---
kind: "range"
citation: "7 U.S.C. §§ 6–11"
title: "7"
from: "6"
to: "11"
count: 40
release: "119-102"
url: "https://uscodex.org/usc/7/6..11"
---

# §6. Regulation of futures trading and foreign transactions

- (a) **Restriction on futures trading—** Unless exempted by the [Commission](/usc/7/1a.md?p=8) pursuant to [subsection (c)](#c) or by [subsection (e)](#e), it shall be unlawful for any [person](/usc/7/1a.md?p=38) to [offer](/usc/7/1a.md?p=36) 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](/usc/7/6402.md?p=8), its territories or possessions, for the purpose of soliciting or accepting any [order](/usc/7/2902.md?p=10) for, or otherwise dealing in, any transaction in, or in connection with, a [contract](/usc/7/518.md?p=4) for the purchase or sale of a [commodity](/usc/7/1a.md?p=9) for [future delivery](/usc/7/1a.md?p=27) (other than a [contract](/usc/7/518.md?p=4) which is made on or subject to the rules of a [board of trade](/usc/7/1a.md?p=6), [exchange](/usc/7/1a.md?p=1-D), or market located outside the [United States](/usc/7/6402.md?p=8), its territories or possessions) unless—
  - (1) such transaction is conducted on or subject to the rules of a [board of trade](/usc/7/1a.md?p=6) which has been designated or registered by the [Commission](/usc/7/1a.md?p=8) as a [contract](/usc/7/518.md?p=4) market or derivatives transaction execution facility for such [commodity](/usc/7/1a.md?p=9);
  - (2) such [contract](/usc/7/518.md?p=4) is executed or consummated by or through a [contract](/usc/7/518.md?p=4) market; and
  - (3) such [contract](/usc/7/518.md?p=4) is evidenced by a record in writing which shows the date, the parties to such [contract](/usc/7/518.md?p=4) and their addresses, the property covered and its price, and the terms of delivery: Provided, That each [contract](/usc/7/518.md?p=4) market or derivatives transaction execution facility [member](/usc/7/1a.md?p=34) shall keep such record for a period of three years from the date thereof, or for a longer period if the [Commission](/usc/7/1a.md?p=8) shall so direct, which record shall at all times be open to the inspection of any representative of the [Commission](/usc/7/1a.md?p=8) or the Department of Justice.
- (b) **Regulation of foreign transactions by United States persons—**
  - (1) **Foreign boards of trade—**
    - (A) **Registration—** The [Commission](/usc/7/1a.md?p=8) may adopt rules and regulations requiring registration with the [Commission](/usc/7/1a.md?p=8) for a foreign [board of trade](/usc/7/1a.md?p=6) that provides the [members](/usc/7/1a.md?p=34) of the foreign [board of trade](/usc/7/1a.md?p=6) or other participants located in the [United States](/usc/7/6402.md?p=8) with direct access to the electronic trading and [order](/usc/7/2902.md?p=10) matching system of the foreign [board of trade](/usc/7/1a.md?p=6), including rules and regulations prescribing procedures and requirements applicable to the registration of such foreign [boards](/usc/7/1a.md?p=5) of trade. For purposes of this paragraph, “direct access” refers to an explicit grant of [authority](/usc/7/2009aa.md?p=1) by a foreign [board of trade](/usc/7/1a.md?p=6) to an identified [member](/usc/7/1a.md?p=34) or other participant located in the [United States](/usc/7/6402.md?p=8) to enter trades directly into the trade matching system of the foreign [board of trade](/usc/7/1a.md?p=6). In adopting such rules and regulations, the [commission](/usc/7/1a.md?p=8)[^1] shall consider—
      - (i) whether any such foreign [board of trade](/usc/7/1a.md?p=6) is subject to comparable, comprehensive supervision and regulation by the appropriate governmental [authorities](/usc/7/2009aa.md?p=1) in the foreign [board of trade](/usc/7/1a.md?p=6)’s home country; and
      - (ii) any previous [commission](/usc/7/1a.md?p=8)[^1] findings that the foreign [board of trade](/usc/7/1a.md?p=6) is subject to comparable comprehensive supervision and regulation by the appropriate government [authorities](/usc/7/2009aa.md?p=1) in the foreign [board of trade](/usc/7/1a.md?p=6)’s home country.
    - (B) **Linked contracts—** The [Commission](/usc/7/1a.md?p=8) may not permit a foreign [board of trade](/usc/7/1a.md?p=6) to provide to the [members](/usc/7/1a.md?p=34) of the foreign [board of trade](/usc/7/1a.md?p=6) or other participants located in the [United States](/usc/7/6402.md?p=8) direct access to the electronic trading and [order](/usc/7/2902.md?p=10)-matching system of the foreign [board of trade](/usc/7/1a.md?p=6) with respect to an agreement, [contract](/usc/7/518.md?p=4), or transaction that settles against any price (including the daily or final settlement price) of 1 or more [contracts](/usc/7/518.md?p=4) listed for trading on a [registered entity](/usc/7/1a.md?p=40), unless the [Commission](/usc/7/1a.md?p=8) determines that—
      - (i) the foreign [board of trade](/usc/7/1a.md?p=6) makes public daily trading information regarding the agreement, [contract](/usc/7/518.md?p=4), or transaction that is comparable to the daily trading information published by the [registered entity](/usc/7/1a.md?p=40) for the 1 or more [contracts](/usc/7/518.md?p=4) against which the agreement, [contract](/usc/7/518.md?p=4), or transaction traded on the foreign [board of trade](/usc/7/1a.md?p=6) settles; and
      - (ii) the foreign [board of trade](/usc/7/1a.md?p=6) (or the [foreign futures authority](/usc/7/1a.md?p=26) that oversees the foreign [board of trade](/usc/7/1a.md?p=6))—
        - (I) adopts position limits (including related hedge exemption provisions) for the agreement, [contract](/usc/7/518.md?p=4), or transaction that are comparable to the position limits (including related hedge exemption provisions) adopted by the [registered entity](/usc/7/1a.md?p=40) for the 1 or more [contracts](/usc/7/518.md?p=4) against which the agreement, [contract](/usc/7/518.md?p=4), or transaction traded on the foreign [board of trade](/usc/7/1a.md?p=6) settles;
        - (II) has the [authority](/usc/7/2009aa.md?p=1) to require or direct market participants to limit, reduce, or liquidate any position the foreign [board of trade](/usc/7/1a.md?p=6) (or the [foreign futures authority](/usc/7/1a.md?p=26) that oversees the foreign [board of trade](/usc/7/1a.md?p=6)) determines to be necessary to prevent or reduce the threat of price manipulation, excessive speculation as described in [section 6a of this title](/usc/7/6a.md), price distortion, or disruption of delivery or the cash settlement process;
        - (III) agrees to promptly notify the [Commission](/usc/7/1a.md?p=8), with regard to the agreement, [contract](/usc/7/518.md?p=4), or transaction that settles against any price (including the daily or final settlement price) of 1 or more [contracts](/usc/7/518.md?p=4) listed for trading on a [registered entity](/usc/7/1a.md?p=40), of any change regarding—
          - (aa) the information that the foreign [board of trade](/usc/7/1a.md?p=6) will make publicly available;
          - (bb) the position limits that the foreign [board of trade](/usc/7/1a.md?p=6) or [foreign futures authority](/usc/7/1a.md?p=26) will adopt and enforce;
          - (cc) the position reductions required to prevent manipulation, excessive speculation as described in [section 6a of this title](/usc/7/6a.md), price distortion, or disruption of delivery or the cash settlement process; and
          - (dd) any other [area](/usc/7/1471.md?p=5) of interest expressed by the [Commission](/usc/7/1a.md?p=8) to the foreign [board of trade](/usc/7/1a.md?p=6) or [foreign futures authority](/usc/7/1a.md?p=26);
        - (IV) provides information to the [Commission](/usc/7/1a.md?p=8) regarding large trader positions in the agreement, [contract](/usc/7/518.md?p=4), or transaction that is comparable to the large trader position information collected by the [Commission](/usc/7/1a.md?p=8) for the 1 or more [contracts](/usc/7/518.md?p=4) against which the agreement, [contract](/usc/7/518.md?p=4), or transaction traded on the foreign [board of trade](/usc/7/1a.md?p=6) settles; and
        - (V) provides the [Commission](/usc/7/1a.md?p=8) such information as is necessary to publish reports on aggregate trader positions for the agreement, [contract](/usc/7/518.md?p=4), or transaction traded on the foreign [board of trade](/usc/7/1a.md?p=6) that are comparable to such reports on aggregate trader positions for the 1 or more [contracts](/usc/7/518.md?p=4) against which the agreement, [contract](/usc/7/518.md?p=4), or transaction traded on the foreign [board of trade](/usc/7/1a.md?p=6) settles.
    - (C) **Existing foreign boards of trade—** Subparagraphs [(A)](#b-1-A) and [(B)](#b-1-B) shall not be effective with respect to any foreign [board of trade](/usc/7/1a.md?p=6) to which, prior to July 21, 2010, the [Commission](/usc/7/1a.md?p=8) granted direct access permission until the date that is 180 days after July 21, 2010.
  - (2) **Persons located in the United States—**
    - (A) **In general—** The [Commission](/usc/7/1a.md?p=8) 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](/usc/7/4531.md?p=5), and registration with the [Commission](/usc/7/1a.md?p=8) by any [person](/usc/7/1a.md?p=38) located in the [United States](/usc/7/6402.md?p=8), its territories or possessions, who engages in the [offer](/usc/7/1a.md?p=36) or sale of any [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) that is made or to be made on or subject to the rules of a [board of trade](/usc/7/1a.md?p=6), [exchange](/usc/7/1a.md?p=1-D), or market located outside the [United States](/usc/7/6402.md?p=8), its territories or possessions.
    - (B) **Different requirements—** Rules and regulations described in [subparagraph (A)](#b-2-A) may impose different requirements for such [persons](/usc/7/1a.md?p=38) depending upon the particular foreign [board of trade](/usc/7/1a.md?p=6), [exchange](/usc/7/1a.md?p=1-D), or market involved.
    - (C) **Prohibition—** Except as provided in paragraphs [(1)](#b-1) and [(2)](#b-2), no rule or regulation may be adopted by the [Commission](/usc/7/1a.md?p=8) under this subsection that—
      - (i) requires [Commission](/usc/7/1a.md?p=8) approval of any [contract](/usc/7/518.md?p=4), rule, regulation, or action of any foreign [board of trade](/usc/7/1a.md?p=6), [exchange](/usc/7/1a.md?p=1-D), or market, or clearinghouse for such [board of trade](/usc/7/1a.md?p=6), [exchange](/usc/7/1a.md?p=1-D), or market; or
      - (ii) governs in any way any rule or [contract](/usc/7/518.md?p=4) term or action of any foreign [board of trade](/usc/7/1a.md?p=6), [exchange](/usc/7/1a.md?p=1-D), or market, or clearinghouse for such [board of trade](/usc/7/1a.md?p=6), [exchange](/usc/7/1a.md?p=1-D), or market.
- (c) **Public interest exemptions—**
  - (1) In [order](/usc/7/2902.md?p=10) to promote responsible economic or financial innovation and fair competition, the [Commission](/usc/7/1a.md?p=8) by rule, regulation, or [order](/usc/7/2902.md?p=10), after notice and opportunity for hearing, may (on its own initiative or on application of any [person](/usc/7/1a.md?p=38), including any [board of trade](/usc/7/1a.md?p=6) designated or registered as a [contract](/usc/7/518.md?p=4) market or derivatives transaction execution facility for transactions for [future delivery](/usc/7/1a.md?p=27) in any [commodity](/usc/7/1a.md?p=9) under [section 7 of this title](/usc/7/7.md)) exempt any agreement, [contract](/usc/7/518.md?p=4), or transaction (or class thereof) that is otherwise subject to [subsection (a)](#a) (including any [person](/usc/7/1a.md?p=38) or class of [persons](/usc/7/1a.md?p=38) offering, entering into, rendering advice or rendering other services with respect to, the agreement, [contract](/usc/7/518.md?p=4), 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)](#a), or from any other provision of this chapter (except subparagraphs (C)(ii) and (D) of [section 2(a)(1) of this title](/usc/7/2.md?p=a-1),[^2] except that—
    - (A) unless the [Commission](/usc/7/1a.md?p=8) is expressly authorized by any provision described in this subparagraph to grant exemptions, with respect to amendments made by subtitle A of the Wall Street Transparency and Accountability Act of 2010—
      - (i) with respect to—
        - (I) paragraphs [(2)](#c-2), [(3)](#c-3), [(4)](#c-4), [(5)](#c-5), and (7), paragraph (18)(A)(vii)(III), paragraphs (23), (24), (31), (32), (38), (39), (41), (42), (46), (47), (48), and (49) of [section 1a of this title](/usc/7/1a.md), and sections 2(a)(13), 2(c)(1)(D), 6a(a), 6a(b), 6d(c), 6d(d), 6r, 6s, 7a–1(a), 7a–1(b), 7(d), 7(g), 7(h),[^3] 7a–1(c), 7a–1(i), 12(e),[^4] and 24a of this title; and
        - (II) [section 206(e)](/usc/7/206.md)[^5] of the Gramm-Leach-Bliley Act (Public Law 106–102; [15 U.S.C. 78c](/usc/15/78c.md) note); and
      - (ii) in sections 721(c) and 742 of the Dodd-Frank Wall Street Reform and Consumer Protection Act; and
    - (B) the [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) may by rule, regulation, or [order](/usc/7/2902.md?p=10) jointly exclude any agreement, [contract](/usc/7/518.md?p=4), or transaction from [section 2(a)(1)(D) of this title](/usc/7/2.md?p=a-1-D))[^6] if the [Commissions](/usc/7/1a.md?p=8) determine that the exemption would be consistent with the public interest.
  - (2) The [Commission](/usc/7/1a.md?p=8) shall not grant any exemption under [paragraph (1)](#c-1) from any of the requirements of [subsection (a)](#a) unless the [Commission](/usc/7/1a.md?p=8) determines that—
    - (A) the requirement should not be applied to the agreement, [contract](/usc/7/518.md?p=4), 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](/usc/7/518.md?p=4), or transaction—
      - (i) will be entered into solely between [appropriate persons](#c-3); and
      - (ii) will not have a material adverse effect on the ability of the [Commission](/usc/7/1a.md?p=8) or any [contract](/usc/7/518.md?p=4) 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](/usc/7/1a.md?p=38) or classes thereof:
    - (A) A [bank](/usc/7/27.md?p=a) 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](/usc/15/80a–1.md) et seq.).
    - (E) A [commodity pool](/usc/7/1a.md?p=10-A) formed or operated by a [person](/usc/7/1a.md?p=38) subject to regulation under this chapter.
    - (F) A [corporation](/usc/7/1502.md?p=b-5), 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](/usc/7/518.md?p=4) 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](/usc/7/27.md?p=a), trust company, insurance company, investment adviser registered under the Investment Advisers Act of 1940 [[15 U.S.C. 80b–1](/usc/15/80b–1.md) et seq.], or a [commodity trading advisor](/usc/7/1a.md?p=12-B) subject to regulation under this chapter.
    - (H) Any governmental entity (including the [United States](/usc/7/6402.md?p=8), any [state](/usc/7/1359aa.md?p=5),[^7] 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.
    - (I) A broker-dealer subject to regulation under the [Securities](/usc/7/1a.md?p=41) Exchange Act of 1934 ([15 U.S.C. 78a](/usc/15/78a.md) et seq.) acting on its own behalf or on behalf of another [appropriate person](#c-3).
    - (J) A [futures commission merchant](/usc/7/1a.md?p=28-A), [floor broker](/usc/7/1a.md?p=22-A), or [floor trader](/usc/7/1a.md?p=23-A) subject to regulation under this chapter acting on its own behalf or on behalf of another [appropriate person](#c-3).
    - (K) Such other [persons](/usc/7/1a.md?p=38) that the [Commission](/usc/7/1a.md?p=8) 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](/usc/7/2902.md?p=10) granting an exemption under [paragraph (1)](#c-1), the [Commission](/usc/7/1a.md?p=8) 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](/usc/7/1a.md?p=8) 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](/usc/7/1a.md?p=8) may—
    - (A) promptly following October 28, 1992, or upon application by any [person](/usc/7/1a.md?p=38), exercise the exemptive [authority](/usc/7/2009aa.md?p=1) granted under [paragraph (1)](#c-1) with respect to classes of [hybrid instruments](/usc/7/1a.md?p=29) that are predominantly [securities](/usc/7/1a.md?p=41) 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](/usc/7/1a.md?p=38), exercise the exemptive [authority](/usc/7/2009aa.md?p=1) granted under [paragraph (1)](#c-1) effective as of October 23, 1974, with respect to classes of [swap](/usc/7/1a.md?p=47-A) agreements (as defined in [section 101 of title 11](/usc/11/101.md)) 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](/usc/7/1a.md?p=8) shall determine to be appropriate pursuant to [paragraph (1)](#c-1).

  - (6) If the [Commission](/usc/7/1a.md?p=8) determines that the exemption would be consistent with the public interest and the purposes of this chapter, the [Commission](/usc/7/1a.md?p=8) shall, in accordance with paragraphs [(1)](#c-1) and [(2)](#c-2), exempt from the requirements of this chapter an agreement, [contract](/usc/7/518.md?p=4), or transaction that is entered into—
    - (A) pursuant to a tariff or rate schedule approved or permitted to take effect by the Federal Energy Regulatory [Commission](/usc/7/1a.md?p=8);
    - (B) pursuant to a tariff or rate schedule establishing rates or charges for, or protocols governing, the sale of electric energy approved or permitted to take effect by the regulatory [authority](/usc/7/2009aa.md?p=1) of the [State](/usc/7/1359aa.md?p=5) or municipality having jurisdiction to regulate rates and charges for the sale of electric energy within the [State](/usc/7/1359aa.md?p=5) or municipality; or
    - (C) between entities described in [section 824(f) of title 16](/usc/16/824.md?p=f).
- (d) **Effect of exemption on investigative authority of Commission—** The granting of an exemption under this section shall not affect the [authority](/usc/7/2009aa.md?p=1) of the [Commission](/usc/7/1a.md?p=8) under any other provision of this chapter to conduct investigations in [order](/usc/7/2902.md?p=10) 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](/usc/7/2902.md?p=10) thereunder caused by the failure to comply with or satisfy such conditions or requirements.
- (e) **Liability of registered persons trading on a foreign board of trade—**
  - (1) **In general—** A [person](/usc/7/1a.md?p=38) registered with the [Commission](/usc/7/1a.md?p=8), or exempt from registration by the [Commission](/usc/7/1a.md?p=8), under this chapter may not be found to have violated [subsection (a)](#a) with respect to a transaction in, or in connection with, 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) if the [person](/usc/7/1a.md?p=38)—
    - (A) has reason to believe that the transaction and the [contract](/usc/7/518.md?p=4) is made on or subject to the rules of a foreign [board of trade](/usc/7/1a.md?p=6) that is—
      - (i) legally organized under the laws of a foreign country;
      - (ii) authorized to act as a [board of trade](/usc/7/1a.md?p=6) by a [foreign futures authority](/usc/7/1a.md?p=26); and
      - (iii) subject to regulation by the [foreign futures authority](/usc/7/1a.md?p=26); and
    - (B) has not been determined by the [Commission](/usc/7/1a.md?p=8) to be operating in violation of [subsection (a)](#a).
  - (2) **Rule of construction—** Nothing in this subsection shall be construed as implying or creating any presumption that a [board of trade](/usc/7/1a.md?p=6), [exchange](/usc/7/1a.md?p=1-D), or market is located outside the [United States](/usc/7/6402.md?p=8), or its territories or possessions, for purposes of [subsection (a)](#a).

