---
kind: "range"
citation: "7 U.S.C. §§ 27–27f"
title: "7"
from: "27"
to: "27f"
count: 7
release: "119-102"
url: "https://uscodex.org/usc/7/27..27f"
---

# §27. Definitions

- (a) **Bank—** In [sections 27 to 27f](/usc/7/27..27f.md) of this title, the term “[bank](#b-1)” means—
  - (1) any depository institution (as defined in [section 1813(c) of title 12](/usc/12/1813.md?p=c));
  - (2) any foreign [bank](#b-1) or branch or agency of a foreign [bank](#b-1) (each as defined in [section 3101 of title 12](/usc/12/3101.md));
  - (3) any Federal or [State](/usc/7/1359aa.md?p=5) credit union (as defined in [section 1752 of title 12](/usc/12/1752.md));
  - (4) any [corporation](/usc/7/1502.md?p=b-5) organized under section 25A of the Federal Reserve Act [[12 U.S.C. 611](/usc/12/611.md) et seq.];
  - (5) any [corporation](/usc/7/1502.md?p=b-5) operating under section 25 of the Federal Reserve Act [[12 U.S.C. 601](/usc/12/601.md) et seq.];
  - (6) any trust company; or
  - (7) any subsidiary of any entity described in paragraph[^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](/usc/15/78c.md)) or a [futures commission merchant](/usc/7/1a.md?p=28-A) (as defined in [section 1a of this title](/usc/7/1a.md)).
- (b) **Identified banking product—** In [sections 27 to 27f](/usc/7/27..27f.md) of this title, the term “identified banking product” shall have the same meaning as in [paragraphs (1) through (5)](/usc/7/206.md?p=a-1..a-5) of section 206(a) of the Gramm-Leach-Bliley Act, except that in applying such section for purposes of [sections 27 to 27f](/usc/7/27..27f.md) of this title—
  - (1) the term “[bank](#a)” shall have the meaning given in [subsection (a)](#a) of this section; and
  - (2) the term “qualified investor” means [eligible contract participant](/usc/7/1a.md?p=18) (as defined in [section 1a of this title](/usc/7/1a.md), as in effect on December 21, 2000).
- (c) **Hybrid instrument—** In [sections 27 to 27f](/usc/7/27..27f.md) of this title, the term “[hybrid instrument](/usc/7/1a.md?p=29)” means an [identified banking product](#b) not excluded by [section 27a of this title](/usc/7/27a.md), offered by a [bank](#a), having one or more payments indexed to the value, level, or rate of, or providing for the delivery of, one or more [commodities](/usc/7/1a.md?p=9) (as defined in [section 1a of this title](/usc/7/1a.md)).

