by the

Commission for five years or such longer period as the Commission

shall determine, on such terms and conditions as the Commission may

prescribe, unless the Commission determines that the imposition of

such suspension, denial of registration or reregistration, or

market bar is not required to protect the public interest. The

Commission may upon petition later review such disqualification and

market bar and for good cause shown reduce the period thereof.

(c) Transactions by Commissioners and Commission employees

prohibited

It shall be a felony punishable by a fine of not more than

$500,000 or imprisonment for not more than five years, or both,

together with the costs of prosecution, for any Commissioner of the

Commission or any employee or agent thereof, to participate,

directly or indirectly, in any transaction in commodity futures or

any transaction of the character of or which is commonly known to

the trade as an ''option'', ''privilege'', ''indemnity'', ''bid'',

''offer'', ''put'', ''call'', ''advance guaranty'', or ''decline

guaranty'', or any transaction for the delivery of any commodity

under a standardized contract commonly known to the trade as a

margin account, margin contract, leverage account, or leverage

contract, or under any contract, account, arrangement, scheme, or

device that the Commission determines serves the same function or

functions as such a standardized contract, or is marketed or

managed in substantially the same manner as such a standardized

contract, or for any such person to participate, directly or

indirectly, in any investment transaction in an actual commodity if

nonpublic information is used in the investment transaction, if the

investment transaction is prohibited by rule or regulation of the

Commission, or if the investment transaction is effected by means

of any instrument regulated by the Commission. The foregoing

prohibitions shall not apply to any transaction or class of

transactions that the Commission, by rule or regulation, has

determined would not be contrary to the public interest or

otherwise inconsistent with the purposes of this subsection.

(d) Use of information by Commissioners and Commission employees

prohibited

It shall be a felony punishable by a fine of not more than

$500,000 or imprisonment for not more than five years, or both,

together with the costs of prosecution - (1) for any Commissioner

of the Commission or any employee or agent thereof who, by virtue

of his employment or position, acquires information which may

affect or tend to affect the price of any commodity futures or

commodity and which information has not been made public to impart

such information with intent to assist another person, directly or

indirectly, to participate in any transaction in commodity futures,

any transaction in an actual commodity, or in any transaction of

the character of or which is commonly known to the trade as an

''option'', ''privilege'', ''indemnity'', ''bid'', ''offer'',

''put'', ''call'', ''advance guaranty'', or ''decline guaranty'',

or in any transaction for the delivery of any commodity under a

standardized contract commonly known to the trade as a margin

account, margin contract, leverage account, or leverage contract,

or under any contract, account, arrangement, scheme, or device that

the Commission determines serves the same function or functions as

such a standardized contract, or is marketed or managed in

substantially the same manner as such a standardized contract; and

(2) for any person to acquire such information from any

Commissioner of the Commission or any employee or agent thereof and

to use such information in any transaction in commodity futures,

any transaction in an actual commodity, or in any transaction of

the character of or which is commonly known to the trade as an

''option'', ''privilege'', ''indemnity'', ''bid'', ''offer'',

''put'', ''call'', ''advance guaranty'', or ''decline guaranty'',

or in any transaction for the delivery of any commodity under a

standardized contract commonly known to the trade as a margin

account, margin contract, leverage account, or leverage contract,

or under any contract, account, arrangement, scheme, or device that

the Commission determines serves the same function or functions as

such a standardized contract, or is marketed or managed in

substantially the same manner as such a standardized contract.

(e) Redesignated (d)

(f) Insider trading prohibited

It shall be a felony for any person -

(1) who is an employee, member of the governing board, or

member of any committee of a board of trade, registered entity,

or registered futures association, in violation of a regulation

issued by the Commission, willfully and knowingly to trade for

such person's own account, or for or on behalf of any other

account, in contracts for future delivery or options thereon on

the basis of, or willfully and knowingly to disclose for any

purpose inconsistent with the performance of such person's

official duties as an employee or member, any material nonpublic

information obtained through special access related to the

performance of such duties. (FOOTNOTE 2)

(FOOTNOTE 2) So in original. The period probably should be '';

or''.

(2) willfully and knowingly to trade for such person's own

account, or for or on behalf of any other account, in contracts

for future delivery or options thereon on the basis of any

material nonpublic information that such person knows was

obtained in violation of paragraph (1) from an employee, member

of the governing board, or member of any committee of a board of

trade, registered entity, or registered futures association.

Such felony shall be punishable by a fine of not more than

$500,000, plus the amount of any profits realized from such trading

or disclosure made in violation of this subsection, or imprisonment

for not more than five years, or both, together with the costs of

prosecution.

-SOURCE-

(Sept. 21, 1922, ch. 369, Sec. 9, 42 Stat. 1003; June 15, 1936, ch.

545, Sec. 2, 11, 49 Stat. 1491, 1501; Pub. L. 90-258, Sec. 25, Feb.

19, 1968, 82 Stat. 33; Pub. L. 93-463, title II, Sec. 212(d), title

IV, Sec. 401, 409, Oct. 23, 1974, 88 Stat. 1404, 1412, 1414; Pub.

L. 95-405, Sec. 19, Sept. 30, 1978, 92 Stat. 875; Pub. L. 97-444,

title II, Sec. 227, Jan. 11, 1983, 96 Stat. 2316; Pub. L. 99-641,

title I, Sec. 105, 110(3), (4), Nov. 10, 1986, 100 Stat. 3558,

3561; Pub. L. 102-546, title II, Sec. 212(a), 214(a), Oct. 28,

1992, 106 Stat. 3608, 3610; Pub. L. 106-554, Sec. 1(a)(5) (title I,

Sec. 123(a)(22)), Dec. 21, 2000, 114 Stat. 2763, 2763A-410.)

-MISC1-

AMENDMENTS

2000 - Subsecs. (a)(2) to (4), (f)(1), (2). Pub. L. 106-554

substituted ''registered entity'' for ''contract market''.

1992 - Subsec. (a). Pub. L. 102-546, Sec. 212(a)(1)(A), (C),

added subsec. (a) and struck out former subsec. (a) which related

to penalty for embezzlement and larcenous actions.

Subsec. (b). Pub. L. 102-546, Sec. 212(a)(1)(A), (C), added

subsec. (b) and struck out former subsec. (b) which related to

penalty for price manipulation, cornering, and fraudulent

information.

Subsec. (c). Pub. L. 102-546, Sec. 212(a)(1)(A), (B), (2),

redesignated subsec. (d) as (c), substituted ''$500,000'' for

''$100,000'', and struck out former subsec. (c) which related to

penalty for misdemeanors.

Subsecs. (d) to (f). Pub. L. 102-546, Sec. 212(a)(1)(B), (3),

214(a), redesignated subsec. (e) as (d), substituted ''$500,000''

for ''$100,000'', and added subsec. (f).

1986 - Subsec. (c). Pub. L. 99-641, Sec. 110(3), substituted

''6k,'' for ''6k.''

Subsec. (d). Pub. L. 99-641, Sec. 110(4), substituted ''advance

guaranty'' for ''advance guarantee''.

Pub. L. 99-641, Sec. 105, inserted ''if nonpublic information is

used in the investment transaction, if the investment transaction

is prohibited by rule or regulation of the Commission, or if the

investment transaction is effected by means of any instrument

regulated by the Commission'' after ''actual commodity'', and

substituted provisions which related to foregoing prohibitions not

being applicable to transactions determined by Commission not

contrary to public interest or inconsistent with this subsection

for provisions which read as follows: ''Such prohibition against

any investment transaction in an actual commodity shall not apply

to (1) a transaction in which such person buys an agricultural

commodity or livestock for use in such person's own farming or

ranching operations or sells an agricultural commodity which such

person has produced in connection with such person's own farming or

ranching operations nor to any transaction in which such person

sells livestock owned by such person for at least three months, (2)

a transaction entered into by the trustee of a trust established by

such person over which such person exercises no control if such

transaction is entered into solely to hedge against adverse price

changes in connection with such farming or ranching operations or

is a transaction for the lease of oil or gas or other mineral

rights or interests owned by such person, or (3) a transaction in

which such person buys or sells, directly or indirectly (except by

means of an instrument regulated by the Commission), a United

States Government security, a certificate of deposit, or a similar

financial instrument if no nonpublic information is used by such

person in such transaction. With respect to such excepted

transactions, the Commission shall require any Commissioner of the

Commission or any employee or agent thereof who participates in any

such transaction to notify the Commission thereof in accordance

with such regulations as the Commission shall prescribe and the

Commission shall make such information available to the public.''

1983 - Subsec. (a). Pub. L. 97-444, Sec. 227(1), expanded

applicability to any person registered or required to be registered

under this chapter and inserted provision suspending persons

convicted under this subsec. from registration and denying

reregistration for five years or longer as determined by the

Commission, unless such suspension or denial is not required to

protect the public interest.

Subsec. (b). Pub. L. 97-444, Sec. 227(2), inserted ''A person

convicted of a felony under this subsection shall be suspended from

any registration under this chapter, denied registration or

reregistration for five years or such longer period as the

Commission shall determine, and barred from using or participating

in any manner in any market regulated by the Commission for five

years or such longer period as the Commission shall determine on

such terms and conditions as the Commission may prescribe, unless

the Commission determines that the imposition of such suspension,

denial of registration or reregistration, or market bar is not

required to protect the public interest. The Commission may upon

petition later review such disqualification and market bar and for

good cause shown reduce the period thereof.''

Subsec. (c). Pub. L. 97-444, Sec. 227(3), inserted ''A person

convicted under this subsection of knowingly violating the

provisions of section 6a of this title shall be suspended from any

registration under this chapter, denied registration or

reregistration for a period of two years or such longer period as

the Commission shall determine, and barred from using or

participating in any manner in any market regulated by the

Commission for two years or such longer period as the Commission

shall determine on such terms and conditions as the Commission may

prescribe, unless the Commission determines that the imposition of

such suspension, denial of registration or reregistration, or

market bar is not required to protect the public interest. The

Commission may upon petition later review such disqualification and

market bar and for good cause shown reduce the period thereof.''

Subsec. (d). Pub. L. 97-444, Sec. 227(4), in amending subsec. (d)

generally, added to range of felonious conduct, participation in

any transaction for the delivery of any commodity under a

standardized contract commonly known to the trade as a margin

account, margin contract, leverage account, or leverage contract,

or under any contract, account, arrangement, scheme, or device that

the Commission determines serves the same function or functions as

such a standardized contract, or is marketed or managed in

substantially the same manner as such a standardized contract, and

added to nonapplicability of prohibition against any investment

transaction in an actual commodity, a transaction entered into by

the trustee of a trust established by such person over which such

person exercises no control if such transaction is entered into

solely to hedge against adverse price changes in connection with

such farming or ranching operations or is a transaction for the

lease of oil or gas or other mineral rights or interests owned by

such person, or a transaction in which such person buys or sells,

directly or indirectly (except by means of an instrument regulated

by the Commission), a United States Government security, a

certificate of deposit, or a similar financial instrument if no

nonpublic information is used by such person in such transaction.

Subsec. (e). Pub. L. 97-444, Sec. 227(5), inserted after words ''

'decline guaranty' '' each place they appear the following: '', or

in any transaction for the delivery of any commodity under a

standardized contract commonly known to the trade as a margin

account, margin contract, leverage account, or leverage contract,

or under any contract, account, arrangement, scheme, or device that

the Commission determines serves the same function or functions as

such a standardized contract, or is marketed or managed in

substantially the same manner as such a standardized contract''.

1978 - Subsec. (a). Pub. L. 95-405, Sec. 19(1), substituted

''$500,000'' for ''$100,000'' and inserted provision relating to a

fine of not more than $100,000 plus costs of prosecution for a

violation by a person who is an individual.

Subsec. (b). Pub. L. 95-405, Sec. 19(2), substituted ''$500,000''

for ''$100,000'' and inserted provisions making felonies the

violation of sections 6, 6b, 6c(b) to (e), 6h, 6o(1) and 23 of this

title, knowingly making any false or misleading statement of

material fact, or omitting such fact in any application or report,

and setting the fine for such felonies at not more than $100,000

for a person who is an individual.

Subsec. (c). Pub. L. 95-405, Sec. 19(3), inserted references to

subsecs. (d) and (e) of this section and substituted ''sections 6a,

6c(a), 6d, 6e, 6i, 6k, 6m, 6o(2), or 12b of this title'' for

''sections 6 to 6e, 6h, 6i, 6k, 6m, 6o or 12b of this title''.

Subsecs. (d), (e). Pub. L. 95-405, Sec. 19(4), (5), substituted

''$100,000'' for ''$10,000''.

1974 - Subsecs. (a), (b). Pub. L. 93-463, Sec. 212(d)(1), (2),

substituted ''$100,000'' for ''$10,000''.

Subsec. (c). Pub. L. 93-463, Sec. 212(d)(3), 409, substituted

''$100,000'' for ''$10,000'' and inserted reference to sections 6k,

6m, and 6o of this title.

Subsecs. (d), (e). Pub. L. 93-463, Sec. 401, added subsecs. (d)

and (e).

1968 - Subsec. (a). Pub. L. 90-258 added subsec. (a).

Subsec. (b). Pub. L. 90-258 incorporated existing offenses in

provisions designated as subsec. (b), changed classification

thereof from misdemeanors to felonies, and increased term of

imprisonment from not more than one year to not more than five

years.

Subsec. (c). Pub. L. 90-258 incorporated existing offenses in

provisions designated as subsec. (c), and included penalty for

violation of section 12b of this title.

1936 - Act June 15, 1936, amended section generally and provided

that price manipulations of commodities in interstate commerce was

a violation.

EFFECTIVE DATE OF 1983 AMENDMENT

Amendment by Pub. L. 97-444 effective Jan. 11, 1983, see section

239 of Pub. L. 97-444, set out as a note under section 2 of this

title.

EFFECTIVE DATE OF 1978 AMENDMENT

Amendment by Pub. L. 95-405 effective Oct. 1, 1978, see section

28 of Pub. L. 95-405, set out as a note under section 2 of this

title.

EFFECTIVE DATE OF 1974 AMENDMENT

For effective date of amendment by Pub. L. 93-463, see section

418 of Pub. L. 93-463, set out as a note under section 2 of this

title.

EFFECTIVE DATE OF 1968 AMENDMENT

Amendment by Pub. L. 90-258 effective 120 days after Feb. 19,

1968, see section 28 of Pub. L. 90-258, set out as a note under

section 2 of this title.

EFFECTIVE DATE OF 1936 AMENDMENT

Amendment by act June 15, 1936, effective 90 days after June 15,

1936, see section 13 of that act, set out as a note under section 1

of this title.

REGULATIONS

Section 214(b) of Pub. L. 102-546 provided that: ''The Commodity

Futures Trading Commission shall issue regulations to implement the

amendment made by subsection (a) (amending this section) not later

than three hundred and sixty days after the date of enactment of

this Act (Oct. 28, 1992).''

PENALTIES STUDY AND GUIDELINES

Section 225 of Pub. L. 102-546 provided that:

''(a) Study. - The Commodity Futures Trading Commission shall

study the penalties the Commission imposes against persons found to

have violated the Commodity Exchange Act (7 U.S.C. 1 et seq.) and

the penalties imposed by contract markets and registered futures

associations against persons found to have violated their

respective rules established under such Act.

''(b) Report. - Not later than two years after the date of

enactment of this Act (Oct. 28, 1992), the Commission shall submit

to the Committee on Agriculture of the House of Representatives and

the Committee on Agriculture, Nutrition, and Forestry of the Senate

a report that describes the results of the study conducted under

subsection (a). The report shall -

''(1) include an analysis of whether systematic differences

exist among penalties imposed by various contract markets and

registered futures associations for similar offenses, and, if so,

the causes of such differences;

''(2) propose industry-wide guidelines or rules to make penalty

levels among contract markets and registered futures associations

consistent, including, if appropriate, minimum penalties or

penalty ranges for various offenses; and

''(3) propose guidelines or rules to make Commission penalty

levels consistent, including, if appropriate, minimum penalties

or penalty ranges for various offenses.''

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 2, 6a, 7a-3, 7b-1, 13b of

this title.

-CITE-

7 USC Sec. 13-1 01/06/03

-EXPCITE-

TITLE 7 - AGRICULTURE

CHAPTER 1 - COMMODITY EXCHANGES

-HEAD-

Sec. 13-1. Violations, prohibition against dealings in onion

futures; punishment

-STATUTE-

(a) No contract for the sale of onions for future delivery shall

be made on or subject to the rules of any board of trade in the

United States. The terms used in this section shall have the same

meaning as when used in this chapter.

(b) Any person who shall violate the provisions of this section

shall be deemed guilty of a misdemeanor and upon conviction thereof

be fined not more than $5,000.

-SOURCE-

(Pub. L. 85-839, Sec. 1, Aug. 28, 1958, 72 Stat. 1013.)

-COD-

CODIFICATION

Section was not enacted as part of the Commodity Exchange Act

which comprises this chapter.

-MISC3-

EFFECTIVE DATE

Section 2 of Pub. L. 85-839 provided that: ''This Act (enacting

this section) shall take effect thirty days after its enactment

(Aug. 28, 1958).''

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in section 1a of this title.

-CITE-

7 USC Sec. 13a 01/06/03

-EXPCITE-

TITLE 7 - AGRICULTURE

CHAPTER 1 - COMMODITY EXCHANGES

-HEAD-

Sec. 13a. Nonenforcement of rules of government or other

violations; cease and desist orders; fines and penalties;

imprisonment; misdemeanor; separate offenses

-STATUTE-

If any registered entity is not enforcing or has not enforced its

rules of government made a condition of its designation or

registration as set forth in sections 7 through 7a-2 of this title,

or if any registered entity, or any director, officer, agent, or

employee of any registered entity otherwise is violating or has

violated any of the provisions of this chapter or any of the rules,

regulations, or orders of the Commission thereunder, the Commission

may, upon notice and hearing on the record and subject to appeal as

in other cases provided for in section 8(b) of this title, make and

enter an order directing that such registered entity, director,

officer, agent, or employee shall cease and desist from such

violation, and assess a civil penalty of not more than $500,000 for

each such violation. If such registered entity, director, officer,

agent, or employee, after the entry of such a cease and desist

order and the lapse of the period allowed for appeal of such order

or after the affirmance of such order, shall fail or refuse to obey

or comply with such order, such registered entity, director,

officer, agent, or employee shall be guilty of a misdemeanor and,

upon conviction thereof, shall be fined not more than $500,000 or

imprisoned for not less than six months nor more than one year, or

both. Each day during which such failure or refusal to obey such

cease and desist order continues shall be deemed a separate

offense. If the offending registered entity or other person upon

whom such penalty is imposed, after the lapse of the period allowed

for appeal or after the affirmance of such penalty, shall fail to

pay such penalty, the Commission shall refer the matter to the

Attorney General who shall recover such penalty by action in the

appropriate United States district court. In determining the

amount of the money penalty assessed under this section, the

Commission shall consider the gravity of the offense, and in the

case of a registered entity shall further consider whether the

amount of the penalty will materially impair the ability of the

registered entity to carry on its operations and duties.

-SOURCE-

(Sept. 21, 1922, ch. 369, Sec. 6b, as added June 15, 1936, ch. 545,

Sec. 9, 49 Stat. 1500; amended Pub. L. 90-258, Sec. 18, Feb. 19,

1968, 82 Stat. 31; Pub. L. 93-463, title II, Sec. 212(b), Oct. 23,

1974, 88 Stat. 1403; Pub. L. 95-405, Sec. 14, Sept. 30, 1978, 92

Stat. 872; Pub. L. 102-546, title II, Sec. 209(b)(5), 212(c), Oct.

28, 1992, 106 Stat. 3607, 3609; Pub. L. 106-554, Sec. 1(a)(5)

(title I, Sec. 123(a)(14)), Dec. 21, 2000, 114 Stat. 2763,

2763A-409.)

-MISC1-

AMENDMENTS

2000 - Pub. L. 106-554 substituted ''registered entity'' for

''contract market'' wherever appearing, ''designation or

registration as set forth in sections 7 through 7a-2 of this

title'' for ''designation as set forth in section 7 of this title''

in first sentence, and ''the ability of the registered entity'' for

''the contract market's ability'' in last sentence.

1992 - Pub. L. 102-546 substituted ''section 8(b) of this title''

for ''paragraph (a) of section 8 of this title'', substituted

''$500,000'' for ''$100,000'' in two places, and in last sentence

struck out ''the appropriateness of such penalty to the net worth

of the offending person and'' after ''Commission shall consider''.

1978 - Pub. L. 95-405 inserted ''on the record'' after ''notice

and hearing''.

1974 - Pub. L. 93-463 inserted provision for assessment of a

civil penalty of not more than $100,000 for each violation,

substituted ''not more than $100,000'' for ''not less than $500 nor

more than $10,000'' as permissible range of fines imposed, inserted

provisions for enforcement of a penalty, and substituted ''orders

of the Commission'' for ''orders of the Secretary of Agriculture or

the commission''.

1968 - Pub. L. 90-258 amended section to clarify application only

to boards of trade designated as contract markets, to include as

grounds for cease and desist orders failure to enforce the market's

rules of government made a condition of its designation and

violation of rules or regulations of the commission or orders of

the Secretary, and to authorize such orders in conjunction with a

suspension or revocation of designation as a contract market rather

than in lieu of suspension or revocation.

EFFECTIVE DATE OF 1978 AMENDMENT

Amendment by Pub. L. 95-405 effective Oct. 1, 1978, see section

28 of Pub. L. 95-405, set out as a note under section 2 of this

title.

EFFECTIVE DATE OF 1974 AMENDMENT

For effective date of amendment by Pub. L. 93-463, see section

418 of Pub. L. 93-463, set out as a note under section 2 of this

title.

EFFECTIVE DATE OF 1968 AMENDMENT

Amendment by Pub. L. 90-258 effective 120 days after Feb. 19,

1968, see section 28 of Pub. L. 90-258, set out as a note under

section 2 of this title.

EFFECTIVE DATE

For effective date of section, see section 13 of act June 15,

1936, set out as an Effective Date of 1936 Amendment note under

section 1 of this title.

-CITE-

7 USC Sec. 13a-1 01/06/03

-EXPCITE-

TITLE 7 - AGRICULTURE

CHAPTER 1 - COMMODITY EXCHANGES

-HEAD-

Sec. 13a-1. Enjoining or restraining violations

-STATUTE-

(a) Action to enjoin or restrain violations

Whenever it shall appear to the Commission that any registered

entity or other person has engaged, is engaging, or is about to

engage in any act or practice constituting a violation of any

provision of this chapter or any rule, regulation, or order

thereunder, or is restraining trading in any commodity for future

delivery, the Commission may bring an action in the proper district

court of the United States or the proper United States court of any

territory or other place subject to the jurisdiction of the United

States, to enjoin such act or practice, or to enforce compliance

with this chapter, or any rule, regulation or order thereunder, and

said courts shall have jurisdiction to entertain such actions:

Provided, That no restraining order (other than a restraining order

which prohibits any person from destroying, altering or disposing

of, or refusing to permit authorized representatives of the

Commission to inspect, when and as requested, any books and records

or other documents or which prohibits any person from withdrawing,

transferring, removing, dissipating, or disposing of any funds,

assets, or other property, and other than an order appointing a

temporary receiver to administer such restraining order and to

perform such other duties as the court may consider appropriate) or

injunction for violation of the provisions of this chapter shall be

issued ex parte by said court.