# §6a. Excessive speculation

- (a) **Burden on interstate commerce; trading or position limits—**
  - (1) **In general—** Excessive speculation in any [commodity](/usc/7/1a.md?p=9) under [contracts](/usc/7/518.md?p=4) of sale of such [commodity](/usc/7/1a.md?p=9) for [future delivery](/usc/7/1a.md?p=27) made on or subject to the rules of [contract](/usc/7/518.md?p=4) markets or derivatives transaction execution facilities, or [swaps](/usc/7/1a.md?p=47-A) that perform or affect a significant price discovery function with respect to [registered entities](/usc/7/1a.md?p=40) causing sudden or unreasonable fluctuations or unwarranted changes in the price of such [commodity](/usc/7/1a.md?p=9), is an undue and unnecessary burden on [interstate commerce](/usc/7/1a.md?p=30) in such [commodity](/usc/7/1a.md?p=9). For the purpose of diminishing, eliminating, or preventing such burden, the [Commission](/usc/7/1a.md?p=8) shall, from time to time, after due notice and opportunity for hearing, by rule, regulation, or [order](/usc/7/2902.md?p=10), proclaim and fix such limits on the amounts of trading which may be done or positions which may be held by any [person](/usc/7/1a.md?p=38), including any group or class of traders, under [contracts](/usc/7/518.md?p=4) of sale of such [commodity](/usc/7/1a.md?p=9) for [future delivery](/usc/7/1a.md?p=27) on or subject to the rules of any [contract](/usc/7/518.md?p=4) market or derivatives transaction execution facility, or [swaps](/usc/7/1a.md?p=47-A) traded on or subject to the rules of a designated [contract](/usc/7/518.md?p=4) market or a [swap execution facility](/usc/7/1a.md?p=50), or [swaps](/usc/7/1a.md?p=47-A) not traded on or subject to the rules of a designated [contract](/usc/7/518.md?p=4) market or a [swap execution facility](/usc/7/1a.md?p=50) that performs a significant price discovery function with respect to a [registered entity](/usc/7/1a.md?p=40), as the [Commission](/usc/7/1a.md?p=8) finds are necessary to diminish, eliminate, or prevent such burden. In determining whether any [person](/usc/7/1a.md?p=38) has exceeded such limits, the positions held and trading done by any [persons](/usc/7/1a.md?p=38) directly or indirectly controlled by such [person](/usc/7/1a.md?p=38) shall be included with the positions held and trading done by such [person](/usc/7/1a.md?p=38); and further, such limits upon positions and trading shall apply to positions held by, and trading done by, two or more [persons](/usc/7/1a.md?p=38) 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](/usc/7/1a.md?p=38). Nothing in this section shall be construed to prohibit the [Commission](/usc/7/1a.md?p=8) from fixing different trading or position limits for different [commodities](/usc/7/1a.md?p=9), markets, futures, or delivery months, or for different number of days remaining until the last day of trading in a [contract](/usc/7/518.md?p=4), or different trading limits for buying and selling operations, or different limits for the purposes of paragraphs [(1)](#b-1) and [(2)](#b-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](/usc/7/1a.md?p=8) is authorized to define the term “international arbitrage”.
  - (2) **Establishment of limitations—**
    - (A) **In general—** In accordance with the standards set forth in paragraph (1) of this subsection and consistent with the good faith exception cited in [subsection (b)(2)](#b-2), with respect to physical [commodities](/usc/7/1a.md?p=9) other than [excluded commodities](/usc/7/1a.md?p=19) as defined by the [Commission](/usc/7/1a.md?p=8), the [Commission](/usc/7/1a.md?p=8) shall by rule, regulation, or [order](/usc/7/2902.md?p=10) establish limits on the amount of positions, as appropriate, other than bona fide hedge positions, that may be held by any [person](/usc/7/1a.md?p=38) with respect to [contracts](/usc/7/518.md?p=4) of sale for [future delivery](/usc/7/1a.md?p=27) or with respect to [options](/usc/7/1a.md?p=36) on the [contracts](/usc/7/518.md?p=4) or [commodities](/usc/7/1a.md?p=9) traded on or subject to the rules of a designated [contract](/usc/7/518.md?p=4) market.
    - (B) **Timing—**
      - (i) **Exempt commodities—** For [exempt commodities](/usc/7/1a.md?p=20), the limits required under [subparagraph (A)](#a-2-A) shall be established within 180 days after July 21, 2010.
      - (ii) **Agricultural commodities—** For [agricultural commodities](/usc/7/5602.md?p=1), the limits required under [subparagraph (A)](#a-2-A) shall be established within 270 days after July 21, 2010.
    - (C) **Goal—** In establishing the limits required under [subparagraph (A)](#a-2-A), the [Commission](/usc/7/1a.md?p=8) shall strive to ensure that trading on foreign [boards](/usc/7/1a.md?p=5) of trade in the same [commodity](/usc/7/1a.md?p=9) will be subject to comparable limits and that any limits to be imposed by the [Commission](/usc/7/1a.md?p=8) will not cause price discovery in the [commodity](/usc/7/1a.md?p=9) to shift to trading on the foreign [boards](/usc/7/1a.md?p=5) of trade.
  - (3) **Specific limitations—** In establishing the limits required in [paragraph (2)](#a-2), the [Commission](/usc/7/1a.md?p=8), as appropriate, shall set limits—
    - (A) on the number of positions that may be held by any [person](/usc/7/1a.md?p=38) for the spot month, each other month, and the aggregate number of positions that may be held by any [person](/usc/7/1a.md?p=38) for all months; and
    - (B) to the maximum extent practicable, in its discretion—
      - (i) to diminish, eliminate, or prevent excessive speculation as described under this section;
      - (ii) to deter and prevent market manipulation, squeezes, and corners;
      - (iii) to ensure sufficient market liquidity for bona fide hedgers; and
      - (iv) to ensure that the price discovery function of the underlying market is not disrupted.
  - (4) **Significant price discovery function—** In making a determination whether a [swap](/usc/7/1a.md?p=47-A) performs or affects a significant price discovery function with respect to regulated markets, the [Commission](/usc/7/1a.md?p=8) shall consider, as appropriate:
    - (A) **Price linkage—** The extent to which the [swap](/usc/7/1a.md?p=47-A) uses or otherwise relies on a daily or final settlement price, or other major price parameter, of another [contract](/usc/7/518.md?p=4) traded on a regulated market based upon the same underlying [commodity](/usc/7/1a.md?p=9), to value a position, transfer or convert a position, financially settle a position, or close out a position.
    - (B) **Arbitrage—** The extent to which the price for the [swap](/usc/7/1a.md?p=47-A) is sufficiently related to the price of another [contract](/usc/7/518.md?p=4) traded on a regulated market based upon the same underlying [commodity](/usc/7/1a.md?p=9) so as to permit market participants to effectively [arbitrage](#a-1) between the markets by simultaneously maintaining positions or executing trades in the [swaps](/usc/7/1a.md?p=47-A) on a frequent and recurring basis.
    - (C) **Material price reference—** The extent to which, on a frequent and recurring basis, [bids](/usc/7/1a.md?p=36), [offers](/usc/7/1a.md?p=36), or transactions in a [contract](/usc/7/518.md?p=4) traded on a regulated market are directly based on, or are determined by referencing, the price generated by the [swap](/usc/7/1a.md?p=47-A).
    - (D) **Material liquidity—** The extent to which the volume of [swaps](/usc/7/1a.md?p=47-A) being traded in the [commodity](/usc/7/1a.md?p=9) is sufficient to have a material effect on another [contract](/usc/7/518.md?p=4) traded on a regulated market.
    - (E) **Other material factors—** Such other material factors as the [Commission](/usc/7/1a.md?p=8) specifies by rule or regulation as relevant to determine whether a [swap](/usc/7/1a.md?p=47-A) serves a significant price discovery function with respect to a regulated market.
  - (5) **Economically equivalent contracts—**
    - (A) Notwithstanding any other provision of this section, the [Commission](/usc/7/1a.md?p=8) shall establish limits on the amount of positions, including aggregate position limits, as appropriate, other than bona fide hedge positions, that may be held by any [person](/usc/7/1a.md?p=38) with respect to [swaps](/usc/7/1a.md?p=47-A) that are economically equivalent to [contracts](/usc/7/518.md?p=4) of sale for [future delivery](/usc/7/1a.md?p=27) or to [options](/usc/7/1a.md?p=36) on the [contracts](/usc/7/518.md?p=4) or [commodities](/usc/7/1a.md?p=9) traded on or subject to the rules of a designated [contract](/usc/7/518.md?p=4) market subject to [paragraph (2)](#a-2).
    - (B) In establishing limits pursuant to [subparagraph (A)](#a-5-A), the [Commission](/usc/7/1a.md?p=8) shall—
      - (i) develop the limits concurrently with limits established under [paragraph (2)](#a-2), and the limits shall have similar requirements as under [paragraph (3)(B)](#a-3-B); and
      - (ii) establish the limits simultaneously with limits established under [paragraph (2)](#a-2).
  - (6) **Aggregate position limits—** The [Commission](/usc/7/1a.md?p=8) shall, by rule or regulation, establish limits (including related hedge exemption provisions) on the aggregate number or amount of positions in [contracts](/usc/7/518.md?p=4) based upon the same underlying [commodity](/usc/7/1a.md?p=9) (as defined by the [Commission](/usc/7/1a.md?p=8)) that may be held by any [person](/usc/7/1a.md?p=38), including any group or class of traders, for each month across—
    - (A) [contracts](/usc/7/518.md?p=4) listed by designated [contract](/usc/7/518.md?p=4) markets;
    - (B) with respect to an agreement [contract](/usc/7/518.md?p=4), or transaction that settles against any price (including the daily or final settlement price) of 1 or more [contracts](/usc/7/518.md?p=4) listed for trading on a [registered entity](/usc/7/1a.md?p=40), [contracts](/usc/7/518.md?p=4) traded on a foreign [board of trade](/usc/7/1a.md?p=6) that provides [members](/usc/7/1a.md?p=34) or other participants located in the [United States](/usc/7/6402.md?p=8) with direct access to its electronic trading and [order](/usc/7/2902.md?p=10) matching system; and
    - (C) [swap](/usc/7/1a.md?p=47-A) [contracts](/usc/7/518.md?p=4) that perform or affect a significant price discovery function with respect to regulated entities.
  - (7) **Exemptions—** The [Commission](/usc/7/1a.md?p=8), by rule, regulation, or [order](/usc/7/2902.md?p=10), may exempt, conditionally or unconditionally, any [person](/usc/7/1a.md?p=38) or class of [persons](/usc/7/1a.md?p=38), any [swap](/usc/7/1a.md?p=47-A) or class of [swaps](/usc/7/1a.md?p=47-A), any [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 class of such [contracts](/usc/7/518.md?p=4), any [option](/usc/7/1a.md?p=36) or class of [options](/usc/7/1a.md?p=36), or any transaction or class of transactions from any requirement it may establish under this section with respect to position limits.
- (b) **Prohibition on trading or positions in excess of limits fixed by Commission—** The [Commission](/usc/7/1a.md?p=8) shall, in such rule, regulation, or [order](/usc/7/2902.md?p=10), fix a reasonable time (not to exceed ten days) after the promulgation of the rule, regulation, or [order](/usc/7/2902.md?p=10); after which, and until such rule, regulation, or [order](/usc/7/2902.md?p=10) is suspended, modified, or revoked, it shall be unlawful for any [person](/usc/7/1a.md?p=38)—
  - (1) directly or indirectly to buy or sell, or agree to buy or sell, under [contracts](/usc/7/518.md?p=4) of sale of such [commodity](/usc/7/1a.md?p=9) for [future delivery](/usc/7/1a.md?p=27) on or subject to the rules of the [contract](/usc/7/518.md?p=4) market or markets, or [swap execution facility](/usc/7/1a.md?p=50) or facilities with respect to a [significant price discovery contract](/usc/7/1a.md?p=46), to which the rule, regulation, or [order](/usc/7/2902.md?p=10) applies, any amount of such [commodity](/usc/7/1a.md?p=9) during any one business day in excess of any trading limit fixed for one business day by the [Commission](/usc/7/1a.md?p=8) in such rule, regulation, or [order](/usc/7/2902.md?p=10) for or with respect to such [commodity](/usc/7/1a.md?p=9); or
  - (2) directly or indirectly to hold or control a net long or a net short position in any [commodity](/usc/7/1a.md?p=9) for [future delivery](/usc/7/1a.md?p=27) on or subject to the rules of any [contract](/usc/7/518.md?p=4) market or [swap execution facility](/usc/7/1a.md?p=50) with respect to a [significant price discovery contract](/usc/7/1a.md?p=46) in excess of any position limit fixed by the [Commission](/usc/7/1a.md?p=8) for or with respect to such [commodity](/usc/7/1a.md?p=9): 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](/usc/7/2902.md?p=10).
- (c) **Applicability to bona fide hedging transactions or positions—**
  - (1) No rule, regulation, or [order](/usc/7/2902.md?p=10) issued under [subsection (a)](#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](/usc/7/1a.md?p=8) by rule, regulation, or [order](/usc/7/2902.md?p=10) consistent with the purposes of this chapter. Such terms may be defined to permit [producers](/usc/7/6802.md?p=4-A-iii-III-bb), purchasers, sellers, middlemen, and users of a [commodity](/usc/7/1a.md?p=9) 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](/usc/7/518.md?p=4) is open and available on an [exchange](/usc/7/1a.md?p=1-D). To determine the adequacy of this chapter and the powers of the [Commission](/usc/7/1a.md?p=8) acting thereunder to prevent unwarranted price pressures by large hedgers, the [Commission](/usc/7/1a.md?p=8) shall monitor and analyze the trading activities of the largest hedgers, as determined by the [Commission](/usc/7/1a.md?p=8), operating in the cattle, hog, or pork belly markets and shall report its findings and recommendations to the Senate [Committee](/usc/7/2132.md?p=n) on Agriculture, Nutrition, and Forestry and the House [Committee](/usc/7/2132.md?p=n) on Agriculture in its annual reports for at least two years following January 11, 1983.
  - (2) For the purposes of implementation of [subsection (a)(2)](#a-2) for [contracts](/usc/7/518.md?p=4) of sale for [future delivery](/usc/7/1a.md?p=27) or [options](/usc/7/1a.md?p=36) on the [contracts](/usc/7/518.md?p=4) or [commodities](/usc/7/1a.md?p=9), the [Commission](/usc/7/1a.md?p=8) shall define what constitutes a bona fide hedging transaction or position as a transaction or position that—
    - (A)
      - (i) represents a substitute for transactions made or to be made or positions taken or to be taken at a later time in a physical marketing channel;
      - (ii) is economically appropriate to the reduction of risks in the conduct and management of a commercial enterprise; and
      - (iii) arises from the potential change in the value of—
        - (I) assets that a [person](/usc/7/1a.md?p=38) owns, produces, manufactures, processes, or merchandises or anticipates owning, producing, manufacturing, processing, or merchandising;
        - (II) liabilities that a [person](/usc/7/1a.md?p=38) owns or anticipates incurring; or
        - (III) services that a [person](/usc/7/1a.md?p=38) provides, purchases, or anticipates providing or purchasing; or
    - (B) reduces risks attendant to a position resulting from a [swap](/usc/7/1a.md?p=47-A) that—
      - (i) was executed opposite a counterparty for which the transaction would qualify as a bona fide hedging transaction pursuant to [subparagraph (A)](#c-2-A); or
      - (ii) meets the requirements of [subparagraph (A)](#c-2-A).
- (d) **Persons subject to regulation; applicability to transactions made by or on behalf of United States—** This section shall apply to a [person](/usc/7/1a.md?p=38) that is registered as a [futures commission merchant](/usc/7/1a.md?p=28-A), an [introducing broker](/usc/7/1a.md?p=31-A), or a [floor broker](/usc/7/1a.md?p=22-A) under [authority](/usc/7/2009aa.md?p=1) of this chapter only to the extent that transactions made by such [person](/usc/7/1a.md?p=38) are made on behalf of or for the account or benefit of such [person](/usc/7/1a.md?p=38). This section shall not apply to transactions made by, or on behalf of, or at the direction of, the [United States](/usc/7/6402.md?p=8), 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](/usc/7/518.md?p=4) market, derivatives transaction execution facility, or by any other [board of trade](/usc/7/1a.md?p=6) licensed, designated, or registered by the [Commission](/usc/7/1a.md?p=8) or by any [electronic trading facility](/usc/7/1a.md?p=16) 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](/usc/7/1a.md?p=38) under [contracts](/usc/7/518.md?p=4) of sale of any [commodity](/usc/7/1a.md?p=9) for [future delivery](/usc/7/1a.md?p=27) traded on or subject to the rules of such [contract](/usc/7/518.md?p=4) market or derivatives transaction execution facility or on an [electronic trading facility](/usc/7/1a.md?p=16), or under [options](/usc/7/1a.md?p=36) on such [contracts](/usc/7/518.md?p=4) or [commodities](/usc/7/1a.md?p=9) traded on or subject to the rules of such [contract](/usc/7/518.md?p=4) market, derivatives transaction execution facility, or [electronic trading facility](/usc/7/1a.md?p=16) or such [board of trade](/usc/7/1a.md?p=6): Provided, That if the [Commission](/usc/7/1a.md?p=8) shall have fixed limits under this section for any [contract](/usc/7/518.md?p=4) or under [section 6c of this title](/usc/7/6c.md) for any [commodity](/usc/7/1a.md?p=9) [option](/usc/7/1a.md?p=36), then the limits fixed by the bylaws, rules, regulations, and resolutions adopted by such [contract](/usc/7/518.md?p=4) market, derivatives transaction execution facility, or [electronic trading facility](/usc/7/1a.md?p=16) or such [board of trade](/usc/7/1a.md?p=6) shall not be higher than the limits fixed by the [Commission](/usc/7/1a.md?p=8). It shall be a violation of this chapter for any [person](/usc/7/1a.md?p=38) to violate any bylaw, rule, regulation, or resolution of any [contract](/usc/7/518.md?p=4) market, derivatives transaction execution facility, or other [board of trade](/usc/7/1a.md?p=6) licensed, designated, or registered by the [Commission](/usc/7/1a.md?p=8) or [electronic trading facility](/usc/7/1a.md?p=16) with respect to a [significant price discovery contract](/usc/7/1a.md?p=46) fixing limits on the amount of trading which may be done or positions which may be held by any [person](/usc/7/1a.md?p=38) under [contracts](/usc/7/518.md?p=4) of sale of any [commodity](/usc/7/1a.md?p=9) for [future delivery](/usc/7/1a.md?p=27) or under [options](/usc/7/1a.md?p=36) on such [contracts](/usc/7/518.md?p=4) or [commodities](/usc/7/1a.md?p=9), if such bylaw, rule, regulation, or resolution has been approved by the [Commission](/usc/7/1a.md?p=8) or certified by a [registered entity](/usc/7/1a.md?p=40) pursuant to [section 7a–2(c)(1) of this title](/usc/7/7a–2.md?p=c-1): Provided, That the provisions of [section 13(a)(5) of this title](/usc/7/13.md?p=a-5) shall apply only to those who knowingly violate such limits.

# §6b. Contracts designed to defraud or mislead

- (a) **Unlawful actions—** It shall be unlawful—
  - (1) for any [person](/usc/7/1a.md?p=38), in or in connection with any [order](/usc/7/2902.md?p=10) to make, or the making of, any [contract of sale](/usc/7/1a.md?p=13) of any [commodity](/usc/7/1a.md?p=9) in [interstate commerce](/usc/7/1a.md?p=30) or for [future delivery](/usc/7/1a.md?p=27) that is made, or to be made, on or subject to the rules of a designated [contract](/usc/7/518.md?p=4) market, for or on behalf of any other [person](/usc/7/1a.md?p=38); or
  - (2) for any [person](/usc/7/1a.md?p=38), in or in connection with any [order](/usc/7/2902.md?p=10) to make, or the making of, any [contract of sale](/usc/7/1a.md?p=13) of any [commodity](/usc/7/1a.md?p=9) for [future delivery](/usc/7/1a.md?p=27), or [swap](/usc/7/1a.md?p=47-A), that is made, or to be made, for or on behalf of, or with, any other [person](/usc/7/1a.md?p=38), other than on or subject to the rules of a designated [contract](/usc/7/518.md?p=4) market—
    - (A) to cheat or defraud or attempt to cheat or defraud the other [person](/usc/7/1a.md?p=38);
    - (B) willfully to make or cause to be made to the other [person](/usc/7/1a.md?p=38) any false report or statement or willfully to enter or cause to be entered for the other [person](/usc/7/1a.md?p=38) any false record;
    - (C) willfully to deceive or attempt to deceive the other [person](/usc/7/1a.md?p=38) by any means whatsoever in regard to any [order](/usc/7/2902.md?p=10) or [contract](/usc/7/518.md?p=4) or the disposition or execution of any [order](/usc/7/2902.md?p=10) or [contract](/usc/7/518.md?p=4), or in regard to any act of agency performed, with respect to any [order](/usc/7/2902.md?p=10) or [contract](/usc/7/518.md?p=4) for or, in the case of [paragraph (2)](#a-2), with the other [person](/usc/7/1a.md?p=38); or
    - (D)
      - (i) to bucket an [order](/usc/7/2902.md?p=10) if the [order](/usc/7/2902.md?p=10) is either represented by the [person](/usc/7/1a.md?p=38) as an [order](/usc/7/2902.md?p=10) to be executed, or is required to be executed, on or subject to the rules of a designated [contract](/usc/7/518.md?p=4) market; or
      - (ii) to fill an [order](/usc/7/2902.md?p=10) by offset against the [order](/usc/7/2902.md?p=10) or [orders](/usc/7/2902.md?p=10) of any other [person](/usc/7/1a.md?p=38), or willfully and knowingly and without the prior consent of the other [person](/usc/7/1a.md?p=38) to become the buyer in respect to any selling [order](/usc/7/2902.md?p=10) of the other [person](/usc/7/1a.md?p=38), or become the seller in respect to any buying [order](/usc/7/2902.md?p=10) of the other [person](/usc/7/1a.md?p=38), if the [order](/usc/7/2902.md?p=10) is either represented by the [person](/usc/7/1a.md?p=38) as an [order](/usc/7/2902.md?p=10) to be executed, or is required to be executed, on or subject to the rules of a designated [contract](/usc/7/518.md?p=4) market unless the [order](/usc/7/2902.md?p=10) is executed in accordance with the rules of the designated [contract](/usc/7/518.md?p=4) market.
- (b) **Clarification—** [Subsection (a)(2)](#a-2) of this section shall not obligate any [person](/usc/7/1a.md?p=38), in or in connection with a transaction in 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 [swap](/usc/7/1a.md?p=47-A), with another [person](/usc/7/1a.md?p=38), to disclose to the other [person](/usc/7/1a.md?p=38) nonpublic information that may be material to the market price, rate, or level of the [commodity](/usc/7/1a.md?p=9) or transaction, except as necessary to make any statement made to the other [person](/usc/7/1a.md?p=38) in or in connection with the transaction not misleading in any material respect.
- (c) **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](/usc/7/1a.md?p=28-A) or [floor broker](/usc/7/1a.md?p=22-A) who shall have in hand, simultaneously, buying and selling [orders](/usc/7/2902.md?p=10) at the market for different principals for a like quantity of a [commodity](/usc/7/1a.md?p=9) for [future delivery](/usc/7/1a.md?p=27) in the same month executing such buying and selling [orders](/usc/7/2902.md?p=10) at the market price: Provided, That any such execution shall take place on the floor of the [exchange](/usc/7/1a.md?p=1-D) where such [orders](/usc/7/2902.md?p=10) 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](/usc/7/2902.md?p=10) executed on such [exchange](/usc/7/1a.md?p=1-D): And provided further, That such transactions shall be made in accordance with such rules and regulations as the [Commission](/usc/7/1a.md?p=8) may promulgate regarding the manner of the execution of such transactions.
- (d) **Inapplicability to transactions on foreign exchanges—** Nothing in this section shall apply to any activity that occurs on a [board of trade](/usc/7/1a.md?p=6), [exchange](/usc/7/1a.md?p=1-D), or market, or clearinghouse for such [board of trade](/usc/7/1a.md?p=6), [exchange](/usc/7/1a.md?p=1-D), or market, located outside the [United States](/usc/7/6402.md?p=8), or territories or possessions of the [United States](/usc/7/6402.md?p=8), involving any [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) that is made, or to be made, on or subject to the rules of such [board of trade](/usc/7/1a.md?p=6), [exchange](/usc/7/1a.md?p=1-D), or market.
- (e) **Contracts of sale on group or index of securities—** It shall be unlawful for any [person](/usc/7/1a.md?p=38), directly or indirectly, by the use of any means or instrumentality of [interstate commerce](/usc/7/1a.md?p=30), or of the mails, or of any facility of any [registered entity](/usc/7/1a.md?p=40), in or in connection with any [order](/usc/7/2902.md?p=10) to make, or the making of, any [contract of sale](/usc/7/1a.md?p=13) of any [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)), or any [swap](/usc/7/1a.md?p=47-A), on a group or index of [securities](/usc/7/1a.md?p=41) (or any interest therein or based on the value thereof)—
  - (1) to employ any device, scheme, or artifice to defraud;
  - (2) to make any untrue statement of a material fact or to omit to [state](/usc/7/1359aa.md?p=5) a material fact necessary in [order](/usc/7/2902.md?p=10) to make the statements made, in the light of the circumstances under which they were made, not misleading; or
  - (3) to engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any [person](/usc/7/1a.md?p=38).

# §6b–1. Enforcement authority

- (a) **Commodity Futures Trading Commission—** Except as provided in subsections [(b)](#b), [(c)](#c), and [(d)](#d), the [Commission](/usc/7/1a.md?p=8) shall have exclusive [authority](/usc/7/2009aa.md?p=1) to enforce the provisions of subtitle A of the Wall Street Transparency and Accountability Act of 2010 with respect to any [person](/usc/7/1a.md?p=38).
- (b) **Prudential regulators—** The [prudential regulators](/usc/7/1a.md?p=39) shall have exclusive [authority](/usc/7/2009aa.md?p=1) to enforce the provisions of [section 6s(e) of this title](/usc/7/6s.md?p=e) with respect to [swap dealers](/usc/7/1a.md?p=49-A) or [major swap participants](/usc/7/1a.md?p=33-A) for which they are the [prudential regulator](/usc/7/1a.md?p=39).
- (c) **Referrals—**
  - (1) **Prudential regulators—** If the [prudential regulator](/usc/7/1a.md?p=39) for a [swap dealer](/usc/7/1a.md?p=49-A) or [major swap participant](/usc/7/1a.md?p=33-A) has cause to believe that the [swap dealer](/usc/7/1a.md?p=49-A) or [major swap participant](/usc/7/1a.md?p=33-A), or any affiliate or division of the [swap dealer](/usc/7/1a.md?p=49-A) or [major swap participant](/usc/7/1a.md?p=33-A), may have engaged in conduct that constitutes a violation of the nonprudential requirements of this chapter (including [section 6s of this title](/usc/7/6s.md) or rules adopted by the [Commission](/usc/7/1a.md?p=8) under that section), the [prudential regulator](/usc/7/1a.md?p=39) may promptly notify the [Commission](/usc/7/1a.md?p=8) in a written report that includes—
    - (A) a request that the [Commission](/usc/7/1a.md?p=8) initiate an enforcement proceeding under this chapter; and
    - (B) an explanation of the facts and circumstances that led to the preparation of the written report.
  - (2) **Commission—** If the [Commission](/usc/7/1a.md?p=8) has cause to believe that a [swap dealer](/usc/7/1a.md?p=49-A) or [major swap participant](/usc/7/1a.md?p=33-A) that has a [prudential regulator](/usc/7/1a.md?p=39) may have engaged in conduct that constitutes a violation of any prudential requirement of [section 6s of this title](/usc/7/6s.md) or rules adopted by the [Commission](/usc/7/1a.md?p=8) under that section, the [Commission](/usc/7/1a.md?p=8) may notify the [prudential regulator](/usc/7/1a.md?p=39) of the conduct in a written report that includes—
    - (A) a request that the [prudential regulator](/usc/7/1a.md?p=39) initiate an enforcement proceeding under this chapter or any other Federal law (including regulations); and
    - (B) an explanation of the concerns of the [Commission](/usc/7/1a.md?p=8), and a description of the facts and circumstances, that led to the preparation of the written report.
- (d) **Backstop enforcement authority—**
  - (1) **Initiation of enforcement proceeding by prudential regulator—** If the [Commission](/usc/7/1a.md?p=8) does not initiate an enforcement proceeding before the end of the 90-day period beginning on the date on which the [Commission](/usc/7/1a.md?p=8) receives a written report under [subsection (c)(1)](#c-1), the [prudential regulator](/usc/7/1a.md?p=39) may initiate an enforcement proceeding.
  - (2) **Initiation of enforcement proceeding by Commission—** If the [prudential regulator](/usc/7/1a.md?p=39) does not initiate an enforcement proceeding before the end of the 90-day period beginning on the date on which the [prudential regulator](/usc/7/1a.md?p=39) receives a written report under [subsection (c)(2)](#c-2), the [Commission](/usc/7/1a.md?p=8) may initiate an enforcement proceeding.

