---
kind: "section"
citation: "12 C.F.R. § 240.2"
title: "12"
number: "240.2"
heading: "Definitions."
url: "https://uscodex.org/cfr/12/240.2"
---

# §240.2. Definitions.


For purposes of this part, the following terms have the same meaning as in the Commodity Exchange Act ([7 U.S.C. 1](/usc/7/1.md) et seq.): “affiliated person of a futures commission merchant”; “associated person”; “contract of sale”; “commodity”; “futures commission merchant”; “future delivery”; “option”; “security”; and “security futures product.”

- (a) **Affiliate—** has the same meaning as in section 2(k) of the Bank Holding Company Act of 1956 ([12 U.S.C. 1841(k)](/usc/12/1841.md?p=k)).
- (b) **Banking institution—** means:
  - (1) A state member bank (as defined in [12 CFR 208.2](/cfr/12/208.2.md));
  - (2) An uninsured state-licensed U.S. branch or agency of a foreign bank;
  - (3) A financial holding company (as defined in section 2 of the Bank Holding Company Act of 1956; [12 U.S.C. 1841](/usc/12/1841.md));
  - (4) A bank holding company (as defined in section 2 of the Bank Holding Company Act of 1956; [12 U.S.C. 1841](/usc/12/1841.md));
  - (5) A savings and loan holding company (as defined in section 10 of the Home Owners Loan Act; [12 U.S.C. 1467a](/usc/12/1467a.md))
  - (6) A corporation operating under the fifth undesignated paragraph of section 25 of the Federal Reserve Act ([12 U.S.C. 603](/usc/12/603.md)), commonly known as “an agreement corporation;” and
  - (7) A corporation organized under section 25A of the Federal Reserve Act ([12 U.S.C. 611](/usc/12/611.md) et seq.), commonly known as an “Edge Act corporation.”
- (c) Commodity Exchange Act means the Commodity Exchange Act ([7 U.S.C. 1](/usc/7/1.md) et seq.).
- (d) **Eligible contract participant—** has the same meaning as in the Commodity Exchange Act ([7 U.S.C. 1](/usc/7/1.md) et seq., as implemented in [17 CFR 1.3(m)](/cfr/17/1.3.md?p=m).
- (e) Forex means foreign exchange.
- (f) **Identified banking product—** has the same meaning as in [section 401(b)](/cfr/12/401.md?p=b) of the Legal Certainty for Bank Products Act of 2000 ([7 U.S.C. 27(b)](/usc/7/27.md?p=b)).
- (g) **Institution-affiliated party—** or IAP has the same meaning as in 12 U.S.C. [1813(u)(1)](/usc/12/1813.md?p=u-1), [(2)](/usc/12/1813.md?p=u-2), or [(3)](/usc/12/1813.md?p=u-3).
- (h) Introducing broker means any person who solicits or accepts orders from a retail forex customer in connection with retail forex transactions.
- (i) **Related person,—** when used in reference to a retail forex counterparty, means:
  - (1) Any general partner, officer, director, or owner of ten percent or more of the capital stock of the retail forex counterparty;
  - (2) An associated person or employee of the retail forex counterparty, if the retail forex counterparty is not an insured depository institution;
  - (3) An IAP, if the retail forex counterparty is an insured depository institution; and
  - (4) Any relative or spouse of any of the foregoing persons, or any relative of such spouse, who shares the same home as any of the foregoing persons.
- (j) Retail foreign exchange dealer means any person other than a retail forex customer that is, or that offers to be, the counterparty to a retail forex transaction, except for a person described in item (aa), (bb), (cc)(AA), (dd), or (ff) of section 2(c)(2)(B)(i)(II) of the Commodity Exchange Act ([7 U.S.C. 2(c)(2)(B)(i)(II)](/usc/7/2.md?p=c-2-B-i-II)).
- (k) Retail forex account means the account of a retail forex customer, established with a banking institution, in which retail forex transactions with the banking institution as counterparty are undertaken, or the account of a retail forex customer that is established in order to enter into such transactions.
- (l) Retail forex account agreement means the contractual agreement between a banking institution and a retail forex customer that contains the terms governing the customer's retail forex account with the banking institution.
- (m) Retail forex business means engaging in one or more retail forex transactions with the intent to derive income from those transactions, either directly or indirectly.
- (n) **Retail forex counterparty—** includes, as appropriate:
  - (1) A banking institution;
  - (2) A retail foreign exchange dealer;
  - (3) A futures commission merchant;
  - (4) An affiliated person of a futures commission merchant; and
  - (5) A broker or dealer registered under [section 15(b)](/cfr/12/15.md?p=b) (except paragraph (11) thereof) or 15C of the Securities Exchange Act of 1934 (15 U.S.C. [78o(b)](/usc/15/78o.md?p=b), [78o-5](/usc/15/78o-5.md)) or a U.S. financial institution other than a banking institution, provided the counterparty is subject to a rule or regulation of a Federal regulatory agency covering retail forex transactions.
- (o) Retail forex customer means a customer that is not an eligible contract participant, acting on his, her, or its own behalf and engaging in retail forex transactions.
- (p) Retail forex proprietary account means a retail forex account carried on the books of a banking institution for one of the following persons; a retail forex account of which 10 percent or more is owned by one of the following persons; or a retail forex account of which an aggregate of 10 percent or more of which is owned by more than one of the following persons:
  - (1) The banking institution;
  - (2) An officer, director or owner of ten percent or more of the capital stock of the banking institution; or
  - (3) **An employee of the banking institution, whose duties include—**
    - (i) The management of the banking institution's business;
    - (ii) The handling of the banking institution's retail forex transactions;
    - (iii) The keeping of records, including without limitation the software used to make or maintain those records, pertaining to the banking institution's retail forex transactions; or
    - (iv) The signing or co-signing of checks or drafts on behalf of the banking institution;
  - (4) A spouse or minor dependent living in the same household as of any of the foregoing persons; or
  - (5) An affiliate of the banking institution;
- (q) Retail forex transaction means an agreement, contract, or transaction in foreign currency, other than an identified banking product or a part of an identified banking product, that is offered or entered into by a banking institution with a person that is not an eligible contract participant and that is:
  - (1) A contract of sale of a commodity for future delivery or an option on such a contract; or
  - (2) 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)](/usc/15/78f.md?p=a)); or
  - (3) Offered or entered into on a leveraged or margined basis, or financed by a banking institution, its affiliate, or any person acting in concert with the banking institution or its affiliate on a similar basis, other than:
    - (i) A security that is not a security futures product as defined in section 1a(47) of the Commodity Exchange Act ([7 U.S.C. 1a(47)](/usc/7/1a.md?p=47)); or
    - (ii) **A contract of sale that—**
      - (A) Results in actual delivery within two days; or
      - (B) Creates an enforceable obligation to deliver between a seller and buyer that have the ability to deliver and accept delivery, respectively, in connection with their line of business; or
    - (iii) An agreement, contract, or transaction that the Board determines is not functionally or economically similar to an agreement, contract, or transaction described in paragraph [(p)(1)](#p-1) or [(p)(2)](#p-2) of this section.

## Notes

### Authority

Authority: 7 U.S.C. 2(c)(2)(E), 12 U.S.C. 248, 321-338, 1813(q), 1818, 1844(b), 3106a, 3108.

### Source

Source: 78 FR 21027, Apr. 9, 2013, unless otherwise noted.