(b) Injunction or restraining order

Upon a proper showing a permanent or temporary injunction or

restraining order shall be granted without bond.

(c) Writs or other orders

Upon application of the Commission, the district courts of the

United States and the United States courts of any territory or

other place subject to the jurisdiction of the United States shall

also have jurisdiction to issue writs of mandamus, or orders

affording like relief, commanding any person to comply with the

provisions of this chapter or any rule, regulation, or order of the

Commission thereunder, including the requirement that such person

take such action as is necessary to remove the danger of violation

of this chapter or any such rule, regulation, or order: Provided,

That no such writ of mandamus, or order affording like relief,

shall be issued ex parte.

(d) Civil penalties

(1) In any action brought under this section, the Commission may

seek and the court shall have jurisdiction to impose, on a proper

showing, on any person found in the action to have committed any

violation a civil penalty in the amount of not more than the higher

of $100,000 or triple the monetary gain to the person for each

violation.

(2) If a person on whom such a penalty is imposed fails to pay

the penalty within the time prescribed in the court's order, the

Commission may refer the matter to the Attorney General who shall

recover the penalty by action in the appropriate United States

district court.

(e) Venue and process

Any action under this section may be brought in the district

wherein the defendant is found or is an inhabitant or transacts

business or in the district where the act or practice occurred, is

occurring, or is about to occur, and process in such cases may be

served in any district in which the defendant is an inhabitant or

wherever the defendant may be found.

(f) Action by Attorney General

In lieu of bringing actions itself pursuant to this section, the

Commission may request the Attorney General to bring the action.

(g) Notice to Attorney General of action brought by Commission

Where the Commission elects to bring the action, it shall inform

the Attorney General of such suit and advise him of subsequent

developments.

(h) Notice of investigations and enforcement actions

The Commission shall provide the Securities and Exchange

Commission with notice of the commencement of any proceeding and a

copy of any order entered by the Commission against any futures

commission merchant or introducing broker registered pursuant to

section 6f(a)(2) of this title, any floor broker or floor trader

exempt from registration pursuant to section 6f(a)(3) of this

title, any associated person exempt from registration pursuant to

section 6k(6) (FOOTNOTE 1) of this title, or any board of trade

designated as a contract market pursuant to section 7b-1 of this

title.

(FOOTNOTE 1) So in original. Probably should refer to the

second par. (5) of section 6k.

-SOURCE-

(Sept. 21, 1922, ch. 369, Sec. 6c, as added Pub. L. 93-463, title

II, Sec. 211, Oct. 23, 1974, 88 Stat. 1402; amended Pub. L. 97-444,

title II, Sec. 220, Jan. 11, 1983, 96 Stat. 2308; Pub. L. 99-641,

title I, Sec. 104, Nov. 10, 1986, 100 Stat. 3557; Pub. L. 102-546,

title II, Sec. 221, Oct. 28, 1992, 106 Stat. 3614; Pub. L. 106-554,

Sec. 1(a)(5) (title I, Sec. 123(a)(15), title II, Sec. 253(c)),

Dec. 21, 2000, 114 Stat. 2763, 2763A-409, 2763A-449.)

-MISC1-

AMENDMENTS

2000 - Subsec. (a). Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec.

123(a)(15)), substituted ''registered entity'' for ''contract

market''.

Subsec. (h). Pub. L. 106-554, Sec. 1(a)(5) (title II, Sec.

253(c)), added subsec. (h).

1992 - Pub. L. 102-546 designated first, second, and third

sentences as subsecs. (a) to (c), respectively, added subsec. (d),

and designated fourth, fifth, and sixth sentences as subsecs. (e)

to (g), respectively.

1986 - Pub. L. 99-641 inserted '', and other than an order

appointing a temporary receiver to administer such restraining

order and to perform such other duties as the court may consider

appropriate''.

1983 - Pub. L. 97-444 inserted ''(other than a restraining order

which prohibits any person from destroying, altering or disposing

of, or refusing to permit authorized representatives of the

Commission to inspect, when and as requested, any books and records

or other documents or which prohibits any person from withdrawing,

transferring, removing, dissipating, or disposing of any funds,

assets, or other property)'' after ''Provided, That no restraining

order''.

EFFECTIVE DATE OF 1983 AMENDMENT

Amendment by Pub. L. 97-444 effective Jan. 11, 1983, see section

239 of Pub. L. 97-444, set out as a note under section 2 of this

title.

EFFECTIVE DATE

For effective date of section, see section 418 of Pub. L. 93-463,

set out as an Effective Date of 1974 Amendment note under section 2

of this title.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in section 2 of this title.

-CITE-

7 USC Sec. 13a-2 01/06/03

-EXPCITE-

TITLE 7 - AGRICULTURE

CHAPTER 1 - COMMODITY EXCHANGES

-HEAD-

Sec. 13a-2. Jurisdiction of States

-STATUTE-

(1) Whenever it shall appear to the attorney general of any

State, the administrator of the securities laws of any State, or

such other official as a State may designate, that the interests of

the residents of that State have been, are being, or may be

threatened or adversely affected because any person (other than a

contract market, derivatives transaction execution facility,

clearinghouse, floor broker, or floor trader) has engaged in, is

engaging or is about to engage in, any act or practice constituting

a violation of any provision of this chapter or any rule,

regulation, or order of the Commission thereunder, the State may

bring a suit in equity or an action at law on behalf of its

residents to enjoin such act or practice, to enforce compliance

with this chapter, or any rule, regulation, or order of the

Commission thereunder, to obtain damages on behalf of their

residents, or to obtain such further and other relief as the court

may deem appropriate.

(2) The district courts of the United States, the United States

courts of any territory, and the District Court of the United

States for the District of Columbia, shall have jurisdiction of all

suits in equity and actions at law brought under this section to

enforce any liability or duty created by this chapter or any rule,

regulation, or order of the Commission thereunder, or to obtain

damages or other relief with respect thereto. Upon proper

application, such courts shall also have jurisdiction to issue

writs of mandamus, or orders affording like relief, commanding the

defendant to comply with the provisions of this chapter or any

rule, regulation, or order of the Commission thereunder, including

the requirement that the defendant take such action as is necessary

to remove the danger of violation of this chapter or of any such

rule, regulation, or order. Upon a proper showing, a permanent or

temporary injunction or restraining order shall be granted without

bond.

(3) Immediately upon instituting any such suit or action, the

State shall serve written notice thereof upon the Commission and

provide the Commission with a copy of its complaint, and the

Commission shall have the right to (A) intervene in the suit or

action and, upon doing so, shall be heard on all matters arising

therein, and (B) file petitions for appeal.

(4) Any suit or action brought under this section in a district

court of the United States may be brought in the district wherein

the defendant is found or is an inhabitant or transacts business or

wherein the act or practice occurred, is occurring, or is about to

occur, and process in such cases may be served in any district in

which the defendant is an inhabitant or wherever the defendant may

be found.

(5) For purposes of bringing any suit or action under this

section, nothing in this chapter shall prevent the attorney

general, the administrator of the State securities laws, or other

duly authorized State officials from exercising the powers

conferred on them by the laws of such State to conduct

investigations or to administer oaths or affirmations or to compel

the attendance of witnesses or the production of documentary and

other evidence.

(6) For purposes of this section, ''State'' means any State of

the United States, the District of Columbia, the Commonwealth of

Puerto Rico, or any territory or possession of the United States.

(7) Nothing contained in this section shall prohibit an

authorized State official from proceeding in State court on the

basis of an alleged violation of any general civil or criminal

antifraud statute of such State.

(8)(A) Nothing in this chapter shall prohibit an authorized State

official from proceeding in a State court against any person

registered under this chapter (other than a floor broker, floor

trader, or registered futures association) for an alleged violation

of any antifraud provision of this chapter or any antifraud rule,

regulation, or order issued pursuant to the chapter.

(B) The State shall give the Commission prior written notice of

its intent to proceed before instituting a proceeding in State

court as described in this subsection and shall furnish the

Commission with a copy of its complaint immediately upon

instituting any such proceeding. The Commission shall have the

right to (i) intervene in the proceeding and, upon doing so, shall

be heard on all matters arising therein, and (ii) file a petition

for appeal. The Commission or the defendant may remove such

proceeding to the district court of the United States for the

proper district by following the procedure for removal otherwise

provided by law, except that the petition for removal shall be

filed within sixty days after service of the summons and complaint

upon the defendant. The Commission shall have the right to appear

as amicus curiae in any such proceeding.

-SOURCE-

(Sept. 21, 1922, ch. 369, Sec. 6d, as added Pub. L. 95-405, Sec.

15, Sept. 30, 1978, 92 Stat. 872; amended Pub. L. 97-444, title II,

Sec. 221, Jan. 11, 1983, 96 Stat. 2308; Pub. L. 102-546, title II,

Sec. 207(b)(1), (2), Oct. 28, 1992, 106 Stat. 3604; Pub. L.

106-554, Sec. 1(a)(5) (title I, Sec. 123(a)(16)), Dec. 21, 2000,

114 Stat. 2763, 2763A-409.)

-MISC1-

AMENDMENTS

2000 - Par. (1). Pub. L. 106-554 inserted ''derivatives

transaction execution facility,'' after ''contract market,''.

1992 - Pars. (1), (8)(A). Pub. L. 102-546 inserted reference to

floor trader.

1983 - Par. (8). Pub. L. 97-444 added par. (8).

EFFECTIVE DATE OF 1992 AMENDMENT

Amendment by Pub. L. 102-546 effective 180 days after Oct. 28,

1992, with Commodity Futures Trading Commission to issue any

regulations necessary to implement such amendment no later than 180

days after Oct. 28, 1992, see section 207(c) of Pub. L. 102-546,

set out as a note under section 6e of this title.

EFFECTIVE DATE OF 1983 AMENDMENT

Amendment by Pub. L. 97-444 effective Jan. 11, 1983, see section

239 of Pub. L. 97-444, set out as a note under section 2 of this

title.

EFFECTIVE DATE

Section effective Oct. 1, 1978, see section 28 of Pub. L. 95-405,

set out as an Effective Date of 1978 Amendment note under section 2

of this title.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 2, 6f, 6k of this title.

-CITE-

7 USC Sec. 13b 01/06/03

-EXPCITE-

TITLE 7 - AGRICULTURE

CHAPTER 1 - COMMODITY EXCHANGES

-HEAD-

Sec. 13b. Manipulations or other violations; cease and desist

orders against persons other than registered entities;

punishment; misdemeanor or felony; separate offenses

-STATUTE-

If any person (other than a registered entity) is manipulating or

attempting to manipulate or has manipulated or attempted to

manipulate the market price of any commodity, in interstate

commerce, or for future delivery on or subject to the rules of any

registered entity, or otherwise is violating or has violated any of

the provisions of this chapter or of the rules, regulations, or

orders of the Commission or the commission (FOOTNOTE 1) thereunder,

the Commission may, upon notice and hearing, and subject to appeal

as in other cases provided for in sections 9 and 15 of this title,

make and enter an order directing that such person shall cease and

desist therefrom and, if such person thereafter and after the lapse

of the period allowed for appeal of such order or after the

affirmance of such order, shall fail or refuse to obey or comply

with such order, such person shall be guilty of a misdemeanor and,

upon conviction thereof, shall be fined not more than the higher of

$100,000 or triple the monetary gain to such person, or imprisoned

for not less than six months nor more than one year, or both,

except that if such failure or refusal to obey or comply with such

order involves any offense within paragraph (a) or (b) of section

13 of this title, such person shall be guilty of a felony and, upon

conviction thereof, shall be subject to the penalties of said

paragraph (a) or (b): Provided, That any such cease and desist

order against any respondent in any case of manipulation of, or

attempt to manipulate, the price of any commodity shall be issued

only in conjunction with an order issued against such respondent

under sections 9 and 15 of this title. Each day during which such

failure or refusal to obey or comply with such order continues

shall be deemed a separate offense.

(FOOTNOTE 1) So in original. The words ''or the commission''

probably should not appear.

-SOURCE-

(Sept. 21, 1922, ch. 369, Sec. 6(d), formerly Sec. 6(c), as added

Pub. L. 90-258, Sec. 17, Feb. 19, 1968, 82 Stat. 31; amended Pub.

L. 93-463, title I, Sec. 103(a), (b), title II, Sec. 212(c), Oct.

23, 1974, 88 Stat. 1392, 1404; renumbered Sec. 6(d) and amended

Pub. L. 102-546, title II, Sec. 209(a)(1), (4), 212(b), Oct. 28,

1992, 106 Stat. 3606, 3609; Pub. L. 106-554, Sec. 1(a)(5) (title I,

Sec. 123(a)(12)(D)), Dec. 21, 2000, 114 Stat. 2763, 2763A-409.)

-COD-

CODIFICATION

Section is comprised of subsec. (d) of section 6 of act Sept. 21,

1922. Subsecs. (a) and (b) of section 6 are classified to section 8

of this title. Subsec. (c) of section 6 is classified to sections

9 and 15 of this title. Subsecs. (e), (f), and (g) of section 6

are classified to sections 9a, 9b, and 9c of this title,

respectively.

-MISC3-

AMENDMENTS

2000 - Pub. L. 106-554 substituted ''registered entity'' for

''contract market'' in two places.

1992 - Pub. L. 102-546 made technical amendment to references to

sections 9 and 15 of this title to reflect change in reference to

corresponding section of original act and substituted ''the higher

of $100,000 or triple the monetary gain to such person'' for

''$100,000''.

1974 - Pub. L. 93-463, Sec. 103(a), 212(c), substituted

''Commission'' for ''Secretary'' before ''may'' and substituted

''not more than $100,000'' for ''not less than $500 nor more than

$10,000''.

Pub. L. 93-463, Sec. 103(a), provided for substitution of

''Commission'' for ''Secretary of Agriculture'' except where such

words would be stricken by section 103(b), which directed striking

the words ''the Secretary of Agriculture or'' where they appeared

in the phrase ''the Secretary of Agriculture or the Commission''.

Because the word ''commission'' was not capitalized in the text of

this section, section 103(b) did not apply to this section and

therefore section 103(a) was executed, resulting in the

substitution of ''the Commission or the commission'' for ''the

Secretary of Agriculture or the commission''.

EFFECTIVE DATE OF 1974 AMENDMENT

For effective date of amendment by Pub. L. 93-463, see section

418 of Pub. L. 93-463, set out as a note under section 2 of this

title.

EFFECTIVE DATE

Section effective 120 days after Feb. 19, 1968, see section 28 of

Pub. L. 90-258, set out as an Effective Date of 1968 Amendment note

under section 2 of this title.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 2, 9c of this title.

-CITE-

7 USC Sec. 13c 01/06/03

-EXPCITE-

TITLE 7 - AGRICULTURE

CHAPTER 1 - COMMODITY EXCHANGES

-HEAD-

Sec. 13c. Responsibility as principal; minor violations

-STATUTE-

(a) Any person who commits, or who willfully aids, abets,

counsels, commands, induces, or procures the commission of, a

violation of any of the provisions of this chapter, or any of the

rules; regulations, or orders issued pursuant to this chapter, or

who acts in combination or concert with any other person in any

such violation, or who willfully causes an act to be done or

omitted which if directly performed or omitted by him or another

would be a violation of the provisions of this chapter or any of

such rules, regulations, or orders may be held responsible for such

violation as a principal.

(b) Any person who, directly or indirectly, controls any person

who has violated any provision of this chapter or any of the rules,

regulations, or orders issued pursuant to this chapter may be held

liable for such violation in any action brought by the Commission

to the same extent as such controlled person. In such action, the

Commission has the burden of proving that the controlling person

did not act in good faith or knowingly induced, directly or

indirectly, the act or acts constituting the violation.

(c) Nothing in this chapter shall be construed as requiring the

Commission or the Commission (FOOTNOTE 1) to report minor

violations of this chapter for prosecution, whenever it appears

that the public interest does not require such action.

(FOOTNOTE 1) So in original. The words ''or the Commission''

probably should not appear.

-SOURCE-

(Sept. 21, 1922, ch. 369, Sec. 13, as added Pub. L. 90-258, Sec.

26, Feb. 19, 1968, 82 Stat. 34; amended Pub. L. 93-463, title I,

Sec. 103(a), (b), Oct. 23, 1974, 88 Stat. 1392; Pub. L. 97-444,

title II, Sec. 230, Jan. 11, 1983, 96 Stat. 2319; Pub. L. 102-546,

title IV, Sec. 402(1)(D), (9)(C), Oct. 28, 1992, 106 Stat. 3624,

3625.)

-MISC1-

AMENDMENTS

1992 - Subsec. (c). Pub. L. 102-546, Sec. 402(9)(C), which

directed that ''the Secretary of Agriculture or'' be struck out,

could not be executed because of amendment by Pub. L. 93-463, Sec.

103(a). See 1974 Amendment note below.

Pub. L. 102-546, Sec. 402(1)(D), substituted ''Commission'' for

''commission'' before ''to report''.

1983 - Subsec. (a). Pub. L. 97-444, Sec. 230(1), struck out ''in

administrative proceedings under this chapter'' after ''may be held

responsible''.

Subsecs. (b), (c). Pub. L. 97-444, Sec. 230(2), (3), added

subsec. (b) and redesignated former subsec. (b) as (c).

1974 - Subsec. (b). Pub. L. 93-463, Sec. 103(a), provided for

substitution of ''Commission'' for ''Secretary of Agriculture''

except where such words would be stricken by section 103(b), which

directed striking the words ''the Secretary of Agriculture or''

where they appeared in the phrase ''the Secretary of Agriculture or

the Commission''. Because the word ''commission'' was not

capitalized in the text of this section, section 103(b) did not

apply to this section and therefore section 103(a) was executed,

resulting in the substitution of ''the Commission or the

commission'' for ''the Secretary of Agriculture or the

commission''.

EFFECTIVE DATE OF 1983 AMENDMENT

Amendment by Pub. L. 97-444 effective Jan. 11, 1983, see section

239 of Pub. L. 97-444, set out as a note under section 2 of this

title.

EFFECTIVE DATE OF 1974 AMENDMENT

For effective date of amendment by Pub. L. 93-463, see section

418 of Pub. L. 93-463, set out as a note under section 2 of this

title.

EFFECTIVE DATE

Section effective 120 days after Feb. 19, 1968, see section 28 of

Pub. L. 90-258, set out as an Effective Date of 1968 Amendment note

under section 2 of this title.

-CITE-

7 USC Sec. 14 01/06/03

-EXPCITE-

TITLE 7 - AGRICULTURE

CHAPTER 1 - COMMODITY EXCHANGES

-HEAD-

Sec. 14. Repealed. Pub. L. 99-641, title I, Sec. 110(5), Nov. 10,

1986, 100 Stat. 3561

-MISC1-

Section, act Sept. 21, 1922, ch. 369, Sec. 11, 42 Stat. 1003,

provided that violations of this chapter occurring before Nov. 1,

1922, should not be punishable.

-CITE-

7 USC Sec. 15 01/06/03

-EXPCITE-

TITLE 7 - AGRICULTURE

CHAPTER 1 - COMMODITY EXCHANGES

-HEAD-

Sec. 15. Enforcement powers of Commission

-STATUTE-

For the purpose of securing effective enforcement of the

provisions of this chapter, for the purpose of any investigation or

proceeding under this chapter, and for the purpose of any action

taken under section 16(f) of this title, any member of the

Commission or any Administrative Law Judge or other officer

designated by the Commission (except as provided in the third

sentence of this section) may administer oaths and affirmations,

subpoena witnesses, compel their attendance, take evidence, and

require the production of any books, papers, correspondence,

memoranda, or other records that the Commission deems relevant or

material to the inquiry. The attendance of witnesses and the

production of any such records may be required from any place in

the United States, any State, or any foreign country or

jurisdiction at any designated place of hearing. A subpoena issued

under this section may be served upon any person who is not to be

found within the territorial jurisdiction of any court of the

United States in such manner as the Federal Rules of Civil

Procedure prescribe for service of process in a foreign country,

except that a subpoena to be served on a person who is not to be

found within the territorial jurisdiction of any court of the

United States may be issued only on the prior approval of the

Commission. In case of contumacy by, or refusal to obey a subpoena

issued to, any person, the Commission may invoke the aid of any

court of the United States within the jurisdiction in which the

investigation or proceeding is conducted, or where such person

resides or transacts business, in requiring the attendance and

testimony of witnesses and the production of books, papers,

correspondence, memoranda, and other records. Such court may issue

an order requiring such person to appear before the Commission or

member or Administrative Law Judge or other officer designated by

the Commission, there to produce records, if so ordered, or to give

testimony touching the matter under investigation or in question.

Any failure to obey such order of the court may be punished by the

court as a contempt thereof. All process in any such case may be

served in the judicial district wherein such person is an

inhabitant or transacts business or wherever such person may be

found.

-SOURCE-

(Sept. 21, 1922, ch. 369, Sec. 6(c), formerly Sec. 6(b), 42 Stat.

1002; June 15, 1936, ch. 545, Sec. 8(e)-(g), 49 Stat. 1499; June

16, 1955, ch. 151, 69 Stat. 160; Pub. L. 91-452, title II, Sec.

202, Oct. 15, 1970, 84 Stat. 928; Pub. L. 93-463, title I, Sec.

103(d), title IV, Sec. 408(b), Oct. 23, 1974, 88 Stat. 1392, 1414;

Pub. L. 95-405, Sec. 13(3), Sept. 30, 1978, 92 Stat. 871; Pub. L.

99-641, title I, Sec. 103, Nov. 10, 1986, 100 Stat. 3557;

renumbered Sec. 6(c) and amended Pub. L. 102-546, title II, Sec.

209(a)(1), title III, Sec. 301, title IV, Sec. 402(7), Oct. 28,

1992, 106 Stat. 3606, 3622, 3624.)

-REFTEXT-

REFERENCES IN TEXT

This section, referred to in text, means section 6 of act Sept.

21, 1922, ch. 369, 42 Stat. 1001. For classification of section 6

to the Code, see Codification note below.

The Federal Rules of Civil Procedure, referred to in text, are

set out in the Appendix to Title 28, Judiciary and Judicial

Procedure.

-COD-

CODIFICATION

Section is comprised of part of subsec. (c) of section 6 of act

Sept. 21, 1922. A further provision of subsec. (c) is contained in

section 9 of this title. This subsec. (c) (former par. (a)) prior

to its incorporation into the Code contained a provision as to

finality of judgments and review by the Supreme Court and is

covered by section 1254 of Title 28, Judiciary and Judicial

Procedure. Subsecs. (a) and (b) of section 6 are classified to

section 8 of this title. Subsecs. (d), (e), (f), and (g) of

section 6 are classified to sections 13b, 9a, 9b, and 9c of this

title, respectively.