# §27a. Exclusion of identified banking product

- (a) **Exclusion—** Except as provided in subsection [(b)](#b) or [(c)](#c)—
  - (1) the [Commodity](/usc/7/1a.md?p=9) Exchange Act ([7 U.S.C. 1](/usc/7/1.md) et seq.) shall not apply to, and the [Commodity](/usc/7/1a.md?p=9) Futures Trading [Commission](/usc/7/1a.md?p=8) shall not exercise regulatory [authority](/usc/7/2009aa.md?p=1) under the [Commodity](/usc/7/1a.md?p=9) Exchange Act ([7 U.S.C. 1](/usc/7/1.md) et seq.) with respect to, an [identified banking product](/usc/7/27.md?p=b); and
  - (2) the definitions of “[security-based swap](/usc/7/1a.md?p=42)” in section 3(a)(68) of the [Securities](/usc/7/1a.md?p=41) Exchange Act of 1934 [[15 U.S.C. 78c(a)(68)](/usc/15/78c.md?p=a-68)] and “[security-based swap](/usc/7/1a.md?p=42) agreement” in section 1a(47)(A)(v) of the [Commodity](/usc/7/1a.md?p=9) Exchange Act [[7 U.S.C. 1a(47)(A)(v)](/usc/7/1a.md?p=47-A-v)] and section 3(a)(78) of the [Securities](/usc/7/1a.md?p=41) Exchange Act of 1934 [[15 U.S.C. 78c(a)(78)](/usc/15/78c.md?p=a-78)] do not include any identified [bank](/usc/7/27.md?p=a) product.
- (b) **Exception—** An [appropriate Federal banking agency](/usc/7/1a.md?p=2) may except an [identified banking product](/usc/7/27.md?p=b) of a [bank](/usc/7/27.md?p=a) under its regulatory jurisdiction from the exclusion in [subsection (a)](#a) if the agency determines, in consultation with the [Commodity](/usc/7/1a.md?p=9) Futures Trading [Commission](/usc/7/1a.md?p=8) and the [Securities](/usc/7/1a.md?p=41) and [Exchange](/usc/7/1a.md?p=1-D) [Commission](/usc/7/1a.md?p=8), that the product—
  - (1) would meet the definition of a “[swap](/usc/7/1a.md?p=47-A)” under section 1a(47) of the [Commodity](/usc/7/1a.md?p=9) Exchange Act ([7 U.S.C. 1a](/usc/7/1a.md)[47]) or a “[security-based swap](/usc/7/1a.md?p=42)” under that[^1] section 3(a)(68) of the [Securities](/usc/7/1a.md?p=41) Exchange Act of 1934; and
  - (2) has become known to the trade as a [swap](/usc/7/1a.md?p=47-A) or [security-based swap](/usc/7/1a.md?p=42), or otherwise has been structured as an [identified banking product](/usc/7/27.md?p=b) for the purpose of evading the provisions of the [Commodity](/usc/7/1a.md?p=9) Exchange Act ([7 U.S.C. 1](/usc/7/1.md) et seq.), the Securities Act of 1933 ([15 U.S.C. 77a](/usc/15/77a.md) et seq.), or the [Securities](/usc/7/1a.md?p=41) Exchange Act of 1934 ([15 U.S.C. 78a](/usc/15/78a.md) et seq.).
- (c) **Exception—** The exclusions in [subsection (a)](#a) shall not apply to an identified [bank](/usc/7/27.md?p=a) product that—
  - (1) is a product of a [bank](/usc/7/27.md?p=a) that is not under the regulatory jurisdiction of an [appropriate Federal banking agency](/usc/7/1a.md?p=2);
  - (2) meets the definition of [swap](/usc/7/1a.md?p=47-A) in section 1a(47) of the [Commodity](/usc/7/1a.md?p=9) Exchange Act or [security-based swap](/usc/7/1a.md?p=42) in section 3(a)(68) of the [Securities](/usc/7/1a.md?p=41) Exchange Act of 1934; and
  - (3) has become known to the trade as a [swap](/usc/7/1a.md?p=47-A) or [security-based swap](/usc/7/1a.md?p=42), or otherwise has been structured as an [identified banking product](/usc/7/27.md?p=b) for the purpose of evading the provisions of the [Commodity](/usc/7/1a.md?p=9) Exchange Act ([7 U.S.C. 1](/usc/7/1.md) et seq.), the Securities Act of 1933 ([15 U.S.C. 77a](/usc/15/77a.md) et seq.), or the [Securities](/usc/7/1a.md?p=41) Exchange Act of 1934 ([15 U.S.C. 78a](/usc/15/78a.md) et seq.).

# [§27b. Repealed. Pub. L. 111–203, title VII, § 725(g)(1)(A), July 21, 2010, 124 Stat. 1694 — repealed]



# §27c. Exclusion of certain other identified banking products

- (a) **In general—** No provision of the [Commodity](/usc/7/1a.md?p=9) Exchange Act [[7 U.S.C. 1](/usc/7/1.md) et seq.] shall apply to, and the [Commodity](/usc/7/1a.md?p=9) Futures Trading [Commission](/usc/7/1a.md?p=8) shall not exercise regulatory [authority](/usc/7/2009aa.md?p=1) with respect to, a banking product if the product is a [hybrid instrument](/usc/7/1a.md?p=29) that is predominantly a banking product under the predominance test set forth in [subsection (b)](#b).
- (b) **Predominance test—** A [hybrid instrument](/usc/7/1a.md?p=29) shall be considered to be predominantly a banking product for purposes of this section if—
  - (1) the issuer of the [hybrid instrument](/usc/7/1a.md?p=29) receives payment in full of the purchase price of the [hybrid instrument](/usc/7/1a.md?p=29) substantially contemporaneously with delivery of the [hybrid instrument](/usc/7/1a.md?p=29);
  - (2) the purchaser or holder of the [hybrid instrument](/usc/7/1a.md?p=29) 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)](#b-1), whether as margin, settlement payment, or otherwise during the life of the [hybrid instrument](/usc/7/1a.md?p=29) or at maturity;
  - (3) the issuer of the [hybrid instrument](/usc/7/1a.md?p=29) is not subject by the terms of the instrument to mark-to-market margining requirements; and
  - (4) the [hybrid instrument](/usc/7/1a.md?p=29) is not marketed as a [contract of sale](/usc/7/1a.md?p=13) of a [commodity](/usc/7/1a.md?p=9) for [future delivery](/usc/7/1a.md?p=27) (or [option](/usc/7/1a.md?p=36) on such a [contract](/usc/7/518.md?p=4)) subject to the [Commodity](/usc/7/1a.md?p=9) Exchange Act [[7 U.S.C. 1](/usc/7/1.md) et seq.].
- (c) **Mark-to-market margining requirement—** For purposes of [subsection (b)(3)](#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.