# §6c. Prohibited transactions

- (a) **In general—**
  - (1) **Prohibition—** It shall be unlawful for any [person](/usc/7/1a.md?p=38) to [offer](/usc/7/1a.md?p=36) to enter into, enter into, or confirm the execution of a transaction described in [paragraph (2)](#a-2) involving the purchase or sale of any [commodity](/usc/7/1a.md?p=9) for [future delivery](/usc/7/1a.md?p=27) (or any [option](/usc/7/1a.md?p=36) on such a transaction or [option](/usc/7/1a.md?p=36) on a [commodity](/usc/7/1a.md?p=9)) or [swap](/usc/7/1a.md?p=47-A) if the transaction is used or may be used to—
    - (A) hedge any transaction in [interstate commerce](/usc/7/1a.md?p=30) in the [commodity](/usc/7/1a.md?p=9) or the product or byproduct of the [commodity](/usc/7/1a.md?p=9);
    - (B) determine the price basis of any such transaction in [interstate commerce](/usc/7/1a.md?p=30) in the [commodity](/usc/7/1a.md?p=9); or
    - (C) deliver any such [commodity](/usc/7/1a.md?p=9) sold, shipped, or received in [interstate commerce](/usc/7/1a.md?p=30) for the execution of the transaction.
  - (2) **Transaction—** A transaction referred to in [paragraph (1)](#a-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.
  - (3) **Contract of sale—** It shall be unlawful for any employee or agent of any department or agency of the Federal Government or any [Member](/usc/7/1a.md?p=34) of Congress or employee of Congress (as such terms are defined under section 2 of the STOCK Act) or any judicial officer or judicial employee (as such terms are defined, respectively, under section 2 of the STOCK Act) who, by virtue of the employment or position of the [Member](/usc/7/1a.md?p=34), officer, employee or agent, acquires information that may affect or tend to affect the price of any [commodity](/usc/7/1a.md?p=9) in [interstate commerce](/usc/7/1a.md?p=30), or for [future delivery](/usc/7/1a.md?p=27), or any [swap](/usc/7/1a.md?p=47-A), and which information has not been disseminated by the department or agency of the Federal Government holding or creating the information or by Congress or by the judiciary in a manner which makes it generally available to the trading public, or disclosed in a criminal, civil, or administrative hearing, or in a congressional, administrative, or Government Accountability Office report, hearing, audit, or investigation, to use the information in his personal capacity and for personal gain to enter into, or [offer](/usc/7/1a.md?p=36) to enter into—
    - (A) 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));
    - (B) an [option](/usc/7/1a.md?p=36) (other than an [option](/usc/7/1a.md?p=36) executed or traded on a national [securities](/usc/7/1a.md?p=41) [exchange](/usc/7/1a.md?p=1-D) registered pursuant to [section 78f(a) of title 15](/usc/15/78f.md?p=a)); or
    - (C) a [swap](/usc/7/1a.md?p=47-A).
  - (4) **Nonpublic information—**
    - (A) **Imparting of nonpublic information—** It shall be unlawful for any employee or agent of any department or agency of the Federal Government or any [Member](/usc/7/1a.md?p=34) of Congress or employee of Congress or any judicial officer or judicial employee who, by virtue of the employment or position of the [Member](/usc/7/1a.md?p=34), officer, employee or agent, acquires information that may affect or tend to affect the price of any [commodity](/usc/7/1a.md?p=9) in [interstate commerce](/usc/7/1a.md?p=30), or for [future delivery](/usc/7/1a.md?p=27), or any [swap](/usc/7/1a.md?p=47-A), and which information has not been disseminated by the department or agency of the Federal Government holding or creating the information or by Congress or by the judiciary in a manner which makes it generally available to the trading public, or disclosed in a criminal, civil, or administrative hearing, or in a congressional, administrative, or Government Accountability Office report, hearing, audit, or investigation, to impart the information in his personal capacity and for personal gain with intent to assist another [person](/usc/7/1a.md?p=38), directly or indirectly, to use the information to enter into, or [offer](/usc/7/1a.md?p=36) to enter into—
      - (i) 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));
      - (ii) an [option](/usc/7/1a.md?p=36) (other than an [option](/usc/7/1a.md?p=36) executed or traded on a national [securities](/usc/7/1a.md?p=41) [exchange](/usc/7/1a.md?p=1-D) registered pursuant to [section 78f(a) of title 15](/usc/15/78f.md?p=a)); or
      - (iii) a [swap](/usc/7/1a.md?p=47-A).
    - (B) **Knowing use—** It shall be unlawful for any [person](/usc/7/1a.md?p=38) who receives information imparted by any employee or agent of any department or agency of the Federal Government or any [Member](/usc/7/1a.md?p=34) of Congress or employee of Congress or any judicial officer or judicial employee as described in [subparagraph (A)](#a-4-A) to knowingly use such information to enter into, or [offer](/usc/7/1a.md?p=36) to enter into—
      - (i) 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));
      - (ii) an [option](/usc/7/1a.md?p=36) (other than an [option](/usc/7/1a.md?p=36) executed or traded on a national [securities](/usc/7/1a.md?p=41) [exchange](/usc/7/1a.md?p=1-D) registered pursuant to [section 78f(a) of title 15](/usc/15/78f.md?p=a)); or
      - (iii) a [swap](/usc/7/1a.md?p=47-A).
    - (C) **Theft of nonpublic information—** It shall be unlawful for any [person](/usc/7/1a.md?p=38) to steal, convert, or misappropriate, by any means whatsoever, information held or created by any department or agency of the Federal Government or by Congress or by the judiciary that may affect or tend to affect the price of any [commodity](/usc/7/1a.md?p=9) in [interstate commerce](/usc/7/1a.md?p=30), or for [future delivery](/usc/7/1a.md?p=27), or any [swap](/usc/7/1a.md?p=47-A), where such [person](/usc/7/1a.md?p=38) knows, or acts in reckless disregard of the fact, that such information has not been disseminated by the department or agency of the Federal Government holding or creating the information or by Congress or by the judiciary in a manner which makes it generally available to the trading public, or disclosed in a criminal, civil, or administrative hearing, or in a congressional, administrative, or Government Accountability Office report, hearing, audit, or investigation, and to use such information, or to impart such information with the intent to assist another [person](/usc/7/1a.md?p=38), directly or indirectly, to use such information to enter into, or [offer](/usc/7/1a.md?p=36) to enter into—
      - (i) 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));
      - (ii) an [option](/usc/7/1a.md?p=36) (other than an [option](/usc/7/1a.md?p=36) executed or traded on a national [securities](/usc/7/1a.md?p=41) [exchange](/usc/7/1a.md?p=1-D) registered pursuant to [section 78f(a) of title 15](/usc/15/78f.md?p=a)); or
      - (iii) a [swap](/usc/7/1a.md?p=47-A), provided, however, that nothing in this subparagraph shall preclude a [person](/usc/7/1a.md?p=38) that has provided information concerning, or generated by, the [person](/usc/7/1a.md?p=38), its operations or activities, to any employee or agent of any department or agency of the Federal Government, to Congress, any [Member](/usc/7/1a.md?p=34) of Congress, any employee of Congress, any judicial officer, or any judicial employee, voluntarily or as required by law, from using such information to enter into, or [offer](/usc/7/1a.md?p=36) to enter into, a [contract of sale](/usc/7/1a.md?p=13), [option](/usc/7/1a.md?p=36), or [swap](/usc/7/1a.md?p=47-A) described in clauses[^1] (i), (ii), or (iii).
  - (5) **Disruptive practices—** It shall be unlawful for any [person](/usc/7/1a.md?p=38) to engage in any trading, practice, or conduct on or subject to the rules of a [registered entity](/usc/7/1a.md?p=40) that—
    - (A) violates [bids](/usc/7/1a.md?p=36) or [offers](/usc/7/1a.md?p=36);
    - (B) demonstrates intentional or reckless disregard for the orderly execution of transactions during the closing period; or
    - (C) is, is of the character of, or is commonly known to the trade as, “spoofing” (bidding or offering with the intent to cancel the [bid](/usc/7/1a.md?p=36) or [offer](/usc/7/1a.md?p=36) before execution).
  - (6) **Rulemaking authority—** The [Commission](/usc/7/1a.md?p=8) may make and promulgate such rules and regulations as, in the judgment of the [Commission](/usc/7/1a.md?p=8), are reasonably necessary to prohibit the trading practices described in [paragraph (5)](#a-5) and any other trading practice that is disruptive of fair and equitable trading.
  - (7) **Use of swaps to defraud—** It shall be unlawful for any [person](/usc/7/1a.md?p=38) to enter into a [swap](/usc/7/1a.md?p=47-A) knowing, or acting in reckless disregard of the fact, that its counterparty will use the [swap](/usc/7/1a.md?p=47-A) as part of a device, scheme, or artifice to defraud any third party.
- (b) **Regulated option trading—** No [person](/usc/7/1a.md?p=38) shall [offer](/usc/7/1a.md?p=36) to enter into, enter into or confirm the execution of, any transaction involving any [commodity](/usc/7/1a.md?p=9) regulated under this chapter which is of the character of, or is commonly known to the trade as, an “[option](/usc/7/1a.md?p=36)”, “[privilege](/usc/7/1a.md?p=36)”, “[indemnity](/usc/7/1a.md?p=36)”, “[bid](/usc/7/1a.md?p=36)”, “[offer](/usc/7/1a.md?p=36)”, “[put](/usc/7/1a.md?p=36)”, “[call](/usc/7/1a.md?p=36)”, “[advance guaranty](/usc/7/1a.md?p=36)”, or “[decline guaranty](/usc/7/1a.md?p=36)”, contrary to any rule, regulation, or [order](/usc/7/2902.md?p=10) of the [Commission](/usc/7/1a.md?p=8) prohibiting any such transaction or allowing any such transaction under such terms and conditions as the [Commission](/usc/7/1a.md?p=8) shall prescribe. Any such [order](/usc/7/2902.md?p=10), rule, or regulation may be made only after notice and opportunity for hearing, and the [Commission](/usc/7/1a.md?p=8) 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](/usc/7/1a.md?p=8) shall issue regulations—
  - (1) to eliminate the pilot status of its program for [commodity](/usc/7/1a.md?p=9) [option](/usc/7/1a.md?p=36) transactions involving the trading of [options](/usc/7/1a.md?p=36) on [contract](/usc/7/518.md?p=4) markets, including any numerical restrictions on the number of [commodities](/usc/7/1a.md?p=9) or [option](/usc/7/1a.md?p=36) [contracts](/usc/7/518.md?p=4) for which a [contract](/usc/7/518.md?p=4) market may be designated; and
  - (2) otherwise to continue to permit the trading of such [commodity](/usc/7/1a.md?p=9) [options](/usc/7/1a.md?p=36) under such terms and conditions that the [Commission](/usc/7/1a.md?p=8) from time to time may prescribe.
- (d) **Dealer options exempt from subsections (b) and (c) prohibitions; requirements—** Notwithstanding the provisions of [subsection (c)](#c) of this section—
  - (1) any [person](/usc/7/1a.md?p=38) domiciled in the [United States](/usc/7/6402.md?p=8) who on May 1, 1978, was in the business of granting an [option](/usc/7/1a.md?p=36) on a physical [commodity](/usc/7/1a.md?p=9), other than a [commodity](/usc/7/1a.md?p=9) specifically set forth in [section 2(a) of this title](/usc/7/2.md?p=a) prior to October 23, 1974, and was in the business of buying, selling, producing, or otherwise using that [commodity](/usc/7/1a.md?p=9), may continue to grant or issue [options](/usc/7/1a.md?p=36) on that [commodity](/usc/7/1a.md?p=9) in accordance with [Commission](/usc/7/1a.md?p=8) regulations in effect on August 17, 1978, until thirty days after the effective date of regulations issued by the [Commission](/usc/7/1a.md?p=8) under clause (2) of this subsection: Provided, That if such [person](/usc/7/1a.md?p=38) 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](/usc/7/1a.md?p=38) may continue to grant or issue [options](/usc/7/1a.md?p=36) pending a final determination by the [Commission](/usc/7/1a.md?p=8) on the application; and
  - (2) the [Commission](/usc/7/1a.md?p=8) shall issue regulations that permit grantors and [futures commission merchants](/usc/7/1a.md?p=28-A) to [offer](/usc/7/1a.md?p=36) to enter into, enter into, or confirm the execution of, any [commodity](/usc/7/1a.md?p=9) [option](/usc/7/1a.md?p=36) transaction on a physical [commodity](/usc/7/1a.md?p=9) subject to the provisions of [subsection (b)](#b) of this section, other than a [commodity](/usc/7/1a.md?p=9) specifically set forth in [section 2(a) of this title](/usc/7/2.md?p=a) prior to October 23, 1974, if—
    - (A) the grantor is a [person](/usc/7/1a.md?p=38) domiciled in the [United States](/usc/7/6402.md?p=8) who—
      - (i) is in the business of buying, selling, producing, or otherwise using the underlying [commodity](/usc/7/1a.md?p=9);
      - (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](/usc/7/1a.md?p=8) and every [futures commission merchant](/usc/7/1a.md?p=28-A) offering the grantor’s [option](/usc/7/1a.md?p=36) 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](/usc/7/1a.md?p=41) (within the meaning of [section 78c(a)(12) of title 15](/usc/15/78c.md?p=a-12)), 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](/usc/7/2902.md?p=10) for such transactions executed, including the execution price and a transaction identification number;
    - (B) the [futures commission merchant](/usc/7/1a.md?p=28-A) is a [person](/usc/7/1a.md?p=38) who—
      - (i) has evidence that the grantor meets the requirements specified in [subclause (A)](#d-2-A) of this clause;
      - (ii) treats and deals with all money, [securities](/usc/7/1a.md?p=41), 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](/usc/7/1a.md?p=36), or, if the customer exercises the [option](/usc/7/1a.md?p=36), until all rights of the customer under the [commodity](/usc/7/1a.md?p=9) [option](/usc/7/1a.md?p=36) 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](/usc/7/1a.md?p=8), that discloses, among other things, all costs, including any markups or [commissions](/usc/7/1a.md?p=8) involved in such transaction; and
    - (C) the grantor and [futures commission merchant](/usc/7/1a.md?p=28-A) comply with any additional uniform and reasonable terms and conditions the [Commission](/usc/7/1a.md?p=8) may prescribe, including registration with the [Commission](/usc/7/1a.md?p=8).

  The [Commission](/usc/7/1a.md?p=8) may permit [persons](/usc/7/1a.md?p=38) not domiciled in the [United States](/usc/7/6402.md?p=8) to grant [options](/usc/7/1a.md?p=36) under this subsection, other than [options](/usc/7/1a.md?p=36) on a [commodity](/usc/7/1a.md?p=9) specifically set forth in [section 2(a) of this title](/usc/7/2.md?p=a) prior to October 23, 1974, under such additional rules, regulations, and [orders](/usc/7/2902.md?p=10) as the [Commission](/usc/7/1a.md?p=8) may adopt to provide protection to purchasers that are substantially the equivalent of those applicable to grantors domiciled in the [United States](/usc/7/6402.md?p=8). The [Commission](/usc/7/1a.md?p=8) may terminate the right of any [person](/usc/7/1a.md?p=38) to grant, [offer](/usc/7/1a.md?p=36), or sell [options](/usc/7/1a.md?p=36) 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](/usc/7/1a.md?p=8) may suspend the right to grant, [offer](/usc/7/1a.md?p=36), or sell [options](/usc/7/1a.md?p=36) of any [person](/usc/7/1a.md?p=38) whose activities in the [Commission](/usc/7/1a.md?p=8)’s judgment present a substantial risk to the public interest.

- (e) **Rules and regulations—** The [Commission](/usc/7/1a.md?p=8) may adopt rules and regulations, after public notice and opportunity for a hearing on the record, prohibiting the granting, issuance, or sale of [options](/usc/7/1a.md?p=36) permitted under [subsection (d)](#d) of this section if the [Commission](/usc/7/1a.md?p=8) determines that such [options](/usc/7/1a.md?p=36) 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](/usc/7/1a.md?p=36) on foreign currency traded on a national [securities](/usc/7/1a.md?p=41) [exchange](/usc/7/1a.md?p=1-D).
- (g) **Oral orders—** The [Commission](/usc/7/1a.md?p=8) shall adopt rules requiring that a contemporaneous written record be made, as practicable, of all [orders](/usc/7/2902.md?p=10) for execution on the floor or subject to the rules of each [contract](/usc/7/518.md?p=4) market or derivatives transaction execution facility placed by a [member](/usc/7/1a.md?p=34) of the [contract](/usc/7/518.md?p=4) market or derivatives transaction execution facility who is present on the floor at the time such [order](/usc/7/2902.md?p=10) is placed.

# §6d. Dealing by unregistered futures commission merchants or introducing brokers prohibited; duties in handling customer receipts; conflict-of-interest systems and procedures; Chief Compliance Officer; rules to avoid duplicative regulations; swap requirements; portfolio margining accounts

- (a) **Futures commission merchant registration requirements; duties of merchants in handling customer receipts—** It shall be unlawful for any [person](/usc/7/1a.md?p=38) to be a [futures commission merchant](/usc/7/1a.md?p=28-A) unless—
  - (1) such [person](/usc/7/1a.md?p=38) shall have registered, under this chapter, with the [Commission](/usc/7/1a.md?p=8) as such [futures commission merchant](/usc/7/1a.md?p=28-A) and such registration shall not have expired nor been suspended nor revoked; and
  - (2) such [person](/usc/7/1a.md?p=38) shall, whether a [member](/usc/7/1a.md?p=34) or nonmember of a [contract](/usc/7/518.md?p=4) market or derivatives transaction execution facility, treat and deal with all money, [securities](/usc/7/1a.md?p=41), and property received by such [person](/usc/7/1a.md?p=38) to margin, guarantee, or secure the trades or [contracts](/usc/7/518.md?p=4) of any customer of such [person](/usc/7/1a.md?p=38), or accruing to such customer as the result of such trades or [contracts](/usc/7/518.md?p=4), as belonging to such customer. Such money, [securities](/usc/7/1a.md?p=41), and property shall be separately accounted for and shall not be commingled with the [funds](/usc/7/4531.md?p=5) of such [commission](/usc/7/1a.md?p=8) merchant or be used to margin or guarantee the trades or [contracts](/usc/7/518.md?p=4), or to secure or extend the credit, of any customer or [person](/usc/7/1a.md?p=38) other than the one for whom the same are held: Provided, however, That such money, [securities](/usc/7/1a.md?p=41), and property of the customers of such [futures commission merchant](/usc/7/1a.md?p=28-A) may, for convenience, be commingled and deposited in the same account or accounts with any [bank](/usc/7/27.md?p=a) or trust company or with the clearing house organization of such [contract](/usc/7/518.md?p=4) 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](/usc/7/518.md?p=4) or trades of such customers, or resulting market positions, with the clearinghouse organization of such [contract](/usc/7/518.md?p=4) market or derivatives transaction execution facility or with any [member](/usc/7/1a.md?p=34) of such [contract](/usc/7/518.md?p=4) market or derivatives transaction execution facility, may be withdrawn and applied to such purposes, including the payment of [commissions](/usc/7/1a.md?p=8), brokerage, interest, taxes, storage, and other charges, lawfully accruing in connection with such [contracts](/usc/7/518.md?p=4) and trades: Provided further, That in accordance with such terms and conditions as the [Commission](/usc/7/1a.md?p=8) may prescribe by rule, regulation, or [order](/usc/7/2902.md?p=10), such money, [securities](/usc/7/1a.md?p=41), and property of the customers of such [futures commission merchant](/usc/7/1a.md?p=28-A) may be commingled and deposited as provided in this section with any other money, [securities](/usc/7/1a.md?p=41), and property received by such [futures commission merchant](/usc/7/1a.md?p=28-A) and required by the [Commission](/usc/7/1a.md?p=8) to be separately accounted for and treated and dealt with as belonging to the customers of such [futures commission merchant](/usc/7/1a.md?p=28-A): Provided further, That such money may be invested in obligations of the [United States](/usc/7/6402.md?p=8), in general obligations of any [State](/usc/7/1359aa.md?p=5) or of any political subdivision thereof, and in obligations fully guaranteed as to principal and interest by the [United States](/usc/7/6402.md?p=8), such investments to be made in accordance with such rules and regulations and subject to such conditions as the [Commission](/usc/7/1a.md?p=8) may prescribe.
- (b) **Duties of clearing agencies, depositories, and others in handling customer receipts—** It shall be unlawful for any [person](/usc/7/1a.md?p=38), including but not limited to any clearing agency of a [contract](/usc/7/518.md?p=4) market or derivatives transaction execution facility and any depository, that has received any money, [securities](/usc/7/1a.md?p=41), or property for deposit in a separate account as provided in paragraph (2) of this section,[^1] to hold, dispose of, or use any such money, [securities](/usc/7/1a.md?p=41), or property as belonging to the depositing [futures commission merchant](/usc/7/1a.md?p=28-A) or any [person](/usc/7/1a.md?p=38) other than the customers of such [futures commission merchant](/usc/7/1a.md?p=28-A).
- (c) **Conflicts of interest—** The [Commission](/usc/7/1a.md?p=8) shall require that [futures commission merchants](/usc/7/1a.md?p=28-A) and [introducing brokers](/usc/7/1a.md?p=31-A) implement conflict-of-interest systems and procedures that—
  - (1) establish structural and institutional safeguards to ensure that the activities of any [person](/usc/7/1a.md?p=38) within the firm relating to research or analysis of the price or market for any [commodity](/usc/7/1a.md?p=9) are separated by appropriate informational partitions within the firm from the review, pressure, or oversight of [persons](/usc/7/1a.md?p=38) whose involvement in trading or clearing activities might potentially bias the judgment or supervision of the [persons](/usc/7/1a.md?p=38); and
  - (2) address such other issues as the [Commission](/usc/7/1a.md?p=8) determines to be appropriate.
- (d) **Designation of Chief Compliance Officer—** Each [futures commission merchant](/usc/7/1a.md?p=28-A) shall designate an individual to serve as its Chief Compliance Officer and perform such duties and responsibilities as shall be set forth in regulations to be adopted by the [Commission](/usc/7/1a.md?p=8) or rules to be adopted by a futures association registered under [section 21 of this title](/usc/7/21.md).
- (e) **Rules to avoid duplicative regulation of dual registrants—** Consistent with this chapter, the [Commission](/usc/7/1a.md?p=8), in consultation with the [Securities](/usc/7/1a.md?p=41) and [Exchange](/usc/7/1a.md?p=1-D) [Commission](/usc/7/1a.md?p=8), shall issue such rules, regulations, or [orders](/usc/7/2902.md?p=10) as are necessary to avoid duplicative or conflicting regulations applicable to any [futures commission merchant](/usc/7/1a.md?p=28-A) registered with the [Commission](/usc/7/1a.md?p=8) pursuant to [section 6f(a) of this title](/usc/7/6f.md?p=a) (except [paragraph (2)](#e-2) thereof), that is also registered with the [Securities](/usc/7/1a.md?p=41) and [Exchange](/usc/7/1a.md?p=1-D) [Commission](/usc/7/1a.md?p=8) pursuant to [section 78o(b)](/usc/15/78o.md?p=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](/usc/15/78q.md) and the rules and regulations thereunder related to the treatment of customer [funds](/usc/7/4531.md?p=5), [securities](/usc/7/1a.md?p=41), or property, maintenance of books and records, financial reporting or other financial responsibility rules (as defined in [section 78c(a)(40) of title 15](/usc/15/78c.md?p=a-40)), involving [security futures products](/usc/7/1a.md?p=45); and
  - (2) similar provisions of this chapter and the rules and regulations thereunder involving [security futures products](/usc/7/1a.md?p=45).
- (f) **Swaps—**
  - (1) **Registration requirement—** It shall be unlawful for any [person](/usc/7/1a.md?p=38) to accept any money, [securities](/usc/7/1a.md?p=41), or property (or to extend any credit in lieu of money, [securities](/usc/7/1a.md?p=41), or property) from, for, or on behalf of a [swaps](/usc/7/1a.md?p=47-A) customer to margin, guarantee, or secure a [swap](/usc/7/1a.md?p=47-A) cleared by or through a [derivatives clearing organization](/usc/7/1a.md?p=15-A) (including money, [securities](/usc/7/1a.md?p=41), or property accruing to the customer as the result of such a [swap](/usc/7/1a.md?p=47-A)), unless the [person](/usc/7/1a.md?p=38) shall have registered under this chapter with the [Commission](/usc/7/1a.md?p=8) as a [futures commission merchant](/usc/7/1a.md?p=28-A), and the registration shall not have expired nor been suspended nor revoked.
  - (2) **Cleared swaps—**
    - (A) **Segregation required—** A [futures commission merchant](/usc/7/1a.md?p=28-A) shall treat and deal with all money, [securities](/usc/7/1a.md?p=41), and property of any [swaps](/usc/7/1a.md?p=47-A) customer received to margin, guarantee, or secure a [swap](/usc/7/1a.md?p=47-A) cleared by or though a [derivatives clearing organization](/usc/7/1a.md?p=15-A) (including money, [securities](/usc/7/1a.md?p=41), or property accruing to the [swaps](/usc/7/1a.md?p=47-A) customer as the result of such a [swap](/usc/7/1a.md?p=47-A)) as belonging to the [swaps](/usc/7/1a.md?p=47-A) customer.
    - (B) **Commingling prohibited—** Money, [securities](/usc/7/1a.md?p=41), and property of a [swaps](/usc/7/1a.md?p=47-A) customer described in [subparagraph (A)](#f-2-A) shall be separately accounted for and shall not be commingled with the [funds](/usc/7/4531.md?p=5) of the [futures commission merchant](/usc/7/1a.md?p=28-A) or be used to margin, secure, or guarantee any trades or [contracts](/usc/7/518.md?p=4) of any [swaps](/usc/7/1a.md?p=47-A) customer or [person](/usc/7/1a.md?p=38) other than the [person](/usc/7/1a.md?p=38) for whom the same are held.
  - (3) **Exceptions—**
    - (A) **Use of funds—**
      - (i) **In general—** Notwithstanding [paragraph (2)](#f-2), money, [securities](/usc/7/1a.md?p=41), and property of [swap](/usc/7/1a.md?p=47-A) customers of a [futures commission merchant](/usc/7/1a.md?p=28-A) described in [paragraph (2)](#f-2) may, for convenience, be commingled and deposited in the same account or accounts with any [bank](/usc/7/27.md?p=a) or trust company or with a [derivatives clearing organization](/usc/7/1a.md?p=15-A).
      - (ii) **Withdrawal—** Notwithstanding [paragraph (2)](#f-2), such share of the money, [securities](/usc/7/1a.md?p=41), and property described in [clause (i)](#f-3-A-i) as in the normal course of business shall be necessary to margin, guarantee, secure, transfer, adjust, or settle a [cleared swap](/usc/7/1a.md?p=7) with a [derivatives clearing organization](/usc/7/1a.md?p=15-A), or with any [member](/usc/7/1a.md?p=34) of the [derivatives clearing organization](/usc/7/1a.md?p=15-A), may be withdrawn and applied to such purposes, including the payment of [commissions](/usc/7/1a.md?p=8), brokerage, interest, taxes, storage, and other charges, lawfully accruing in connection with the [cleared swap](/usc/7/1a.md?p=7).
    - (B) **Commission action—** Notwithstanding [paragraph (2)](#f-2), in accordance with such terms and conditions as the [Commission](/usc/7/1a.md?p=8) may prescribe by rule, regulation, or [order](/usc/7/2902.md?p=10), any money, [securities](/usc/7/1a.md?p=41), or property of the [swaps](/usc/7/1a.md?p=47-A) customers of a [futures commission merchant](/usc/7/1a.md?p=28-A) described in [paragraph (2)](#f-2) may be commingled and deposited in customer accounts with any other money, [securities](/usc/7/1a.md?p=41), or property received by the [futures commission merchant](/usc/7/1a.md?p=28-A) and required by the [Commission](/usc/7/1a.md?p=8) to be separately accounted for and treated and dealt with as belonging to the [swaps](/usc/7/1a.md?p=47-A) customer of the [futures commission merchant](/usc/7/1a.md?p=28-A).
  - (4) **Permitted investments—** Money described in [paragraph (2)](#f-2) may be invested in obligations of the [United States](/usc/7/6402.md?p=8), in general obligations of any [State](/usc/7/1359aa.md?p=5) or of any political subdivision of a [State](/usc/7/1359aa.md?p=5), and in obligations fully guaranteed as to principal and interest by the [United States](/usc/7/6402.md?p=8), or in any other investment that the [Commission](/usc/7/1a.md?p=8) may by rule or regulation prescribe, and such investments shall be made in accordance with such rules and regulations and subject to such conditions as the [Commission](/usc/7/1a.md?p=8) may prescribe.
  - (5) **Commodity contract—** A [swap](/usc/7/1a.md?p=47-A) cleared by or through a [derivatives clearing organization](/usc/7/1a.md?p=15-A) shall be considered to be a [commodity](/usc/7/1a.md?p=9) [contract](/usc/7/518.md?p=4) as such term is defined in [section 761 of title 11](/usc/11/761.md), with regard to all money, [securities](/usc/7/1a.md?p=41), and property of any [swaps](/usc/7/1a.md?p=47-A) customer received by a [futures commission merchant](/usc/7/1a.md?p=28-A) or a [derivatives clearing organization](/usc/7/1a.md?p=15-A) to margin, guarantee, or secure the [swap](/usc/7/1a.md?p=47-A) (including money, [securities](/usc/7/1a.md?p=41), or property accruing to the customer as the result of the [swap](/usc/7/1a.md?p=47-A)).
  - (6) **Prohibition—** It shall be unlawful for any [person](/usc/7/1a.md?p=38), including any [derivatives clearing organization](/usc/7/1a.md?p=15-A) and any depository institution, that has received any money, [securities](/usc/7/1a.md?p=41), or property for deposit in a separate account or accounts as provided in [paragraph (2)](#f-2) to hold, dispose of, or use any such money, [securities](/usc/7/1a.md?p=41), or property as belonging to the depositing [futures commission merchant](/usc/7/1a.md?p=28-A) or any [person](/usc/7/1a.md?p=38) other than the [swaps](/usc/7/1a.md?p=47-A) customer of the [futures commission merchant](/usc/7/1a.md?p=28-A).
- (g) **Introducing broker registration requirements—** It shall be unlawful for any [person](/usc/7/1a.md?p=38) to be an [introducing broker](/usc/7/1a.md?p=31-A) unless such [person](/usc/7/1a.md?p=38) shall have registered under this chapter with the [Commission](/usc/7/1a.md?p=8) as an [introducing broker](/usc/7/1a.md?p=31-A) and such registration shall not have expired nor been suspended nor revoked.
- (h) **Contracts held in portfolio margining accounts—** Notwithstanding [subsection (a)(2)](#a-2) or the rules and regulations thereunder, and pursuant to an exemption granted by the [Commission](/usc/7/1a.md?p=8) under [section 6(c) of this title](/usc/7/6.md?p=c) or pursuant to a rule or regulation, a [futures commission merchant](/usc/7/1a.md?p=28-A) that is registered pursuant to [section 6f(a)(1) of this title](/usc/7/6f.md?p=a-1) and also registered as a broker or dealer pursuant to section 78(o)(b)(1) of title 15 may, pursuant to a portfolio margining program approved by the [Securities](/usc/7/1a.md?p=41) and [Exchange](/usc/7/1a.md?p=1-D) [Commission](/usc/7/1a.md?p=8) pursuant to [section 78s(b) of title 15](/usc/15/78s.md?p=b), hold in a portfolio margining account carried as a [securities](/usc/7/1a.md?p=41) account subject to section 78(o)(c)(3) of title 15 and the rules and regulations thereunder, a [contract](/usc/7/518.md?p=4) for the purchase or sale of a [commodity](/usc/7/1a.md?p=9) for [future delivery](/usc/7/1a.md?p=27) or an [option](/usc/7/1a.md?p=36) on such a [contract](/usc/7/518.md?p=4), and any money, [securities](/usc/7/1a.md?p=41) or other property received from a customer to margin, guarantee or secure such a [contract](/usc/7/518.md?p=4), or accruing to a customer as the result of such a [contract](/usc/7/518.md?p=4). The [Commission](/usc/7/1a.md?p=8) shall consult with the [Securities](/usc/7/1a.md?p=41) and [Exchange](/usc/7/1a.md?p=1-D) [Commission](/usc/7/1a.md?p=8) to adopt rules to ensure that such transactions and accounts are subject to comparable requirements to the extent practical for similar products.