-MISC3-

AMENDMENTS

1992 - Pub. L. 102-546 substituted ''chapter,'' for ''chapter

and'' after ''provisions of this'', ''chapter, and for the purpose

of any action taken under section 16(f) of this title, any'' for

''chapter, any'', and ''subpoena'' for ''subpena'' wherever

appearing.

1986 - Pub. L. 99-641 inserted ''(except as provided in the third

sentence of this section)'', substituted '', any State, or any

foreign country or jurisdiction'' for ''or any State'', and

inserted provisions which related to service of subpena upon person

not found within territorial jurisdiction of United States.

1978 - Pub. L. 95-405 substituted provisions giving Commission or

any Administrative Law Judge or other officer designated by

Commission independent authority to administer oaths and

affirmations, to subpena witnesses, and related actions for the

purpose of conducting investigations and proceedings with regard to

this chapter for provisions basing authority of Commission or any

Administrative Law Judge with regard to investigations and

proceedings under this chapter on the Interstate Commerce Act and

inserted provisions authorizing Commission to invoke the aid of the

courts in requiring attendance and testimony of witnesses and the

production of books and other records.

1974 - Pub. L. 93-463 struck out ''the Secretary of Agriculture

(or any person designated by him),'' after ''jurisdiction, and

authority of'' and substituted ''Administrative Law Judge'' for

''referee''.

1970 - Pub. L. 91-452 struck out references to sections 46-48 of

title 49, and provisions relating to the immunity of witnesses.

1955 - Act June 16, 1955, extended subpoena power to

investigations.

1936 - Act June 15, 1936, Sec. 8(e), (f), substituted ''sections

12 and 46-48 of title 49'' for ''section 12 of title 49''.

Act June 15, 1936, Sec. 8(g), substituted ''and'' for ''or''

after ''commission''.

EFFECTIVE DATE OF 1978 AMENDMENT

Amendment by Pub. L. 95-405 effective Oct. 1, 1978, see section

28 of Pub. L. 95-405, set out as a note under section 2 of this

title.

EFFECTIVE DATE OF 1974 AMENDMENT

For effective date of amendment of Pub. L. 93-463, see section

418 of Pub. L. 93-463, set out as a note under section 2 of this

title.

EFFECTIVE DATE OF 1970 AMENDMENT

Amendment by Pub. L. 91-452 effective on sixtieth day following

Oct. 15, 1970, and not to affect any immunity to which any

individual is entitled under this section by reason of any

testimony given before sixtieth day following Oct. 15, 1970, see

section 260 of Pub. L. 91-452, set out as an Effective Date;

Savings Provision note under section 6001 of Title 18, Crimes and

Criminal Procedure.

EFFECTIVE DATE OF 1936 AMENDMENT

Amendment by act June 15, 1936, effective 90 days after June 15,

1936, see section 13 of that act, set out as a note under section 1

of this title.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 7a-13, 9a, 9c, 12, 12a,

13b, 18, 21, 27d of this title.

-CITE-

7 USC Sec. 15a 01/06/03

-EXPCITE-

TITLE 7 - AGRICULTURE

CHAPTER 1 - COMMODITY EXCHANGES

-HEAD-

Sec. 15a. Repealed. Pub. L. 95-405, Sec. 24, Sept. 30, 1978, 92

Stat. 877

-MISC1-

Section, Pub. L. 93-463, title II, Sec. 217, Oct. 23, 1974, 88

Stat. 1405, related to leverage contracts for gold and silver. See

section 23(b) of this title.

EFFECTIVE DATE OF REPEAL

Repeal effective Oct. 1, 1978, see section 28 of Pub. L. 95-405,

set out as an Effective Date of 1978 Amendment note under section 2

of this title.

-CITE-

7 USC Sec. 15b 01/06/03

-EXPCITE-

TITLE 7 - AGRICULTURE

CHAPTER 1 - COMMODITY EXCHANGES

-HEAD-

Sec. 15b. Cotton futures contracts

-STATUTE-

(a) Short title

This section may be cited as the ''United States Cotton Futures

Act''.

(b) Repeal of tax on cotton futures

Subchapter D of chapter 39 of title 26 (relating to tax on cotton

futures) is repealed.

(c) Definitions

For purposes of this section -

(1) Cotton futures contract

The term ''cotton futures contract'' means any contract of sale

of cotton for future delivery made at, on, or in any exchange,

board of trade, or similar institution or place of business which

has been designated a ''contract market'' by the Commodity

Futures Trading Commission pursuant to the Commodity Exchange Act

(7 U.S.C. 1 et seq.) and the term ''contract of sale'' as so used

shall be held to include sales, agreements of sale, and

agreements to sell, except that any cotton futures contract that,

by its terms, is settled in cash is excluded from the coverage of

this paragraph and section.

(2) Future delivery

The term ''future delivery'' shall not include any cash sale of

cotton for deferred shipment or delivery.

(3) Person

The term ''person'' includes an individual, trust, estate,

partnership, association, company, or corporation.

(4) Secretary

The term ''Secretary'' means the Secretary of Agriculture of

the United States.

(5) Standards

The term ''standards'' means the official cotton standards of

the United States established by the Secretary pursuant to the

United States Cotton Standards Act, as amended (7 U.S.C. 51 et

seq.).

(d) Bona fide spot markets and commercial differences

(1) Definition

For purposes of this section, the only markets which shall be

considered bona fide spot markets shall be those which the

Secretary shall, from time to time, after investigation,

determine and designate to be such, and of which he shall give

public notice.

(2) Determination

In determining, pursuant to the provisions of this section,

what markets are bona fide spot markets, the Secretary is

directed to consider only markets in which spot cotton is sold in

such volume and under such conditions as customarily to reflect

accurately the value of middling cotton and the differences

between the prices or values of middling cotton and of other

grades of cotton for which standards shall have been established

by the Secretary; except that if there are not sufficient places,

in the markets of which are made bona fide sales of spot cotton

of grades for which standards are established by the Secretary,

to enable him to designate at least five spot markets in

accordance with subsection (f)(3) of this section, he shall, from

data as to spot sales collected by him, make rules and

regulations for determining the actual commercial differences in

the value of spot cotton of the grades established by him as

reflected by bona fide sales of spot cotton, of the same or

different grades, in the market selected and designated by him,

from time to time, for that purpose, and in that event

differences in value of cotton of various grades involved in

contracts made pursuant to subsection (f)(1) and (2) of this

section shall be determined in compliance with such rules and

regulations. It shall be the duty of any person engaged in the

business of dealing in cotton, when requested by the Secretary or

any agent acting under his instructions, to answer correctly to

the best of his knowledge, under oath or otherwise, all questions

touching his knowledge of the number of bales, the

classification, the price or bona fide price offered, and other

terms of purchase or sale, of any cotton involved in any

transaction participated in by him, or to produce all books,

letters, papers, or documents in his possession or under his

control relating to such matter. A person complying with the

preceding sentence shall not be liable for any loss or damage

arising or resulting from such compliance.

(3) Withholding information

Any person engaged in the business of dealing in cotton who

shall, within a reasonable time prescribed by the Secretary or

any agent acting under his instructions, willfully fail or refuse

to answer questions or to produce books, letters, papers, or

documents, as required under paragraph (2) of this subsection, or

who shall willfully give any answer that is false or misleading,

shall, upon conviction thereof, be fined not more than $500.

(e) Form and validity of cotton futures contracts

Each cotton futures contract shall be a basis grade contract, or

a tendered grade contract, or a specific grade contract as

specified in subsections (f), (g), or (h) of this section and shall

be in writing plainly stating, or evidenced by written memorandum

showing, the terms of such contract, including the quantity of the

cotton involved and the names and addresses of the seller and buyer

in such contract, and shall be signed by the party to be charged,

or by his agent in his behalf. No cotton futures contract which

does not conform to such requirements shall be enforceable by, or

on behalf of, any party to such contract or his privies.

(f) Basis grade contracts

(1) Conditions

Each basis grade cotton futures contract shall comply with each

of the following conditions:

(A) Conformity with regulations

Conform to the regulations made pursuant to this section.

(B) Specification of grade, price, and dates of sale and

settlement

Specify the basis grade for the cotton involved in the

contract, which shall be one of the grades for which standards

are established by the Secretary, except grades prohibited from

being delivered on a contract made under this subsection by

subparagraph (E), the price per pound at which the cotton of

such basis grade is contracted to be bought or sold, the date

when the purchase or sale was made, and the month or months in

which the contract is to be fulfilled or settled; except that

middling shall be deemed the basis grade incorporated into the

contract if no other basis grade be specified either in the

contract or in the memorandum evidencing the same.

(C) Provision for delivery of standard grades only

Provide that the cotton dealt with therein or delivered

thereunder shall be of or within the grades for which standards

are established by the Secretary except grades prohibited from

being delivered on a contract made under this subsection by

subparagraph (E) and no other grade or grades.

(D) Provision for settlement on basis of actual commercial

differences

Provide that in case cotton of grade other than the basis

grade be tendered or delivered in settlement of such contract,

the differences above or below the contract price which the

receiver shall pay for such grades other than the basis grade

shall be the actual commercial differences, determined as

here-inafter provided.

(E) Prohibition of delivery of inferior cotton

Provide that cotton that, because of the presence of

extraneous matter of any character, or irregularities or

defects, is reduced in value below that of low middling, or

cotton that is below the grade of low middling, or, if tinged,

cotton that is below the grade of strict middling, or, if

yellow stained, cotton that is below the grade of good

middling, the grades mentioned being of the official cotton

standards of the United States, or cotton that is less than

seven-eighths of an inch in length of staple, or cotton of

perished staple, or of immature staple, or cotton that is ''gin

cut'' or reginned, or cotton that is ''repacked'' or ''false

packed'' or ''mixed packed'' or ''water packed'', shall not be

delivered on, under, or in settlement of such contract.

(F) Provisions for tender in full, notice of delivery date, and

certificate of grade

Provide that all tenders of cotton under such contract shall

be the full number of bales involved therein, except that such

variations of the number of bales may be permitted as is

necessary to bring the total weight of the cotton tendered

within the provisions of the contract as to weight; that, on

the fifth business day prior to delivery, the person making the

tender shall give to the person receiving the same written

notice of the date of delivery, and that, on or prior to the

date so fixed for delivery, and in advance of final settlement

of the contract, the person making the tender shall furnish to

the person receiving the same a written notice or certificate

stating the grade of each individual bale to be delivered and,

by means of marks or numbers, identifying each bale with its

grade.

(G) Provision for tender and settlement in accordance with

Government classification

Provide that all tenders of cotton and settlements therefor

under such contract shall be in accordance with the

classification thereof made under the regulations of the

Secretary by such officer or officers of the Government as

shall be designated for the purpose, and the costs of such

classification shall be fixed, assessed, collected, and paid as

provided in such regulations and shall be credited to the

account referred to in section 55 of this title. The Secretary

may provide by regulation conditions under which cotton samples

submitted or used in the performance of services authorized by

this act shall become the property of the United States and may

be sold and the proceeds credited to the foregoing account:

Provided, That such cotton samples shall not be subject to the

provisions of the Federal Property and Administrative Services

Act of 1949. (FOOTNOTE 1) The Secretary is authorized to

prescribe regulations for carrying out the purposes of this

subparagraph and the certificates of the officers of the

Government as to the classification of any cotton for the

purposes of this subparagraph shall be accepted in the courts

of the United States in all suits between the parties to such

contract, or their privies, as prima facie evidence of the true

classification of the cotton involved.

(FOOTNOTE 1) See References in Text note below.

(2) Incorporation of conditions in contracts

The provisions of paragraphs (1)(C), (D), (E), (F), and (G)

shall be deemed fully incorporated into any such contract if

there be written or printed thereon, or on the memorandums

evidencing the same, at or prior to the time the same is signed,

the phrase ''Subject to United States Cotton Futures Act,

subsection (f).''

(3) Delivery allowances

For the purpose of this subsection, the differences above or

below the contract price which the receiver shall pay for cotton

of grades above or below the basic (FOOTNOTE 2) grade in the

settlement of a contract of sale for the future delivery of

cotton shall be determined by the actual commercial differences

in value thereof upon the sixth business day prior to the day

fixed, in accordance with paragraph (1)(F), for the delivery of

cotton on the contract, established by the sale of spot cotton in

the spot markets of not less than five places designated for the

purpose from time to time by the Secretary, as such values were

established by the sales of spot cotton, in such designated five

or more markets. For purposes of this paragraph, such values in

the such spot markets shall be based upon the standards for

grades of cotton established by the Secretary. Whenever the value

of one grade is to be determined from the sale or sales of spot

cotton of another grade or grades, such value shall be fixed in

accordance with rules and regulations which shall be prescribed

for the purpose by the Secretary.

(FOOTNOTE 2) So in original. Probably should be ''basis''.

(g) Tendered grade contracts

(1) Conditions

Each tendered grade cotton future contract shall comply with

each of the following conditions:

(A) Compliance with subsection (f)

Comply with all the terms and conditions of subsection (f) of

this section not inconsistent with this subsection; and

(B) Provision for contingent specific performance

Provide that, in case cotton of grade or grades other than

the basis grade specified in the contract shall be tendered in

performance of the contract, the parties to such contract may

agree, at the time of the tender, as to the price of the grade

or grades so tendered, and that if they shall not then agree as

to such price, then, and in that event, the buyer of said

contract shall have the right to demand the specific

fulfillment of such contract by the actual delivery of cotton

of the basis grade named therein and at the price specified for

such basis grade in said contract.

(2) Incorporation of conditions in contract

Contracts made in compliance with this subsection shall be

known as ''subsection (g) Contracts''. The provisions of this

subsection shall be deemed fully incorporated into any such

contract if there be written or printed thereon, or on the

memorandum evidencing the same, at or prior to the time the same

is signed, the phrase ''Subject to United States Cotton Futures

Act, subsection (g)''.

(3) Application of subsection

Nothing in this subsection shall be so construed as to

authorize any contract in which, or in the settlement of or in

respect to which, any device or arrangement whatever is resorted

to, or any agreement is made, for the determination or adjustment

of the price of the grade or grades tendered other than the basis

grade specified in the contract by any ''fixed difference''

system, or by arbitration, or by any other method not provided

for by this section.

(h) Specific grade contracts

(1) Conditions

Each specific grade cotton futures contract shall comply with

each of the following conditions:

(A) Conformity with rules and regulations

Conform to the rules and regulations made pursuant to this

section.

(B) Specification of grade, price, dates of sale and delivery

Specify the grade, type, sample, or description of the cotton

involved in the contract, the price per pound at which such

cotton is contracted to be bought or sold, the date of the

purchase or sale, and the time when shipment or delivery of

such cotton is to be made.

(C) Prohibition of delivery of other than specified grade

Provide that cotton of or within the grade or of the type, or

according to the sample or description, specified in the

contract shall be delivered thereunder, and that no cotton

which does not conform to the type, sample, or description, or

which is not of or within the grade specified in the contract

shall be tendered or delivered thereunder.

(D) Provision for specific performance

Provide that the delivery of cotton under the contract shall

not be effected by means of ''setoff'' or ''ring'' settlement,

but only by the actual transfer of the specified cotton

mentioned in the contract.

(2) Incorporation of conditions in contract

The provisions of paragraphs (1)(A), (C), and (D) shall be

deemed fully incorporated into any such contract if there be

written or printed thereon, or on the document or memorandum

evidencing the same, at or prior to the time the same is entered

into, the words ''Subject to United States Cotton Futures Act,

subsection (h)''.

(3) Application of subsection

This subsection shall not be construed to apply to any contract

of sale made in compliance with subsection (f) or (g) of this

section.

(i) Liability of principal for acts of agent

When construing and enforcing the provisions of this section, the

act, omission, or failure of any official, agent, or other person

acting for or employed by any association, partnership, or

corporation within the scope of his employment or office shall, in

every case, also be deemed the act, omission, or failure of such

association, partnership, or corporation, as well as that of the

person.

(j) Regulations

The Secretary is authorized to make such regulations with the

force and effect of law as he determines may be necessary to carry

out the provisions of this section and the powers vested in him by

this section.

(k) Violations

Any person who knowingly violates any regulation made in

pursuance of this section, shall, upon conviction thereof, be fined

not less than $100 nor more than $500, for each violation thereof,

in the discretion of the court, and, in case of natural persons,

may, in addition be punished by imprisonment for not less than 30

days nor more than 90 days, for each violation, in the discretion

of the court except that this subsection shall not apply to

violations subject to subsection (d)(3) of this section.

(l) Applicability to contracts prior to effective date

The provisions of this section shall not apply to any cotton

futures contract entered into prior to the effective date of this

section or to any act or failure to act by any person prior to such

effective date and all such prior contracts, acts or failure to act

shall continue to be governed by the applicable provisions of the

Internal Revenue Code of 1954 (FOOTNOTE 1) as in effect prior to

the enactment of this section. All designations of bona fide spot

markets and all rules and regulations issued by the Secretary

pursuant to the applicable provisions of the Internal Revenue Code

of 1954 (FOOTNOTE 1) which were in effect on the effective date of

this section, shall remain fully effective as designations and

regulations under this section until superseded, amended, or

terminated by the Secretary.

(m) Authorization

There are authorized to be appropriated such sums as may be

necessary to carry out this section.

-SOURCE-

(Pub. L. 94-455, title XIX, Sec. 1952(a)-(m), Oct. 4, 1976, 90

Stat. 1841-1846; Pub. L. 97-35, title I, Sec. 156(c), Aug. 13,

1981, 95 Stat. 374; Pub. L. 102-237, title I, Sec. 123, Dec. 13,

1991, 105 Stat. 1844; Pub. L. 106-472, title III, Sec. 311, Nov. 9,

2000, 114 Stat. 2076.)

-REFTEXT-

REFERENCES IN TEXT

The Commodity Exchange Act, referred to in subsec. (c)(1), is act

Sept. 21, 1922, ch. 369, 42 Stat. 998, as amended, which is

classified generally to chapter 1 (Sec. 1 et seq.) of this title.

For complete classification of this Act to the Code, see section 1

of this title and Tables.

The United States Cotton Standards Act, as amended, referred to

in subsec. (c)(5), is act Mar. 4, 1923, ch. 288, 42 Stat. 1517, as

amended, which is classified generally to chapter 2 (Sec. 51 et

seq.) of this title. For complete classification of this Act to

the Code, see section 51 of this title and Tables.

The Federal Property and Administrative Services Act of 1949,

referred to in subsec. (f)(1)(G), is act June 30, 1949, ch. 288, 63

Stat. 377, as amended. Except for title III of the Act, which is

classified generally to subchapter IV (Sec. 251 et seq.) of chapter

4 of Title 41, Public Contracts, the Act was repealed and reenacted

by Pub. L. 107-217, Sec. 1, 6(b), Aug. 21, 2002, 116 Stat. 1062,

1304, as chapters 1 to 11 of Title 40, Public Buildings, Property,

and Works.

The Internal Revenue Code of 1954, referred to in subsec. (l),

was redesignated the Internal Revenue Code of 1986 by Pub. L.

99-514, Sec. 2, Oct. 22, 1986, 100 Stat. 2095, and is classified to

Title 26, Internal Revenue Code.

-COD-

CODIFICATION

Section was enacted as part of the Tax Reform Act of 1976, and

not as part of the Commodity Exchange Act which comprises this

chapter.

This section, referred to in subsec. (c)(1), was in the original

a reference to this ''Act'', meaning the United States Cotton

Futures Act, which comprises this section.

-MISC3-

AMENDMENTS

2000 - Subsec. (d)(2). Pub. L. 106-472 inserted at end ''A person

complying with the preceding sentence shall not be liable for any

loss or damage arising or resulting from such compliance.''

1991 - Subsec. (c)(1). Pub. L. 102-237 inserted before period at

end '', except that any cotton futures contract that, by its terms,

is settled in cash is excluded from the coverage of this paragraph

and section''.

1981 - Subsec. (f)(1)(G). Pub. L. 97-35 inserted provisions

relating to crediting to account referred to in section 55 of this

title and provisions respecting cotton samples submitted or used

becoming the property of the United States.

EFFECTIVE DATE OF 1981 AMENDMENT

Amendment by Pub. L. 97-35 effective Oct. 1, 1981, see section

156(e) of Pub. L. 97-35, set out as an Effective Date note under

section 61a of this title.

EFFECTIVE DATE

Section 1952(o) of Pub. L. 94-455 provided that: ''The provisions

of this section (enacting this section, amending section 6808 of

Title 26, Internal Revenue Code, and repealing sections 7233 and

7263, subchapter D of chapter 39, and subchapter E of chapter 76 of

Title 26) shall take effect on the 90th day after the date of

enactment of this Act (Oct. 4, 1976).''

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in section 55 of this title.

-CITE-

7 USC Sec. 16 01/06/03

-EXPCITE-

TITLE 7 - AGRICULTURE

CHAPTER 1 - COMMODITY EXCHANGES

-HEAD-

Sec. 16. Commission operations

-STATUTE-

(a) Cooperation with other agencies

The Commission may cooperate with any Department or agency of the

Government, any State, territory, district, or possession, or

department, agency, or political subdivision thereof, any foreign

futures authority, any department or agency of a foreign government

or political subdivision thereof, or any person.

(b) Employment of investigators, experts, Administrative Law

Judges, consultants, clerks, and other personnel; contracts

(1) The Commission shall have the authority to employ such

investigators, special experts, Administrative Law Judges, clerks,

and other employees as it may from time to time find necessary for

the proper performance of its duties and as may be from time to

time appropriated for by Congress.

(2) The Commission may employ experts and consultants in

accordance with section 3109 of title 5, and compensate such

persons at rates not in excess of the maximum daily rate prescribed

for GS-18 under section 5332 of title 5.

(3) The Commission shall also have authority to make and enter

into contracts with respect to all matters which in the judgment of

the Commission are necessary and appropriate to effectuate the

purposes and provisions of this chapter, including, but not limited

to, the rental of necessary space at the seat of Government and

elsewhere.

(4) The Commission may request (in accordance with the procedures

set forth in subchapter II of chapter 31 of title 5) and the Office

of Personnel Management shall authorize pursuant to the request,

eight positions in the Senior Executive Service in addition to the

number of such positions authorized for the Commission on October

28, 1992.

(c) Expenses

All of the expenses of the Commissioners, including all necessary

expenses for transportation incurred by them while on official

business of the Commission, shall be allowed and paid on the

presentation of itemized vouchers therefor approved by the

Commission.

(d) Authorization of appropriations

There are authorized to be appropriated such sums as are

necessary to carry out this chapter for each of fiscal years 1995

through 2005.

(e) Relation to other law, departments, or agencies

(1) Nothing in this chapter shall supersede or preempt -

(A) criminal prosecution under any Federal criminal statute;

(B) the application of any Federal or State statute (except as

provided in paragraph (2)), including any rule or regulation

thereunder, to any transaction in or involving any commodity,

product, right, service, or interest -

(i) that is not conducted on or subject to the rules of a

registered entity or exempt board of trade;

(ii) (except as otherwise specified by the Commission by rule

or regulation) that is not conducted on or subject to the rules

of any board of trade, exchange, or market located outside the

United States, its territories or possessions; or

(iii) that is not subject to regulation by the Commission

under section 6c or 23 of this title; or

(C) the application of any Federal or State statute, including

any rule or regulation thereunder, to any person required to be

registered or designated under this chapter who shall fail or

refuse to obtain such registration or designation.