# §27d. Administration of the predominance test

- (a) **In general—** No provision of the [Commodity](/usc/7/1a.md?p=9) Exchange Act [[7 U.S.C. 1](/usc/7/1.md) et seq.] shall apply to, and the [Commodity](/usc/7/1a.md?p=9) Futures Trading [Commission](/usc/7/1a.md?p=8) shall not regulate, a [hybrid instrument](/usc/7/1a.md?p=29), unless the [Commission](/usc/7/1a.md?p=8) 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](/usc/7/1a.md?p=9) Exchange Act [[7 U.S.C. 1](/usc/7/1.md) et seq.] and the purposes of the [Commodity](/usc/7/1a.md?p=9) Exchange Act; and
  - (3) the [hybrid instrument](/usc/7/1a.md?p=29) is not predominantly a banking product under the predominance test set forth in [section 27c(b) of this title](/usc/7/27c.md?p=b).
- (b) **Consultation—** Before commencing a rulemaking or making a determination pursuant to a rule issued under [sections 27 to 27f](/usc/7/27..27f.md) of this title, the [Commodity](/usc/7/1a.md?p=9) Futures Trading [Commission](/usc/7/1a.md?p=8) shall consult with and seek the concurrence of the [Board](/usc/7/1a.md?p=5) of Governors of the Federal Reserve System concerning—
  - (1) the nature of the [hybrid instrument](/usc/7/1a.md?p=29); and
  - (2) the history, purpose, extent, and appropriateness of the regulation of the [hybrid instrument](/usc/7/1a.md?p=29) under the [Commodity](/usc/7/1a.md?p=9) Exchange Act [[7 U.S.C. 1](/usc/7/1.md) et seq.] and under appropriate banking laws.
- (c) **Objection to Commission regulation—**
  - (1) **Filing of petition for review—** The [Board](/usc/7/1a.md?p=5) of Governors of the Federal Reserve System may obtain review of any rule or determination referred to in [subsection (a)](#a) in the [United States](/usc/7/6402.md?p=8) 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)](#c-1) shall be transmitted as soon as possible by the Clerk of the court to an officer or employee of the [Commodity](/usc/7/1a.md?p=9) Futures Trading [Commission](/usc/7/1a.md?p=8) designated for that purpose. Upon receipt of the petition, the [Commission](/usc/7/1a.md?p=8) 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)](#c-1), the court shall have jurisdiction, which shall become exclusive on the filing of the materials set forth in [paragraph (2)](#c-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](/usc/7/1a.md?p=9) Futures Trading [Commission](/usc/7/1a.md?p=8) 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](/usc/7/1a.md?p=9) Exchange Act [[7 U.S.C. 1](/usc/7/1.md) 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](/usc/7/27..27f.md) of this title, and under the appropriate banking laws, giving deference neither to the views of the [Commodity](/usc/7/1a.md?p=9) Futures Trading [Commission](/usc/7/1a.md?p=8) nor the [Board](/usc/7/1a.md?p=5) of Governors of the Federal Reserve System.
  - (5) **Judicial stay—** The filing of a petition by the [Board](/usc/7/1a.md?p=5) pursuant to [paragraph (1)](#c-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](/usc/7/1a.md?p=9) Exchange Act [[7 U.S.C. 9](/usc/7/9.md)] of a determination or rulemaking by the [Commodity](/usc/7/1a.md?p=9) Futures Trading [Commission](/usc/7/1a.md?p=8) under this section.

# [§27e. Repealed. Pub. L. 111–203, title VII, § 725(g)(1)(A), July 21, 2010, 124 Stat. 1694 — repealed]



# §27f. Contract enforcement

- (a) **Hybrid instruments—** No [hybrid instrument](/usc/7/1a.md?p=29) shall be void, voidable, or unenforceable, and no party to a [hybrid instrument](/usc/7/1a.md?p=29) shall be entitled to rescind, or recover any payment made with respect to, a [hybrid instrument](/usc/7/1a.md?p=29) under any provision of Federal or [State](/usc/7/1359aa.md?p=5) law, based solely on the failure of the [hybrid instrument](/usc/7/1a.md?p=29) to satisfy the predominance test set forth in [section 27c(b) of this title](/usc/7/27c.md?p=b) or to comply with the terms or conditions of an exemption or exclusion from any provision of the [Commodity](/usc/7/1a.md?p=9) Exchange Act [[7 U.S.C. 1](/usc/7/1.md) et seq.] or any regulation of the [Commodity](/usc/7/1a.md?p=9) Futures Trading [Commission](/usc/7/1a.md?p=8).
- (b) **Preemption—** [Sections 27 to 27f](/usc/7/27..27f.md) of this title shall supersede and preempt the application of any [State](/usc/7/1359aa.md?p=5) 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 [hybrid instrument](/usc/7/1a.md?p=29) that is predominantly a banking product.