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


It shall be unlawful for any [person](/usc/7/1a.md?p=38) to act as [floor trader](/usc/7/1a.md?p=23-A) in executing purchases and sales, or as [floor broker](/usc/7/1a.md?p=22-A) in executing any [orders](/usc/7/2902.md?p=10) for the purchase or sale, of any [commodity](/usc/7/1a.md?p=9) for [future delivery](/usc/7/1a.md?p=27), or involving any [contracts](/usc/7/518.md?p=4) of sale of any [commodity](/usc/7/1a.md?p=9) for [future delivery](/usc/7/1a.md?p=27), on or subject to the rules of any [contract](/usc/7/518.md?p=4) market or derivatives transaction execution facility unless such [person](/usc/7/1a.md?p=38) shall have registered, under this chapter, with the [Commission](/usc/7/1a.md?p=8) as such [floor trader](/usc/7/1a.md?p=23-A) or [floor broker](/usc/7/1a.md?p=22-A) and such registration shall not have expired nor been suspended nor revoked.


# §6f. Registration and financial requirements; risk assessment

- (a) **Registration of futures commission merchants, introducing brokers, and floor brokers and traders—**
  - (1) Any [person](/usc/7/1a.md?p=38) desiring to register as a [futures commission merchant](/usc/7/1a.md?p=28-A), [introducing broker](/usc/7/1a.md?p=31-A), [floor broker](/usc/7/1a.md?p=22-A), or [floor trader](/usc/7/1a.md?p=23-A) hereunder shall be registered upon application to the [Commission](/usc/7/1a.md?p=8). The application shall be made in such form and manner as prescribed by the [Commission](/usc/7/1a.md?p=8), giving such information and facts as the [Commission](/usc/7/1a.md?p=8) 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](/usc/7/1a.md?p=28-A) or an [introducing broker](/usc/7/1a.md?p=31-A), 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](/usc/7/1502.md?p=b-5), as the [Commission](/usc/7/1a.md?p=8) may direct. Such [person](/usc/7/1a.md?p=38), when registered hereunder, shall likewise continue to report and furnish to the [Commission](/usc/7/1a.md?p=8) the above-mentioned information and such other information pertaining to such [person](/usc/7/1a.md?p=38)’s business as the [Commission](/usc/7/1a.md?p=8) 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](/usc/7/1a.md?p=8) may by rule, regulation, or [order](/usc/7/2902.md?p=10) 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)](#a-1), and except as provided in [paragraph (3)](#a-3), any broker or dealer that is registered with the [Securities](/usc/7/1a.md?p=41) and [Exchange](/usc/7/1a.md?p=1-D) [Commission](/usc/7/1a.md?p=8) shall be registered as a [futures commission merchant](/usc/7/1a.md?p=28-A) or [introducing broker](/usc/7/1a.md?p=31-A), as applicable, if—
    - (A) the broker or dealer limits its solicitation of [orders](/usc/7/2902.md?p=10), acceptance of [orders](/usc/7/2902.md?p=10), or execution of [orders](/usc/7/2902.md?p=10), or placing of [orders](/usc/7/2902.md?p=10) on behalf of others involving any [contracts](/usc/7/518.md?p=4) of sale of any [commodity](/usc/7/1a.md?p=9) for [future delivery](/usc/7/1a.md?p=27), on or subject to the rules of any [contract](/usc/7/518.md?p=4) market or registered derivatives transaction execution facility to [security futures products](/usc/7/1a.md?p=45);
    - (B) the broker or dealer files written notice with the [Commission](/usc/7/1a.md?p=8) in such form as the [Commission](/usc/7/1a.md?p=8), by rule, may prescribe containing such information as the [Commission](/usc/7/1a.md?p=8), 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](/usc/7/2902.md?p=10) of the [Securities](/usc/7/1a.md?p=41) and [Exchange](/usc/7/1a.md?p=1-D) [Commission](/usc/7/1a.md?p=8); and
    - (D) the broker or dealer is a [member](/usc/7/1a.md?p=34) of a national [securities](/usc/7/1a.md?p=41) association registered pursuant to [section 78o–3(a)](/usc/15/78o–3.md?p=a) of title 15.

    The registration shall be effective contemporaneously with the submission of notice, in written or electronic form, to the [Commission](/usc/7/1a.md?p=8).

  - (3) A [floor broker](/usc/7/1a.md?p=22-A) or [floor trader](/usc/7/1a.md?p=23-A) shall be exempt from the registration requirements of [section 6e of this title](/usc/7/6e.md) and paragraph (1) of this subsection if—
    - (A) the [floor broker](/usc/7/1a.md?p=22-A) or [floor trader](/usc/7/1a.md?p=23-A) is a broker or dealer registered with the [Securities](/usc/7/1a.md?p=41) and [Exchange](/usc/7/1a.md?p=1-D) [Commission](/usc/7/1a.md?p=8);
    - (B) the [floor broker](/usc/7/1a.md?p=22-A) or [floor trader](/usc/7/1a.md?p=23-A) limits its solicitation of [orders](/usc/7/2902.md?p=10), acceptance of [orders](/usc/7/2902.md?p=10), or execution of [orders](/usc/7/2902.md?p=10), or placing of [orders](/usc/7/2902.md?p=10) on behalf of others involving any [contracts](/usc/7/518.md?p=4) of sale of any [commodity](/usc/7/1a.md?p=9) for [future delivery](/usc/7/1a.md?p=27), on or subject to the rules of any [contract](/usc/7/518.md?p=4) market to [security futures products](/usc/7/1a.md?p=45); and
    - (C) the registration of the [floor broker](/usc/7/1a.md?p=22-A) or [floor trader](/usc/7/1a.md?p=23-A) is not suspended pursuant to an [order](/usc/7/2902.md?p=10) of the [Securities](/usc/7/1a.md?p=41) and [Exchange](/usc/7/1a.md?p=1-D) [Commission](/usc/7/1a.md?p=8).
  - (4)
    - (A) A broker or dealer that is registered as a [futures commission merchant](/usc/7/1a.md?p=28-A) or [introducing broker](/usc/7/1a.md?p=31-A) pursuant to [paragraph (2)](#a-2), or that is a [floor broker](/usc/7/1a.md?p=22-A) or [floor trader](/usc/7/1a.md?p=23-A) exempt from registration pursuant to [paragraph (3)](#a-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](/usc/7/6c.md).
      - (ii) Sections [6d](/usc/7/6d.md), [6e](/usc/7/6e.md), and [6h](/usc/7/6h.md) of this title.
      - (iii) Subsections [(b)](#b) and [(c)](#c) of this section.
      - (iv) [Section 6j of this title](/usc/7/6j.md).
      - (v) [Section 6k(1) of this title](/usc/7/6k.md?p=1).
      - (vi) [Section 6p of this title](/usc/7/6p.md).
      - (vii) [Section 13a–2 of this title](/usc/7/13a–2.md).
      - (viii) Subsections (d) and (g) of [section 12 of this title](/usc/7/12.md).
      - (ix) [Section 20 of this title](/usc/7/20.md).
    - (B)
      - (i) Except as provided in clause (ii) of this subparagraph, but notwithstanding any other provision of this chapter, the [Commission](/usc/7/1a.md?p=8), by rule, regulation, or [order](/usc/7/2902.md?p=10), may conditionally or unconditionally exempt any broker or dealer subject to the registration requirement of [paragraph (2)](#a-2), or any broker or dealer exempt from registration pursuant to [paragraph (3)](#a-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](/usc/7/1a.md?p=8) shall, by rule or regulation, determine the procedures under which an exemptive [order](/usc/7/2902.md?p=10) under this section shall be granted and may, in its sole discretion, decline to entertain any application for an [order](/usc/7/2902.md?p=10) of exemption under this section.
    - (C)
      - (i) A broker or dealer that is registered as a [futures commission merchant](/usc/7/1a.md?p=28-A) or [introducing broker](/usc/7/1a.md?p=31-A) pursuant to [paragraph (2)](#a-2) or an associated [person](/usc/7/1a.md?p=38) thereof, or that is a [floor broker](/usc/7/1a.md?p=22-A) or [floor trader](/usc/7/1a.md?p=23-A) exempt from registration pursuant to [paragraph (3)](#a-3), shall not be required to become a [member](/usc/7/1a.md?p=34) of any futures association registered under [section 21 of this title](/usc/7/21.md).
      - (ii) No futures association registered under [section 21 of this title](/usc/7/21.md) shall limit its [members](/usc/7/1a.md?p=34) from carrying an account, accepting an [order](/usc/7/2902.md?p=10), or transacting business with a broker or dealer that is registered as a [futures commission merchant](/usc/7/1a.md?p=28-A) or [introducing broker](/usc/7/1a.md?p=31-A) pursuant to [paragraph (2)](#a-2) or an associated [person](/usc/7/1a.md?p=38) thereof, or that is a [floor broker](/usc/7/1a.md?p=22-A) or [floor trader](/usc/7/1a.md?p=23-A) exempt from registration pursuant to [paragraph (3)](#a-3).
- (b) **Financial requirements for futures commission merchants and introducing brokers—** Notwithstanding any other provisions of this chapter, no [person](/usc/7/1a.md?p=38) desiring to register as [futures commission merchant](/usc/7/1a.md?p=28-A) or as [introducing broker](/usc/7/1a.md?p=31-A) shall be so registered unless he meets such minimum financial requirements as the [Commission](/usc/7/1a.md?p=8) may by regulation prescribe as necessary to insure his meeting his obligation as a registrant, and each [person](/usc/7/1a.md?p=38) 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](/usc/7/1a.md?p=34) of a [contract](/usc/7/518.md?p=4) market or derivatives transaction execution facility and conforms to minimum financial standards and related reporting requirements set by such [contract](/usc/7/518.md?p=4) market or derivatives transaction execution facility in its bylaws, rules, regulations, or resolutions and approved by the [Commission](/usc/7/1a.md?p=8) 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](/usc/7/1a.md?p=38) directly or indirectly controlling, controlled by, or under common control with a [futures commission merchant](/usc/7/1a.md?p=28-A), as the [Commission](/usc/7/1a.md?p=8), 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](/usc/12/1813.md?p=q).
  - (2)
    - (A) Each registered [futures commission merchant](/usc/7/1a.md?p=28-A) shall obtain such information and make and keep such records as the [Commission](/usc/7/1a.md?p=8), by rule or regulation, prescribes concerning the registered [futures commission merchant](/usc/7/1a.md?p=28-A)’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](#c-1-i), other than a natural [person](/usc/7/1a.md?p=38).
    - (B) The records required under [subparagraph (A)](#c-2-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](#c-1-i) whose business activities are reasonably likely to have a material impact on the financial or operational condition of the [futures commission merchant](/usc/7/1a.md?p=28-A), including its adjusted net capital, its liquidity, or its ability to conduct or finance its operations.
    - (C) The [Commission](/usc/7/1a.md?p=8), by rule or regulation, may require summary reports of such information to be filed by the [futures commission merchant](/usc/7/1a.md?p=28-A) with the [Commission](/usc/7/1a.md?p=8) no more frequently than quarterly.
  - (3)
    - (A) ,[^1] If, as a result of adverse market conditions or based on reports provided to the [Commission](/usc/7/1a.md?p=8) pursuant to [paragraph (2)](#c-2) or other available information, the [Commission](/usc/7/1a.md?p=8) reasonably concludes that the [Commission](/usc/7/1a.md?p=8) has concerns regarding the financial or operational condition of any registered [futures commission merchant](/usc/7/1a.md?p=28-A), the [Commission](/usc/7/1a.md?p=8) may require the [futures commission merchant](/usc/7/1a.md?p=28-A) to make reports concerning the futures and other financial activities of any of such [person](/usc/7/1a.md?p=38)’s [affiliated persons](#c-1-i), other than a natural [person](/usc/7/1a.md?p=38), whose business activities are reasonably likely to have a material impact on the financial or operational condition of the [futures commission merchant](/usc/7/1a.md?p=28-A).
    - (B) The [Commission](/usc/7/1a.md?p=8), 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](/usc/7/1a.md?p=8) or to a [contract](/usc/7/518.md?p=4) market or derivatives transaction execution facility or other self-regulatory organization with primary responsibility for examining the registered [futures commission merchant](/usc/7/1a.md?p=28-A)’s financial and operational condition.
  - (4)
    - (A) in[^2] developing and implementing reporting requirements pursuant to [paragraph (2)](#c-2) with respect to [affiliated persons](#c-1-i) subject to examination by or reporting requirements of a [Federal banking agency](#c-1-ii), the [Commission](/usc/7/1a.md?p=8) shall consult with and consider the views of each such [Federal banking agency](#c-1-ii). If a [Federal banking agency](#c-1-ii) comments in writing on a proposed rule of the [Commission](/usc/7/1a.md?p=8) under this subsection that has been published for comment, the [Commission](/usc/7/1a.md?p=8) shall respond in writing to the written comment before adopting the proposed rule. The [Commission](/usc/7/1a.md?p=8) shall, at the request of the [Federal banking agency](#c-1-ii), publish the comment and response in the Federal Register at the time of publishing the adopted rule.
    - (B)
      - (i) Except as provided in [clause (ii)](#c-4-B-ii), a registered [futures commission merchant](/usc/7/1a.md?p=28-A) shall be considered to have complied with a recordkeeping or reporting requirement adopted pursuant to [paragraph (2)](#c-2) concerning an [affiliated person](#c-1-i) that is subject to examination by, or reporting requirements of, a [Federal banking agency](#c-1-ii) if the [futures commission merchant](/usc/7/1a.md?p=28-A) utilizes for the recordkeeping or reporting requirement copies of reports filed by the [affiliated person](#c-1-i) with the [Federal banking agency](#c-1-ii) pursuant to [section 161 of title 12](/usc/12/161.md), section 9 of the Federal Reserve Act ([12 U.S.C. 321](/usc/12/321.md) et seq.), [section 1817(a) of title 12](/usc/12/1817.md?p=a), [section 1467a(b) of title 12](/usc/12/1467a.md?p=b), or [section 1844 of title 12](/usc/12/1844.md).
      - (ii) The [Commission](/usc/7/1a.md?p=8) may, by rule adopted pursuant to [paragraph (2)](#c-2), require any [futures commission merchant](/usc/7/1a.md?p=28-A) filing the reports with the [Commission](/usc/7/1a.md?p=8) to obtain, maintain, or report supplemental information if the [Commission](/usc/7/1a.md?p=8) makes an explicit finding that the supplemental information is necessary to inform the [Commission](/usc/7/1a.md?p=8) regarding potential risks to the [futures commission merchant](/usc/7/1a.md?p=28-A). Prior to requiring any such supplemental information, the [Commission](/usc/7/1a.md?p=8) shall first request the [Federal banking agency](#c-1-ii) to expand its reporting requirements to include the information.
  - (5) Prior to making a request pursuant to [paragraph (3)](#c-3) for information with respect to an [affiliated person](#c-1-i) that is subject to examination by or reporting requirements of a [Federal banking agency](#c-1-ii), the [Commission](/usc/7/1a.md?p=8) shall—
    - (A) notify the agency of the information required with respect to the [affiliated person](#c-1-i); and
    - (B) consult with the agency to determine whether the information required is available from the agency and for other purposes, unless the [Commission](/usc/7/1a.md?p=8) determines that any delay resulting from the consultation would be inconsistent with ensuring the financial and operational condition of the [futures commission merchant](/usc/7/1a.md?p=28-A) or the stability or integrity of the futures markets.
  - (6) Nothing in this subsection shall be construed to permit the [Commission](/usc/7/1a.md?p=8) to require any [futures commission merchant](/usc/7/1a.md?p=28-A) to obtain, maintain, or furnish any examination report of any [Federal banking agency](#c-1-ii) or any supervisory recommendations or analysis contained in the report.
  - (7) No information provided to or obtained by the [Commission](/usc/7/1a.md?p=8) from any [Federal banking agency](#c-1-ii) pursuant to a request under [paragraph (5)](#c-5) regarding any [affiliated person](#c-1-i) that is subject to examination by or reporting requirements of a [Federal banking agency](#c-1-ii) may be disclosed to any other [person](/usc/7/1a.md?p=38) (other than as provided in [section 12 of this title](/usc/7/12.md) or [section 12a(6) of this title](/usc/7/12a.md?p=6)), without the prior written approval of the [Federal banking agency](#c-1-ii).
  - (8) The [Commission](/usc/7/1a.md?p=8) shall notify a [Federal banking agency](#c-1-ii) of any concerns of the [Commission](/usc/7/1a.md?p=8) regarding significant financial or operational risks resulting from the activities of any [futures commission merchant](/usc/7/1a.md?p=28-A) to any [affiliated person](#c-1-i) thereof that is subject to examination by or reporting requirements of the [Federal banking agency](#c-1-ii).
  - (9) The [Commission](/usc/7/1a.md?p=8), by rule, regulation, or [order](/usc/7/2902.md?p=10), may exempt any [person](/usc/7/1a.md?p=38) or class of [persons](/usc/7/1a.md?p=38) under such terms and conditions and for such periods as the [Commission](/usc/7/1a.md?p=8) shall provide in the rule, regulation, or [order](/usc/7/2902.md?p=10), from this subsection and the rules and regulations issued under this subsection. In granting the exemption, the [Commission](/usc/7/1a.md?p=8) 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](/usc/12/3401.md?p=7)), a [State](/usc/7/1359aa.md?p=5) insurance [commission](/usc/7/1a.md?p=8) or similar [State agency](/usc/7/2012.md?p=s), the [Securities](/usc/7/1a.md?p=41) and [Exchange](/usc/7/1a.md?p=1-D) [Commission](/usc/7/1a.md?p=8), or a similar foreign regulator;
    - (B) the primary business of any [affiliated person](#c-1-i);
    - (C) the nature and extent of domestic or foreign regulation of the [affiliated person](#c-1-i)’s activities;
    - (D) the nature and extent of the registered [futures commission merchant](/usc/7/1a.md?p=28-A)’s [commodity](/usc/7/1a.md?p=9) futures and [options](/usc/7/1a.md?p=36) activities; and
    - (E) with respect to the registered [futures commission merchant](/usc/7/1a.md?p=28-A) and its [affiliated persons](#c-1-i), on a consolidated basis, the amount and proportion of assets devoted to, and revenues derived from activities in the [United States](/usc/7/6402.md?p=8) futures markets.
  - (10) Information required to be provided pursuant to this subsection shall be subject to [section 12 of this title](/usc/7/12.md). Except as specifically provided in [section 12 of this title](/usc/7/12.md) and notwithstanding any other provision of law, the [Commission](/usc/7/1a.md?p=8) shall not be compelled to disclose any information required to be reported under this subsection, or any information supplied to the [Commission](/usc/7/1a.md?p=8) by any domestic or foreign regulatory agency that relates to the financial or operational condition of any [affiliated person](#c-1-i) of a registered [futures commission merchant](/usc/7/1a.md?p=28-A).
  - (11) Nothing in [paragraphs (1) through (10)](#c-1..c-10) shall be construed to supersede or to limit in any way the [authority](/usc/7/2009aa.md?p=1) or powers of the [Commission](/usc/7/1a.md?p=8) pursuant to any other provision of this chapter or regulations issued under this chapter.

# §6g. Reporting and recordkeeping

- (a) **In general—** Every [person](/usc/7/1a.md?p=38) registered hereunder as [futures commission merchant](/usc/7/1a.md?p=28-A), [introducing broker](/usc/7/1a.md?p=31-A), [floor broker](/usc/7/1a.md?p=22-A), or [floor trader](/usc/7/1a.md?p=23-A) shall make such reports as are required by the [Commission](/usc/7/1a.md?p=8) regarding the transactions and positions of such [person](/usc/7/1a.md?p=38), and the transactions and positions of the customer thereof, in [commodities](/usc/7/1a.md?p=9) for [future delivery](/usc/7/1a.md?p=27) on any [board of trade](/usc/7/1a.md?p=6) in the [United States](/usc/7/6402.md?p=8) or elsewhere, and in any [significant price discovery contract](/usc/7/1a.md?p=46) traded or executed on an [electronic trading facility](/usc/7/1a.md?p=16) or any agreement, [contract](/usc/7/518.md?p=4), or transaction that is treated by a [derivatives clearing organization](/usc/7/1a.md?p=15-A), whether registered or not registered, as fungible with a [significant price discovery contract](/usc/7/1a.md?p=46); 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](/usc/7/1a.md?p=8); and shall keep such books and records open to inspection by any representative of the [Commission](/usc/7/1a.md?p=8) or the [United States](/usc/7/6402.md?p=8) Department of Justice.
- (b) **Daily trading records: registered entities—** Every [registered entity](/usc/7/1a.md?p=40) shall maintain daily trading records. The daily trading records shall include such information as the [Commission](/usc/7/1a.md?p=8) shall prescribe by rule.
- (c) **Daily trading records: floor brokers, introducing brokers, and futures commission merchants—** [Floor brokers](/usc/7/1a.md?p=22-A), [introducing brokers](/usc/7/1a.md?p=31-A), and [futures commission merchants](/usc/7/1a.md?p=28-A) 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)](#b).
- (d) **Daily trading records: form and reports—** Daily trading records shall be maintained in a form suitable to the [Commission](/usc/7/1a.md?p=8) for such period as may be required by the [Commission](/usc/7/1a.md?p=8). Reports shall be made from the records maintained at such times and at such places and in such form as the [Commission](/usc/7/1a.md?p=8) may prescribe by rule, [order](/usc/7/2902.md?p=10), or regulation in [order](/usc/7/2902.md?p=10) to protect the public interest and the interest of [persons](/usc/7/1a.md?p=38) trading in [commodity](/usc/7/1a.md?p=9) futures.
- (e) **Disclosure of information—** Before the beginning of trading each day, the [exchange](/usc/7/1a.md?p=1-D) shall, insofar as is practicable and under terms and conditions specified by the [Commission](/usc/7/1a.md?p=8), make public the volume of trading on each type of [contract](/usc/7/518.md?p=4) for the previous day and such other information as the [Commission](/usc/7/1a.md?p=8) deems necessary in the public interest and prescribes by rule, [order](/usc/7/2902.md?p=10), or regulation.
- (f) **Authority of Commission to make separate determinations unimpaired—** Nothing contained in this section shall be construed to prohibit the [Commission](/usc/7/1a.md?p=8) from making separate determinations for different [registered entities](/usc/7/1a.md?p=40) when such determinations are warranted in the judgment of the [Commission](/usc/7/1a.md?p=8).