(2) This chapter shall supersede and preempt the application of

any State or local law that prohibits or regulates gaming or the

operation of bucket shops (other than antifraud provisions of

general applicability) in the case of -

(A) an electronic trading facility excluded under section 2(e)

of this title; and

(B) an agreement, contract, or transaction that is excluded

from this chapter under section 2(c), 2(d), 2(f), or 2(g) of this

title or sections 27 to 27f of this title, or exempted under

section 2(h) or 6(c) of this title (regardless of whether any

such agreement, contract, or transaction is otherwise subject to

this chapter).

(f) Investigative assistance to foreign futures authorities

(1) On request from a foreign futures authority, the Commission

may, in its discretion, provide assistance in accordance with this

section if the requesting authority states that the requesting

authority is conducting an investigation which it deems necessary

to determine whether any person has violated, is violating, or is

about to violate any laws, rules or regulations relating to futures

or options matters that the requesting authority administers or

enforces. The Commission may conduct such investigation as the

Commission deems necessary to collect information and evidence

pertinent to the request for assistance. Such assistance may be

provided without regard to whether the facts stated in the request

would also constitute a violation of the laws of the United States.

(2) In deciding whether to provide assistance under this

subsection, the Commission shall consider whether -

(A) the requesting authority has agreed to provide reciprocal

assistance to the Commission in futures and options matters; and

(B) compliance with the request would prejudice the public

interest of the United States.

(3) Notwithstanding any other provision of law, the Commission

may accept payment and reimbursement, in cash or in kind, from a

foreign futures authority, or made on behalf of such authority, for

necessary expenses incurred by the Commission, its members, and

employees in carrying out any investigation, or in providing any

other assistance to a foreign futures authority, pursuant to this

section. Any payment or reimbursement accepted shall be considered

a reimbursement to the appropriated funds of the Commission.

(g) Computerized futures trading

Consistent with its responsibilities under section 22 of this

title, the Commission is directed to facilitate the development and

operation of computerized trading as an adjunct to the open outcry

auction system. The Commission is further directed to cooperate

with the Office of the United States Trade Representative, the

Department of the Treasury, the Department of Commerce, and the

Department of State in order to remove any trade barriers that may

be imposed by a foreign nation on the international use of

electronic trading systems.

-SOURCE-

(Sept. 21, 1922, ch. 369, Sec. 12, 42 Stat. 1003; Pub. L. 93-463,

title I, Sec. 101(b), Oct. 23, 1974, 88 Stat. 1391; Pub. L. 95-405,

Sec. 20, Sept. 30, 1978, 92 Stat. 875; Pub. L. 97-444, title II,

Sec. 228, 229, Jan. 11, 1983, 96 Stat. 2318; Pub. L. 99-641, title

I, Sec. 106, Nov. 10, 1986, 100 Stat. 3558; Pub. L. 102-546, title

II, Sec. 216, 220(a), title III, Sec. 302, 303, title IV, Sec. 401,

title V, Sec. 502(c), Oct. 28, 1992, 106 Stat. 3611, 3614, 3622,

3624, 3631; Pub. L. 104-9, Sec. 2, Apr. 21, 1995, 109 Stat. 154;

Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec. 116, 117), Dec. 21,

2000, 114 Stat. 2763, 2763A-402.)

-MISC1-

AMENDMENTS

2000 - Subsec. (d). Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec.

116), substituted ''2005'' for ''2000''.

Subsec. (e). Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec. 117),

added subsec. (e) and struck out former subsec. (e) which provided

that this chapter did not supersede or preempt criminal

prosecutions under Federal criminal statutes or the application of

any Federal or State statute to certain specified transactions and

persons.

1995 - Subsec. (d). Pub. L. 104-9 amended subsec. (d) generally.

Prior to amendment, subsec. (d) read as follows: ''There are

authorized to be appropriated to carry out this chapter -

''(1) $53,000,000 for fiscal year 1993; and

''(2) $60,000,000 for fiscal year 1994.''

1992 - Subsec. (a). Pub. L. 102-546, Sec. 302, inserted ''any

foreign futures authority, any department or agency of a foreign

government or political subdivision thereof,'' after ''thereof,''.

Subsec. (b). Pub. L. 102-546, Sec. 216, designated first through

third sentences as pars. (1) to (3), respectively, and added par.

(4).

Subsec. (d). Pub. L. 102-546, Sec. 401, amended subsec. (d)

generally. Prior to amendment, subsec. (d) read as follows:

''There are authorized to be appropriated to carry out this chapter

such sums as may be necessary for each of the fiscal years during

the period beginning October 1, 1986, and ending September 30,

1989.''

Subsec. (e)(2)(A). Pub. L. 102-546, Sec. 502(c), inserted ''or,

in the case of any State or local law that prohibits or regulates

gaming or the operation of 'bucket shops' (other than antifraud

provisions of general applicability), that is not a transaction or

class of transactions that has received or is covered by the terms

of any exemption previously granted by the Commission under

subsection (c) of section 6 of this title,'' after ''market,''.

Subsec. (f). Pub. L. 102-546, Sec. 303, added subsec. (f).

Subsec. (g). Pub. L. 102-546, Sec. 220(a), added subsec. (g).

1986 - Subsec. (d). Pub. L. 99-641 amended subsec. (d)

generally. Prior to amendment, subsec. (d) read as follows:

''There are authorized to be appropriated to carry out the

provisions of this chapter such sums as may be required for each of

the fiscal years during the period beginning October 1, 1982, and

ending September 30, 1986.''

1983 - Subsec. (d). Pub. L. 97-444, Sec. 228, substituted

appropriation authorization for fiscal years during period

beginning Oct. 1, 1982, and ending Sept. 30, 1986, for prior

authorization for fiscal years during period beginning Oct. 1,

1978, and ending Sept. 30, 1982.

Subsec. (e). Pub. L. 97-444, Sec. 229, added subsec. (e).

1978 - Subsec. (d). Pub. L. 95-405 substituted ''for each of the

fiscal years during the period beginning October 1, 1978, and

ending September 30, 1982'' for ''for the fiscal year ending June

30, 1975, for the fiscal year ending June 30, 1976, for the fiscal

year ending June 30, 1977, and for the fiscal year ending June 30,

1978''.

1974 - Pub. L. 93-463 designated existing unlettered provisions

as subsecs. (a) to (d), substituted ''Commission'' for ''Secretary

of Agriculture'', inserted provisions authorizing the expenditure

of funds for expenses upon the presentation of itemized vouchers

therefor approved by the Commission, substituted provisions

authorizing appropriations specifically for fiscal years ending

June 30, 1975, 1976, 1977, and 1978, for provisions making a

general authorization of appropriations without a fiscal year

limitation, and inserted authorization to enter into contracts and

compensate experts and consultants in accordance with section 3109

of title 5 at rates not in excess of the maximum daily rate

prescribed for GS-18 under section 5332 of title 5.

EFFECTIVE DATE OF 1983 AMENDMENT

Amendment by Pub. L. 97-444 effective Jan. 11, 1983, see section

239 of Pub. L. 97-444, set out as a note under section 2 of this

title.

EFFECTIVE DATE OF 1978 AMENDMENT

Amendment by Pub. L. 95-405 effective Oct. 1, 1978, see section

28 of Pub. L. 95-405, set out as a note under section 2 of this

title.

EFFECTIVE DATE OF 1974 AMENDMENT

For effective date of amendment by Pub. L. 93-463, see section

418 of Pub. L. 93-463, set out as a note under section 2 of this

title.

REFERENCES IN OTHER LAWS TO GS-16, 17, OR 18 PAY RATES

References in laws to the rates of pay for GS-16, 17, or 18, or

to maximum rates of pay under the General Schedule, to be

considered references to rates payable under specified sections of

Title 5, Government Organization and Employees, see section 529

(title I, Sec. 101(c)(1)) of Pub. L. 101-509, set out in a note

under section 5376 of Title 5.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 2, 7a-3, 15 of this

title.

-CITE-

7 USC Sec. 16a 01/06/03

-EXPCITE-

TITLE 7 - AGRICULTURE

CHAPTER 1 - COMMODITY EXCHANGES

-HEAD-

Sec. 16a. Service fees and National Futures Association study

-STATUTE-

(a) Development and implementation of plan for user fees; report to

and approval by Congressional committees

Notwithstanding any other provision of law, the Commodity Futures

Trading Commission may develop and implement a plan to charge and

collect reasonable fees to cover the estimated cost of regulating

transactions under the jurisdiction of the Commission. However,

prior to implementing such a plan, the Commission shall report its

intention to do so to the House Committee on Agriculture and the

Senate Committee on Agriculture, Nutrition, and Forestry. The

Commission shall include in its report the feasibility and

desirability of collecting such fees. Any plan developed under

this section shall not be implemented until approved by the House

Committee on Agriculture and the Senate Committee on Agriculture,

Nutrition, and Forestry. Fees collected under any plan approved

under this section shall be deposited in the Treasury of the United

States as miscellaneous receipts.

(b) National Futures Association regulatory experience; report;

contents

The Commodity Futures Trading Commission shall submit to Congress

a report containing the results of a study of the regulatory

experience of the National Futures Association for the period

beginning January 1, 1983 and ending September 30, 1985. The report

shall be submitted not later than January 1, 1986. The report shall

include (but not to be limited to) the following -

(1) the extent to which the National Futures Association has

fully implemented the program provided in the rules approved by

the Commission under section 17(p) and (q) of the Commodity

Exchange Act (7 U.S.C. 21(p), (q)) and the effectiveness of the

operation of such program;

(2) the actual and projected cost savings to the Federal

Government, if any, resulting from operations of the National

Futures Association;

(3) the actual and projected costs which the Commission and the

public would have incurred if the Association had not undertaken

self-regulatory responsibility for certain areas under the

Commission's jurisdiction;

(4) problem areas, if any, encountered by the Association;

(5) the nature of the working relationship between the

Association and the Commission;

(6) an assessment of the actual and projected efficiencies the

Commission has achieved or expects to be achieved as a result of

the continuing regulatory activities of the Association; and

(7) the immediate and projected capabilities of the Commission

at the time of submission of the study to turn its attention to

more immediate problems of regulation, as a result of the

activities of the Association.

(c) Schedule of fees for services, activities and functions; notice

and hearing; actual cost standard

Nothing in this section shall limit the authority of the

Commission to promulgate, after notice and opportunity for hearing,

a schedule of appropriate fees to be charged for services rendered

and activities and functions performed by the Commission in

conjunction with its administration and enforcement of the

Commodity Exchange Act (7 U.S.C. 1 et seq.): Provided, That the

fees for any specified service or activity or function shall not

exceed the actual cost thereof to the Commission.

-SOURCE-

(Pub. L. 95-405, Sec. 26, Sept. 30, 1978, 92 Stat. 877; Pub. L.

97-444, title II, Sec. 237, Jan. 11, 1983, 96 Stat. 2325.)

-REFTEXT-

REFERENCES IN TEXT

The Commodity Exchange Act, referred to in subsec. (c), is act

Sept. 21, 1922, ch. 369, 42 Stat. 998, as amended, which is

classified generally to chapter 1 (Sec. 1 et seq.) of this title.

For complete classification of this Act to the Code, see section 1

of this title and Tables.

-COD-

CODIFICATION

Section was enacted as part of the Futures Trading Act of 1978,

and not as part of the Commodity Exchange Act which comprises this

chapter.

-MISC3-

AMENDMENTS

1983 - Pub. L. 97-444 designated existing provisions as subsec.

(a) and added subsecs. (b) and (c).

EFFECTIVE DATE OF 1983 AMENDMENT

Amendment by Pub. L. 97-444 effective Jan. 11, 1983, see section

239 of Pub. L. 97-444, set out as a note under section 2 of this

title.

EFFECTIVE DATE

Section effective Oct. 1, 1978, see section 28 of Pub. L. 95-405,

set out as an Effective Date of 1978 Amendment note under section 2

of this title.

STUDY OF ASSESSMENTS ON TRANSACTIONS

Pub. L. 102-546, title II, Sec. 218, Oct. 28, 1992, 106 Stat.

3612, provided that:

''(a) Study. - The Comptroller General of the United States shall

conduct a study to determine whether -

''(1) it is feasible to fund some or all of the enforcement and

market surveillance activities of the Commodity Futures Trading

Commission, as required by the amendments to the Commodity

Exchange Act made by the Futures Trading Practices Act of 1992

(see Short Title of 1992 Amendment note set out under section 1

of this title), through the imposition of an assessment on

commodity futures and options transactions executed pursuant to

the Commodity Exchange Act (7 U.S.C. 1 et seq.); and

''(2) a program of assessment-based funding for some or all of

such enforcement and market surveillance activities would better

provide resources to the Commodity Futures Trading Commission to

enable the Commission to -

''(A) protect the interests of market users (including

hedgers and speculators), producers of commodities traded on

the futures markets, and the general public; and

''(B) maintain and enhance the credibility of such futures

and options markets.

''(b) Report. - Not later than one year after the date of

enactment of this Act (Oct. 28, 1992), the Comptroller General

shall submit to the Committee on Agriculture of the House of

Representatives and the Committee on Agriculture, Nutrition, and

Forestry of the Senate a report containing the Comptroller

General's determinations pursuant to subsection (a), together with

any appropriate recommendations for the implementation of such a

program of assessment-based funding for some or all of the

Commodity Futures Trading Commission's enforcement and market

surveillance activities.''

-CITE-

7 USC Sec. 17 01/06/03

-EXPCITE-

TITLE 7 - AGRICULTURE

CHAPTER 1 - COMMODITY EXCHANGES

-HEAD-

Sec. 17. Separability

-STATUTE-

If any provision of this chapter or the application thereof to

any person or circumstances is held invalid, the validity of the

remainder of the chapter and of the application of such provision

to other persons and circumstances shall not be affected thereby.

-SOURCE-

(Sept. 21, 1922, ch. 369, Sec. 10, 42 Stat. 1003.)

-CITE-

7 USC Sec. 17a 01/06/03

-EXPCITE-

TITLE 7 - AGRICULTURE

CHAPTER 1 - COMMODITY EXCHANGES

-HEAD-

Sec. 17a. Separability of 1936 amendment

-STATUTE-

If any provision of the act of June 15, 1936, ch. 545, 49 Stat.

1491, which amends this chapter, or the application thereof to any

person or circumstances is held invalid, the provisions of the

section of this chapter which is amended by such provision of said

act shall apply to such person or circumstances. No proceeding

shall be abated by reason of any amendment to this chapter made by

said act but shall be disposed of pursuant to said act.

-SOURCE-

(June 15, 1936, ch. 545, Sec. 12, 49 Stat. 1501.)

-COD-

CODIFICATION

Section was not enacted as part of the Commodity Exchange Act

which comprises this chapter.

-MISC3-

EFFECTIVE DATE

For effective date of section, see section 13 of act June 15,

1936, set out as an Effective Date of 1936 Amendment note under

section 1 of this title.

-CITE-

7 USC Sec. 17b 01/06/03

-EXPCITE-

TITLE 7 - AGRICULTURE

CHAPTER 1 - COMMODITY EXCHANGES

-HEAD-

Sec. 17b. Separability of 1968 amendment

-STATUTE-

If any provision of this Act or the application thereof to any

person or circumstances is held invalid, the validity of the

remainder of the Act and the application of such provision to other

persons or circumstances shall not be affected thereby, and the

provisions of the section of this chapter which is amended by such

provision of this Act shall apply to such person or circumstances.

Pending proceedings shall not be abated by reason of any provision

of this Act but shall be disposed of pursuant to the provisions of

this chapter, in effect prior to the effective date of this Act.

-SOURCE-

(Pub. L. 90-258, Sec. 27, Feb. 19, 1968, 82 Stat. 34.)

-REFTEXT-

REFERENCES IN TEXT

This Act, referred to in text, is Pub. L. 90-258, Feb. 19, 1968,

82 Stat. 26. For complete classification of this Act to the Code,

see Tables.

Effective date of this Act, referred to in text, as one hundred

and twenty days after Feb. 19, 1968, see section 28 of Pub. L.

90-258, set out as an Effective Date of 1968 Amendment note under

section 2 of this title.

-COD-

CODIFICATION

Section was not enacted as part of the Commodity Exchange Act

which comprises this chapter.

-CITE-

7 USC Sec. 18 01/06/03

-EXPCITE-

TITLE 7 - AGRICULTURE

CHAPTER 1 - COMMODITY EXCHANGES

-HEAD-

Sec. 18. Complaints against registered persons

-STATUTE-

(a) Petition for actual damages

(1) Any person complaining of any violation of any provision of

this chapter, or any rule, regulation, or order issued pursuant to

this chapter, by any person who is registered under this chapter

may, at any time within two years after the cause of action

accrues, apply to the Commission for an order awarding -

(A) actual damages proximately caused by such violation. If an

award of actual damages is made against a floor broker in

connection with the execution of a customer order, and the

futures commission merchant which selected the floor broker for

the execution of the customer order is held to be responsible

under section 2(a)(1) of this title for the floor broker's

violation, such futures commission merchant may be required to

satisfy such award; and

(B) in the case of any action arising from a willful and

intentional violation in the execution of an order on the floor

of a registered entity, punitive or exemplary damages equal to no

more than two times the amount of such actual damages. If an

award of punitive or exemplary damages is made against a floor

broker in connection with the execution of a customer order, and

the futures commission merchant which selected the floor broker

for the execution of the customer order is held to be responsible

under section 2(a)(1) of this title for the floor broker's

violation, such futures commission merchant may be required to

satisfy such award if the floor broker fails to do so, except

that such requirement shall apply to the futures commission

merchant only if it willfully and intentionally selected the

floor broker with the intent to assist or facilitate the floor

broker's violation.

(2)(A) An action may be brought under this subsection by any one

or more persons described in this subsection for and in behalf of

such person or persons and other persons similarly situated, if the

Commission permits such actions pursuant to a final rule issued by

the Commission.

(B) Not later than two hundred and seventy days after October 28,

1992, the Commission shall propose and publish for public comment

such rules as are necessary to carry out subparagraph (A). In

developing such rules, the Commission shall consider the potential

impact of such actions on resources available to the reparations

system established under this chapter and the relative merits of

bringing such actions in Federal court.

(b) Rules and regulations; control over right of appeal

The Commission may promulgate such rules, regulations, and orders

as it deems necessary or appropriate for the efficient and

expeditious administration of this section. Notwithstanding any

other provision of law, such rules, regulations, and orders may

prescribe, or otherwise condition, without limitation, the form,

filing, and service of pleadings or orders, the nature and scope of

discovery, counterclaims, motion practice (including the grounds

for dismissal of any claim or counterclaim), hearings (including

the waiver thereof, which may relate to the amount in controversy),

rights of appeal, if any, and all other matters governing

proceedings before the Commission under this section.

(c) Bond requirement when complainant is nonresident; waiver

In case a complaint is made by a nonresident of the United

States, the complainant shall be required, before any formal action

is taken on his complaint, to furnish a bond in double the amount

of the claim conditioned upon the payment of costs, including a

reasonable attorney's fee for the respondent if the respondent

shall prevail, and any reparation award that may be issued by the

Commission against the complainant on any counterclaim by

respondent: Provided, That the Commission shall have authority to

waive the furnishing of a bond by a complainant who is a resident

of a country which permits the filing of a complaint by a resident

of the United States without the furnishing of a bond.

(d) Enforcement of reparation award

If any person against whom an award has been made does not pay

the reparation award within the time specified in the Commission's

order, the complainant, or any person for whose benefit such order

was made, within three years of the date of the order, may file a

certified copy of the order of the Commission, in the district

court of the United States for the district in which he resides or

in which is located the principal place of business of the

respondent, for enforcement of such reparation award by appropriate

orders. The orders, writs, and processes of such district court

may in such case run, be served, and be returnable anywhere in the

United States. The petitioner shall not be liable for costs in the

district court, nor for costs at any subsequent state of the

proceedings, unless they accrue upon his appeal. If the petitioner

finally prevails, he shall be allowed a reasonable attorney's fee,

to be taxed and collected as a part of the costs of the suit.

Subject to the right of appeal under subsection (e) of this

section, an order of the Commission awarding reparations shall be

final and conclusive.

(e) Review

Any order of the Commission entered hereunder shall be reviewable

on petition of any party aggrieved thereby, by the United States

Court of Appeals for any circuit in which a hearing was held, or if

no hearing was held, any circuit in which the appellee is located,

under the procedure provided in sections 9 and 15 of this title.

Such appeal shall not be effective unless within 30 days from and

after the date of the reparation order the appellant also files

with the clerk of the court a bond in double the amount of the

reparation awarded against the appellant conditioned upon the

payment of the judgment entered by the court, plus interest and

costs, including a reasonable attorney's fee for the appellee, if

the appellee shall prevail. Such bond shall be in the form of

cash, negotiable securities having a market value at least

equivalent to the amount of bond prescribed, or the undertaking of

a surety company on the approved list of sureties issued by the

Treasury Department of the United States. The appellee shall not be

liable for costs in said court. If the appellee prevails, he shall

be allowed a reasonable attorney's fee to be taxed and collected as

a part of his costs.

(f) Automatic bar from trading and suspension for noncompliance;

effect of appeal

Unless the party against whom a reparation order has been issued

shows to the satisfaction of the Commission within fifteen days

from the expiration of the period allowed for compliance with such

order that either an appeal as herein authorized has been taken or

payment of the full amount of the order (or any agreed settlement

thereof) has been made, such party shall be prohibited

automatically from trading on all registered entities and, if the

party is registered with the Commission, such registration shall be

suspended automatically at the expiration of such fifteen-day

period until such party shows to the satisfaction of the Commission

that payment of such amount with interest thereon to date of

payment has been made: Provided, That if on appeal the appellee

prevails or if the appeal is dismissed, the automatic prohibition

against trading and suspension of registration shall become

effective at the expiration of thirty days from the date of

judgment on the appeal, but if the judgment is stayed by a court of

competent jurisdiction, the suspension shall become effective ten

days after the expiration of such stay, unless prior thereto the

judgment of the court has been satisfied.

(g) Predispute resolution agreements for institutional customers

Nothing in this section prohibits a registered futures commission

merchant from requiring a customer that is an eligible contract

participant, as a condition to the commission merchant's conducting

a transaction for the customer, to enter into an agreement waiving

the right to file a claim under this section.

-SOURCE-

(Sept. 21, 1922, ch. 369, Sec. 14, as added Pub. L. 93-463, title

I, Sec. 106, Oct. 23, 1974, 88 Stat. 1393; amended Pub. L. 94-16,

Sec. 3, Apr. 16, 1975, 89 Stat. 77; Pub. L. 95-405, Sec. 21, Sept.

30, 1978, 92 Stat. 875; Pub. L. 97-444, title II, Sec. 231, Jan.