# §6h. False self-representation as registered entity member prohibited


It shall be unlawful for any [person](/usc/7/1a.md?p=38) falsely to represent such [person](/usc/7/1a.md?p=38) to be a [member](/usc/7/1a.md?p=34) of a [registered entity](/usc/7/1a.md?p=40) or the representative or agent of such [member](/usc/7/1a.md?p=34), or to be a registrant under this chapter or the representative or agent of any registrant, in soliciting or handling any [order](/usc/7/2902.md?p=10) or [contract](/usc/7/518.md?p=4) for the purchase or sale of any [commodity](/usc/7/1a.md?p=9) in [interstate commerce](/usc/7/1a.md?p=30) or for [future delivery](/usc/7/1a.md?p=27), or falsely to represent in connection with the handling of any such [order](/usc/7/2902.md?p=10) or [contract](/usc/7/518.md?p=4) that the same is to be or has been executed on, or by or through a [member](/usc/7/1a.md?p=34) of, any [registered entity](/usc/7/1a.md?p=40).


# §6i. Reports of deals equal to or in excess of trading limits; books and records; cash and controlled transactions


It shall be unlawful for any [person](/usc/7/1a.md?p=38) to make any [contract](/usc/7/518.md?p=4) for the purchase or sale of any [commodity](/usc/7/1a.md?p=9) for [future delivery](/usc/7/1a.md?p=27) on or subject to the rules of any [contract](/usc/7/518.md?p=4) market or derivatives transaction execution facility, or any [significant price discovery contract](/usc/7/1a.md?p=46) traded or executed on an [electronic trading facility](/usc/7/1a.md?p=16) or any agreement, [contract](/usc/7/518.md?p=4), or transaction that is treated by a [derivatives clearing organization](/usc/7/1a.md?p=15-A), whether registered or not registered, as fungible with a [significant price discovery contract](/usc/7/1a.md?p=46)—

- (1) if such [person](/usc/7/1a.md?p=38) shall directly or indirectly make such [contracts](/usc/7/518.md?p=4) with respect to any [commodity](/usc/7/1a.md?p=9) or any future of such [commodity](/usc/7/1a.md?p=9) 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](/usc/7/1a.md?p=8), and
- (2) if such [person](/usc/7/1a.md?p=38) shall directly or indirectly have or obtain a long or short position in any [commodity](/usc/7/1a.md?p=9) or any future of such [commodity](/usc/7/1a.md?p=9) equal to or in excess of such amount as shall be fixed from time to time by the [Commission](/usc/7/1a.md?p=8),

unless such [person](/usc/7/1a.md?p=38) files or causes to be filed with the properly designated officer of the [Commission](/usc/7/1a.md?p=8) such reports regarding any transactions or positions described in clauses [(1)](#1) and [(2)](#2) hereof as the [Commission](/usc/7/1a.md?p=8) may by rule or regulation require and unless, in accordance with rules and regulations of the [Commission](/usc/7/1a.md?p=8), such [person](/usc/7/1a.md?p=38) shall keep books and records of all such transactions and positions and transactions and positions in any such [commodity](/usc/7/1a.md?p=9) traded on or subject to the rules of any other [board of trade](/usc/7/1a.md?p=6) or [electronic trading facility](/usc/7/1a.md?p=16), and of cash or spot transactions in, and inventories and purchase and sale commitments of such [commodity](/usc/7/1a.md?p=9). Such books and records shall show complete details concerning all such transactions, positions, inventories, and commitments, including the names and addresses of all [persons](/usc/7/1a.md?p=38) having any interest therein, and shall be open at all times to inspection by any representative of the [Commission](/usc/7/1a.md?p=8) or the Department of Justice. For the purposes of this section, the futures and cash or spot transactions and positions of any [person](/usc/7/1a.md?p=38) shall include such transactions and positions of any [persons](/usc/7/1a.md?p=38) directly or indirectly controlled by such [person](/usc/7/1a.md?p=38).


# §6j. Restrictions on dual trading in security futures products on designated contract markets and registered derivatives transaction execution facilities

- (a) **Issuance of regulations—** The [Commission](/usc/7/1a.md?p=8) shall issue regulations to prohibit the [privilege](/usc/7/1a.md?p=36) of [dual trading](#b) in [security futures products](/usc/7/1a.md?p=45) on each [contract](/usc/7/518.md?p=4) market and registered derivatives transaction execution facility. The regulations issued by the [Commission](/usc/7/1a.md?p=8) under this section—
  - (1) shall provide that the prohibition of [dual trading](#b) thereunder shall take effect upon issuance of the regulations; and
  - (2) shall provide exceptions, as the [Commission](/usc/7/1a.md?p=8) determines appropriate, to ensure fairness and orderly trading in [security futures product](/usc/7/1a.md?p=45) 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](/usc/7/1a.md?p=22-A) to execute [orders](/usc/7/2902.md?p=10) for such customer, notwithstanding the regulations to prohibit the [privilege](/usc/7/1a.md?p=36) of [dual trading](#b) required under this section; and
    - (C) other measures reasonably designed to accommodate unique or special characteristics of individual [boards](/usc/7/1a.md?p=5) of trade or [contract](/usc/7/518.md?p=4) 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](/usc/7/2902.md?p=10) by a [floor broker](/usc/7/1a.md?p=22-A) during the same trading session in which the [floor broker](/usc/7/1a.md?p=22-A) executes any trade in the same [contract](/usc/7/518.md?p=4) market or registered derivatives transaction execution facility for—
  - (1) the account of such [floor broker](/usc/7/1a.md?p=22-A);
  - (2) an account for which such [floor broker](/usc/7/1a.md?p=22-A) has trading discretion; or
  - (3) an account controlled by a [person](/usc/7/1a.md?p=38) with whom such [floor broker](/usc/7/1a.md?p=22-A) has a relationship through membership in a [broker association](#c).
- (c) **“Broker association” defined—** As used in this section, the term “broker association” shall include two or more [contract](/usc/7/518.md?p=4) market [members](/usc/7/1a.md?p=34) or registered derivatives transaction execution facility [members](/usc/7/1a.md?p=34) with floor trading [privileges](/usc/7/1a.md?p=36) of whom at least one is acting as a [floor broker](/usc/7/1a.md?p=22-A), 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](/usc/7/2902.md?p=10).

# §6k. Registration of associates of futures commission merchants, commodity pool operators, and commodity trading advisors; required disclosure of disqualifications; exemptions for associated persons

- (1) It shall be unlawful for any [person](/usc/7/1a.md?p=38) to be associated with a [futures commission merchant](/usc/7/1a.md?p=28-A) as a partner, officer, or employee, or to be associated with an [introducing broker](/usc/7/1a.md?p=31-A) as a partner, officer, employee, or agent (or any [person](/usc/7/1a.md?p=38) occupying a similar status or performing similar functions), in any capacity that involves (i) the solicitation or acceptance of customers’ [orders](/usc/7/2902.md?p=10) (other than in a clerical capacity) or (ii) the supervision of any [person](/usc/7/1a.md?p=38) or [persons](/usc/7/1a.md?p=38) so engaged, unless such [person](/usc/7/1a.md?p=38) is registered with the [Commission](/usc/7/1a.md?p=8) under this chapter as an associated [person](/usc/7/1a.md?p=38) of such [futures commission merchant](/usc/7/1a.md?p=28-A) or of such [introducing broker](/usc/7/1a.md?p=31-A) 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](/usc/7/1a.md?p=28-A) or [introducing broker](/usc/7/1a.md?p=31-A) to permit such a [person](/usc/7/1a.md?p=38) to become or remain associated with the [futures commission merchant](/usc/7/1a.md?p=28-A) or [introducing broker](/usc/7/1a.md?p=31-A) in any such capacity if such [futures commission merchant](/usc/7/1a.md?p=28-A) or [introducing broker](/usc/7/1a.md?p=31-A) knew or should have known that such [person](/usc/7/1a.md?p=38) 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](/usc/7/1a.md?p=22-A), [futures commission merchant](/usc/7/1a.md?p=28-A), or [introducing broker](/usc/7/1a.md?p=31-A) (and such registration is not suspended or revoked) need not also register under this paragraph.
- (2) It shall be unlawful for any [person](/usc/7/1a.md?p=38) to be associated with a [commodity pool operator](/usc/7/1a.md?p=11-A) as a partner, officer, employee, consultant, or agent (or any [person](/usc/7/1a.md?p=38) occupying a similar status or performing similar functions), in any capacity that involves (i) the solicitation of [funds](/usc/7/4531.md?p=5), [securities](/usc/7/1a.md?p=41), or property for a participation in a [commodity pool](/usc/7/1a.md?p=10-A) or (ii) the supervision of any [person](/usc/7/1a.md?p=38) or [persons](/usc/7/1a.md?p=38) so engaged, unless such [person](/usc/7/1a.md?p=38) is registered with the [Commission](/usc/7/1a.md?p=8) under this chapter as an associated [person](/usc/7/1a.md?p=38) of such [commodity pool operator](/usc/7/1a.md?p=11-A) 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](/usc/7/1a.md?p=11-A) to permit such a [person](/usc/7/1a.md?p=38) to become or remain associated with the [commodity pool operator](/usc/7/1a.md?p=11-A) in any such capacity if the [commodity pool operator](/usc/7/1a.md?p=11-A) knew or should have known that such [person](/usc/7/1a.md?p=38) 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](/usc/7/1a.md?p=22-A), [futures commission merchant](/usc/7/1a.md?p=28-A), [introducing broker](/usc/7/1a.md?p=31-A), [commodity pool operator](/usc/7/1a.md?p=11-A), or as an associated [person](/usc/7/1a.md?p=38) 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](/usc/7/1a.md?p=8) may exempt any [person](/usc/7/1a.md?p=38) or class of [persons](/usc/7/1a.md?p=38) from having to register under this paragraph by rule, regulation, or [order](/usc/7/2902.md?p=10).
- (3) It shall be unlawful for any [person](/usc/7/1a.md?p=38) to be associated with a [commodity trading advisor](/usc/7/1a.md?p=12-B) as a partner, officer, employee, consultant, or agent (or any [person](/usc/7/1a.md?p=38) 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](/usc/7/1a.md?p=38) or [persons](/usc/7/1a.md?p=38) so engaged, unless such [person](/usc/7/1a.md?p=38) is registered with the [Commission](/usc/7/1a.md?p=8) under this chapter as an associated [person](/usc/7/1a.md?p=38) of such [commodity trading advisor](/usc/7/1a.md?p=12-B) 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](/usc/7/1a.md?p=12-B) to permit such a [person](/usc/7/1a.md?p=38) to become or remain associated with the [commodity trading advisor](/usc/7/1a.md?p=12-B) in any such capacity if the [commodity trading advisor](/usc/7/1a.md?p=12-B) knew or should have known that such [person](/usc/7/1a.md?p=38) 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](/usc/7/1a.md?p=22-A), [futures commission merchant](/usc/7/1a.md?p=28-A), [introducing broker](/usc/7/1a.md?p=31-A), [commodity trading advisor](/usc/7/1a.md?p=12-B), or as an associated [person](/usc/7/1a.md?p=38) 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](/usc/7/1a.md?p=8) may exempt any [person](/usc/7/1a.md?p=38) or class of [persons](/usc/7/1a.md?p=38) from having to register under this paragraph by rule, regulation, or [order](/usc/7/2902.md?p=10).
- (4) Any [person](/usc/7/1a.md?p=38) desiring to be registered as an associated [person](/usc/7/1a.md?p=38) of a [futures commission merchant](/usc/7/1a.md?p=28-A), of an [introducing broker](/usc/7/1a.md?p=31-A), of a [commodity pool operator](/usc/7/1a.md?p=11-A), or of a [commodity trading advisor](/usc/7/1a.md?p=12-B) shall make application to the [Commission](/usc/7/1a.md?p=8) in the form and manner prescribed by the [Commission](/usc/7/1a.md?p=8), giving such information and facts as the [Commission](/usc/7/1a.md?p=8) may deem necessary concerning the applicant. Such [person](/usc/7/1a.md?p=38), when registered hereunder, shall likewise continue to report and furnish to the [Commission](/usc/7/1a.md?p=8) such information as the [Commission](/usc/7/1a.md?p=8) may require. Such registration shall expire at such time as the [Commission](/usc/7/1a.md?p=8) may by rule, regulation, or [order](/usc/7/2902.md?p=10) prescribe.
- (5) It shall be unlawful for any registrant to permit a [person](/usc/7/1a.md?p=38) to become or remain an associated [person](/usc/7/1a.md?p=38) of such registrant, if the registrant knew or should have known of facts regarding such associated [person](/usc/7/1a.md?p=38) that are set forth as statutory disqualifications in [section 12a(2) of this title](/usc/7/12a.md?p=2), unless such registrant has notified the [Commission](/usc/7/1a.md?p=8) of such facts and the [Commission](/usc/7/1a.md?p=8) has determined that such [person](/usc/7/1a.md?p=38) should be registered or temporarily licensed.
- (6) Any associated [person](/usc/7/1a.md?p=38) of a broker or dealer that is registered with the [Securities](/usc/7/1a.md?p=41) and [Exchange](/usc/7/1a.md?p=1-D) [Commission](/usc/7/1a.md?p=8), and who limits its solicitation of [orders](/usc/7/2902.md?p=10), acceptance of [orders](/usc/7/2902.md?p=10), or execution of [orders](/usc/7/2902.md?p=10), or placing of [orders](/usc/7/2902.md?p=10) on behalf of others involving any [contracts](/usc/7/518.md?p=4) of sale of any [commodity](/usc/7/1a.md?p=9) for [future delivery](/usc/7/1a.md?p=27) or any [option](/usc/7/1a.md?p=36) on such a [contract](/usc/7/518.md?p=4), on or subject to the rules of any [contract](/usc/7/518.md?p=4) market or registered derivatives transaction execution facility to [security futures products](/usc/7/1a.md?p=45), 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](/usc/7/6c.md).
  - (B) Sections [6d](/usc/7/6d.md), [6e](/usc/7/6e.md), and [6h](/usc/7/6h.md) of this title.
  - (C) Subsections (b) and (c) of [section 6f of this title](/usc/7/6f.md).
  - (D) [Section 6j of this title](/usc/7/6j.md).
  - (E) [Paragraph (1)](#1) of this section.
  - (F) [Section 6p of this title](/usc/7/6p.md).
  - (G) [Section 13a–2 of this title](/usc/7/13a–2.md).
  - (H) Subsections (d) and (g) of [section 12 of this title](/usc/7/12.md).
  - (I) [Section 20 of this title](/usc/7/20.md).

# §6l. Commodity trading advisors and commodity pool operators; Congressional finding


It is hereby found that the activities of [commodity trading advisors](/usc/7/1a.md?p=12-B) and [commodity pool operators](/usc/7/1a.md?p=11-A) 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](/usc/7/518.md?p=4), 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](/usc/7/1a.md?p=30);
- (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](/usc/7/1a.md?p=9) for [future delivery](/usc/7/1a.md?p=27) on or subject to the rules of [contract](/usc/7/518.md?p=4) markets or derivatives transaction execution facilities; and
- (3) the foregoing transactions occur in such volume as to affect substantially transactions on [contract](/usc/7/518.md?p=4) markets or derivatives transaction execution facilities.

# §6m. Use of mails or other means or instrumentalities of interstate commerce by commodity trading advisors and commodity pool operators; relation to other law

- (1) It shall be unlawful for any [commodity trading advisor](/usc/7/1a.md?p=12-B) or [commodity pool operator](/usc/7/1a.md?p=11-A), unless registered under this chapter, to make use of the mails or any means or instrumentality of [interstate commerce](/usc/7/1a.md?p=30) in connection with his business as such [commodity trading advisor](/usc/7/1a.md?p=12-B) or [commodity pool operator](/usc/7/1a.md?p=11-A): Provided, That the provisions of this section shall not apply to any [commodity trading advisor](/usc/7/1a.md?p=12-B) who, during the course of the preceding twelve months, has not furnished [commodity](/usc/7/1a.md?p=9) trading advice to more than fifteen [persons](/usc/7/1a.md?p=38) and who does not hold himself out generally to the public as a [commodity trading advisor](/usc/7/1a.md?p=12-B). The provisions of this section shall not apply to any [commodity trading advisor](/usc/7/1a.md?p=12-B) who is a (1) dealer, [processor](/usc/7/609.md?p=d-7-D), broker, or seller in cash market transactions of any [commodity](/usc/7/1a.md?p=9) specifically set forth in [section 2(a) of this title](/usc/7/2.md?p=a) 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](/usc/7/1a.md?p=9) specifically set forth in [section 2(a) of this title](/usc/7/2.md?p=a) prior to October 23, 1974; if the advice by the [person](/usc/7/1a.md?p=38) described in clause [(1)](#1) or [(2)](#2) of this sentence as a [commodity trading advisor](/usc/7/1a.md?p=12-B) is solely incidental to the conduct of that [person](/usc/7/1a.md?p=38)’s business: Provided, That such [person](/usc/7/1a.md?p=38) shall be subject to proceedings under [section 18 of this title](/usc/7/18.md).
- (2) Nothing in this chapter shall relieve any [person](/usc/7/1a.md?p=38) of any obligation or duty, or affect the availability of any right or remedy available to the [Securities](/usc/7/1a.md?p=41) and [Exchange](/usc/7/1a.md?p=1-D) [Commission](/usc/7/1a.md?p=8) or any private party arising under 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.] governing the issuance, [offer](/usc/7/1a.md?p=36), purchase, or sale of [securities](/usc/7/1a.md?p=41) of a [commodity pool](/usc/7/1a.md?p=10-A), or of [persons](/usc/7/1a.md?p=38) engaged in transactions with respect to such [securities](/usc/7/1a.md?p=41), or reporting by a [commodity pool](/usc/7/1a.md?p=10-A).
- (3) **Exception.—**
  - (A) **In general.—** [Paragraph (1)](#1) shall not apply to any [commodity trading advisor](/usc/7/1a.md?p=12-B) that is registered with the [Securities](/usc/7/1a.md?p=41) and [Exchange](/usc/7/1a.md?p=1-D) [Commission](/usc/7/1a.md?p=8) as an investment adviser whose business does not consist primarily of acting as a [commodity trading advisor](/usc/7/1a.md?p=12-B), as defined in [section 1a of this title](/usc/7/1a.md), and that does not act as a [commodity trading advisor](/usc/7/1a.md?p=12-B) to any [commodity pool](/usc/7/1a.md?p=10-A) that is engaged primarily in trading [commodity](/usc/7/1a.md?p=9) interests.
  - (B) **Engaged primarily.—** For purposes of [subparagraph (A)](#3-A), a [commodity trading advisor](/usc/7/1a.md?p=12-B) or a [commodity pool](/usc/7/1a.md?p=10-A) shall be considered to be “engaged primarily” in the business of being a [commodity trading advisor](/usc/7/1a.md?p=12-B) or [commodity pool](/usc/7/1a.md?p=10-A) if it is or holds itself out to the public as being engaged primarily, or proposes to engage primarily, in the business of advising on [commodity](/usc/7/1a.md?p=9) interests or investing, reinvesting, owning, holding, or trading in [commodity](/usc/7/1a.md?p=9) interests, respectively.
  - (C) **Commodity interests.—** For purposes of this paragraph, [commodity](/usc/7/1a.md?p=9) interests shall include [contracts](/usc/7/518.md?p=4) of sale of a [commodity](/usc/7/1a.md?p=9) for [future delivery](/usc/7/1a.md?p=27), [options](/usc/7/1a.md?p=36) on such [contracts](/usc/7/518.md?p=4), [security futures](/usc/7/1a.md?p=44), [swaps](/usc/7/1a.md?p=47-A), leverage [contracts](/usc/7/518.md?p=4), foreign [exchange](/usc/7/1a.md?p=1-D), spot and forward [contracts](/usc/7/518.md?p=4) on physical [commodities](/usc/7/1a.md?p=9), and any monies held in an account used for trading [commodity](/usc/7/1a.md?p=9) interests.

# §6n. Registration of commodity trading advisors and commodity pool operators; application; expiration and renewal; record keeping and reports; disclosure; statements of account

- (1) Any [commodity trading advisor](/usc/7/1a.md?p=12-B) or [commodity pool operator](/usc/7/1a.md?p=11-A), or any [person](/usc/7/1a.md?p=38) who contemplates becoming a [commodity trading advisor](/usc/7/1a.md?p=12-B) or [commodity pool operator](/usc/7/1a.md?p=11-A), may register under this chapter by filing an application with the [Commission](/usc/7/1a.md?p=8). Such application shall contain such information, in such form and detail, as the [Commission](/usc/7/1a.md?p=8) 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](/usc/7/1359aa.md?p=5) 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](/usc/7/1a.md?p=38) 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](/usc/7/1a.md?p=38) performing similar functions and of any controlling [person](/usc/7/1a.md?p=38) 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](/usc/7/2009aa.md?p=1) of the applicant with respect to clients’ [funds](/usc/7/4531.md?p=5) and accounts;
  - (E) the basis upon which the applicant is or will be compensated; and
  - (F) such other information as the [Commission](/usc/7/1a.md?p=8) 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](/usc/7/1a.md?p=8) may by rule, regulation, or [order](/usc/7/2902.md?p=10) 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](/usc/7/1a.md?p=12-B) and [commodity pool operator](/usc/7/1a.md?p=11-A) 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](/usc/7/1a.md?p=8). All such books and records shall be kept for a period of at least three years, or longer if the [Commission](/usc/7/1a.md?p=8) so directs, and shall be open to inspection by any representative of the [Commission](/usc/7/1a.md?p=8) or the Department of Justice. Upon the request of the [Commission](/usc/7/1a.md?p=8), a registered [commodity trading advisor](/usc/7/1a.md?p=12-B) or [commodity pool operator](/usc/7/1a.md?p=11-A) 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](/usc/7/1a.md?p=8) by rule or regulation, all [commodity trading advisors](/usc/7/1a.md?p=12-B) and [commodity pool operators](/usc/7/1a.md?p=11-A) 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](/usc/7/1a.md?p=11-A) 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](/usc/7/1a.md?p=8) and shall include complete information as to the current status of all trading accounts in which such participant has an interest.

# §6o. Fraud and misrepresentation by commodity trading advisors, commodity pool operators, and associated persons

- (1) It shall be unlawful for a [commodity trading advisor](/usc/7/1a.md?p=12-B), associated [person](/usc/7/1a.md?p=38) of a [commodity trading advisor](/usc/7/1a.md?p=12-B), [commodity pool operator](/usc/7/1a.md?p=11-A), or associated [person](/usc/7/1a.md?p=38) of a [commodity pool operator](/usc/7/1a.md?p=11-A), by use of the mails or any means or instrumentality of [interstate commerce](/usc/7/1a.md?p=30), 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](/usc/7/1a.md?p=12-B), associated [person](/usc/7/1a.md?p=38) of a [commodity trading advisor](/usc/7/1a.md?p=12-B), [commodity pool operator](/usc/7/1a.md?p=11-A), or associated [person](/usc/7/1a.md?p=38) of a [commodity pool operator](/usc/7/1a.md?p=11-A) registered under this chapter to represent or imply in any manner whatsoever that such [person](/usc/7/1a.md?p=38) has been sponsored, recommended, or approved, or that such [person](/usc/7/1a.md?p=38)’s abilities or qualifications have in any respect been passed upon, by the [United States](/usc/7/6402.md?p=8) or any agency or officer thereof. This section shall not be construed to prohibit a statement that a [person](/usc/7/1a.md?p=38) is registered under this chapter as a [commodity trading advisor](/usc/7/1a.md?p=12-B), associated [person](/usc/7/1a.md?p=38) of a [commodity trading advisor](/usc/7/1a.md?p=12-B), [commodity pool operator](/usc/7/1a.md?p=11-A), or associated [person](/usc/7/1a.md?p=38) of a [commodity pool operator](/usc/7/1a.md?p=11-A), if such statement is true in fact and if the effect of such registration is not misrepresented.

# [§6o–1. Transferred — transferred]



# §6p. Standards and examinations

- (a) The [Commission](/usc/7/1a.md?p=8) may specify by rules and regulations appropriate standards with respect to training, experience, and such other qualifications as the [Commission](/usc/7/1a.md?p=8) finds necessary or desirable to insure the fitness of [persons](/usc/7/1a.md?p=38) required to be registered with the [Commission](/usc/7/1a.md?p=8). In connection therewith, the [Commission](/usc/7/1a.md?p=8) 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](/usc/7/1a.md?p=8) may further prescribe by rules and regulations that, in lieu of examinations administered by the [Commission](/usc/7/1a.md?p=8), futures associations registered under [section 21 of this title](/usc/7/21.md), [contract](/usc/7/518.md?p=4) 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](/usc/7/1a.md?p=8) 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](/usc/7/1a.md?p=34) of the public with whom such individuals deal.
- (b) The [Commission](/usc/7/1a.md?p=8) 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](/usc/7/1a.md?p=8), any rule of any appropriate [contract](/usc/7/518.md?p=4) market, derivatives transaction execution facility, registered futures association, or other self-regulatory organization, or any other applicable Federal or [state](/usc/7/1359aa.md?p=5)[^1] law, rule or regulation.

# §6q. Special procedures to encourage and facilitate bona fide hedging by agricultural producers

- (a) **Authority—** The [Commission](/usc/7/1a.md?p=8) shall consider issuing rules or [orders](/usc/7/2902.md?p=10) which—
  - (1) prescribe procedures under which each [contract](/usc/7/518.md?p=4) market is to provide for orderly delivery, including temporary storage costs, of any [agricultural commodity](/usc/7/5602.md?p=1) enumerated in [section 1a(9) of this title](/usc/7/1a.md?p=9) which is the subject of a [contract](/usc/7/518.md?p=4) for purchase or sale for [future delivery](/usc/7/1a.md?p=27);
  - (2) increase the ease with which domestic agricultural [producers](/usc/7/6802.md?p=4-A-iii-III-bb) may participate in [contract](/usc/7/518.md?p=4) markets, including by addressing cost and margin requirements, so as to better enable the [producers](/usc/7/6802.md?p=4-A-iii-III-bb) to hedge price risk associated with their production;
  - (3) provide flexibility in the minimum quantities of such [agricultural commodities](/usc/7/5602.md?p=1) that may be the subject of a [contract](/usc/7/518.md?p=4) for purchase or sale for [future delivery](/usc/7/1a.md?p=27) that is traded on a [contract](/usc/7/518.md?p=4) market, to better allow domestic agricultural [producers](/usc/7/6802.md?p=4-A-iii-III-bb) to hedge such price risk; and
  - (4) encourage [contract](/usc/7/518.md?p=4) markets to provide information and otherwise facilitate the participation of domestic agricultural [producers](/usc/7/6802.md?p=4-A-iii-III-bb) in [contract](/usc/7/518.md?p=4) markets.
- (b) **Report—** Within 1 year after December 21, 2000, the [Commission](/usc/7/1a.md?p=8) shall submit to the [Committee](/usc/7/2132.md?p=n) on Agriculture of the House of Representatives and the [Committee](/usc/7/2132.md?p=n) 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](/usc/7/518.md?p=4) markets pursuant to this section.

# §6r. Reporting and recordkeeping for uncleared swaps

- (a) **Required reporting of swaps not accepted by any derivatives clearing organization—**
  - (1) **In general—** Each [swap](/usc/7/1a.md?p=47-A) that is not accepted for clearing by any [derivatives clearing organization](/usc/7/1a.md?p=15-A) shall be reported to—
    - (A) a [swap data repository](/usc/7/1a.md?p=48) described in [section 24a of this title](/usc/7/24a.md); or
    - (B) in the case in which there is no [swap data repository](/usc/7/1a.md?p=48) that would accept the [swap](/usc/7/1a.md?p=47-A), to the [Commission](/usc/7/1a.md?p=8) pursuant to this section within such time period as the [Commission](/usc/7/1a.md?p=8) may by rule or regulation prescribe.
  - (2) **Transition rule for preenactment swaps—**
    - (A) **Swaps entered into before July 21, 2010—** Each [swap](/usc/7/1a.md?p=47-A) entered into before July 21, 2010, the terms of which have not expired as of July 21, 2010, shall be reported to a registered [swap data repository](/usc/7/1a.md?p=48) or the [Commission](/usc/7/1a.md?p=8) by a date that is not later than—
      - (i) 30 days after issuance of the interim final rule; or
      - (ii) such other period as the [Commission](/usc/7/1a.md?p=8) determines to be appropriate.
    - (B) **Commission rulemaking—** The [Commission](/usc/7/1a.md?p=8) shall promulgate an interim final rule within 90 days of July 21, 2010, providing for the reporting of each [swap](/usc/7/1a.md?p=47-A) entered into before July 21, 2010.
    - (C) **Effective date—** The reporting provisions described in this section shall be effective upon the enactment of this section.
  - (3) **Reporting obligations—**
    - (A) **Swaps in which only 1 counterparty is a swap dealer or major swap participant—** With respect to a [swap](/usc/7/1a.md?p=47-A) in which only 1 counterparty is a [swap dealer](/usc/7/1a.md?p=49-A) or [major swap participant](/usc/7/1a.md?p=33-A), the [swap dealer](/usc/7/1a.md?p=49-A) or [major swap participant](/usc/7/1a.md?p=33-A) shall report the [swap](/usc/7/1a.md?p=47-A) as required under paragraphs [(1)](#a-1) and [(2)](#a-2).
    - (B) **Swaps in which 1 counterparty is a swap dealer and the other a major swap participant—** With respect to a [swap](/usc/7/1a.md?p=47-A) in which 1 counterparty is a [swap dealer](/usc/7/1a.md?p=49-A) and the other a [major swap participant](/usc/7/1a.md?p=33-A), the [swap dealer](/usc/7/1a.md?p=49-A) shall report the [swap](/usc/7/1a.md?p=47-A) as required under paragraphs [(1)](#a-1) and [(2)](#a-2).
    - (C) **Other swaps—** With respect to any other [swap](/usc/7/1a.md?p=47-A) not described in subparagraph [(A)](#a-3-A) or [(B)](#a-3-B), the counterparties to the [swap](/usc/7/1a.md?p=47-A) shall select a counterparty to report the [swap](/usc/7/1a.md?p=47-A) as required under paragraphs [(1)](#a-1) and [(2)](#a-2).
- (b) **Duties of certain individuals—** Any individual or entity that enters into a [swap](/usc/7/1a.md?p=47-A) shall meet each requirement described in [subsection (c)](#c) if the individual or entity did not—
  - (1) clear the [swap](/usc/7/1a.md?p=47-A) in accordance with [section 2(h)(1) of this title](/usc/7/2.md?p=h-1); or
  - (2) have the data regarding the [swap](/usc/7/1a.md?p=47-A) accepted by a [swap data repository](/usc/7/1a.md?p=48) in accordance with rules (including timeframes) adopted by the [Commission](/usc/7/1a.md?p=8) under [section 24a of this title](/usc/7/24a.md).
- (c) **Requirements—** An individual or entity described in [subsection (b)](#b) shall—
  - (1) upon written request from the [Commission](/usc/7/1a.md?p=8), provide reports regarding the [swaps](/usc/7/1a.md?p=47-A) held by the individual or entity to the [Commission](/usc/7/1a.md?p=8) in such form and in such manner as the [Commission](/usc/7/1a.md?p=8) may request; and
  - (2) maintain books and records pertaining to the [swaps](/usc/7/1a.md?p=47-A) held by the individual or entity in such form, in such manner, and for such period as the [Commission](/usc/7/1a.md?p=8) may require, which shall be open to inspection by—
    - (A) any representative of the [Commission](/usc/7/1a.md?p=8);
    - (B) an appropriate [prudential regulator](/usc/7/1a.md?p=39);
    - (C) the [Securities](/usc/7/1a.md?p=41) and [Exchange](/usc/7/1a.md?p=1-D) [Commission](/usc/7/1a.md?p=8);
    - (D) the Financial Stability Oversight [Council](/usc/7/3402.md?p=i); and
    - (E) the Department of Justice.
- (d) **Identical data—** In prescribing rules under this section, the [Commission](/usc/7/1a.md?p=8) shall require individuals and entities described in [subsection (b)](#b) to submit to the [Commission](/usc/7/1a.md?p=8) a report that contains data that is not less comprehensive than the data required to be collected by [swap data repositories](/usc/7/1a.md?p=48) under [section 24a of this title](/usc/7/24a.md).