11, 1983, 96 Stat. 2319; Pub. L. 102-546, title II, Sec. 209(b)(7),

222(b), 224, title IV, Sec. 402(11), Oct. 28, 1992, 106 Stat. 3607,

3615, 3617, 3625; Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec. 118,

123(a)(23)), Dec. 21, 2000, 114 Stat. 2763, 2763A-403, 2763A-410.)

-MISC1-

AMENDMENTS

2000 - Subsec. (a)(1)(B). Pub. L. 106-554, Sec. 1(a)(5) (title I,

Sec. 123(a)(23)(A)), substituted ''registered entity'' for ''

contract market''.

Subsec. (f). Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec.

123(a)(23)(B)), substituted ''registered entities'' for '' contract

markets''.

Subsec. (g). Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec. 118),

added subsec. (g) and struck out former subsec. (g) which read as

follows: ''The provisions of this section shall not become

effective until fifteen months after October 23, 1974: Provided,

That claims which arise within one year immediately prior to the

effective date of this section may be heard by the Commission after

such 15-month period.''

1992 - Subsec. (a). Pub. L. 102-546, Sec. 224, designated

existing provisions as par. (1), redesignated former pars. (1) and

(2) as subpars. (A) and (B), respectively, and added par. (2).

Pub. L. 102-546, Sec. 222(b), substituted ''awarding - '' and

pars. (1) and (2) for ''awarding actual damages proximately caused

by such violation.''

Subsec. (e). Pub. L. 102-546, Sec. 209(b)(7), made technical

amendment to reference to sections 9 and 15 of this title to

reflect change in reference to corresponding section of original

act.

Subsec. (g). Pub. L. 102-546, Sec. 402(11), substituted

''15-month'' for second reference to ''fifteen months''.

1983 - Subsec. (a). Pub. L. 97-444, Sec. 231(1), substituted

provisions relating to complaints against violations by persons

''registered under this chapter'' for provisions relating to

complaints against persons ''registered or required to be

registered under section 6d, 6e, 6j, or 6m of this title'', and

substituted provisions for application to Commission for an award

of actual damages caused by such violation, for provisions

authorizing application to Commission by petition, and forwarding

of complaint, if warranted, to respondent for satisfaction or

answer.

Subsec. (b). Pub. L. 97-444, Sec. 231(2), substituted provisions

relating to promulgation by Commission of rules, regulations, and

orders necessary or appropriate for administration of this section,

including rules of practice and procedure governing proceedings

before the Commission, for provisions relating to investigation and

service of complaint by Commission, and hearing thereon before an

Administrative Law Judge, except that where amount claimed as

damages did not exceed $5,000, hearing need not be held, and proofs

could be supplied by deposition or verified statements of fact.

Subsec. (c). Pub. L. 97-444, Sec. 231(3), (4), redesignated

subsec. (d) as (c). Former subsec. (c), which provided that after

opportunity for hearing on complaints where the damages claimed

exceeded the sum of $5,000 had been provided or waived and on

complaints where damages claimed did not exceed the sum of $5,000

not requiring hearing as provided herein, Commission would

determine whether or not the respondent had violated any provision

of this chapter or any rule, regulation, or order thereunder, was

struck out.

Subsec. (d). Pub. L. 97-444, Sec. 231(4), (5), redesignated

subsec. (f) as (d) and substituted ''subsection (e)'' for

''subsection (g)''. Former subsec. (d) was redesignated (c).

Subsec. (e). Pub. L. 97-444, Sec. 231(3), (4), redesignated

subsec. (g) as (e). Former subsec. (e), which provided that if,

after a hearing on a complaint made by any person under subsection

(a) of this section, or without hearing as provided in subsections

(b) and (c) of this section, or upon failure of the party

complained against to answer a complaint duly served within the

time prescribed, or to appear at a hearing after being duly

notified, the Commission determined that the respondent had

violated any provision of this chapter, or any rule, regulation, or

order thereunder, the Commission would unless the offender had

already made reparation to the person complaining, determine the

amount of damage, if any, to which such person was entitled as a

result of such violation and would make an order directing the

offender to pay to such person complaining such amount on or before

the date fixed in the order, and that if, after the respondent had

filed his answer to the complaint, it appeared therein that the

respondent had admitted liability for a portion of the amount

claimed in the complaint as damages, the Commission under such

rules and regulations as it would prescribe, unless the respondent

had already made reparation to the person complaining, could issue

an order directing the respondent to pay to the complainant the

undisputed amount on or before the date fixed in the order, leaving

the respondent's liability for the disputed amount for subsequent

determination, with the remaining disputed amount to be determined

in the same manner and under the same procedure as it would have

been determined if no order had been issued by the Commission with

respect to the undisputed sum, was struck out.

Subsec. (f). Pub. L. 97-444, Sec. 231(4), (6), redesignated

subsec. (h) as (f), made certain grammatical changes, and inserted

provision allowing party against whom a reparation order has been

issued to show compliance by payment of the full amount of the

order or any agreed settlement thereof.

Subsecs. (g) to (i). Pub. L. 97-444, Sec. 231(4), redesignated

subsecs. (g), (h), and (i), as (e), (f), and (g), respectively.

1978 - Subsec. (a). Pub. L. 95-405, Sec. 21(1), substituted ''who

is registered or required to be registered'' for ''registered''.

Subsecs. (b), (c). Pub. L. 95-405, Sec. 21(2), (3), substituted

''$5,000'' for ''$2,500'' wherever appearing.

1975 - Subsec. (i). Pub. L. 94-16 substituted ''fifteen months''

for ''one year'' in two places, and ''one year'' for ''nine

months''.

EFFECTIVE DATE OF 1983 AMENDMENT

Amendment by Pub. L. 97-444 effective 120 days after Jan. 11,

1983, or such earlier date as the Commission shall prescribe by

regulation, see section 239 of Pub. L. 97-444, set out as a note

under section 2 of this title.

EFFECTIVE DATE OF 1978 AMENDMENT

Amendment by Pub. L. 95-405 effective Oct. 1, 1978, see section

28 of Pub. L. 95-405, set out as a note under section 2 of this

title.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 6m, 25 of this title.

-CITE-

7 USC Sec. 19 01/06/03

-EXPCITE-

TITLE 7 - AGRICULTURE

CHAPTER 1 - COMMODITY EXCHANGES

-HEAD-

Sec. 19. Consideration of costs and benefits and antitrust laws

-STATUTE-

(a) Costs and benefits

(1) In general

Before promulgating a regulation under this chapter or issuing

an order (except as provided in paragraph (3)), the Commission

shall consider the costs and benefits of the action of the

Commission.

(2) Considerations

The costs and benefits of the proposed Commission action shall

be evaluated in light of -

(A) considerations of protection of market participants and

the public;

(B) considerations of the efficiency, competitiveness, and

financial integrity of futures markets;

(C) considerations of price discovery;

(D) considerations of sound risk management practices; and

(E) other public interest considerations.

(3) Applicability

This subsection does not apply to the following actions of the

Commission:

(A) An order that initiates, is part of, or is the result of

an adjudicatory or investigative process of the Commission.

(B) An emergency action.

(C) A finding of fact regarding compliance with a requirement

of the Commission.

(b) Antitrust laws

The Commission shall take into consideration the public interest

to be protected by the antitrust laws and endeavor to take the

least anticompetitive means of achieving the objectives of this

chapter, as well as the policies and purposes of this chapter, in

issuing any order or adopting any Commission rule or regulation

(including any exemption under section 6(c) or 6c(b) of this

title), or in requiring or approving any bylaw, rule, or regulation

of a contract market or registered futures association established

pursuant to section 21 of this title.

-SOURCE-

(Sept. 21, 1922, ch. 369, Sec. 15, as added Pub. L. 93-463, title

I, Sec. 107, Oct. 23, 1974, 88 Stat. 1395; amended Pub. L. 102-546,

title V, Sec. 502(b), Oct. 28, 1992, 106 Stat. 3631; Pub. L.

106-554, Sec. 1(a)(5) (title I, Sec. 119), Dec. 21, 2000, 114 Stat.

2763, 2763A-403.)

-REFTEXT-

REFERENCES IN TEXT

The antitrust laws, referred to in subsec. (b), are classified

generally to chapter 1 (Sec. 1 et seq.) of Title 15, Commerce and

Trade.

-MISC2-

AMENDMENTS

2000 - Pub. L. 106-554 inserted section catchline, added subsec.

(a), designated existing provisions as subsec. (b), and inserted

subsec. (b) heading.

1992 - Pub. L. 102-546 substituted ''regulation (including any

exemption under section 6(c) or 6c(b) of this title)'' for

''regulation''.

EFFECTIVE DATE

For effective date of section, see section 418 of Pub. L. 93-463,

set out as an Effective Date of 1974 Amendment note under section 2

of this title.

-CITE-

7 USC Sec. 20 01/06/03

-EXPCITE-

TITLE 7 - AGRICULTURE

CHAPTER 1 - COMMODITY EXCHANGES

-HEAD-

Sec. 20. Market reports

-STATUTE-

(a) Information

The Commission may conduct regular investigations of the markets

for goods, articles, services, rights, and interests which are the

subject of futures contracts, and furnish reports of the findings

of these investigations to the public on a regular basis. These

market reports shall, where appropriate, include information on the

supply, demand, prices, and other conditions in the United States

and other countries with respect to such goods, articles, services,

rights, interests, and information respecting the futures markets.

(b) Avoidance of duplication

The Commission shall cooperate with the Department of Agriculture

and any other Department or Federal agency which makes market

investigations to avoid unnecessary duplication of

information-gathering activities.

(c) Furnishing of information; confidentiality

The Department of Agriculture and any other Department or Federal

agency which has market information sought by the Commission shall

furnish it to the Commission upon the request of any authorized

employee of the Commission. The Commission shall abide by any rules

of confidentiality applying to such information.

(d) Disclosure of business transactions, market positions, trade

secrets, or names of customers

The Commission shall not disclose in such reports data and

information which would separately disclose the business

transactions or market positions of any person and trade secrets or

names of customers except as provided in section 12 of this title.

(e) Application

This section shall not apply to investigations involving any

security underlying a security futures product.

-SOURCE-

(Sept. 21, 1922, ch. 369, Sec. 16, as added Pub. L. 93-463, title

IV, Sec. 414, Oct. 23, 1974, 88 Stat. 1414; amended Pub. L. 97-444,

title II, Sec. 232, Jan. 11, 1983, 96 Stat. 2320; Pub. L. 106-554,

Sec. 1(a)(5) (title II, Sec. 251(e)), Dec. 21, 2000, 114 Stat.

2763, 2763A-443.)

-MISC1-

AMENDMENTS

2000 - Subsec. (e). Pub. L. 106-554 added subsec. (e).

1983 - Subsec. (d). Pub. L. 97-444 prohibited disclosure of

market positions.

EFFECTIVE DATE OF 1983 AMENDMENT

Amendment by Pub. L. 97-444 effective Jan. 11, 1983, see section

239 of Pub. L. 97-444, set out as a note under section 2 of this

title.

EFFECTIVE DATE

For effective date of section, see section 418 of Pub. L. 93-463,

set out as an Effective Date of 1974 Amendment note under section 2

of this title.

STUDY OF TRADING IN CATTLE FUTURES CONTRACTS

Pub. L. 99-641, title I, Sec. 111, Nov. 10, 1986, 100 Stat. 3561,

provided that:

''(a) Study. - The Comptroller General of the United States shall

conduct and complete a comprehensive study of the effect of trading

in contracts for the future delivery of live cattle on the cash

market price of live cattle, with particular emphasis on -

''(1) whether the reaction of the live cattle futures market to

the results of the milk production termination program in March

1986, conducted under section 201(d)(3) of the Agricultural Act

of 1949 (7 U.S.C. 1446(d)(3)), was based on and accurately

reflected the then prevailing conditions of supply and demand;

''(2) the effect of the trading in contracts for the future

delivery of live cattle on -

''(i) the price relationship between feeder cattle and fed

cattle;

''(ii) the price discovery process with respect to live

cattle; and

''(iii) price competition within the cattle industry;

''(3) the effect of the use of packer contracts, as a means of

obtaining slaughter cattle, on the increase in short hedging in

contracts for the future delivery of live cattle and the effect

of this increase in short hedging on prices in the futures and

cash markets;

''(4) the effect on the ability of the cash markets to

accurately reflect prevailing conditions of supply and demand if

packer contracts become the prevalent method of marketing fed

cattle;

''(5) whether the present delivery system for contracts for the

future delivery of live cattle creates any bias (either upward or

downward) in the cash price for cattle;

''(6) whether the present delivery system for contracts for the

future delivery of live cattle creates price volatility during

the delivery month; and

''(7) whether there are advantages or disadvantages to a cash

settlement system in lieu of the present delivery system in the

case of contracts for the future delivery of live cattle.

''(b) Reports. -

''(1) Preliminary report. - Not later than January 15, 1987,

the Comptroller General shall submit a preliminary report on the

results of the study required under subsection (a) to the

Committee on Agriculture of the House of Representatives and the

Committee on Agriculture, Nutrition, and Forestry of the Senate.

''(2) Final report. - Not later than 1 year after the date of

enactment of this Act (Nov. 10, 1986), the Comptroller General

shall submit to such committees a detailed final report of the

results of the study required under subsection (a).''

POTATO FUTURES STUDY; SUBMISSION OF REPORT TO CONGRESS

Pub. L. 95-405, Sec. 27, Sept. 30, 1978, 92 Stat. 877, required,

within one year of Oct. 1, 1978, Secretary of Agriculture to (1)

conduct a comprehensive study of marketing of Irish potatoes and of

making and trading of contracts of sale for future delivery of

Irish potatoes, including rules and regulations pertaining to such

trading issued by Commodity Futures Trading Commission or any

contract market designated by Commission; and (2) submit to each

House of Congress a detailed report on results of such study, and

that report should also include any proposals Secretary may have

concerning any legislation needed to implement such recommendations

and concerning any modifications and rules and regulations needed

to improve regulation of such contracts by Commission or any

contract market designated by Commission.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 6f, 6k, 7b-1 of this

title.

-CITE-

7 USC Sec. 21 01/06/03

-EXPCITE-

TITLE 7 - AGRICULTURE

CHAPTER 1 - COMMODITY EXCHANGES

-HEAD-

Sec. 21. Registered futures associations

-STATUTE-

(a) Registration statement

Any association of persons may be registered with the Commission

as a registered futures association pursuant to subsection (b) of

this section, under the terms and conditions hereinafter provided

in this section, by filing with the Commission for review and

approval a registration statement in such form as the Commission

may prescribe, setting forth the information, and accompanied by

the documents, below specified:

(1) Data as to its organization, membership, and rules of

procedure, and such other information as the Commission may by

rules and regulations require as necessary or appropriate in the

public interest; and

(2) Copies of its constitution, charter, or articles of

incorporation or association, with all amendments thereto, and of

its bylaws, and of any rules or instruments corresponding to the

foregoing, whatever the name, hereinafter in this section

collectively referred to as the ''rules of the association''.

(b) Standards for registration; Commission findings

An applicant association shall not be registered as a futures

association unless the Commission finds, under standards

established by the Commission, that -

(1) such association is in the public interest and that it will

be able to comply with the provisions of this section and the

rules and regulations thereunder and to carry out the purposes of

this section;

(2) the rules of the association provide that any person

registered under this chapter, registered entity, or any other

person designated pursuant to the rules of the Commission as

eligible for membership may become a member of such association,

except such as are excluded pursuant to paragraph (3) or (4) of

this subsection, or a rule of the association permitted under

this subparagraph. The rules of the association may restrict

membership in such association on such specified basis relating

to the type of business done by its members, or on such other

specified and appropriate basis, as appears to the Commission to

be necessary or appropriate in the public interest and to

carryout the purpose of this section. Rules adopted by the

association may provide that the association may, unless the

Commission directs otherwise in cases in which the Commission

finds it appropriate in the public interest so to direct, deny

admission to, or refuse to continue in such association any

person if (i) such person, whether prior or subsequent to

becoming registered as such, or (ii) any person associated within

the meaning of ''associated person'' as set forth in section 6k

of this title, whether prior or subsequent to becoming so

associated, has been and is suspended or expelled from a

registered entity or has been and is barred or suspended from

being associated with all members of such registered entity, for

violation of any rule of such registered entity;

(3) the rules of the association provide that, except with the

approval or at the direction of the Commission in cases in which

the Commission finds it appropriate in the public interest so to

approve or direct, no person shall be admitted to or continued in

membership in such association, if such person -

(A) has been and is suspended or expelled from a registered

futures association or from a registered entity or has been and

is barred or suspended from being associated with all members

of such association or from being associated with all members

of such registered entity, for violation of any rule of such

association or registered entity which prohibits any act or

transaction constituting conduct inconsistent with just and

equitable principles of trade, or requires any act the omission

of which constitutes conduct inconsistent with just and

equitable principles of trade;

(B) is subject to an order of the Commission denying,

suspending, or revoking his registration pursuant to sections 9

and 15 of this title, or expelling or suspending him from

membership in a registered futures association or a registered

entity, or barring or suspending him from being associated with

a futures commission merchant;

(C) whether prior or subsequent to becoming a member, by his

conduct while associated with a member, was a cause of any

suspension, expulsion, or order of the character described in

clause (A) or (B) which is in effect with respect to such

member, and in entering such a suspension, expulsion, or order,

the Commission or any such registered entity or association

shall have jurisdiction to determine whether or not any person

was a cause thereof; or

(D) has associated with him any person who is known, or in

the exercise of reasonable care should be known, to him to be a

person who would be ineligible for admission to or continuance

in membership under clause (A), (B), or (C) of this paragraph;

(4) the rules of the association provide that, except with the

approval or at the direction of the Commission in cases in which

the Commission finds it appropriate in the public interest so to

approve or direct, no person shall become a member and no natural

person shall become a person associated with a member, unless

such person is qualified to become a member or a person

associated with a member in conformity with specified and

appropriate standards with respect to the training, experience,

and such other qualifications of such person as the association

finds necessary or desirable, and in the case of a member, the

financial responsibility of such a member. For the purpose of

defining such standards and the application thereof, such rules

may -

(A) appropriately classify prospective members (taking into

account relevant matters, including type or nature of business

done) and persons proposed to be associated with members;

(B) specify that all or any portion of such standard shall be

applicable to any such class;

(C) require persons in any such class to pass examinations

prescribed in accordance with such rules;

(D) provide that persons in any such class other than

prospective members and partners, officers and supervisory

employees (which latter term may be defined by such rules and

as so defined shall include branch managers of members) of

members, may be qualified solely on the basis of compliance

with specified standards of training and such other

qualifications as the association finds appropriate;

(E) provide that applications to become a member or a person

associated with a member shall set forth such facts as the

association may prescribe as to the training, experience, and

other qualifications (including, in the case of an applicant

for membership, financial responsibility) of the applicant and

that the association shall adopt procedures for verification of

qualifications of the applicant, which may require the

applicant to be fingerprinted and to submit, or cause to be

submitted, such fingerprints to the Attorney General for

identification and appropriate processing. Notwithstanding any

other provision of law, such an association may receive from

the Attorney General all the results of such identification and

processing; and

(F) require any class of persons associated with a member to

be registered with the association in accordance with

procedures specified by such rules (and any application or

document supplemental thereto required by such rules of a

person seeking to be registered with such association shall,

for the purposes of sections 9 and 15 of this title, be deemed

an application required to be filed under this section);

(5) the rules of the association assure a fair representation

of its members in the adoption of any rule of the association or

amendment thereto, the selection of its officers and directors,

and in all other phases of the administration of its affairs;

(6) the rules of the association provide for the equitable

allocation of dues among its members, to defray reasonable

expenses of administration;

(7) the rules of the association are designed to prevent

fraudulent and manipulative acts and practices, to promote just

and equitable principles of trade, in general, to protect the

public interest, and to remove impediments to and perfect the

mechanism of free and open futures trading;

(8) the rules of the association provide that its members and

persons associated with its members shall be appropriately

disciplined, by expulsion, suspension, fine, censure, or being

suspended or barred from being associated with all members, or

any other fitting penalty, for any violation of its rules;

(9) the rules of the association provide a fair and orderly

procedure with respect to the disciplining of members and persons

associated with members and the denial of membership to any

person seeking membership therein or the barring of any person

from being associated with a member. In any proceeding to

determine whether any member or other person shall be

disciplined, such rules shall require that specific charges be

brought; that such member or person shall be notified of, and be

given an opportunity to defend against, such charges; that a

record shall be kept; and that the determination shall include -

(A) a statement setting forth any act or practice in which

such member or other person may be found to have engaged, or

which such member or other person may be found to have omitted;

(B) a statement setting forth the specific rule or rules of

the association of which any such act or practice, or omission

to act, is deemed to be in violation;

(C) a statement whether the acts or practices prohibited by

such rule or rules, or the omission of any act required

thereby, are deemed to constitute conduct inconsistent with

just and equitable principles of trade; and

(D) a statement setting forth the penalty imposed; (FOOTNOTE

1)

(FOOTNOTE 1) So in original. The semicolon probably should be a

period.

In any proceeding to determine whether a person shall be denied

membership or whether any person shall be barred from being

associated with a member, such rules shall provide that the

person shall be notified of, and be given an opportunity to be

heard upon, the specific grounds for denial or bar which are

under consideration; that a record shall be kept; and that the

determination shall set forth the specific grounds upon which the

denial or bar is based;

(10) the rules of the association provide a fair, equitable,

and expeditious procedure through arbitration or otherwise for

the settlement of customers' claims and grievances against any

member or employee thereof: Provided, That (A) the use of such

procedure by a customer shall be voluntary, (B) the term

''customer'' as used in this paragraph shall not include another

member of the association, and (C) in the case of a claim arising

from a violation in the execution of an order on the floor of a

registered entity, such procedure shall provide, to the extent

appropriate -

(i) for payment of actual damages proximately caused by such

violation. If an award of actual damages is made against a

floor broker in connection with the execution of a customer

order, and the futures commission merchant which selected the

floor broker for the execution of the customer order is held to

be responsible under section 2(a)(1) of this title for the

floor broker's violation, such futures commission merchant may

be required to satisfy such award; and

(ii) where the violation is willful and intentional, for

payment to the customer of punitive or exemplary damages, in

addition to losses proximately caused by the violation, in an

amount equal to no more than two times the amount of such

losses. If punitive or exemplary damages are awarded against a

floor broker in connection with the execution of a customer

order, and the futures commission merchant which selected the

floor broker for the execution of such order is held to be

responsible under section 2(a)(1) of this title for the floor

broker's violation, such futures commission merchant may be

required to satisfy the award of punitive or exemplary damages

if the floor broker fails to do so, except that such

requirement shall apply to the futures commission merchant only

if it willfully and intentionally selected the floor broker

with the intent to assist or facilitate the floor broker's

violation; and (FOOTNOTE 2)

(FOOTNOTE 2) So in original. The word ''and'' probably should

not appear.

(11) such association provides for meaningful representation on

the governing board of such association of a diversity of

membership interests and provides that no less than 20 percent of

the regular voting members of such board be comprised of

qualified nonmembers of or persons who are not regulated by such

association. (FOOTNOTE 3)

(FOOTNOTE 3) So in original. The period probably should be a

semicolon.