# §6s. Registration and regulation of swap dealers and major swap participants

- (a) **Registration—**
  - (1) **Swap dealers—** It shall be unlawful for any [person](/usc/7/1a.md?p=38) to act as a [swap dealer](/usc/7/1a.md?p=49-A) unless the [person](/usc/7/1a.md?p=38) is registered as a [swap dealer](/usc/7/1a.md?p=49-A) with the [Commission](/usc/7/1a.md?p=8).
  - (2) **Major swap participants—** It shall be unlawful for any [person](/usc/7/1a.md?p=38) to act as a [major swap participant](/usc/7/1a.md?p=33-A) unless the [person](/usc/7/1a.md?p=38) is registered as a [major swap participant](/usc/7/1a.md?p=33-A) with the [Commission](/usc/7/1a.md?p=8).
- (b) **Requirements—**
  - (1) **In general—** A [person](/usc/7/1a.md?p=38) shall register as a [swap dealer](/usc/7/1a.md?p=49-A) or [major swap participant](/usc/7/1a.md?p=33-A) by filing a registration application with the [Commission](/usc/7/1a.md?p=8).
  - (2) **Contents—**
    - (A) **In general—** The application shall be made in such form and manner as prescribed by the [Commission](/usc/7/1a.md?p=8), and shall contain such information, as the [Commission](/usc/7/1a.md?p=8) considers necessary concerning the business in which the applicant is or will be engaged.
    - (B) **Continual reporting—** A [person](/usc/7/1a.md?p=38) that is registered as a [swap dealer](/usc/7/1a.md?p=49-A) or [major swap participant](/usc/7/1a.md?p=33-A) shall continue to submit to the [Commission](/usc/7/1a.md?p=8) reports that contain such information pertaining to the business of the [person](/usc/7/1a.md?p=38) as the [Commission](/usc/7/1a.md?p=8) may require.
  - (3) **Expiration—** Each registration under this section shall expire at such time as the [Commission](/usc/7/1a.md?p=8) may prescribe by rule or regulation.
  - (4) **Rules—** Except as provided in subsections [(d)](#d) and [(e)](#e), the [Commission](/usc/7/1a.md?p=8) may prescribe rules applicable to [swap dealers](/usc/7/1a.md?p=49-A) and [major swap participants](/usc/7/1a.md?p=33-A), including rules that limit the activities of [swap dealers](/usc/7/1a.md?p=49-A) and [major swap participants](/usc/7/1a.md?p=33-A).
  - (5) **Transition—** Rules under this section shall provide for the registration of [swap dealers](/usc/7/1a.md?p=49-A) and [major swap participants](/usc/7/1a.md?p=33-A) not later than 1 year after July 21, 2010.
  - (6) **Statutory disqualification—** Except to the extent otherwise specifically provided by rule, regulation, or [order](/usc/7/2902.md?p=10), it shall be unlawful for a [swap dealer](/usc/7/1a.md?p=49-A) or a [major swap participant](/usc/7/1a.md?p=33-A) to permit any [person](/usc/7/1a.md?p=38) associated with a [swap dealer](/usc/7/1a.md?p=49-A) or a [major swap participant](/usc/7/1a.md?p=33-A) who is subject to a statutory disqualification to effect or be involved in effecting [swaps](/usc/7/1a.md?p=47-A) on behalf of the [swap dealer](/usc/7/1a.md?p=49-A) or [major swap participant](/usc/7/1a.md?p=33-A), if the [swap dealer](/usc/7/1a.md?p=49-A) or [major swap participant](/usc/7/1a.md?p=33-A) knew, or in the exercise of reasonable care should have known, of the statutory disqualification.
- (c) **Dual registration—**
  - (1) **Swap dealer—** Any [person](/usc/7/1a.md?p=38) that is required to be registered as a [swap dealer](/usc/7/1a.md?p=49-A) under this section shall register with the [Commission](/usc/7/1a.md?p=8) regardless of whether the [person](/usc/7/1a.md?p=38) also is a depository institution or is registered with the [Securities](/usc/7/1a.md?p=41) and [Exchange](/usc/7/1a.md?p=1-D) [Commission](/usc/7/1a.md?p=8) as a [security-based swap dealer](/usc/7/1a.md?p=43).
  - (2) **Major swap participant—** Any [person](/usc/7/1a.md?p=38) that is required to be registered as a [major swap participant](/usc/7/1a.md?p=33-A) under this section shall register with the [Commission](/usc/7/1a.md?p=8) regardless of whether the [person](/usc/7/1a.md?p=38) also is a depository institution or is registered with the [Securities](/usc/7/1a.md?p=41) and [Exchange](/usc/7/1a.md?p=1-D) [Commission](/usc/7/1a.md?p=8) as a [major security-based swap participant](/usc/7/1a.md?p=32).
- (d) **Rulemakings—**
  - (1) **In general—** The [Commission](/usc/7/1a.md?p=8) shall adopt rules for [persons](/usc/7/1a.md?p=38) that are registered as [swap dealers](/usc/7/1a.md?p=49-A) or [major swap participants](/usc/7/1a.md?p=33-A) under this section.
  - (2) **Exception for prudential requirements—**
    - (A) **In general—** The [Commission](/usc/7/1a.md?p=8) may not prescribe rules imposing prudential requirements on [swap dealers](/usc/7/1a.md?p=49-A) or [major swap participants](/usc/7/1a.md?p=33-A) for which there is a [prudential regulator](/usc/7/1a.md?p=39).
    - (B) **Applicability—** [Subparagraph (A)](#d-2-A) does not limit the [authority](/usc/7/2009aa.md?p=1) of the [Commission](/usc/7/1a.md?p=8) to prescribe rules as directed under this section.
- (e) **Capital and margin requirements—**
  - (1) **In general—**
    - (A) **Swap dealers and major swap participants that are banks—** Each registered [swap dealer](/usc/7/1a.md?p=49-A) and [major swap participant](/usc/7/1a.md?p=33-A) for which there is a [prudential regulator](/usc/7/1a.md?p=39) shall meet such minimum capital requirements and minimum initial and variation margin requirements as the [prudential regulator](/usc/7/1a.md?p=39) shall by rule or regulation prescribe under [paragraph (2)(A)](#e-2-A).
    - (B) **Swap dealers and major swap participants that are not banks—** Each registered [swap dealer](/usc/7/1a.md?p=49-A) and [major swap participant](/usc/7/1a.md?p=33-A) for which there is not a [prudential regulator](/usc/7/1a.md?p=39) shall meet such minimum capital requirements and minimum initial and variation margin requirements as the [Commission](/usc/7/1a.md?p=8) shall by rule or regulation prescribe under [paragraph (2)(B)](#e-2-B).
  - (2) **Rules—**
    - (A) **Swap dealers and major swap participants that are banks—** The [prudential regulators](/usc/7/1a.md?p=39), in consultation with the [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), shall jointly adopt rules for [swap dealers](/usc/7/1a.md?p=49-A) and [major swap participants](/usc/7/1a.md?p=33-A), with respect to their activities as a [swap dealer](/usc/7/1a.md?p=49-A) or [major swap participant](/usc/7/1a.md?p=33-A), for which there is a [prudential regulator](/usc/7/1a.md?p=39) imposing—
      - (i) capital requirements; and
      - (ii) both initial and variation margin requirements on all [swaps](/usc/7/1a.md?p=47-A) that are not cleared by a registered [derivatives clearing organization](/usc/7/1a.md?p=15-A).
    - (B) **Swap dealers and major swap participants that are not banks—** The [Commission](/usc/7/1a.md?p=8) shall adopt rules for [swap dealers](/usc/7/1a.md?p=49-A) and [major swap participants](/usc/7/1a.md?p=33-A), with respect to their activities as a [swap dealer](/usc/7/1a.md?p=49-A) or [major swap participant](/usc/7/1a.md?p=33-A), for which there is not a [prudential regulator](/usc/7/1a.md?p=39) imposing—
      - (i) capital requirements; and
      - (ii) both initial and variation margin requirements on all [swaps](/usc/7/1a.md?p=47-A) that are not cleared by a registered [derivatives clearing organization](/usc/7/1a.md?p=15-A).
    - (C) **Capital—** In setting capital requirements for a [person](/usc/7/1a.md?p=38) that is designated as a [swap dealer](/usc/7/1a.md?p=49-A) or a [major swap participant](/usc/7/1a.md?p=33-A) for a single type or single class or category of [swap](/usc/7/1a.md?p=47-A) or activities, the [prudential regulator](/usc/7/1a.md?p=39) and the [Commission](/usc/7/1a.md?p=8) shall take into account the risks associated with other types of [swaps](/usc/7/1a.md?p=47-A) or classes of [swaps](/usc/7/1a.md?p=47-A) or categories of [swaps](/usc/7/1a.md?p=47-A) engaged in and the other activities conducted by that [person](/usc/7/1a.md?p=38) that are not otherwise subject to regulation applicable to that [person](/usc/7/1a.md?p=38) by virtue of the status of the [person](/usc/7/1a.md?p=38) as a [swap dealer](/usc/7/1a.md?p=49-A) or a [major swap participant](/usc/7/1a.md?p=33-A).
  - (3) **Standards for capital and margin—**
    - (A) **In general—** To offset the greater risk to the [swap dealer](/usc/7/1a.md?p=49-A) or [major swap participant](/usc/7/1a.md?p=33-A) and the financial system arising from the use of [swaps](/usc/7/1a.md?p=47-A) that are not cleared, the requirements imposed under [paragraph (2)](#e-2) shall—
      - (i) help ensure the safety and soundness of the [swap dealer](/usc/7/1a.md?p=49-A) or [major swap participant](/usc/7/1a.md?p=33-A); and
      - (ii) be appropriate for the risk associated with the non-[cleared swaps](/usc/7/1a.md?p=7) held as a [swap dealer](/usc/7/1a.md?p=49-A) or [major swap participant](/usc/7/1a.md?p=33-A).
    - (B) **Rule of construction—**
      - (i) **In general—** Nothing in this section shall limit, or be construed to limit, the [authority](/usc/7/2009aa.md?p=1)—
        - (I) of the [Commission](/usc/7/1a.md?p=8) to set financial responsibility rules for a [futures commission merchant](/usc/7/1a.md?p=28-A) or [introducing broker](/usc/7/1a.md?p=31-A) registered pursuant to [section 6f(a) of this title](/usc/7/6f.md?p=a) (except for [section 6f(a)(3) of this title](/usc/7/6f.md?p=a-3)) in accordance with [section 6f(b) of this title](/usc/7/6f.md?p=b); or
        - (II) of the [Securities](/usc/7/1a.md?p=41) and [Exchange](/usc/7/1a.md?p=1-D) [Commission](/usc/7/1a.md?p=8) to set financial responsibility rules for a broker or dealer registered pursuant to section 15(b) of the [Securities](/usc/7/1a.md?p=41) Exchange Act of 1934 ([15 U.S.C. 78o(b)](/usc/15/78o.md?p=b)) (except for [section 15(b)(11)](/usc/7/15.md) of that Act ([15 U.S.C. 78o(b)(11)](/usc/15/78o.md?p=b-11))[^1] in accordance with section 15(c)(3) of the [Securities](/usc/7/1a.md?p=41) Exchange Act of 1934 ([15 U.S.C. 78o(c)(3)](/usc/15/78o.md?p=c-3)).
      - (ii) **Futures commission merchants and other dealers—** A [futures commission merchant](/usc/7/1a.md?p=28-A), [introducing broker](/usc/7/1a.md?p=31-A), broker, or dealer shall maintain sufficient capital to comply with the stricter of any applicable capital requirements to which such [futures commission merchant](/usc/7/1a.md?p=28-A), [introducing broker](/usc/7/1a.md?p=31-A), broker, or dealer is subject to under this chapter 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) **Margin requirements—** In prescribing margin requirements under this subsection, the [prudential regulator](/usc/7/1a.md?p=39) with respect to [swap dealers](/usc/7/1a.md?p=49-A) and [major swap participants](/usc/7/1a.md?p=33-A) for which it is the [prudential regulator](/usc/7/1a.md?p=39) and the [Commission](/usc/7/1a.md?p=8) with respect to [swap dealers](/usc/7/1a.md?p=49-A) and [major swap participants](/usc/7/1a.md?p=33-A) for which there is no [prudential regulator](/usc/7/1a.md?p=39) shall permit the use of noncash collateral, as the regulator or the [Commission](/usc/7/1a.md?p=8) determines to be consistent with—
      - (i) preserving the financial integrity of markets trading [swaps](/usc/7/1a.md?p=47-A); and
      - (ii) preserving the stability of the [United States](/usc/7/6402.md?p=8) financial system.
    - (D) **Comparability of capital and margin requirements—**
      - (i) **In general—** The [prudential regulators](/usc/7/1a.md?p=39), the [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) shall periodically (but not less frequently than annually) consult on minimum capital requirements and minimum initial and variation margin requirements.
      - (ii) **Comparability—** The entities described in [clause (i)](#e-3-D-i) shall, to the maximum extent practicable, establish and maintain comparable minimum capital requirements and minimum initial and variation margin requirements, including the use of non cash collateral, for—
        - (I) [swap dealers](/usc/7/1a.md?p=49-A); and
        - (II) [major swap participants](/usc/7/1a.md?p=33-A).
  - (4) **Applicability with respect to counterparties—** The requirements of paragraphs [(2)(A)(ii)](#e-2-A-ii) and [(2)(B)(ii)](#e-2-B-ii), including the initial and variation margin requirements imposed by rules adopted pursuant to paragraphs [(2)(A)(ii)](#e-2-A-ii) and [(2)(B)(ii)](#e-2-B-ii), shall not apply to a [swap](/usc/7/1a.md?p=47-A) in which a counterparty qualifies for an exception under [section 2(h)(7)(A) of this title](/usc/7/2.md?p=h-7-A), or an exemption issued under [section 6(c)(1) of this title](/usc/7/6.md?p=c-1) from the requirements of [section 2(h)(1)(A) of this title](/usc/7/2.md?p=h-1-A) for cooperative entities as defined in such exemption, or satisfies the criteria in [section 2(h)(7)(D) of this title](/usc/7/2.md?p=h-7-D).
- (f) **Reporting and recordkeeping—**
  - (1) **In general—** Each registered [swap dealer](/usc/7/1a.md?p=49-A) and [major swap participant](/usc/7/1a.md?p=33-A)—
    - (A) shall make such reports as are required by the [Commission](/usc/7/1a.md?p=8) by rule or regulation regarding the transactions and positions and financial condition of the registered [swap dealer](/usc/7/1a.md?p=49-A) or [major swap participant](/usc/7/1a.md?p=33-A);
    - (B)
      - (i) for which there is a [prudential regulator](/usc/7/1a.md?p=39), shall keep books and records of all activities related to the business as a [swap dealer](/usc/7/1a.md?p=49-A) or [major swap participant](/usc/7/1a.md?p=33-A) in such form and manner and for such period as may be prescribed by the [Commission](/usc/7/1a.md?p=8) by rule or regulation; and
      - (ii) for which there is no [prudential regulator](/usc/7/1a.md?p=39), shall keep books and records in such form and manner and for such period as may be prescribed by the [Commission](/usc/7/1a.md?p=8) by rule or regulation;
    - (C) shall keep books and records described in [subparagraph (B)](#f-1-B) open to inspection and examination by any representative of the [Commission](/usc/7/1a.md?p=8); and
    - (D) shall keep any such books and records relating to [swaps](/usc/7/1a.md?p=47-A) defined in [section 1a(47)(A)(v) of this title](/usc/7/1a.md?p=47-A-v) open to inspection and examination by the [Securities](/usc/7/1a.md?p=41) and [Exchange](/usc/7/1a.md?p=1-D) [Commission](/usc/7/1a.md?p=8).
  - (2) **Rules—** The [Commission](/usc/7/1a.md?p=8) shall adopt rules governing reporting and recordkeeping for [swap dealers](/usc/7/1a.md?p=49-A) and [major swap participants](/usc/7/1a.md?p=33-A).
- (g) **Daily trading records—**
  - (1) **In general—** Each registered [swap dealer](/usc/7/1a.md?p=49-A) and [major swap participant](/usc/7/1a.md?p=33-A) shall maintain daily trading records of the [swaps](/usc/7/1a.md?p=47-A) of the registered [swap dealer](/usc/7/1a.md?p=49-A) and [major swap participant](/usc/7/1a.md?p=33-A) and all related records (including related cash or forward transactions) and recorded communications, including electronic mail, instant messages, and recordings of telephone [calls](/usc/7/1a.md?p=36), for such period as may be required by the [Commission](/usc/7/1a.md?p=8) by rule or regulation.
  - (2) **Information requirements—** The daily trading records shall include such information as the [Commission](/usc/7/1a.md?p=8) shall require by rule or regulation.
  - (3) **Counterparty records—** Each registered [swap dealer](/usc/7/1a.md?p=49-A) and [major swap participant](/usc/7/1a.md?p=33-A) shall maintain daily trading records for each counterparty in a manner and form that is identifiable with each [swap](/usc/7/1a.md?p=47-A) transaction.
  - (4) **Audit trail—** Each registered [swap dealer](/usc/7/1a.md?p=49-A) and [major swap participant](/usc/7/1a.md?p=33-A) shall maintain a complete audit trail for conducting comprehensive and accurate trade reconstructions.
  - (5) **Rules—** The [Commission](/usc/7/1a.md?p=8) shall adopt rules governing daily trading records for [swap dealers](/usc/7/1a.md?p=49-A) and [major swap participants](/usc/7/1a.md?p=33-A).
- (h) **Business conduct standards—**
  - (1) **In general—** Each registered [swap dealer](/usc/7/1a.md?p=49-A) and [major swap participant](/usc/7/1a.md?p=33-A) shall conform with such business conduct standards as prescribed in [paragraph (3)](#h-3) and as may be prescribed by the [Commission](/usc/7/1a.md?p=8) by rule or regulation that relate to—
    - (A) fraud, manipulation, and other abusive practices involving [swaps](/usc/7/1a.md?p=47-A) (including [swaps](/usc/7/1a.md?p=47-A) that are offered but not entered into);
    - (B) diligent supervision of the business of the registered [swap dealer](/usc/7/1a.md?p=49-A) and [major swap participant](/usc/7/1a.md?p=33-A);
    - (C) adherence to all applicable position limits; and
    - (D) such other matters as the [Commission](/usc/7/1a.md?p=8) determines to be appropriate.
  - (2) **Responsibilities with respect to special entities—**
    - (A) **Advising special entities—** A [swap dealer](/usc/7/1a.md?p=49-A) or [major swap participant](/usc/7/1a.md?p=33-A) that acts as an advisor to a [special entity](#h-2-C) regarding a [swap](/usc/7/1a.md?p=47-A) shall comply with the requirements of [subparagraph (4)](#h-4) with respect to such [Special Entity](#h-2-C).
    - (B) **Entering of swaps with respect to special entities—** A [swap dealer](/usc/7/1a.md?p=49-A) that enters into or [offers](/usc/7/1a.md?p=36) to enter into [swap](/usc/7/1a.md?p=47-A)[^2] with a [Special Entity](#h-2-C) shall comply with the requirements of [subparagraph (5)](#h-5) with respect to such [Special Entity](#h-2-C).
    - (C) **Special entity defined—** For purposes of this subsection, the term “special entity” means—
      - (i) a Federal agency;
      - (ii) a [State](/usc/7/1359aa.md?p=5), [State agency](/usc/7/2012.md?p=s), city, county, municipality, or other political subdivision of a [State](/usc/7/1359aa.md?p=5);
      - (iii) any employee benefit plan, as defined in section 3 of the Employee Retirement Income Security Act of 1974 ([29 U.S.C. 1002](/usc/29/1002.md));
      - (iv) any governmental plan, as defined in section 3 of the Employee Retirement Income Security Act of 1974 ([29 U.S.C. 1002](/usc/29/1002.md)); or
      - (v) any endowment, including an endowment that is an organization described in [section 501(c)(3) of title 26](/usc/26/501.md?p=c-3).
  - (3) **Business conduct requirements—** Business conduct requirements adopted by the [Commission](/usc/7/1a.md?p=8) shall—
    - (A) establish a duty for a [swap dealer](/usc/7/1a.md?p=49-A) or [major swap participant](/usc/7/1a.md?p=33-A) to verify that any counterparty meets the eligibility standards for an [eligible contract participant](/usc/7/1a.md?p=18);
    - (B) require disclosure by the [swap dealer](/usc/7/1a.md?p=49-A) or [major swap participant](/usc/7/1a.md?p=33-A) to any counterparty to the transaction (other than a [swap dealer](/usc/7/1a.md?p=49-A), [major swap participant](/usc/7/1a.md?p=33-A), [security-based swap dealer](/usc/7/1a.md?p=43), or [major security-based swap participant](/usc/7/1a.md?p=32)) of—
      - (i) information about the material risks and characteristics of the [swap](/usc/7/1a.md?p=47-A);
      - (ii) any material incentives or conflicts of interest that the [swap dealer](/usc/7/1a.md?p=49-A) or [major swap participant](/usc/7/1a.md?p=33-A) may have in connection with the [swap](/usc/7/1a.md?p=47-A); and
      - (iii)
        - (I) for [cleared swaps](/usc/7/1a.md?p=7), upon the request of the counterparty, receipt of the daily mark of the transaction from the appropriate [derivatives clearing organization](/usc/7/1a.md?p=15-A); and
        - (II) for uncleared swaps, receipt of the daily mark of the transaction from the [swap dealer](/usc/7/1a.md?p=49-A) or the [major swap participant](/usc/7/1a.md?p=33-A);
    - (C) establish a duty for a [swap dealer](/usc/7/1a.md?p=49-A) or [major swap participant](/usc/7/1a.md?p=33-A) to communicate in a fair and balanced manner based on principles of fair dealing and good faith; and
    - (D) establish such other standards and requirements as the [Commission](/usc/7/1a.md?p=8) may determine are appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of this chapter.
  - (4) **Special requirements for swap dealers acting as advisors—**
    - (A) **In general—** It shall be unlawful for a [swap dealer](/usc/7/1a.md?p=49-A) or [major swap participant](/usc/7/1a.md?p=33-A)—
      - (i) to employ any device, scheme, or artifice to defraud any [Special Entity](#h-2-C) or prospective customer who is a [Special Entity](#h-2-C);
      - (ii) to engage in any transaction, practice, or course of business that operates as a fraud or deceit on any [Special Entity](#h-2-C) or prospective customer who is a [Special Entity](#h-2-C); or
      - (iii) to engage in any act, practice, or course of business that is fraudulent, deceptive or manipulative.
    - (B) **Duty—** Any [swap dealer](/usc/7/1a.md?p=49-A) that acts as an advisor to a [Special Entity](#h-2-C) shall have a duty to act in the best interests of the [Special Entity](#h-2-C).
    - (C) **Reasonable efforts—** Any [swap dealer](/usc/7/1a.md?p=49-A) that acts as an advisor to a [Special Entity](#h-2-C) shall make reasonable efforts to obtain such information as is necessary to make a reasonable determination that any [swap](/usc/7/1a.md?p=47-A) recommended by the [swap dealer](/usc/7/1a.md?p=49-A) is in the best interests of the [Special Entity](#h-2-C), including information relating to—
      - (i) the financial status of the [Special Entity](#h-2-C);
      - (ii) the tax status of the [Special Entity](#h-2-C);
      - (iii) the investment or financing objectives of the [Special Entity](#h-2-C); and
      - (iv) any other information that the [Commission](/usc/7/1a.md?p=8) may prescribe by rule or regulation.
  - (5) **Special requirements for swap dealers as counterparties to special entities—**
    - (A) Any [swap dealer](/usc/7/1a.md?p=49-A) or [major swap participant](/usc/7/1a.md?p=33-A) that [offers](/usc/7/1a.md?p=36) to enter or enters into a [swap](/usc/7/1a.md?p=47-A) with a [Special Entity](#h-2-C) shall—
      - (i) comply with any duty established by the [Commission](/usc/7/1a.md?p=8) for a [swap dealer](/usc/7/1a.md?p=49-A) or [major swap participant](/usc/7/1a.md?p=33-A), with respect to a counterparty that is an [eligible contract participant](/usc/7/1a.md?p=18) within the meaning of subclause (I) or (II) of clause (vii) of [section 1a(18)](/usc/7/1a.md?p=18)[^3] of this title, that requires the [swap dealer](/usc/7/1a.md?p=49-A) or [major swap participant](/usc/7/1a.md?p=33-A) to have a reasonable basis to believe that the counterparty that is a [Special Entity](#h-2-C) has an independent representative that—
        - (I) has sufficient knowledge to evaluate the transaction and risks;
        - (II) is not subject to a statutory disqualification;
        - (III) is independent of the [swap dealer](/usc/7/1a.md?p=49-A) or [major swap participant](/usc/7/1a.md?p=33-A);
        - (IV) undertakes a duty to act in the best interests of the counterparty it represents;
        - (V) makes appropriate disclosures;
        - (VI) will provide written representations to the [Special Entity](#h-2-C) regarding fair pricing and the appropriateness of the transaction; and
        - (VII) in the case of employee benefit plans subject to the Employee Retirement Income Security act[^4] of 1974 [[29 U.S.C. 1001](/usc/29/1001.md) et seq.], is a fiduciary as defined in [section 3](/usc/29/3.md) of that Act ([29 U.S.C. 1002](/usc/29/1002.md)); and
      - (ii) before the initiation of the transaction, disclose to the [Special Entity](#h-2-C) in writing the capacity in which the [swap dealer](/usc/7/1a.md?p=49-A) is acting; and
    - (B) the [Commission](/usc/7/1a.md?p=8) may establish such other standards and requirements as the [Commission](/usc/7/1a.md?p=8) may determine are appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of this chapter.
  - (6) **Rules—** The [Commission](/usc/7/1a.md?p=8) shall prescribe rules under this subsection governing business conduct standards for [swap dealers](/usc/7/1a.md?p=49-A) and [major swap participants](/usc/7/1a.md?p=33-A).
  - (7) **Applicability—** This section shall not apply with respect to a transaction that is—
    - (A) initiated by a [Special Entity](#h-2-C) on an [exchange](/usc/7/1a.md?p=1-D) or [swap execution facility](/usc/7/1a.md?p=50); and
    - (B) one in which the [swap dealer](/usc/7/1a.md?p=49-A) or [major swap participant](/usc/7/1a.md?p=33-A) does not know the identity of the counterparty to the transaction.
- (i) **Documentation standards—**
  - (1) **In general—** Each registered [swap dealer](/usc/7/1a.md?p=49-A) and [major swap participant](/usc/7/1a.md?p=33-A) shall conform with such standards as may be prescribed by the [Commission](/usc/7/1a.md?p=8) by rule or regulation that relate to timely and accurate confirmation, processing, netting, documentation, and valuation of all [swaps](/usc/7/1a.md?p=47-A).
  - (2) **Rules—** The [Commission](/usc/7/1a.md?p=8) shall adopt rules governing documentation standards for [swap dealers](/usc/7/1a.md?p=49-A) and [major swap participants](/usc/7/1a.md?p=33-A).
- (j) **Duties—** Each registered [swap dealer](/usc/7/1a.md?p=49-A) and [major swap participant](/usc/7/1a.md?p=33-A) at all times shall comply with the following requirements:
  - (1) **Monitoring of trading—** The [swap dealer](/usc/7/1a.md?p=49-A) or [major swap participant](/usc/7/1a.md?p=33-A) shall monitor its trading in [swaps](/usc/7/1a.md?p=47-A) to prevent violations of applicable position limits.
  - (2) **Risk management procedures—** The [swap dealer](/usc/7/1a.md?p=49-A) or [major swap participant](/usc/7/1a.md?p=33-A) shall establish robust and professional risk management systems adequate for managing the day-to-day business of the [swap dealer](/usc/7/1a.md?p=49-A) or [major swap participant](/usc/7/1a.md?p=33-A).
  - (3) **Disclosure of general information—** The [swap dealer](/usc/7/1a.md?p=49-A) or [major swap participant](/usc/7/1a.md?p=33-A) shall disclose to the [Commission](/usc/7/1a.md?p=8) and to the [prudential regulator](/usc/7/1a.md?p=39) for the [swap dealer](/usc/7/1a.md?p=49-A) or [major swap participant](/usc/7/1a.md?p=33-A), as applicable, information concerning—
    - (A) terms and conditions of its [swaps](/usc/7/1a.md?p=47-A);
    - (B) [swap](/usc/7/1a.md?p=47-A) trading operations, mechanisms, and practices;
    - (C) financial integrity protections relating to [swaps](/usc/7/1a.md?p=47-A); and
    - (D) other information relevant to its trading in [swaps](/usc/7/1a.md?p=47-A).
  - (4) **Ability to obtain information—** The [swap dealer](/usc/7/1a.md?p=49-A) or [major swap participant](/usc/7/1a.md?p=33-A) shall—
    - (A) establish and enforce internal systems and procedures to obtain any necessary information to perform any of the functions described in this section; and
    - (B) provide the information to the [Commission](/usc/7/1a.md?p=8) and to the [prudential regulator](/usc/7/1a.md?p=39) for the [swap dealer](/usc/7/1a.md?p=49-A) or [major swap participant](/usc/7/1a.md?p=33-A), as applicable, on request.
  - (5) **Conflicts of interest—** The [swap dealer](/usc/7/1a.md?p=49-A) and [major swap participant](/usc/7/1a.md?p=33-A) shall implement conflict-of-interest systems and procedures that—
    - (A) establish structural and institutional safeguards to ensure that the activities of any [person](/usc/7/1a.md?p=38) within the firm relating to research or analysis of the price or market for any [commodity](/usc/7/1a.md?p=9) or [swap](/usc/7/1a.md?p=47-A) or acting in a role of providing clearing activities or making determinations as to accepting clearing customers are separated by appropriate informational partitions within the firm from the review, pressure, or oversight of [persons](/usc/7/1a.md?p=38) whose involvement in pricing, trading, or clearing activities might potentially bias their judgment or supervision and contravene the core principles of open access and the business conduct standards described in this chapter; and
    - (B) address such other issues as the [Commission](/usc/7/1a.md?p=8) determines to be appropriate.
  - (6) **Antitrust considerations—** Unless necessary or appropriate to achieve the purposes of this chapter, a [swap dealer](/usc/7/1a.md?p=49-A) or [major swap participant](/usc/7/1a.md?p=33-A) shall not—
    - (A) adopt any process or take any action that results in any unreasonable restraint of trade; or
    - (B) impose any material anticompetitive burden on trading or clearing.
  - (7) **Rules—** The [Commission](/usc/7/1a.md?p=8) shall prescribe rules under this subsection governing duties of [swap dealers](/usc/7/1a.md?p=49-A) and [major swap participants](/usc/7/1a.md?p=33-A).
- (k) **Designation of chief compliance officer—**
  - (1) **In general—** Each [swap dealer](/usc/7/1a.md?p=49-A) and [major swap participant](/usc/7/1a.md?p=33-A) shall designate an individual to serve as a chief compliance officer.
  - (2) **Duties—** The chief compliance officer shall—
    - (A) report directly to the [board](/usc/7/1a.md?p=5) or to the senior officer of the [swap dealer](/usc/7/1a.md?p=49-A) or [major swap participant](/usc/7/1a.md?p=33-A);
    - (B) review the compliance of the [swap dealer](/usc/7/1a.md?p=49-A) or [major swap participant](/usc/7/1a.md?p=33-A) with respect to the [swap dealer](/usc/7/1a.md?p=49-A) and [major swap participant](/usc/7/1a.md?p=33-A) requirements described in this section;
    - (C) in consultation with the [board](/usc/7/1a.md?p=5) of directors, a body performing a function similar to the [board](/usc/7/1a.md?p=5), or the senior officer of the organization, resolve any conflicts of interest that may arise;
    - (D) be responsible for administering each policy and procedure that is required to be established pursuant to this section;
    - (E) ensure compliance with this chapter (including regulations) relating to [swaps](/usc/7/1a.md?p=47-A), including each rule prescribed by the [Commission](/usc/7/1a.md?p=8) under this section;
    - (F) establish procedures for the remediation of noncompliance issues identified by the chief compliance officer through any—
      - (i) compliance office review;
      - (ii) look-back;
      - (iii) internal or external audit finding;
      - (iv) self-reported error; or
      - (v) validated complaint; and
    - (G) establish and follow appropriate procedures for the handling, management response, remediation, retesting, and closing of noncompliance issues.
  - (3) **Annual reports—**
    - (A) **In general—** In accordance with rules prescribed by the [Commission](/usc/7/1a.md?p=8), the chief compliance officer shall annually prepare and sign a report that contains a description of—
      - (i) the compliance of the [swap dealer](/usc/7/1a.md?p=49-A) or [major swap participant](/usc/7/1a.md?p=33-A) with respect to this chapter (including regulations); and
      - (ii) each policy and procedure of the [swap dealer](/usc/7/1a.md?p=49-A) or [major swap participant](/usc/7/1a.md?p=33-A) of the chief compliance officer (including the code of ethics and conflict of interest policies).
    - (B) **Requirements—** A compliance report under [subparagraph (A)](#k-3-A) shall—
      - (i) accompany each appropriate financial report of the [swap dealer](/usc/7/1a.md?p=49-A) or [major swap participant](/usc/7/1a.md?p=33-A) that is required to be furnished to the [Commission](/usc/7/1a.md?p=8) pursuant to this section; and
      - (ii) include a certification that, under penalty of law, the compliance report is accurate and complete.
- (l) **Segregation requirements—**
  - (1) **Segregation of assets held as collateral in uncleared swap transactions—**
    - (A) **Notification—** A [swap dealer](/usc/7/1a.md?p=49-A) or [major swap participant](/usc/7/1a.md?p=33-A) shall be required to notify the counterparty of the [swap dealer](/usc/7/1a.md?p=49-A) or [major swap participant](/usc/7/1a.md?p=33-A) at the beginning of a [swap](/usc/7/1a.md?p=47-A) transaction that the counterparty has the right to require segregation of the [funds](/usc/7/4531.md?p=5) or other property supplied to margin, guarantee, or secure the obligations of the counterparty.
    - (B) **Segregation and maintenance of funds—** At the request of a counterparty to a [swap](/usc/7/1a.md?p=47-A) that provides [funds](/usc/7/4531.md?p=5) or other property to a [swap dealer](/usc/7/1a.md?p=49-A) or [major swap participant](/usc/7/1a.md?p=33-A) to margin, guarantee, or secure the obligations of the counterparty, the [swap dealer](/usc/7/1a.md?p=49-A) or [major swap participant](/usc/7/1a.md?p=33-A) shall—
      - (i) segregate the [funds](/usc/7/4531.md?p=5) or other property for the benefit of the counterparty; and
      - (ii) in accordance with such rules and regulations as the [Commission](/usc/7/1a.md?p=8) may promulgate, maintain the [funds](/usc/7/4531.md?p=5) or other property in a segregated account separate from the assets and other interests of the [swap dealer](/usc/7/1a.md?p=49-A) or [major swap participant](/usc/7/1a.md?p=33-A).
  - (2) **Applicability—** The requirements described in [paragraph (1)](#l-1) shall—
    - (A) apply only to a [swap](/usc/7/1a.md?p=47-A) between a counterparty and a [swap dealer](/usc/7/1a.md?p=49-A) or [major swap participant](/usc/7/1a.md?p=33-A) that is not submitted for clearing to a [derivatives clearing organization](/usc/7/1a.md?p=15-A); and
    - (B)
      - (i) not apply to variation margin payments; or
      - (ii) not preclude any commercial arrangement regarding—
        - (I) the investment of segregated [funds](/usc/7/4531.md?p=5) or other property that may only be invested in such investments as the [Commission](/usc/7/1a.md?p=8) may permit by rule or regulation; and
        - (II) the related allocation of gains and losses resulting from any investment of the segregated [funds](/usc/7/4531.md?p=5) or other property.
  - (3) **Use of independent third-party custodians—** The segregated account described in [paragraph (1)](#l-1) shall be—
    - (A) carried by an independent third-party custodian; and
    - (B) designated as a segregated account for and on behalf of the counterparty.
  - (4) **Reporting requirement—** If the counterparty does not choose to require segregation of the [funds](/usc/7/4531.md?p=5) or other property supplied to margin, guarantee, or secure the obligations of the counterparty, the [swap dealer](/usc/7/1a.md?p=49-A) or [major swap participant](/usc/7/1a.md?p=33-A) shall report to the counterparty of the [swap dealer](/usc/7/1a.md?p=49-A) or [major swap participant](/usc/7/1a.md?p=33-A) on a quarterly basis that the back office procedures of the [swap dealer](/usc/7/1a.md?p=49-A) or [major swap participant](/usc/7/1a.md?p=33-A) relating to margin and collateral requirements are in compliance with the agreement of the counterparties.

# §6t. Large swap trader reporting

- (a) **Prohibition—**
  - (1) **In general—** Except as provided in [paragraph (2)](#a-2), it shall be unlawful for any [person](/usc/7/1a.md?p=38) to enter into any [swap](/usc/7/1a.md?p=47-A) that the [Commission](/usc/7/1a.md?p=8) determines to perform a significant price discovery function with respect to [registered entities](/usc/7/1a.md?p=40) if—
    - (A) the [person](/usc/7/1a.md?p=38) directly or indirectly enters into the [swap](/usc/7/1a.md?p=47-A) during any 1 day in an amount equal to or in excess of such amount as shall be established periodically by the [Commission](/usc/7/1a.md?p=8); and
    - (B) the [person](/usc/7/1a.md?p=38) directly or indirectly has or obtains a position in the [swap](/usc/7/1a.md?p=47-A) equal to or in excess of such amount as shall be established periodically by the [Commission](/usc/7/1a.md?p=8).
  - (2) **Exception—** [Paragraph (1)](#a-1) shall not apply if—
    - (A) the [person](/usc/7/1a.md?p=38) files or causes to be filed with the properly designated officer of the [Commission](/usc/7/1a.md?p=8) such reports regarding any transactions or positions described in subparagraphs [(A)](#a-1-A) and [(B)](#a-1-B) of paragraph (1) as the [Commission](/usc/7/1a.md?p=8) may require by rule or regulation; and
    - (B) in accordance with the rules and regulations of the [Commission](/usc/7/1a.md?p=8), the [person](/usc/7/1a.md?p=38) keeps books and records of all such [swaps](/usc/7/1a.md?p=47-A) and any transactions and positions in any related [commodity](/usc/7/1a.md?p=9) traded on or subject to the rules of any designated [contract](/usc/7/518.md?p=4) market or [swap execution facility](/usc/7/1a.md?p=50), and of cash or spot transactions in, inventories of, and purchase and sale commitments of, such a [commodity](/usc/7/1a.md?p=9).
- (b) **Requirements—**
  - (1) **In general—** Books and records described in [subsection (a)(2)(B)](#a-2-B) shall—
    - (A) show such complete details concerning all transactions and positions as the [Commission](/usc/7/1a.md?p=8) may prescribe by rule or regulation;
    - (B) be open at all times to inspection and examination by any representative of the [Commission](/usc/7/1a.md?p=8); and
    - (C) be open at all times to inspection and examination by the [Securities](/usc/7/1a.md?p=41) and [Exchange](/usc/7/1a.md?p=1-D) [Commission](/usc/7/1a.md?p=8), to the extent such books and records relate to transactions in [swaps](/usc/7/1a.md?p=47-A) (as that term is defined in [section 1a(47)(A)(v) of this title](/usc/7/1a.md?p=47-A-v)), and consistent with the confidentiality and disclosure requirements of [section 12 of this title](/usc/7/12.md).
  - (2) **Jurisdiction—** Nothing in [paragraph (1)](#b-1) shall affect the exclusive jurisdiction of the [Commission](/usc/7/1a.md?p=8) to prescribe recordkeeping and reporting requirements for large [swap](/usc/7/1a.md?p=47-A) traders under this section.
- (c) **Applicability—** For purposes of this section, the [swaps](/usc/7/1a.md?p=47-A), futures, and cash or spot transactions and positions of any [person](/usc/7/1a.md?p=38) shall include the [swaps](/usc/7/1a.md?p=47-A), futures, and cash or spot transactions and positions of any [persons](/usc/7/1a.md?p=38) directly or indirectly controlled by the [person](/usc/7/1a.md?p=38).
- (d) **Significant price discovery function—** In making a determination as to whether a [swap](/usc/7/1a.md?p=47-A) performs or affects a significant price discovery function with respect to [registered entities](/usc/7/1a.md?p=40), the [Commission](/usc/7/1a.md?p=8) shall consider the factors described in [section 6a(a)(3) of this title](/usc/7/6a.md?p=a-3).