(12)(A) (FOOTNOTE 4) such association provides on all major

disciplinary committees for a diversity of membership sufficient

to ensure fairness and to prevent special treatment or preference

for any person in the conduct of disciplinary proceedings and the

assessment of penalties. (FOOTNOTE 5)

(FOOTNOTE 4) So in original. No subpar. (B) has been enacted.

(FOOTNOTE 5) So in original. The period probably should be '';

and''.

(13) A (FOOTNOTE 6) major disciplinary committee hearing a

disciplinary matter shall include -

(FOOTNOTE 6) So in original. Probably should not be

capitalized.

(A) qualified persons representing segments of the

association membership other than that of the subject of the

proceeding; and

(B) where appropriate to carry out the purposes of this

paragraph, qualified persons who are not members of the

association.

(c) Suspension of registration

The Commission may, after notice and opportunity for hearing,

suspend the registration of any futures association if it finds

that the rules thereof do not conform to the requirements of the

Commission, and any such suspension shall remain in effect until

the Commission issues an order determining that such rules have

been modified to conform with such requirements.

(d) Fees and charges

In addition to the fees and charges authorized by section 12a(1)

of this title, each person registered under this chapter, who is

not a member of a futures association registered pursuant to this

section, shall pay to the Commission such reasonable fees and

charges as may be necessary to defray the costs of additional

regulatory duties required to be performed by the Commission

because such person is not a member of a registered futures

association. The Commission shall establish such additional fees

and charges by rules and regulations.

(e) Registered persons not members of registered associations

Any person registered under this chapter, who is not a member of

a futures association registered pursuant to this section, in

addition to the other requirements and obligations of this chapter

and the regulations thereunder shall be subject to such other rules

and regulations as the Commission may find necessary to protect the

public interest and promote just and equitable principles of trade.

(f) Denial of registration

Upon filing of an application for registration pursuant to

subsection (a) of this section, the Commission may by order grant

such registration if the requirements of this section are

satisfied. If, after appropriate notice and opportunity for

hearing, it appears to the Commission that any requirement of this

section is not satisfied, the Commission shall by order deny such

registration.

(g) Withdrawal from registration; notice of withdrawal

A registered futures association may, upon such reasonable notice

as the Commission may deem necessary in the public interest,

withdraw from registration by filing with the Commission a written

notice of withdrawal in such form as the Commission may by rules

and regulations prescribe.

(h) Commission review of disciplinary actions taken by registered

futures associations

(1) If any registered futures association takes any final

disciplinary action against a member of the association or a person

associated with a member, denies admission to any person seeking

membership therein, or bars any person from being associated with a

member, the association promptly shall give notice thereof to such

member or person and file notice thereof with the Commission. The

notice shall be in such form and contain such information as the

Commission, by rule or regulation, may prescribe as necessary or

appropriate to carry out the purposes of this chapter.

(2) Any action with respect to which a registered futures

association is required by paragraph (1) to file notice shall be

subject to review by the Commission on its motion, or on

application by any person aggrieved by the action. Such

application shall be filed within 30 days after the date such

notice is filed with the Commission and received by the aggrieved

person, or within such longer period as the Commission may

determine.

(3)(A) Application to the Commission for review, or the

institution of review by the Commission on its own motion, shall

not operate as a stay of such action unless the Commission

otherwise orders, summarily or after notice and opportunity for

hearing on the question of a stay (which hearing may consist solely

of the submission of affidavits or presentation of oral arguments).

(B) The Commission shall establish procedures for expedited

consideration and determination of the question of a stay.

(i) Notice; hearing; findings; cancellation, reduction, or

remission of penalties; review by court of appeals

(1) In a proceeding to review a final disciplinary action taken

by a registered futures association against a member thereof or a

person associated with a member, after appropriate notice and

opportunity for a hearing (which hearing may consist solely of

consideration of the record before the association and opportunity

for the presentation of supporting reasons to affirm, modify, or

set aside the sanction imposed by the association) -

(A) if the Commission finds that -

(i) the member or person associated with a member has engaged

in the acts or practices, or has omitted the acts, that the

association has found the member or person to have engaged in

or omitted;

(ii) the acts or practices, or omissions to act, are in

violation of the rules of the association specified in the

determination of the association; and

(iii) such rules are, and were applied in a manner,

consistent with the purposes of this chapter,

the Commission, by order, shall so declare and, as appropriate,

affirm the sanction imposed by the association, modify the

sanction in accordance with paragraph (2), or remand the case to

the association for further proceedings; or

(B) if the Commission does not make any such finding, the

Commission, by order, shall set aside the sanction imposed by the

association and, if appropriate, remand the case to the

association for further proceedings.

(2) If, after a proceeding under paragraph (1), the Commission

finds that any penalty imposed on a member or person associated

with a member is excessive or oppressive, having due regard for the

public interest, the Commission, by order, shall cancel, reduce, or

require the remission of the penalty.

(3) In a proceeding to review the denial of membership in a

registered futures association or the barring of any person from

being associated with a member, after appropriate notice and

opportunity for a hearing (which hearing may consist solely of

consideration of the record before the association and opportunity

for the presentation of supporting reasons to affirm, modify, or

set aside the action of the association) -

(A) if the Commission finds that -

(i) the specific grounds on which the denial or bar is based

exist in fact;

(ii) the denial or bar is in accordance with the rules of the

association; and

(iii) such rules are, and were applied in a manner,

consistent with the purposes of this chapter,

the Commission, by order, shall so declare and, as appropriate,

affirm or modify the action of the association, or remand the

case to the association for further proceedings; or

(B) if the Commission does not make any such finding, the

Commission, by order, shall set aside the action of the

association and require the association to admit the applicant to

membership or permit the person to be associated with a member,

or, as appropriate, remand the case to the association for

further proceedings.

(4) Any person aggrieved by a final order of the Commission

entered under this subsection may file a petition for review with a

United States court of appeals in the same manner as provided in

sections 9 and 15 of this title.

(j) Changes or additions to association rules

Every registered futures association shall file with the

Commission in accordance with such rules and regulations as the

Commission may prescribe as necessary or appropriate in the public

interest, copies of any changes in or additions to the rules of the

association, and such other information and documents as the

Commission may require to keep current or to supplement the

registration statement and documents filed pursuant to subsection

(a) of this section. A registered futures association shall submit

to the Commission any change in or addition to its rules and may

make such rules effective ten days after receipt of such submission

by the Commission unless, within the ten-day period, the registered

futures association requests review and approval thereof by the

Commission or the Commission notifies such registered futures

association in writing of its determination to review such rules

for approval. The Commission shall approve such rules if such

rules are determined by the Commission to be consistent with the

requirements of this section and not otherwise in violation of this

chapter or the regulations issued pursuant to this chapter, and the

Commission shall disapprove, after appropriate notice and

opportunity for hearing, any such rule which the Commission

determines at any time to be inconsistent with the requirements of

this section or in violation of this chapter or the regulations

issued pursuant to this chapter. If the Commission does not

approve or institute disapproval proceedings with respect to any

rule within one hundred and eighty days after receipt or within

such longer period of time as the registered futures association

may agree to, or if the Commission does not conclude a disapproval

proceeding with respect to any rule within one year after receipt

or within such longer period as the registered futures association

may agree to, such rule may be made effective by the registered

futures association until such time as the Commission disapproves

such rule in accordance with this subsection.

(k) Abrogation of association rules; requests to associations by

Commission to alter or supplement rules

(1) The Commission is authorized by order to abrogate any rule of

a registered futures association, if after appropriate notice and

opportunity for hearing, it appears to the Commission that such

abrogation is necessary or appropriate to assure fair dealing by

the members of such association, to assure a fair representation of

its members in the administration of its affairs or effectuate the

purposes of this section.

(2) The Commission may in writing request any registered futures

association to adopt any specified alteration or supplement to its

rules with respect to any of the matters hereinafter enumerated.

If such association fails to adopt such alteration or supplement

within a reasonable time, the Commission is authorized by order to

alter or supplement the rules of such association in the manner

theretofore requested, or with such modifications of such

alteration or supplement as it deems necessary if, after

appropriate notice and opportunity for hearing, it appears to the

Commission that such alteration or supplement is necessary or

appropriate in the public interest or to effectuate the purposes of

this section, with respect to -

(A) the basis for, and procedure in connection with, the denial

of membership or the barring from being associated with a member

or the disciplining of members or persons associated with

members, or the qualifications required for members or natural

persons associated with members or any class thereof;

(B) the method for adoption of any change in or addition to the

rules of the association;

(C) the method of choosing officers and directors.

(l) Suspension and revocation of registration; expulsion of

members; removal of association officers or directors

The Commission is authorized, if such action appears to it to be

necessary or appropriate in the public interest or to carry out the

purposes of this section -

(1) after appropriate notice and opportunity for hearing, by

order to suspend for a period not exceeding twelve months or to

revoke the registration of a registered futures association, if

the Commission finds that such association has violated any

provisions of this chapter or any rule or regulation thereunder,

or has failed to enforce compliance with its own rules, or has

engaged in any other activity tending to defeat the purposes of

this chapter;

(2) after appropriate notice and opportunity for hearing, by

order to suspend for a period not exceeding twelve months or to

expel from a registered futures association any member thereof,

or to suspend for a period not exceeding twelve months or to bar

any person from being associated with a member thereof, if the

Commission finds that such member or person -

(A) has violated any provision of this chapter or any rule or

regulation thereunder, or has effected any transaction for any

other person who, he had reason to believe, was violating with

respect to such transaction any provision of this chapter or

any rule or regulation thereunder; or

(B) has willfully violated any provision of this chapter, or

of any rule, regulation, or order thereunder, or has effected

any transaction for any other person who, he had reason to

believe, was willfully violating with respect to such

transaction any provision of this chapter or rule, regulation,

or order; and

(3) after appropriate notice and opportunity for hearing, by

order to remove from office any officer or director of a

registered futures association who, the Commission finds, has

willfully failed to enforce the rules of the association, or has

willfully abused his authority.

(m) Rules requiring membership in associations

Notwithstanding any other provision of law, the Commission may

approve rules of futures associations that, directly or indirectly,

require persons eligible for membership in such associations to

become members of at least one such association, upon a

determination by the Commission that such rules are necessary or

appropriate to achieve the purposes and objectives of this chapter.

(n) Reports to Congress

The Commission shall include in its annual reports to Congress

information concerning any futures associations registered pursuant

to this section and the effectiveness of such associations in

regulating the practices of the members.

(o) Delegation to futures associations of registrative functions;

discretionary review by Commission; judicial appeal

(1) The Commission may require any futures association registered

pursuant to this section to perform any portion of the registration

functions under this chapter with respect to each member of the

association other than a registered entity and with respect to each

associated person of such member, in accordance with rules,

notwithstanding any other provision of law, adopted by such futures

association and submitted to the Commission pursuant to subsection

(j) of this section, and subject to the provisions of this chapter

applicable to registrations granted by the Commission.

(2) In performing any Commission registration function authorized

by the Commission under section 12a(10) of this title, this

section, or any other applicable provisions of this chapter, a

futures association may issue orders (A) to refuse to register any

person, (B) to register conditionally any person, (C) to suspend

the registration of any person, (D) to place restrictions on the

registration of any person, or (E) to revoke the registration of

any person. If such an order is the final decision of the futures

association, any person against whom the order has been issued may

petition the Commission to review the decision. The Commission may

on its own initiative or upon petition decline review or grant

review and affirm, set aside, or modify such an order of the

futures association; and the findings of the futures association as

to the facts, if supported by the weight of the evidence, shall be

conclusive. Unless the Commission grants review under this section

of an order concerning registration issued by a futures

association, the order of the futures association shall be

considered to be an order issued by the Commission.

(3) Nothing in this section shall affect the Commission's

authority to review the granting of a registration application by a

registered futures association that is performing any Commission

registration function authorized by the Commission under section

12a(10) of this title, this section, or any other applicable

provision of this chapter.

(4) If a person against whom a futures association has issued a

registration order under this subsection petitions the Commission

to review that order and the Commission declines to take review,

such person may file a petition for review with a United States

court of appeals, in accordance with sections 9 and 15 of this

title.

(p) Establishment of rules for futures associations; approval by

Commission

Notwithstanding any other provision of this section, each futures

association registered under this section on January 11, 1983,

shall adopt and submit for Commission approval not later than

ninety days after such date, and each futures association that

applies for registration after such date shall adopt and include

with its application for registration, rules of the association

that require the association to -

(1) establish training standards and proficiency testing for

persons involved in the solicitation of transactions subject to

the provisions of this chapter, supervisors of such persons, and

all persons for which it has registration responsibilities, and a

program to audit and enforce compliance with such standards;

(2) establish minimum capital, segregation, and other financial

requirements applicable to its members for which such

requirements are imposed by the Commission and implement a

program to audit and enforce compliance with such requirements,

except that such requirements may not be less stringent than

those imposed on such firms by this chapter or by Commission

regulation;

(3) establish minimum standards governing the sales practices

of its members and persons associated therewith for transactions

subject to the provisions of this chapter; and

(4) establish special supervisory guidelines to protect the

public interest relating to the solicitation by telephone of new

futures or options accounts and make such guidelines applicable

to those members determined to require such guidelines in

accordance with standards established by the Commission

consistent with this chapter. Such guidelines may include a

requirement that, with respect to a customer with no previous

futures or commodity options trading experience, the member may

not enter an order for the account of such customer for a period

of three days following opening of the account and receipt of a

signed acknowledgment by the customer of receipt of a risk

disclosure statement.

(q) (FOOTNOTE 7) Major disciplinary rule violations

(FOOTNOTE 7) Two subsecs. (q) have been enacted.

(1) The Commission shall issue regulations requiring each

registered futures association to establish and make available to

the public a schedule of major violations of any rule within the

disciplinary jurisdiction of such registered futures association.

(2) The regulations issued by the Commission pursuant to this

subsection shall prohibit, for a period of time to be determined by

the Commission, any member of a registered futures association who

is found to have committed any major violation from service on the

governing board of any registered futures association or registered

entity, or on any disciplinary committee thereof.

(q) (FOOTNOTE 7) Program for implementation of rules

Each futures association registered under this section shall

develop a comprehensive program that fully implements the rules

approved by the Commission under this section as soon as

practicable but not later than September 30, 1985, in the case of

any futures association registered on January 11, 1983, and not

later than two and one-half years after the date of registration in

the case of any other futures association registered under this

section.

(r) Rules to avoid duplicative regulation of dual registrants

Consistent with this chapter, each futures association registered

under this section shall issue such rules as are necessary to avoid

duplicative or conflicting rules applicable to any futures

commission merchant registered with the Commission pursuant to

section 6f(a) of this title (except paragraph (2) thereof), that is

also registered with the Securities and Exchange Commission

pursuant to section 78o(b) of title 15 (except paragraph (11)

thereof), with respect to the application of -

(1) rules of such futures association of the type specified in

section 6d(3) of this title involving security futures products;

and

(2) similar rules of national securities associations

registered pursuant to section 78o-3(a) of title 15 involving

security futures products.

-SOURCE-

(Sept. 21, 1922, ch. 369, Sec. 17, as added Pub. L. 93-463, title

III, Sec. 301, Oct. 23, 1974, 88 Stat. 1406; amended Pub. L.

95-405, Sec. 22, Sept. 30, 1978, 92 Stat. 876; Pub. L. 97-444,

title II, Sec. 217(b), 233, Jan. 11, 1983, 96 Stat. 2307, 2320;

Pub. L. 99-641, title I, Sec. 107, 108, 110(6), (7), Nov. 10, 1986,

100 Stat. 3558, 3559, 3561; Pub. L. 102-546, title II, Sec. 204(a),

206(b), 209(b)(8), 222(c), 228, title IV, Sec. 402(12), Oct. 28,

1992, 106 Stat. 3600, 3602, 3607, 3616, 3619, 3625; Pub. L.

106-554, Sec. 1(a)(5) (title I, Sec. 123(a)(24), title II, Sec.

251(g)), Dec. 21, 2000, 114 Stat. 2763, 2763A-410, 2763A-444.)

-MISC1-

AMENDMENTS

2000 - Subsecs. (b)(2), (3), (10), (o)(1), (q)(2). Pub. L.

106-554, Sec. 1(a)(5) (title I, Sec. 123(a)(24)), substituted

''registered entity'' for ''contract market'' wherever appearing.

Subsec. (r). Pub. L. 106-554, Sec. 1(a)(5) (title II, Sec.

251(g)), added subsec. (r).

1992 - Subsec. (a)(1), (2). Pub. L. 102-546, Sec. 402(12)(A),

realigned margins.

Subsec. (b)(3). Pub. L. 102-546, Sec. 206(b)(1)(A), (B),

209(b)(8)(A)(i), struck out ''or'' at end of subpar. (A), in

subpar. (B) made technical amendment to reference to sections 9 and

15 of this title to reflect change in reference to corresponding

section of original act and struck out ''or'' at end, and in

subpar. (D) substituted a semicolon for period at end.

Subsec. (b)(4). Pub. L. 102-546, Sec. 206(b)(1)(B), (C),

209(b)(8)(A)(ii), substituted a semicolon for period at end of

subpars. (A) to (D), in subpar. (E) substituted ''; and'' for

period at end, and in subpar. (F) made technical amendment to

reference to sections 9 and 15 of this title to reflect change in

reference to corresponding section of original act and substituted

a semicolon for period at end.

Subsec. (b)(5) to (9). Pub. L. 102-546, Sec. 206(b)(1)(B), (C),

substituted a semicolon for period at end of pars. (5) to (9) and

subpars. (A), (B), and (D) of par. (9) and in par. (9)(C)

substituted ''; and'' for period at end.

Subsec. (b)(10). Pub. L. 102-546, Sec. 206(b)(1)(C), 222(c),

substituted ''(A)'' for ''(i)'' and ''voluntary, (B)'' for

''voluntary and (ii)'', inserted '', and'' and subpar. (C) after

''association'', and substituted ''; and'' for period at end.

Subsec. (b)(11) to (13). Pub. L. 102-546, Sec. 206(b)(1)(D),

added pars. (11) to (13).

Subsec. (i)(4). Pub. L. 102-546, Sec. 228, which directed that

''(other than a registered futures association).'' be struck out,

was executed by striking ''(other than a registered futures

association)'' after ''Any person'' to reflect the probable intent

of Congress.

Pub. L. 102-546, Sec. 209(b)(8)(B), made technical amendment to

reference to sections 9 and 15 of this title to reflect change in

reference to corresponding section of original act.

Subsec. (l)(2)(B). Pub. L. 102-546, Sec. 402(12)(B), made

technical amendment to reference to this chapter appearing after

''violated any provision of'' to reflect change in reference to

corresponding provision of original act and substituted ''; and''

for period at end.

Subsec. (o)(4). Pub. L. 102-546, Sec. 209(b)(8)(C), made

technical amendment to reference to sections 9 and 15 of this title

to reflect change in reference to corresponding section of original

act.

Subsec. (p)(4). Pub. L. 102-546, Sec. 204(a), added par. (4).

Subsec. (q). Pub. L. 102-546, Sec. 206(b)(2), added subsec. (q)

relating to major disciplinary rules violations.

1986 - Subsec. (b)(2). Pub. L. 99-641, Sec. 110(6), substituted

''within'' for ''with in'' before ''the meaning''.

Subsec. (h). Pub. L. 99-641, Sec. 107, amended subsec. (h)

generally. Prior to amendment, subsec. (h) read as follows: ''If

any registered futures association takes any disciplinary action

against any member thereof or any person associated with such a

member or denies admission to any person seeking membership

therein, or bars any person from being associated with a member,

such action shall be subject to review by the Commission, on its

own motion, or upon application by any person aggrieved thereby

filed within thirty days after such action has been taken or within

such longer period as the Commission may determine. Application to

the Commission for review, or the institution of review by the

Commission on its own motion, shall operate as a stay of such

action until an order is issued upon such review pursuant to

subsection (i) of this section unless the Commission otherwise

orders, after notice and opportunity for hearing on the question of

a stay (which hearing may consist solely of affidavits and oral

arguments).''

Subsec. (i). Pub. L. 99-641, Sec. 107, amended subsec. (i)

generally. Prior to amendment, subsec. (i) read as follows:

''(1) In a proceeding to review disciplinary action taken by a

registered futures association against a member thereof or a person

associated with a member, if the Commission, after appropriate

notice and opportunity for hearing, upon consideration of the

record before the association and such other evidence as it may

deem relevant -

''(A) finds that such member or person has engaged in such acts

or practices, or has omitted such act, as the association has

found him to have engaged in or omitted, and

''(B) determines that such acts or practices, or omission to

act, are in violation of such rules of the association as have

been designated in the determination of the association, the

Commission shall by order dismiss the proceeding, unless it

appears to the Commission that such action should be modified in

accordance with paragraph (2) of this subsection. The Commission

shall likewise determine whether the acts or practices

prohibited, or the omission of any act required, by any such rule

constitute conduct inconsistent with just and equitable

principles of trade, and shall so declare. If it appears to the

Commission that the evidence does not warrant the finding

required in clause (A), or if the Commission determines that such

acts or practices as are found to have been engaged in are not

prohibited by the designated rule or rules of the association, or

that such act as is found to have been omitted is not required by

such designated rule or rules, the Commission shall by order set

aside the action of the association.

''(2) If, after appropriate notice and opportunity for hearing,

the Commission finds that any penalty imposed upon a member or

person associated with a member is excessive or oppressive, having

due regard to the public interest, the Commission shall by order

cancel, reduce, or require the remission of such penalty.

''(3) In any proceeding to review the denial of membership in a

registered futures association or the barring of any person from

being associated with a member, if the Commission, after

appropriate notice and hearing, and upon consideration of the

record before the association and such other evidence as it may

deem relevant, determines that the specific grounds on which such

denial or bar is based exist in fact and are valid under this

section, the Commission shall by order dismiss the proceeding;

otherwise, the Commission shall by order set aside the action of

the association and require it to admit the applicant to membership

therein, or to permit such person to be associated with a member.''

Subsec. (j). Pub. L. 99-641, Sec. 108, struck out sentence which

read as follows: ''The Commission shall approve such rules within

thirty days of their receipt if Commission approval is requested

under this subsection or within thirty days after the Commission

determines to review for approval any other rules unless the

Commission notifies the registered futures association of its

inability to complete such approval or review within such period of

time.''

Subsec. (k)(1). Pub. L. 99-641, Sec. 110(7), substituted

''section'' for ''title''.

1983 - Subsec. (b)(4)(E). Pub. L. 97-444, Sec. 233(1), inserted

'', which may require the applicant to be fingerprinted and to

submit, or cause to be submitted, such fingerprints to the Attorney

General for identification and appropriate processing.

Notwithstanding any other provision of law, such an association may

receive from the Attorney General all the results of such

identification and processing'' after ''adopt procedures for

verification of qualifications of the applicant''.

Subsec. (b)(10). Pub. L. 97-444, Sec. 217(b), required

association rules to provide for ''expeditious'' procedure,

redesignated cl. (iv) as (ii) and substituted '' 'customer' as used

in this paragraph shall not include another member of the

association'' for '' 'customer' as used in this subsection shall

not include a futures commission merchant or a floor broker'', and

struck out clauses ''(ii) the procedure shall not be applicable to

any claim in excess of $15,000, (iii) the procedure shall not

result in any compulsory payment except as agreed upon between the

parties,''.

Subsec. (d). Pub. L. 97-444, Sec. 233(2), substituted ''section

12a(1) of this title'' for ''section 12a(4) of this title''.

Subsec. (h). Pub. L. 97-444, Sec. 233(3), substituted

''subsection (i) of this section'' for ''subsection (k) of this

section''.

Subsec. (j). Pub. L. 97-444, Sec. 233(4), substituted ''A

registered futures association shall submit to the Commission any

change in or addition to its rules and may make such rules

effective ten days after receipt of such submission by the

Commission unless, within the ten-day period, the registered

futures association requests review and approval thereof by the

Commission or the Commission notifies such registered futures

association in writing of its determination to review such rules

for approval. The Commission shall approve such rules within

thirty days of their receipt if Commission approval is requested

under this subsection or within thirty days after the Commission

determines to review for approval any other rules unless the

Commission notifies the registered futures association of its

inability to complete such approval or review within such period of

time. The Commission shall approve such rules if such rules are

determined by the Commission to be consistent with the requirements

of this section and not otherwise in violation of this chapter or

the regulations issued pursuant to this chapter, and the Commission

shall disapprove, after appropriate notice and opportunity for

hearing, any such rule which the Commission determines at any time

to be inconsistent with the requirements of this section or in

violation of this chapter or the regulations issued pursuant to

this chapter. If the Commission does not approve or institute

disapproval proceedings with respect to any rule within one hundred

and eighty days after receipt or within such longer period of time

as the registered futures association may agree to, or if the

Commission does not conclude a disapproval proceeding with respect

to any rule within one year after receipt or within such longer

period as the registered futures association may agree to, such

rule may be made effective by the registered futures association

until such time as the Commission disapproves such rule in

accordance with this subsection'' for ''Any change in or addition

to the rules of a registered futures association shall be submitted

to the Commission for approval and shall take effect upon the

thirtieth day after such approval by the Commission, or upon such

earlier date as the Commission may determine, unless the Commission

shall enter an order disapproving such change or addition; and the

Commission shall enter such an order unless such change or addition

appears to the Commission to be consistent with the requirements of

this section and the provisions of this chapter''.

Subsecs. (o) to (q). Pub. L. 97-444, Sec. 233(5), added subsecs.

(o), (p), and (q).

1978 - Subsec. (b)(3)(B). Pub. L. 95-405, Sec. 22(1), struck out

''(7 U.S.C. 9)'' after ''sections 9 and 15 of this title''.

Subsec. (b)(10). Pub. L. 95-405, Sec. 22(2), substituted

''$15,000'' for ''$5,000''.

Subsec. (l)(1), (2)(A). Pub. L. 95-405, Sec. 22(3), substituted

''chapter'' for ''section'' wherever appearing.

Subsecs. (m), (n). Pub. L. 95-405, Sec. 22(4), added subsec. (m)

and redesignated former subsec. (m) as (n).

EFFECTIVE DATE OF 1983 AMENDMENT

Amendment by Pub. L. 97-444 effective Jan. 11, 1983, see section

239 of Pub. L. 97-444, set out as a note under section 2 of this

title.

EFFECTIVE DATE OF 1978 AMENDMENT

Amendment by Pub. L. 95-405 effective Oct. 1, 1978, see section

28 of Pub. L. 95-405, set out as a note under section 2 of this

title.

EFFECTIVE DATE

For effective date of section, see section 418 of Pub. L. 93-463,

set out as an Effective Date of 1974 Amendment note under section 2

of this title.

IMPLEMENTATION

Section 204(b) of Pub. L. 102-546 provided that: ''The guidelines

required under section 17(p)(4) of the Commodity Exchange Act (7

U.S.C. 21(p)(4)) (as added by subsection (a) of this section) shall

be submitted by a futures association registered with the Commodity

Futures Trading Commission on the date of enactment of this Act

(Oct. 28, 1992) to the Commission for the approval of the

Commission not later than one hundred and eighty days after the

date of enactment of this Act.''

STUDY ON COMPUTERIZED FUTURES TRADING

Pub. L. 102-546, title II, Sec. 220(b), (c), Oct. 28, 1992, 106

Stat. 3614, provided that:

''(b) Study. - The Commodity Futures Trading Commission shall

conduct a study to assess -

''(1) the progress made under initiatives to conduct trading in

futures and options subject to the jurisdiction of the Commission

under the Commodity Exchange Act (7 U.S.C. 1 et seq.) through

systems of computers or by other electronic means; and

''(2) whether the experience with such systems of trading

indicates that they may be useful or effective to enhance access

to the futures and options markets by potential market

participants, improve the ability of the Commission to audit the

activities of the futures and options markets, reduce the

opportunity for trading abuses, and otherwise be in the public

interest or raise other related issues.

''(c) Report. - Not later than two years after the date of

enactment of this Act (Oct. 28, 1992), the Commission shall submit

to the Committee on Agriculture of the House of Representatives and

the Committee on Agriculture, Nutrition, and Forestry of the Senate

a report containing the results of the study conducted under

subsection (a), together with any appropriate recommendations.''

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 6f, 6p, 7b-1, 12a, 16a,

19, 25 of this title; title 15 sections 78c, 78f, 78o-3.

-CITE-

7 USC Sec. 22 01/06/03

-EXPCITE-

TITLE 7 - AGRICULTURE

CHAPTER 1 - COMMODITY EXCHANGES

-HEAD-

Sec. 22. Research and information programs; reports to Congress

-STATUTE-

(a) The Commission shall establish and maintain, as part of its

ongoing operations, research and information programs to (1)

determine the feasibility of trading by computer, and the expanded

use of modern information system technology, electronic data

processing, and modern communication systems by commodity

exchanges, boards of trade, and by the Commission itself for

purposes of improving, strengthening, facilitating, or regulating

futures trading operations; (2) assist in the development of

educational and other informational materials regarding futures

trading for dissemination and use among producers, market users,

and the general public; and (3) carry out the general purposes of

this chapter.

(b) The Commission shall include in its annual reports to

Congress plans and findings with respect to implementing this

section.

-SOURCE-

(Sept. 21, 1922, ch. 369, Sec. 18, as added Pub. L. 93-463, title

IV, Sec. 416, Oct. 23, 1974, 88 Stat. 1415.)

-MISC1-

EFFECTIVE DATE

For effective date of section, see section 418 of Pub. L. 93-463,

set out as an Effective Date of 1974 Amendment note under section 2

of this title.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in section 16 of this title.

-CITE-

7 USC Sec. 23 01/06/03

-EXPCITE-

TITLE 7 - AGRICULTURE

CHAPTER 1 - COMMODITY EXCHANGES

-HEAD-

Sec. 23. Standardized contracts for certain commodities

-STATUTE-

(a) Margin accounts or contracts and leverage accounts or contracts

prohibited except as authorized

Except as authorized under subsection (b) of this section, no

person shall offer to enter into, enter into, or confirm the

execution of, any transaction for the delivery of any commodity

under a standardized contract commonly known to the trade as a

margin account, margin contract, leverage account, or leverage

contract, or under any contract, account, arrangement, scheme, or

device that the Commission determines serves the same function or

functions as such a standardized contract, or is marketed or

managed in substantially the same manner as such a standardized

contract.

(b) Permission to enter into contracts for delivery of silver or

gold bullion, bulk silver or gold coins, or platinum; rules and

regulations

(1) Subject to paragraph (2), no person shall offer to enter

into, enter into, or confirm the execution of, any transaction for

the delivery of silver bullion, gold bullion, bulk silver coins,

bulk gold coins, or platinum under a standardized contract

described in subsection (a) of this section, contrary to the terms

of any rule, regulation, or order that the Commission shall

prescribe, which may include terms designed to ensure the financial

solvency of the transaction or prevent manipulation or fraud. Such

rule, regulation, or order may be made only after notice and

opportunity for hearing. The Commission may set different terms

and conditions for transactions involving different commodities.

(2) No person may engage in any activity described in paragraph

(1) who is not permitted to engage in such activity, by the rules,

regulations, and orders of the Commission in effect on November 10,

1986, until the Commission permits such person to engage in such

activity in accordance with regulations issued in accordance with

subsection (c)(2) of this section.

(c) Survey of persons interested in engaging in transactions of

silver and gold, etc.; assistance of futures association;

regulations

(1)(A) Not later than 2 years after November 10, 1986, the

Commission shall -

(i) with the assistance of a futures association registered

under this chapter, conduct a survey concerning the persons

interested in engaging in the business of offering to enter into,

entering into, or confirming the execution of, the transactions

described in subsection (b)(1) of this section; and

(ii) transmit a report of the results of the survey to the

Committee on Agriculture of the House of Representatives and the

Committee on Agriculture, Nutrition, and Forestry of the Senate.

(B) Notwithstanding any other provision of law, for purposes of

completing such report the Commission may direct, by rule,

regulation, or order, a futures association registered under this

chapter to render such assistance as the Commission shall specify.

(C) Such report shall include the findings and any

recommendations of the Commission concerning -

(i) whether such transactions serve an economic purpose;

(ii) the most efficient manner, consistent with the public

interest, to permit additional persons to engage in the business

of offering to enter into, entering into, and confirming the

execution of such transactions; and

(iii) the appropriate regulatory scheme to govern such

transactions to ensure the financial solvency of such

transactions and to prevent manipulation or fraud.

(2) The report shall also include Commission regulations

governing such transactions. The regulations shall provide for

permitting additional persons to engage in such transactions. The

regulations shall become effective on the expiration of 90 calendar

days on which either House of Congress is in session after the date

of the transmittal of the report to Congress. The regulations -

(A) may authorize or require, notwithstanding any other

provision of law, a futures association registered under this

chapter to perform such responsibilities in connection with such

transactions as the Commission may specify; and

(B) may require that permission for additional persons to

engage in such business be given on a gradual basis, so as not to

place an undue burden on the resources of the Commission.

(d) Savings provision

This section shall not affect any rights or obligations arising

out of any transaction subject to this section, as in effect before

November 10, 1986, that was entered into, or the execution of which

was confirmed, before November 10, 1986.

-SOURCE-

(Sept. 21, 1922, ch. 369, Sec. 19, as added Pub. L. 95-405, Sec.

23, Sept. 30, 1978, 92 Stat. 876; amended Pub. L. 97-444, title II,

Sec. 234, Jan. 11, 1983, 96 Stat. 2322; Pub. L. 99-641, title I,

Sec. 109, Nov. 10, 1986, 100 Stat. 3560.)

-MISC1-

PRIOR PROVISIONS

Provisions similar to those appearing in subsec. (b) were

formerly contained in section 15a of this title.

AMENDMENTS

1986 - Subsec. (a). Pub. L. 99-641 amended subsec. (a)

generally. Prior to amendment, subsec. (a) read as follows: ''No

person shall offer to enter into, enter into, or confirm the

execution of, any transaction for the delivery of any commodity

specifically set forth in section 2 of this title prior to October

23, 1974, under a standardized contract commonly known to the trade

as a margin account, margin contract, leverage account, or leverage

contract, or under any contract, account, arrangement, scheme, or

device that the Commission determines serves the same function or

functions as such a standardized contract, or is marketed or

managed in substantially the same manner as such a standardized

contract.''

Subsec. (b). Pub. L. 99-641 amended subsec. (b) generally. Prior

to amendment, subsec. (b) read as follows: ''No person shall offer

to enter into, enter into, or confirm the execution of any

transaction for the delivery of silver bullion, gold bullion, or

bulk silver coins or bulk gold coins, under a standardized contract

described in subsection (a) of this section, contrary to any rule,

regulation, or order of the Commission designed to ensure the

financial solvency of the transaction or prevent manipulation or

fraud: Provided, That such rule, regulation, or order may be made

only after notice and opportunity for hearing.''

Subsec. (c). Pub. L. 99-641 amended subsec. (c) generally. Prior

to amendment, subsec. (c) read as follows: ''The Commission shall

regulate any transactions under a standardized contract described

in subsection (a) of this section involving commodities described

in subsection (b) of this section or any other commodities (except

those commodities described in subsection (a) of this section)

under such terms and conditions as the Commission shall prescribe

by rule, regulation, or order made only after notice and

opportunity for a hearing. The Commission may set different terms

and conditions for such transactions involving different

commodities. Notwithstanding any other provision of this section,

the Commission may prohibit any transaction for the delivery of any

commodity under a standardized contract described in subsection (a)

of this section that is not permitted by the rules, regulations and

orders of the Commission in effect on December 9, 1982, if the

Commission determines that any such transactions would be contrary

to the public interest.''

Subsec. (d). Pub. L. 99-641, in amending section generally, added

subsec. (d).

1983 - Subsec. (c). Pub. L. 97-444, Sec. 234(1), substituted

''shall regulate'' for ''may prohibit or regulate'' and authorized

Commission prohibition of transactions for delivery of commodities

under a standardized contract that was not permitted by the rules,

regulations and orders of the Commission in effect on Dec. 9, 1982,

where transactions are determined to be contrary to the public

interest.

Subsec. (d). Pub. L. 97-444, Sec. 234(2), struck out subsec. (d)

which provided for regulation of transactions in accordance with

applicable provisions of this chapter where Commission determined

the transactions under subsecs. (b) and (c) of this section were

contracts for future delivery within the meaning of this chapter.

EFFECTIVE DATE OF 1983 AMENDMENT

Amendment by Pub. L. 97-444 effective Jan. 11, 1983, see section

239 of Pub. L. 97-444, set out as a note under section 2 of this

title.

EFFECTIVE DATE

Section effective Oct. 1, 1978, see section 28 of Pub. L. 95-405,

set out as an Effective Date of 1978 Amendment note under section 2

of this title.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 1a, 2, 12a, 13, 16, 25 of

this title; title 11 section 761.

-CITE-

7 USC Sec. 24 01/06/03

-EXPCITE-

TITLE 7 - AGRICULTURE

CHAPTER 1 - COMMODITY EXCHANGES

-HEAD-

Sec. 24. Regulations respecting commodity broker debtors;

definitions

-STATUTE-

(a) Notwithstanding title 11, the Commission may provide, with

respect to a commodity broker that is a debtor under chapter 7 of

title 11, by rule or regulation -

(1) that certain cash, securities, other property, or commodity

contracts are to be included in or excluded from customer

property or member property;

(2) that certain cash, securities, other property, or commodity

contracts are to be specifically identifiable to a particular

customer in a specific capacity;

(3) the method by which the business of such commodity broker

is to be conducted or liquidated after the date of the filing of

the petition under such chapter, including the payment and

allocation of margin with respect to commodity contracts not

specifically identifiable to a particular customer pending their

orderly liquidation;

(4) any persons to which customer property and commodity

contracts may be transferred under section 766 of title 11; and

(5) how the net equity of a customer is to be determined.

(b) As used in this section, the terms ''commodity broker'',

''commodity contract'', ''customer'', ''customer property'',

''member property'', ''net equity'', and ''security'' have the

meanings assigned such terms for the purposes of subchapter IV of

chapter 7 of title 11.

-SOURCE-

(Sept. 21, 1922, ch. 369, Sec. 20, formerly Sec. 19, as added Pub.

L. 95-598, title III, Sec. 302, Nov. 6, 1978, 92 Stat. 2673;

renumbered and amended Pub. L. 97-222, Sec. 20, July 27, 1982, 96

Stat. 241.)

-MISC1-

AMENDMENTS

1982 - Subsec. (a)(3). Pub. L. 97-222, Sec. 20(b), inserted '',

including the payment and allocation of margin with respect to

commodity contracts not specifically identifiable to a particular

customer pending their orderly liquidation''.

EFFECTIVE DATE

Section effective Nov. 6, 1978, see section 402(d) of Pub. L.

95-598, set out as a note preceding section 101 of Title 11,

Bankruptcy.

-CITE-

7 USC Sec. 25 01/06/03

-EXPCITE-

TITLE 7 - AGRICULTURE

CHAPTER 1 - COMMODITY EXCHANGES

-HEAD-

Sec. 25. Private rights of action

-STATUTE-

(a) Actual damages; actionable transactions; exclusive remedy

(1) Any person (other than a registered entity or registered

futures association) who violates this chapter or who willfully

aids, abets, counsels, induces, or procures the commission of a

violation of this chapter shall be liable for actual damages

resulting from one or more of the transactions referred to in

subparagraphs (A) through (D) of this paragraph and caused by such

violation to any other person -

(A) who received trading advice from such person for a fee;

(B) who made through such person any contract of sale of any

commodity for future delivery (or option on such contract or any

commodity); or who deposited with or paid to such person money,

securities, or property (or incurred debt in lieu thereof) in

connection with any order to make such contract;

(C) who purchased from or sold to such person or placed through

such person an order for the purchase or sale of -

(i) an option subject to section 6c of this title (other than

an option purchased or sold on a registered entity or other

board of trade);

(ii) a contract subject to section 23 of this title; or

(iii) an interest or participation in a commodity pool; or

(D) who purchased or sold a contract referred to in

subparagraph (B) hereof if the violation constitutes a

manipulation of the price of any such contract or the price of

the commodity underlying such contract.

(2) Except as provided in subsection (b) of this section, the

rights of action authorized by this subsection and by sections

7(d)(13), 7a-1(b)(1)(E), and 21(b)(10) of this title shall be the

exclusive remedies under this chapter available to any person who

sustains loss as a result of any alleged violation of this

chapter. Nothing in this subsection shall limit or abridge the

rights of the parties to agree in advance of a dispute upon any

forum for resolving claims under this section, including

arbitration.

(3) In any action arising from a violation in the execution of an

order on the floor of a registered entity, the person referred to

in paragraph (1) shall be liable for -

(A) actual damages proximately caused by such violation. If an

award of actual damages is made against a floor broker in

connection with the execution of a customer order, and the

futures commission merchant which selected the floor broker for

the execution of the customer order is held to be responsible

under section 2(a)(1) of this title for the floor broker's

violation, such futures commission merchant may be required to

satisfy such award; and

(B) where the violation is willful and intentional, punitive or

exemplary damages equal to no more than two times the amount of

such actual damages. If an award of punitive or exemplary

damages is made against a floor broker in connection with the

execution of a customer order, and the futures commission

merchant which selected the floor broker for the execution of the

customer order is held to be responsible under section 2(a)(1) of

this title for the floor broker's violation, such futures

commission merchant may be required to satisfy such award if the

floor broker fails to do so, except that such requirement shall

apply to the futures commission merchant only if it willfully and

intentionally selected the floor broker with the intent to assist

or facilitate the floor broker's violation.

(4) Contract enforcement between eligible counterparties. - No

agreement, contract, or transaction between eligible contract

participants or persons reasonably believed to be eligible contract

participants, and no hybrid instrument sold to any investor, shall

be void, voidable, or unenforceable, and no such party shall be

entitled to rescind, or recover any payment made with respect to,

such an agreement, contract, transaction, or instrument under this

section or any other provision of Federal or State law, based

solely on the failure of the agreement, contract, transaction, or

instrument to comply with the terms or conditions of an exemption

or exclusion from any provision of this chapter or regulations of

the Commission.

(b) Liabilities of organizations and individuals; bad faith

requirement; exclusive remedy

(1)(A) A registered entity that fails to enforce any bylaw, rule,

regulation, or resolution that it is required to enforce by

sections 7 through 7a-2 of this title, (B) a licensed board of

trade that fails to enforce any bylaw, rule, regulation, or

resolution that it is required to enforce by the Commission, or (C)

any registered entity that in enforcing any such bylaw, rule,

regulation, or resolution violates this chapter or any Commission

rule, regulation, or order, shall be liable for actual damages

sustained by a person who engaged in any transaction on or subject

to the rules of such registered entity to the extent of such

person's actual losses that resulted from such transaction and were

caused by such failure to enforce or enforcement of such bylaws,

rules, regulations, or resolutions.

(2) A registered futures association that fails to enforce any

bylaw or rule that is required under section 21 of this title or in

enforcing any such bylaw or rule violates this chapter or any

Commission rule, regulation, or order shall be liable for actual

damages sustained by a person that engaged in any transaction

specified in subsection (a) of this section to the extent of such

person's actual losses that resulted from such transaction and were

caused by such failure to enforce or enforcement of such bylaw or

rule.

(3) Any individual who, in the capacity as an officer, director,

governor, committee member, or employee of registered (FOOTNOTE 1)

entity or a registered futures association willfully aids, abets,

counsels, induces, or procures any failure by any such entity to

enforce (or any violation of the chapter in enforcing) any bylaw,

rule, regulation, or resolution referred to in paragraph (1) or (2)

of this subsection, shall be liable for actual damages sustained by

a person who engaged in any transaction specified in subsection (a)

of this section on, or subject to the rules of, such registered

entity or, in the case of an officer, director, governor, committee

member, or employee of a registered futures association, any

transaction specified in subsection (a) of this section, in either

case to the extent of such person's actual losses that resulted

from such transaction and were caused by such failure or violation.

(FOOTNOTE 1) So in original. Probably should be preceded by

''a''.

(4) A person seeking to enforce liability under this section must

establish that the registered entity (FOOTNOTE 2) registered

futures association, officer, director, governor, committee member,

or employee acted in bad faith in failing to take action or in

taking such action as was taken, and that such failure or action

caused the loss.

(FOOTNOTE 2) So in original. Probably should be followed by a

comma.

(5) The rights of action authorized by this subsection shall be

the exclusive remedy under this chapter available to any person who

sustains a loss as a result of (A) the alleged failure by a

registered entity or registered futures association or by any

officer, director, governor, committee member, or employee to

enforce any bylaw, rule, regulation, or resolution referred to in

paragraph (1) or (2) of this subsection, or (B) the taking of

action in enforcing any bylaw, rule, regulation, or resolution

referred to in this subsection that is alleged to have violated

this chapter, or any Commission rule, regulation, or order.

(c) Jurisdiction; statute of limitations; venue; process

The United States district courts shall have exclusive

jurisdiction of actions brought under this section. Any such

action shall be brought not later than two years after the date the

cause of action arises. Any action brought under subsection (a) of

this section may be brought in any judicial district wherein the

defendant is found, resides, or transacts business, or in the

judicial district wherein any act or transaction constituting the

violation occurs. Process in such action may be served in any

judicial district of which the defendant is an inhabitant or

wherever the defendant may be found.

(d) Dates of application to actions

The provisions of this section shall become effective with

respect to causes of action accruing on or after the date of

enactment of the Futures Trading Act of 1982 (January 11, 1983):

Provided, That the enactment of the Futures Trading Act of 1982

shall not affect any right of any parties which may exist with

respect to causes of action accruing prior to such date.

-SOURCE-

(Sept. 21, 1922, ch. 369, Sec. 22, as added Pub. L. 97-444, title

II, Sec. 235, Jan. 11, 1983, 96 Stat. 2322; amended Pub. L.

102-546, title II, Sec. 211, 222(d), title IV, Sec. 402(14), Oct.

28, 1992, 106 Stat. 3607, 3616, 3625; Pub. L. 106-554, Sec. 1(a)(5)

(title I, Sec. 120, 123(a)(25)), Dec. 21, 2000, 114 Stat. 2763,

2763A-404, 2763A-410.)

-REFTEXT-

REFERENCES IN TEXT

The Futures Trading Act of 1982, referred to in subsec. (d), is

Pub. L. 97-444, Jan. 11, 1983, 96 Stat. 2294, which is classified

generally to this chapter. For complete classification of this Act

to the Code, see Short Title of 1983 Amendment note set out under

section 1 of this title and Tables.

-MISC2-

AMENDMENTS

2000 - Subsec. (a)(1). Pub. L. 106-554, Sec. 1(a)(5) (title I,

Sec. 123(a)(25)(A)(i)(I)), substituted ''registered entity'' for

''contract market, clearing organization of a contract market,

licensed board of trade,'' in introductory provisions.

Subsec. (a)(1)(C)(i). Pub. L. 106-554, Sec. 1(a)(5) (title I,

Sec. 123(a)(25)(A)(i)(II)), substituted ''registered entity'' for

''contract market''.

Subsec. (a)(2). Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec.

123(a)(25)(A)(ii)), substituted ''sections 7(d)(13),

7a-1(b)(1)(E),'' for ''sections 7a(11),''.

Subsec. (a)(3). Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec.

123(a)(25)(A)(iii)), substituted ''registered entity'' for

''contract market'' in introductory provisions.

Subsec. (a)(4). Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec.

120), added par. (4).

Subsec. (b)(1). Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec.

123(a)(25)(B)(i)), substituted ''registered entity that fails'' for

''contract market or clearing organization of a contract market

that fails'', ''sections 7 through 7a-2 of this title'' for

''section 7a(8) and section 7a(9) of this title'', ''registered

entity that in'' for ''contract market, clearing organization of a

contract market, or licensed board of trade that in'', and

''registered entity to the'' for ''contract market or licensed

board of trade to the''.

Subsec. (b)(3). Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec.

123(a)(25)(B)(ii)), substituted ''employee of registered entity''

for ''employee of a contract market, clearing organization,

licensed board of trade,'' and ''such registered entity'' for

''such contract market, licensed board of trade''.

Subsec. (b)(4). Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec.

123(a)(25)(B)(iii)), substituted ''registered entity'' for

''contract market, licensed board of trade, clearing

organization,''.

Subsec. (b)(5). Pub. L. 106-554, Sec. 1(a)(5) (title I, Sec.

123(a)(25)(B)(iv)), substituted ''registered entity'' for

''contract market, licensed board of trade, clearing

organization,''.

1992 - Subsec. (a)(1). Pub. L. 102-546, Sec. 402(14)(A),

substituted ''subparagraphs'' for ''clauses'' in introductory

provisions and ''subparagraph'' for ''clause'' in subpar. (D).

Subsec. (a)(2). Pub. L. 102-546, Sec. 402(14)(B), made technical

amendment to reference to section 21(b)(10) of this title to

correct reference to corresponding section of original act.

Subsec. (a)(3). Pub. L. 102-546, Sec. 222(d), added par. (3).

Subsec. (c). Pub. L. 102-546, Sec. 211, amended subsec. (c)

generally. Prior to amendment, subsec. (c) read as follows: ''The

United States district courts shall have exclusive jurisdiction of

actions brought under this section. Any such action must be

brought within two years after the date the cause of action

accrued.''

EFFECTIVE DATE

Section effective Jan. 11, 1983, see section 239 of Pub. L.

97-444, set out as an Effective Date of 1983 Amendment note under

section 2 of this title.

-CITE-

7 USC Sec. 26 01/06/03

-EXPCITE-

TITLE 7 - AGRICULTURE

CHAPTER 1 - COMMODITY EXCHANGES

-HEAD-

Sec. 26. Repealed. Pub. L. 102-546, title IV, Sec. 402(15), Oct.

28, 1992, 106 Stat. 3625

-MISC1-

Section, act Sept. 21, 1922, ch. 369, Sec. 23, as added Jan. 11,

1983, Pub. L. 97-444, title II, Sec. 236, 96 Stat. 2324, provided

for special studies to be conducted by Commission, Board of

Governors of Federal Reserve System, and Securities and Exchange

Commission.

EFFECTIVE DATE

Section effective Jan. 11, 1983, see section 239 of Pub. L.

97-444, set out as an Effective Date of 1983 Amendment note under

section 2 of this title.

-CITE-

7 USC Sec. 27 01/06/03

-EXPCITE-

TITLE 7 - AGRICULTURE

CHAPTER 1 - COMMODITY EXCHANGES

-HEAD-

Sec. 27. Definitions

-STATUTE-

(a) Bank

In sections 27 to 27f of this title, the term ''bank'' means -

(1) any depository institution (as defined in section 1813(c)

of title 12);

(2) any foreign bank or branch or agency of a foreign bank

(each as defined in section 3101 of title 12);

(3) any Federal or State credit union (as defined in section

1752 of title 12);

(4) any corporation organized under section 25A of the Federal

Reserve Act (12 U.S.C. 611 et seq.);

(5) any corporation operating under section 25 of the Federal

Reserve Act (12 U.S.C. 601 et seq.);

(6) any trust company; or

(7) any subsidiary of any entity described in paragraph

(FOOTNOTE 1) (1) through (6) of this subsection, if the

subsidiary is regulated as if the subsidiary were part of the

entity and is not a broker or dealer (as such terms are defined

in section 78c of title 15) or a futures commission merchant (as

defined in section 1a(20) of this title).

(FOOTNOTE 1) So in original. Probably should be ''paragraphs''.

(b) Identified banking product

In sections 27 to 27f of this title, the term ''identified

banking product'' shall have the same meaning as in paragraphs (1)

through (5) of section 206(a) of the Gramm-Leach-Bliley Act, except

that in applying such section for purposes of sections 27 to 27f of

this title -

(1) the term ''bank'' shall have the meaning given in

subsection (a) of this section; and

(2) the term ''qualified investor'' means eligible contract

participant (as defined in section 1a(12) of this title, as in

effect on December 21, 2000).

(c) Hybrid instrument

In sections 27 to 27f of this title, the term ''hybrid

instrument'' means an identified banking product not excluded by

section 27a of this title, offered by a bank, having one or more

payments indexed to the value, level, or rate of, or providing for

the delivery of, one or more commodities (as defined in section

1a(4) of this title).

(d) Covered swap agreement

In sections 27 to 27f of this title, the term ''covered swap

agreement'' means a swap agreement (as defined in section 206(b) of

the Gramm-Leach-Bliley Act), including a credit or equity swap,

based on a commodity other than an agricultural commodity

enumerated in section 1a(4) of this title if -

(1) the swap agreement -

(A) is entered into only between persons that are eligible

contract participants (as defined in section 1a(12) of this

title, as in effect on December 21, 2000) at the time the

persons enter into the swap agreement; and

(B) is not entered into or executed on a trading facility (as

defined in section 1a(33) of this title); or

(2) the swap agreement -

(A) is entered into or executed on an electronic trading

facility (as defined in section 1a(10) of this title);

(B) is entered into on a principal-to-principal basis between

parties trading for their own accounts or as described in

section 1a(12)(B)(ii) of this title;

(C) is entered into only between persons that are eligible

contract participants as described in subparagraph (A),

(B)(ii), or (C) of section 1a(12) of this title, as in effect

on December 21, 2000, at the time the persons enter into the

swap agreement; and

(D) is an agreement, contract or transaction in an excluded

commodity (as defined in section 1a(13) of this title).

-SOURCE-

(Pub. L. 106-554, Sec. 1(a)(5) (title IV, Sec. 402), Dec. 21, 2000,

114 Stat. 2763, 2763A-457.)

-REFTEXT-

REFERENCES IN TEXT

Section 25A of the Federal Reserve Act, referred to in subsec.

(a)(4), is classified to subchapter II (Sec. 611 et seq.) of

chapter 6 of Title 12, Banks and Banking. Section 25 of the Federal

Reserve Act, referred to in subsec. (a)(5), is classified to

subchapter I (Sec. 601 et seq.) of chapter 6 of Title 12

Section 206 of the Gramm-Leach-Bliley Act, referred to in

subsecs. (b) and (d), is section 206 of Pub. L. 106-102 which is

set out as a note under section 78c of Title 15, Commerce and

Trade.

-COD-

CODIFICATION

Section was enacted as part of the Legal Certainty for Bank

Products Act of 2000, and also as part of the Commodity Futures

Modernization Act of 2000, and not as part of the Commodity

Exchange Act which comprises this chapter.

-MISC3-

SHORT TITLE

For short title of sections 27 to 27f of this title as the

''Legal Certainty for Bank Products Act of 2000'', see section

1(a)(5) (title IV, Sec. 401) of Pub. L. 106-554, set out as a Short

Title of 2000 Amendment note under section 1 of this title.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 1a, 2, 7a-1, 16, 27d, 27f

of this title; title 15 section 78c.

-CITE-

7 USC Sec. 27a 01/06/03

-EXPCITE-

TITLE 7 - AGRICULTURE

CHAPTER 1 - COMMODITY EXCHANGES

-HEAD-

Sec. 27a. Exclusion of identified banking products commonly offered

on or before December 5, 2000

-STATUTE-

No provision of the Commodity Exchange Act (7 U.S.C. 1 et seq.)

shall apply to, and the Commodity Futures Trading Commission shall

not exercise regulatory authority with respect to, an identified

banking product if -

(1) an appropriate banking agency certifies that the product

has been commonly offered, entered into, or provided in the

United States by any bank on or before December 5, 2000, under

applicable banking law; and

(2) the product was not prohibited by the Commodity Exchange

Act (7 U.S.C. 1 et seq.) and not regulated by the Commodity

Futures Trading Commission as a contract of sale of a commodity

for future delivery (or an option on such a contract) or an

option on a commodity, on or before December 5, 2000.

-SOURCE-

(Pub. L. 106-554, Sec. 1(a)(5) (title IV, Sec. 403), Dec. 21, 2000,

114 Stat. 2763, 2763A-458.)

-REFTEXT-

REFERENCES IN TEXT

The Commodity Exchange Act, referred to in text, is act Sept. 21,

1922, ch. 369, 42 Stat. 998, as amended, which is classified

generally to this chapter. For complete classification of this Act

to the Code, see section 1 of this title and Tables.

-COD-

CODIFICATION

Section was enacted as part of the Legal Certainty for Bank

Products Act of 2000, and also as part of the Commodity Futures

Modernization Act of 2000, and not as part of the Commodity

Exchange Act which comprises this chapter.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 1a, 2, 7a-1, 16, 27, 27d,

27f of this title; title 15 section 78c.

-CITE-

7 USC Sec. 27b 01/06/03

-EXPCITE-

TITLE 7 - AGRICULTURE

CHAPTER 1 - COMMODITY EXCHANGES

-HEAD-

Sec. 27b. Exclusion of certain identified banking products offered

by banks after December 5, 2000

-STATUTE-

No provision of the Commodity Exchange Act (7 U.S.C. 1 et seq.)

shall apply to, and the Commodity Futures Trading Commission shall

not exercise regulatory authority with respect to, an identified

banking product which had not been commonly offered, entered into,

or provided in the United States by any bank on or before December

5, 2000, under applicable banking law if -

(1) the product has no payment indexed to the value, level, or

rate of, and does not provide for the delivery of, any commodity

(as defined in section 1a(4) of the Commodity Exchange Act (7

U.S.C. 1a(4))); or

(2) the product or commodity is otherwise excluded from the

Commodity Exchange Act (7 U.S.C. 1 et seq.).

-SOURCE-

(Pub. L. 106-554, Sec. 1(a)(5) (title IV, Sec. 404), Dec. 21, 2000,

114 Stat. 2763, 2763A-459.)

-REFTEXT-

REFERENCES IN TEXT

The Commodity Exchange Act, referred to in text, is act Sept. 21,

1922, ch. 369, 42 Stat. 998, as amended, which is classified

generally to this chapter. For complete classification of this Act

to the Code, see section 1 of this title and Tables.

-COD-

CODIFICATION

Section was enacted as part of the Legal Certainty for Bank

Products Act of 2000, and also as part of the Commodity Futures

Modernization Act of 2000, and not as part of the Commodity

Exchange Act which comprises this chapter.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 1a, 2, 7a-1, 16, 27, 27d,

27f of this title; title 15 section 78c.

-CITE-

7 USC Sec. 27c 01/06/03

-EXPCITE-

TITLE 7 - AGRICULTURE

CHAPTER 1 - COMMODITY EXCHANGES

-HEAD-

Sec. 27c. Exclusion of certain other identified banking products

-STATUTE-

(a) In general

No provision of the Commodity Exchange Act (7 U.S.C. 1 et seq.)

shall apply to, and the Commodity Futures Trading Commission shall

not exercise regulatory authority with respect to, a banking

product if the product is a hybrid instrument that is predominantly

a banking product under the predominance test set forth in

subsection (b) of this section.

(b) Predominance test

A hybrid instrument shall be considered to be predominantly a

banking product for purposes of this section if -

(1) the issuer of the hybrid instrument receives payment in

full of the purchase price of the hybrid instrument substantially

contemporaneously with delivery of the hybrid instrument;

(2) the purchaser or holder of the hybrid instrument is not

required to make under the terms of the instrument, or any

arrangement referred to in the instrument, any payment to the

issuer in addition to the purchase price referred to in paragraph

(1), whether as margin, settlement payment, or otherwise during

the life of the hybrid instrument or at maturity;

(3) the issuer of the hybrid instrument is not subject by the

terms of the instrument to mark-to-market margining requirements;

and

(4) the hybrid instrument is not marketed as a contract of sale

of a commodity for future delivery (or option on such a contract)

subject to the Commodity Exchange Act (7 U.S.C. 1 et seq.).

(c) Mark-to-market margining requirement

For purposes of subsection (b)(3) of this title, mark-to-market

margining requirements shall not include the obligation of an

issuer of a secured debt instrument to increase the amount of

collateral held in pledge for the benefit of the purchaser of the

secured debt instrument to secure the repayment obligations of the

issuer under the secured debt instrument.

-SOURCE-

(Pub. L. 106-554, Sec. 1(a)(5) (title IV, Sec. 405), Dec. 21, 2000,

114 Stat. 2763, 2763A-459.)

-REFTEXT-

REFERENCES IN TEXT

The Commodity Exchange Act, referred to in subsecs. (a) and

(b)(4), is act Sept. 21, 1922, ch. 369, 42 Stat. 998, as amended,

which is classified generally to this chapter. For complete

classification of this Act to the Code, see section 1 of this title

and Tables.

-COD-

CODIFICATION

Section was enacted as part of the Legal Certainty for Bank

Products Act of 2000, and also as part of the Commodity Futures

Modernization Act of 2000, and not as part of the Commodity

Exchange Act which comprises this chapter.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 1a, 2, 7a-1, 16, 27, 27d,

27f of this title; title 15 section 78c.

-CITE-

7 USC Sec. 27d 01/06/03

-EXPCITE-

TITLE 7 - AGRICULTURE

CHAPTER 1 - COMMODITY EXCHANGES

-HEAD-

Sec. 27d. Administration of the predominance test

-STATUTE-

(a) In general

No provision of the Commodity Exchange Act (7 U.S.C. 1 et seq.)

shall apply to, and the Commodity Futures Trading Commission shall

not regulate, a hybrid instrument, unless the Commission

determines, by or under a rule issued in accordance with this

section, that -

(1) the action is necessary and appropriate in the public

interest;

(2) the action is consistent with the Commodity Exchange Act (7

U.S.C. 1 et seq.) and the purposes of the Commodity Exchange Act;

and

(3) the hybrid instrument is not predominantly a banking

product under the predominance test set forth in section 27c(b)

of this title.

(b) Consultation

Before commencing a rulemaking or making a determination pursuant

to a rule issued under sections 27 to 27f of this title, the

Commodity Futures Trading Commission shall consult with and seek

the concurrence of the Board of Governors of the Federal Reserve

System concerning -

(1) the nature of the hybrid instrument; and

(2) the history, purpose, extent, and appropriateness of the

regulation of the hybrid instrument under the Commodity Exchange

Act (7 U.S.C. 1 et seq.) and under appropriate banking laws.

(c) Objection to Commission regulation

(1) Filing of petition for review

The Board of Governors of the Federal Reserve System may obtain

review of any rule or determination referred to in subsection (a)

of this section in the United States Court of Appeals for the

District of Columbia Circuit by filing in the court, not later

than 60 days after the date of publication of the rule or

determination, a written petition requesting that the rule or

determination be set aside. Any proceeding to challenge any such

rule or determination shall be expedited by the court.

(2) Transmittal of petition and record

A copy of a petition described in paragraph (1) shall be

transmitted as soon as possible by the Clerk of the court to an

officer or employee of the Commodity Futures Trading Commission

designated for that purpose. Upon receipt of the petition, the

Commission shall file with the court the rule or determination

under review and any documents referred to therein, and any other

relevant materials prescribed by the court.

(3) Exclusive jurisdiction

On the date of the filing of a petition under paragraph (1),

the court shall have jurisdiction, which shall become exclusive

on the filing of the materials set forth in paragraph (2), to

affirm and enforce or to set aside the rule or determination at

issue.

(4) Standard of review

The court shall determine to affirm and enforce or set aside a

rule or determination of the Commodity Futures Trading Commission

under this section, based on the determination of the court as to

whether -

(A) the subject product is predominantly a banking product;

and

(B) making the provision or provisions of the Commodity

Exchange Act (7 U.S.C. 1 et seq.) at issue applicable to the

subject instrument is appropriate in light of the history,

purpose, and extent of regulation under such Act, sections 27

to 27f of this title, and under the appropriate banking laws,

giving deference neither to the views of the Commodity Futures

Trading Commission nor the Board of Governors of the Federal

Reserve System.

(5) Judicial stay

The filing of a petition by the Board pursuant to paragraph (1)

shall operate as a judicial stay, until the date on which the

determination of the court is final (including any appeal of the

determination).

(6) Other authority to challenge

Any aggrieved party may seek judicial review pursuant to

section 6(c) of the Commodity Exchange Act (7 U.S.C. 9, 15) of a

determination or rulemaking by the Commodity Futures Trading

Commission under this section.

-SOURCE-

(Pub. L. 106-554, Sec. 1(a)(5) (title IV, Sec. 406), Dec. 21, 2000,

114 Stat. 2763, 2763A-459.)

-REFTEXT-

REFERENCES IN TEXT

The Commodity Exchange Act, referred to in subsecs. (a), (b)(2),

and (c)(4)(B), is act Sept. 21, 1922, ch. 369, 42 Stat. 998, as

amended, which is classified generally to this chapter. For

complete classification of this Act to the Code, see section 1 of

this title and Tables.

-COD-

CODIFICATION

Section was enacted as part of the Legal Certainty for Bank

Products Act of 2000, and also as part of the Commodity Futures

Modernization Act of 2000, and not as part of the Commodity

Exchange Act which comprises this chapter.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 1a, 2, 7a-1, 16, 27, 27f

of this title; title 15 section 78c.

-CITE-

7 USC Sec. 27e 01/06/03

-EXPCITE-

TITLE 7 - AGRICULTURE

CHAPTER 1 - COMMODITY EXCHANGES

-HEAD-

Sec. 27e. Exclusion of covered swap agreements

-STATUTE-

No provision of the Commodity Exchange Act (7 U.S.C. 1 et seq.)

(other than section 5b of such Act (7 U.S.C. 7a-1) with respect to

the clearing of covered swap agreements) shall apply to, and the

Commodity Futures Trading Commission shall not exercise regulatory

authority with respect to, a covered swap agreement offered,

entered into, or provided by a bank.

-SOURCE-

(Pub. L. 106-554, Sec. 1(a)(5) (title IV, Sec. 407), Dec. 21, 2000,

114 Stat. 2763, 2763A-461.)

-REFTEXT-

REFERENCES IN TEXT

The Commodity Exchange Act, referred to in text, is act Sept. 21,

1922, ch. 369, 42 Stat. 998, as amended, which is classified

generally to this chapter. For complete classification of this Act

to the Code, see section 1 of this title and Tables.

-COD-

CODIFICATION

Section was enacted as part of the Legal Certainty for Bank

Products Act of 2000, and also as part of the Commodity Futures

Modernization Act of 2000, and not as part of the Commodity

Exchange Act which comprises this chapter.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 1a, 2, 7a-1, 16, 27, 27d,

27f of this title; title 15 section 78c.

-CITE-

7 USC Sec. 27f 01/06/03

-EXPCITE-

TITLE 7 - AGRICULTURE

CHAPTER 1 - COMMODITY EXCHANGES

-HEAD-

Sec. 27f. Contract enforcement

-STATUTE-

(a) Hybrid instruments

No hybrid instrument shall be void, voidable, or unenforceable,

and no party to a hybrid instrument shall be entitled to rescind,

or recover any payment made with respect to, a hybrid instrument

under any provision of Federal or State law, based solely on the

failure of the hybrid instrument to satisfy the predominance test

set forth in section 27c(b) of this title or to comply with the

terms or conditions of an exemption or exclusion from any provision

of the Commodity Exchange Act (7 U.S.C. 1 et seq.) or any

regulation of the Commodity Futures Trading Commission.

(b) Covered swap agreements

No covered swap agreement shall be void, voidable, or

unenforceable, and no party to a covered swap agreement shall be

entitled to rescind, or recover any payment made with respect to, a

covered swap agreement under any provision of Federal or State law,

based solely on the failure of the covered swap agreement to comply

with the terms or conditions of an exemption or exclusion from any

provision of the Commodity Exchange Act (7 U.S.C. 1 et seq.) or any

regulation of the Commodity Futures Trading Commission.

(c) Preemption

Sections 27 to 27f of this title shall supersede and preempt the

application of any State or local law that prohibits or regulates

gaming or the operation of bucket shops (other than antifraud

provisions of general applicability) in the case of -

(1) a hybrid instrument that is predominantly a banking

product; or

(2) a covered swap agreement.

-SOURCE-

(Pub. L. 106-554, Sec. 1(a)(5) (title IV, Sec. 408), Dec. 21, 2000,

114 Stat. 2763, 2763A-461.)

-REFTEXT-

REFERENCES IN TEXT

The Commodity Exchange Act, referred to in subsecs. (a) and (b),

is act Sept. 21, 1922, ch. 369, 42 Stat. 998, as amended, which is

classified generally to this chapter. For complete classification

of this Act to the Code, see section 1 of this title and Tables.

-COD-

CODIFICATION

Section was enacted as part of the Legal Certainty for Bank

Products Act of 2000, and also as part of the Commodity Futures

Modernization Act of 2000, and not as part of the Commodity

Exchange Act which comprises this chapter.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 1a, 2, 7a-1, 16, 27, 27d

of this title; title 15 section 78c.

-CITE-