# §7. Designation of boards of trade as contract markets

- (a) **Applications—** A [board of trade](/usc/7/1a.md?p=6) applying to the [Commission](/usc/7/1a.md?p=8) for designation as a [contract](/usc/7/518.md?p=4) market shall submit an application to the [Commission](/usc/7/1a.md?p=8) that includes any relevant materials and records the [Commission](/usc/7/1a.md?p=8) may require consistent with this chapter.
- (b) **Repealed. Pub. L. 111–203, title VII, § 735(a), July 21, 2010, 124 Stat. 1718—**
- (c) **Existing contract markets—** A [board of trade](/usc/7/1a.md?p=6) that is designated as a [contract](/usc/7/518.md?p=4) market on December 21, 2000, shall be considered to be a designated [contract](/usc/7/518.md?p=4) market under this section.
- (d) **Core principles for contract markets—**
  - (1) **Designation as contract market—**
    - (A) **In general—** To be designated, and maintain a designation, as a [contract](/usc/7/518.md?p=4) market, a [board of trade](/usc/7/1a.md?p=6) shall comply with—
      - (i) any core principle described in this subsection; and
      - (ii) any requirement that the [Commission](/usc/7/1a.md?p=8) may impose by rule or regulation pursuant to [section 12a(5) of this title](/usc/7/12a.md?p=5).
    - (B) **Reasonable discretion of contract market—** Unless otherwise determined by the [Commission](/usc/7/1a.md?p=8) by rule or regulation, a [board of trade](/usc/7/1a.md?p=6) described in [subparagraph (A)](#d-1-A) shall have reasonable discretion in establishing the manner in which the [board of trade](/usc/7/1a.md?p=6) complies with the core principles described in this subsection.
  - (2) **Compliance with rules—**
    - (A) **In general—** The [board of trade](/usc/7/1a.md?p=6) shall establish, monitor, and enforce compliance with the rules of the [contract](/usc/7/518.md?p=4) market, including—
      - (i) access requirements;
      - (ii) the terms and conditions of any [contracts](/usc/7/518.md?p=4) to be traded on the [contract](/usc/7/518.md?p=4) market; and
      - (iii) rules prohibiting abusive trade practices on the [contract](/usc/7/518.md?p=4) market.
    - (B) **Capacity of contract market—** The [board of trade](/usc/7/1a.md?p=6) shall have the capacity to detect, investigate, and apply appropriate sanctions to any [person](/usc/7/1a.md?p=38) that violates any rule of the [contract](/usc/7/518.md?p=4) market.
    - (C) **Requirement of rules—** The rules of the [contract](/usc/7/518.md?p=4) market shall provide the [board of trade](/usc/7/1a.md?p=6) with the ability and [authority](/usc/7/2009aa.md?p=1) to obtain any necessary information to perform any function described in this subsection, including the capacity to carry out such international information-sharing agreements as the [Commission](/usc/7/1a.md?p=8) may require.
  - (3) **Contracts not readily subject to manipulation—** The [board of trade](/usc/7/1a.md?p=6) shall list on the [contract](/usc/7/518.md?p=4) market only [contracts](/usc/7/518.md?p=4) that are not readily susceptible to manipulation.
  - (4) **Prevention of market disruption—** The [board of trade](/usc/7/1a.md?p=6) shall have the capacity and responsibility to prevent manipulation, price distortion, and disruptions of the delivery or cash-settlement process through market surveillance, compliance, and enforcement practices and procedures, including—
    - (A) methods for conducting real-time monitoring of trading; and
    - (B) comprehensive and accurate trade reconstructions.
  - (5) **Position limitations or accountability—**
    - (A) **In general—** To reduce the potential threat of market manipulation or congestion (especially during trading in the delivery month), the [board of trade](/usc/7/1a.md?p=6) shall adopt for each [contract](/usc/7/518.md?p=4) of the [board of trade](/usc/7/1a.md?p=6), as is necessary and appropriate, position limitations or position accountability for speculators.
    - (B) **Maximum allowable position limitation—** For any [contract](/usc/7/518.md?p=4) that is subject to a position limitation established by the [Commission](/usc/7/1a.md?p=8) pursuant to [section 6a(a) of this title](/usc/7/6a.md?p=a), the [board of trade](/usc/7/1a.md?p=6) shall set the position limitation of the [board of trade](/usc/7/1a.md?p=6) at a level not higher than the position limitation established by the [Commission](/usc/7/1a.md?p=8).
  - (6) **Emergency authority—** The [board of trade](/usc/7/1a.md?p=6), in consultation or cooperation with the [Commission](/usc/7/1a.md?p=8), shall adopt rules to provide for the exercise of emergency [authority](/usc/7/2009aa.md?p=1), as is necessary and appropriate, including the [authority](/usc/7/2009aa.md?p=1)—
    - (A) to liquidate or transfer open positions in any [contract](/usc/7/518.md?p=4);
    - (B) to suspend or curtail trading in any [contract](/usc/7/518.md?p=4); and
    - (C) to require market participants in any [contract](/usc/7/518.md?p=4) to meet special margin requirements.
  - (7) **Availability of general information—** The [board of trade](/usc/7/1a.md?p=6) shall make available to market [authorities](/usc/7/2009aa.md?p=1), market participants, and the public accurate information concerning—
    - (A) the terms and conditions of the [contracts](/usc/7/518.md?p=4) of the [contract](/usc/7/518.md?p=4) market; and
    - (B)
      - (i) the rules, regulations, and mechanisms for executing transactions on or through the facilities of the [contract](/usc/7/518.md?p=4) market; and
      - (ii) the rules and specifications describing the operation of the [contract](/usc/7/518.md?p=4) market’s—
        - (I) electronic matching platform; or
        - (II) trade execution facility.
  - (8) **Daily publication of trading information—** The [board of trade](/usc/7/1a.md?p=6) shall make public daily information on settlement prices, volume, open interest, and opening and closing ranges for actively traded [contracts](/usc/7/518.md?p=4) on the [contract](/usc/7/518.md?p=4) market.
  - (9) **Execution of transactions—**
    - (A) **In general—** The [board of trade](/usc/7/1a.md?p=6) shall provide a competitive, open, and efficient market and mechanism for executing transactions that protects the price discovery process of trading in the centralized market of the [board of trade](/usc/7/1a.md?p=6).
    - (B) **Rules—** The rules of the [board of trade](/usc/7/1a.md?p=6) may authorize, for bona fide business purposes—
      - (i) transfer trades or office trades;
      - (ii) an [exchange](/usc/7/1a.md?p=1-D) of—
        - (I) futures in connection with a cash [commodity](/usc/7/1a.md?p=9) transaction;
        - (II) futures for cash [commodities](/usc/7/1a.md?p=9); or
        - (III) futures for [swaps](/usc/7/1a.md?p=47-A); or
      - (iii) a [futures commission merchant](/usc/7/1a.md?p=28-A), acting as principal or agent, to enter into or confirm the execution of a [contract](/usc/7/518.md?p=4) for the purchase or sale of a [commodity](/usc/7/1a.md?p=9) for [future delivery](/usc/7/1a.md?p=27) if the [contract](/usc/7/518.md?p=4) is reported, recorded, or cleared in accordance with the rules of the [contract](/usc/7/518.md?p=4) market or a [derivatives clearing organization](/usc/7/1a.md?p=15-A).
  - (10) **Trade information—** The [board of trade](/usc/7/1a.md?p=6) 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](/usc/7/518.md?p=4) market to use the information—
    - (A) to assist in the prevention of customer and market abuses; and
    - (B) to provide evidence of any violations of the rules of the [contract](/usc/7/518.md?p=4) market.
  - (11) **Financial integrity of transactions—** The [board of trade](/usc/7/1a.md?p=6) shall establish and enforce—
    - (A) rules and procedures for ensuring the financial integrity of transactions entered into on or through the facilities of the [contract](/usc/7/518.md?p=4) market (including the clearance and settlement of the transactions with a [derivatives clearing organization](/usc/7/1a.md?p=15-A)); and
    - (B) rules to ensure—
      - (i) the financial integrity of any—
        - (I) [futures commission merchant](/usc/7/1a.md?p=28-A); and
        - (II) [introducing broker](/usc/7/1a.md?p=31-A); and
      - (ii) the protection of customer [funds](/usc/7/4531.md?p=5).
  - (12) **Protection of markets and market participants—** The [board of trade](/usc/7/1a.md?p=6) shall establish and enforce rules—
    - (A) to protect markets and market participants from abusive practices committed by any party, including abusive practices committed by a party acting as an agent for a participant; and
    - (B) to promote fair and equitable trading on the [contract](/usc/7/518.md?p=4) market.
  - (13) **Disciplinary procedures—** The [board of trade](/usc/7/1a.md?p=6) shall establish and enforce disciplinary procedures that authorize the [board of trade](/usc/7/1a.md?p=6) to discipline, suspend, or expel [members](/usc/7/1a.md?p=34) or market participants that violate the rules of the [board of trade](/usc/7/1a.md?p=6), or similar methods for performing the same functions, including delegation of the functions to third parties.
  - (14) **Dispute resolution—** The [board of trade](/usc/7/1a.md?p=6) shall establish and enforce rules regarding, and provide facilities for alternative dispute resolution as appropriate for, market participants and any market intermediaries.
  - (15) **Governance fitness standards—** The [board of trade](/usc/7/1a.md?p=6) shall establish and enforce appropriate fitness standards for directors, [members](/usc/7/1a.md?p=34) of any disciplinary [committee](/usc/7/2132.md?p=n), [members](/usc/7/1a.md?p=34) of the [contract](/usc/7/518.md?p=4) market, and any other [person](/usc/7/1a.md?p=38) with direct access to the facility (including any party affiliated with any [person](/usc/7/1a.md?p=38) described in this paragraph).
  - (16) **Conflicts of interest—** The [board of trade](/usc/7/1a.md?p=6) shall establish and enforce rules—
    - (A) to minimize conflicts of interest in the decision-making process of the [contract](/usc/7/518.md?p=4) market; and
    - (B) to establish a process for resolving conflicts of interest described in [subparagraph (A)](#d-16-A).
  - (17) **Composition of governing boards of contract markets—** The governance arrangements of the [board of trade](/usc/7/1a.md?p=6) shall be designed to permit consideration of the views of market participants.
  - (18) **Recordkeeping—** The [board of trade](/usc/7/1a.md?p=6) shall maintain records of all activities relating to the business of the [contract](/usc/7/518.md?p=4) market—
    - (A) in a form and manner that is acceptable to the [Commission](/usc/7/1a.md?p=8); and
    - (B) for a period of at least 5 years.
  - (19) **Antitrust considerations—** Unless necessary or appropriate to achieve the purposes of this chapter, the [board of trade](/usc/7/1a.md?p=6) shall not—
    - (A) adopt any rule or taking[^1] any action that results in any unreasonable restraint of trade; or
    - (B) impose any material anticompetitive burden on trading on the [contract](/usc/7/518.md?p=4) market.
  - (20) **System safeguards—** The [board of trade](/usc/7/1a.md?p=6) shall—
    - (A) establish and maintain a program of risk analysis and oversight to identify and minimize sources of operational risk, through the development of appropriate controls and procedures, and the development of automated systems, that are reliable, secure, and have adequate scalable capacity;
    - (B) establish and maintain emergency procedures, backup facilities, and a plan for disaster recovery that allow for the timely recovery and resumption of operations and the fulfillment of the responsibilities and obligations of the [board of trade](/usc/7/1a.md?p=6); and
    - (C) periodically conduct tests to verify that backup resources are sufficient to ensure continued [order](/usc/7/2902.md?p=10) processing and trade matching, price reporting, market surveillance, and maintenance of a comprehensive and accurate audit trail.
  - (21) **Financial resources—**
    - (A) **In general—** The [board of trade](/usc/7/1a.md?p=6) shall have adequate financial, operational, and managerial resources to discharge each responsibility of the [board of trade](/usc/7/1a.md?p=6).
    - (B) **Determination of adequacy—** The financial resources of the [board of trade](/usc/7/1a.md?p=6) shall be considered to be adequate if the value of the financial resources exceeds the total amount that would enable the [contract](/usc/7/518.md?p=4) market to cover the operating costs of the [contract](/usc/7/518.md?p=4) market for a 1-year period, as calculated on a rolling basis.
  - (22) **Diversity of board of directors—** The [board of trade](/usc/7/1a.md?p=6), if a publicly traded company, shall endeavor to recruit individuals to serve on the [board](/usc/7/1a.md?p=5) of directors and the other decision-making bodies (as determined by the [Commission](/usc/7/1a.md?p=8)) of the [board of trade](/usc/7/1a.md?p=6) from among, and to have the composition of the bodies reflect, a broad and culturally diverse pool of qualified candidates.
  - (23) **Securities and Exchange Commission—** The [board of trade](/usc/7/1a.md?p=6) shall keep any such records relating to [swaps](/usc/7/1a.md?p=47-A) defined in [section 1a(47)(A)(v) of this title](/usc/7/1a.md?p=47-A-v) open to inspection and examination by the [Securities](/usc/7/1a.md?p=41) and [Exchange](/usc/7/1a.md?p=1-D) [Commission](/usc/7/1a.md?p=8).
- (e) **Current agricultural commodities—**
  - (1) Subject to paragraph (2) of this subsection, a [contract](/usc/7/518.md?p=4) for purchase or sale for [future delivery](/usc/7/1a.md?p=27) of an [agricultural commodity](/usc/7/5602.md?p=1) enumerated in [section 1a(9) of this title](/usc/7/1a.md?p=9) that is available for trade on a [contract](/usc/7/518.md?p=4) market, as of December 21, 2000, may be traded only on a [contract](/usc/7/518.md?p=4) market designated under this section.
  - (2) In [order](/usc/7/2902.md?p=10) to promote responsible economic or financial innovation and fair competition, the [Commission](/usc/7/1a.md?p=8), on application by any [person](/usc/7/1a.md?p=38), after notice and public comment and opportunity for hearing, may prescribe rules and regulations to provide for the [offer](/usc/7/1a.md?p=36) and sale of [contracts](/usc/7/518.md?p=4) for [future delivery](/usc/7/1a.md?p=27) or [options](/usc/7/1a.md?p=36) on such [contracts](/usc/7/518.md?p=4) to be conducted on a derivatives transaction execution facility.

# [§7a. Repealed. Pub. L. 111–203, title VII, § 734(a), July 21, 2010, 124 Stat. 1718 — repealed]



# §7a–1. Derivatives clearing organizations

- (a) **Registration requirement—**
  - (1) **In general—** Except as provided in [paragraph (2)](#a-2), it shall be unlawful for a [derivatives clearing organization](/usc/7/1a.md?p=15-A), directly or indirectly, to make use of the mails or any means or instrumentality of [interstate commerce](/usc/7/1a.md?p=30) to perform the functions of a [derivatives clearing organization](/usc/7/1a.md?p=15-A) with respect to—
    - (A) 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 an [option](/usc/7/1a.md?p=36) on the [contract of sale](/usc/7/1a.md?p=13)) or [option](/usc/7/1a.md?p=36) on a [commodity](/usc/7/1a.md?p=9), in each case, unless the [contract](/usc/7/518.md?p=4) or [option](/usc/7/1a.md?p=36) is—
      - (i) excluded from this chapter by subsection (a)(1)(C)(i), (c), or (f) of [section 2 of this title](/usc/7/2.md); or
      - (ii) a [security futures product](/usc/7/1a.md?p=45) cleared by a clearing agency registered with the [Securities](/usc/7/1a.md?p=41) and [Exchange](/usc/7/1a.md?p=1-D) [Commission](/usc/7/1a.md?p=8) under the [Securities](/usc/7/1a.md?p=41) Exchange Act of 1934 ([15 U.S.C. 78a](/usc/15/78a.md) et seq.); or
    - (B) a [swap](/usc/7/1a.md?p=47-A).
  - (2) **Exception—** [Paragraph (1)](#a-1) shall not apply to a [derivatives clearing organization](/usc/7/1a.md?p=15-A) that is registered with the [Commission](/usc/7/1a.md?p=8).
- (b) **Voluntary registration—** A [person](/usc/7/1a.md?p=38) that clears 1 or more agreements, [contracts](/usc/7/518.md?p=4), or transactions that are not required to be cleared under this chapter may register with the [Commission](/usc/7/1a.md?p=8) as a [derivatives clearing organization](/usc/7/1a.md?p=15-A).
- (c) **Registration of derivatives clearing organizations—**
  - (1) **Application—** A [person](/usc/7/1a.md?p=38) desiring to register as a [derivatives clearing organization](/usc/7/1a.md?p=15-A) shall submit to the [Commission](/usc/7/1a.md?p=8) an application in such form and containing such information as the [Commission](/usc/7/1a.md?p=8) may require for the purpose of making the determinations required for approval under [paragraph (2)](#c-2).
  - (2) **Core principles for derivatives clearing organizations—**
    - (A) **Compliance—**
      - (i) **In general—** To be registered and to maintain registration as a [derivatives clearing organization](/usc/7/1a.md?p=15-A), a [derivatives clearing organization](/usc/7/1a.md?p=15-A) shall comply with each core principle described in this paragraph and any requirement that the [Commission](/usc/7/1a.md?p=8) may impose by rule or regulation pursuant to [section 12a(5) of this title](/usc/7/12a.md?p=5).
      - (ii) **Discretion of derivatives clearing organization—** Subject to any rule or regulation prescribed by the [Commission](/usc/7/1a.md?p=8), a [derivatives clearing organization](/usc/7/1a.md?p=15-A) shall have reasonable discretion in establishing the manner by which the [derivatives clearing organization](/usc/7/1a.md?p=15-A) complies with each core principle described in this paragraph.
    - (B) **Financial resources—**
      - (i) **In general—** Each [derivatives clearing organization](/usc/7/1a.md?p=15-A) shall have adequate financial, operational, and managerial resources, as determined by the [Commission](/usc/7/1a.md?p=8), to discharge each responsibility of the [derivatives clearing organization](/usc/7/1a.md?p=15-A).
      - (ii) **Minimum amount of financial resources—** Each [derivatives clearing organization](/usc/7/1a.md?p=15-A) shall possess financial resources that, at a minimum, exceed the total amount that would—
        - (I) enable the organization to meet its financial obligations to its [members](/usc/7/1a.md?p=34) and participants notwithstanding a default by the [member](/usc/7/1a.md?p=34) or participant creating the largest financial exposure for that organization in extreme but plausible market conditions; and
        - (II) enable the [derivatives clearing organization](/usc/7/1a.md?p=15-A) to cover the operating costs of the [derivatives clearing organization](/usc/7/1a.md?p=15-A) for a period of 1 year (as calculated on a rolling basis).
    - (C) **Participant and product eligibility—**
      - (i) **In general—** Each [derivatives clearing organization](/usc/7/1a.md?p=15-A) shall establish—
        - (I) appropriate admission and continuing eligibility standards (including sufficient financial resources and operational capacity to meet obligations arising from participation in the [derivatives clearing organization](/usc/7/1a.md?p=15-A)) for [members](/usc/7/1a.md?p=34) of, and participants in, the [derivatives clearing organization](/usc/7/1a.md?p=15-A); and
        - (II) appropriate standards for determining the eligibility of agreements, [contracts](/usc/7/518.md?p=4), or transactions submitted to the [derivatives clearing organization](/usc/7/1a.md?p=15-A) for clearing.
      - (ii) **Required procedures—** Each [derivatives clearing organization](/usc/7/1a.md?p=15-A) shall establish and implement procedures to verify, on an ongoing basis, the compliance of each participation and membership requirement of the [derivatives clearing organization](/usc/7/1a.md?p=15-A).
      - (iii) **Requirements—** The participation and membership requirements of each [derivatives clearing organization](/usc/7/1a.md?p=15-A) shall—
        - (I) be objective;
        - (II) be publicly disclosed; and
        - (III) permit fair and open access.
    - (D) **Risk management—**
      - (i) **In general—** Each [derivatives clearing organization](/usc/7/1a.md?p=15-A) shall ensure that the [derivatives clearing organization](/usc/7/1a.md?p=15-A) possesses the ability to manage the risks associated with discharging the responsibilities of the [derivatives clearing organization](/usc/7/1a.md?p=15-A) through the use of appropriate tools and procedures.
      - (ii) **Measurement of credit exposure—** Each [derivatives clearing organization](/usc/7/1a.md?p=15-A) shall—
        - (I) not less than once during each business day of the [derivatives clearing organization](/usc/7/1a.md?p=15-A), measure the credit exposures of the [derivatives clearing organization](/usc/7/1a.md?p=15-A) to each [member](/usc/7/1a.md?p=34) and participant of the [derivatives clearing organization](/usc/7/1a.md?p=15-A); and
        - (II) monitor each exposure described in [subclause (I)](#c-2-D-ii-I) periodically during the business day of the [derivatives clearing organization](/usc/7/1a.md?p=15-A).
      - (iii) **Limitation of exposure to potential losses from defaults—** Each [derivatives clearing organization](/usc/7/1a.md?p=15-A), through margin requirements and other risk control mechanisms, shall limit the exposure of the [derivatives clearing organization](/usc/7/1a.md?p=15-A) to potential losses from defaults by [members](/usc/7/1a.md?p=34) and participants of the [derivatives clearing organization](/usc/7/1a.md?p=15-A) to ensure that—
        - (I) the operations of the [derivatives clearing organization](/usc/7/1a.md?p=15-A) would not be disrupted; and
        - (II) nondefaulting [members](/usc/7/1a.md?p=34) or participants would not be exposed to losses that nondefaulting [members](/usc/7/1a.md?p=34) or participants cannot anticipate or control.
      - (iv) **Margin requirements—** The margin required from each [member](/usc/7/1a.md?p=34) and participant of a [derivatives clearing organization](/usc/7/1a.md?p=15-A) shall be sufficient to cover potential exposures in normal market conditions.
      - (v) **Requirements regarding models and parameters—** Each model and parameter used in setting margin requirements under [clause (iv)](#c-2-D-iv) shall be—
        - (I) risk-based; and
        - (II) reviewed on a regular basis.
    - (E) **Settlement procedures—** Each [derivatives clearing organization](/usc/7/1a.md?p=15-A) shall—
      - (i) complete money settlements on a timely basis (but not less frequently than once each business day);
      - (ii) employ money settlement arrangements to eliminate or strictly limit the exposure of the [derivatives clearing organization](/usc/7/1a.md?p=15-A) to settlement [bank](/usc/7/27.md?p=a) risks (including credit and liquidity risks from the use of [banks](/usc/7/27.md?p=a) to effect money settlements);
      - (iii) ensure that money settlements are final when effected;
      - (iv) maintain an accurate record of the flow of [funds](/usc/7/4531.md?p=5) associated with each money settlement;
      - (v) possess the ability to comply with each term and condition of any permitted netting or offset arrangement with any other clearing organization;
      - (vi) regarding physical settlements, establish rules that clearly [state](/usc/7/1359aa.md?p=5) each obligation of the [derivatives clearing organization](/usc/7/1a.md?p=15-A) with respect to physical deliveries; and
      - (vii) ensure that each risk arising from an obligation described in [clause (vi)](#c-2-E-vi) is identified and managed.
    - (F) **Treatment of funds—**
      - (i) **Required standards and procedures—** Each [derivatives clearing organization](/usc/7/1a.md?p=15-A) shall establish standards and procedures that are designed to protect and ensure the safety of [member](/usc/7/1a.md?p=34) and participant [funds](/usc/7/4531.md?p=5) and assets.
      - (ii) **Holding of funds and assets—** Each [derivatives clearing organization](/usc/7/1a.md?p=15-A) shall hold [member](/usc/7/1a.md?p=34) and participant [funds](/usc/7/4531.md?p=5) and assets in a manner by which to minimize the risk of loss or of delay in the access by the [derivatives clearing organization](/usc/7/1a.md?p=15-A) to the assets and [funds](/usc/7/4531.md?p=5).
      - (iii) **Permissible investments—** [Funds](/usc/7/4531.md?p=5) and assets invested by a [derivatives clearing organization](/usc/7/1a.md?p=15-A) shall be held in instruments with minimal credit, market, and liquidity risks.
    - (G) **Default rules and procedures—**
      - (i) **In general—** Each [derivatives clearing organization](/usc/7/1a.md?p=15-A) shall have rules and procedures designed to allow for the efficient, fair, and safe management of events during which [members](/usc/7/1a.md?p=34) or participants—
        - (I) become insolvent; or
        - (II) otherwise default on the obligations of the [members](/usc/7/1a.md?p=34) or participants to the [derivatives clearing organization](/usc/7/1a.md?p=15-A).
      - (ii) **Default procedures—** Each [derivatives clearing organization](/usc/7/1a.md?p=15-A) shall—
        - (I) clearly [state](/usc/7/1359aa.md?p=5) the default procedures of the [derivatives clearing organization](/usc/7/1a.md?p=15-A);
        - (II) make publicly available the default rules of the [derivatives clearing organization](/usc/7/1a.md?p=15-A); and
        - (III) ensure that the [derivatives clearing organization](/usc/7/1a.md?p=15-A) may take timely action—
          - (aa) to contain losses and liquidity pressures; and
          - (bb) to continue meeting each obligation of the [derivatives clearing organization](/usc/7/1a.md?p=15-A).
    - (H) **Rule enforcement—** Each [derivatives clearing organization](/usc/7/1a.md?p=15-A) shall—
      - (i) maintain adequate arrangements and resources for—
        - (I) the effective monitoring and enforcement of compliance with the rules of the [derivatives clearing organization](/usc/7/1a.md?p=15-A); and
        - (II) the resolution of disputes;
      - (ii) have the [authority](/usc/7/2009aa.md?p=1) and ability to discipline, limit, suspend, or terminate the activities of a [member](/usc/7/1a.md?p=34) or participant due to a violation by the [member](/usc/7/1a.md?p=34) or participant of any rule of the [derivatives clearing organization](/usc/7/1a.md?p=15-A); and
      - (iii) report to the [Commission](/usc/7/1a.md?p=8) regarding rule enforcement activities and sanctions imposed against [members](/usc/7/1a.md?p=34) and participants as provided in [clause (ii)](#c-2-H-ii).
    - (I) **System safeguards—** Each [derivatives clearing organization](/usc/7/1a.md?p=15-A) shall—
      - (i) establish and maintain a program of risk analysis and oversight to identify and minimize sources of operational risk through the development of appropriate controls and procedures, and automated systems, that are reliable, secure, and have adequate scalable capacity;
      - (ii) establish and maintain emergency procedures, backup facilities, and a plan for disaster recovery that allows for—
        - (I) the timely recovery and resumption of operations of the [derivatives clearing organization](/usc/7/1a.md?p=15-A); and
        - (II) the fulfillment of each obligation and responsibility of the [derivatives clearing organization](/usc/7/1a.md?p=15-A); and
      - (iii) periodically conduct tests to verify that the backup resources of the [derivatives clearing organization](/usc/7/1a.md?p=15-A) are sufficient to ensure daily processing, clearing, and settlement.
    - (J) **Reporting—** Each [derivatives clearing organization](/usc/7/1a.md?p=15-A) shall provide to the [Commission](/usc/7/1a.md?p=8) all information that the [Commission](/usc/7/1a.md?p=8) determines to be necessary to conduct oversight of the [derivatives clearing organization](/usc/7/1a.md?p=15-A).
    - (K) **Recordkeeping—** Each [derivatives clearing organization](/usc/7/1a.md?p=15-A) shall maintain records of all activities related to the business of the [derivatives clearing organization](/usc/7/1a.md?p=15-A) as a [derivatives clearing organization](/usc/7/1a.md?p=15-A)—
      - (i) in a form and manner that is acceptable to the [Commission](/usc/7/1a.md?p=8); and
      - (ii) for a period of not less than 5 years.
    - (L) **Public information—**
      - (i) **In general—** Each [derivatives clearing organization](/usc/7/1a.md?p=15-A) shall provide to market participants sufficient information to enable the market participants to identify and evaluate accurately the risks and costs associated with using the services of the [derivatives clearing organization](/usc/7/1a.md?p=15-A).
      - (ii) **Availability of information—** Each [derivatives clearing organization](/usc/7/1a.md?p=15-A) shall make information concerning the rules and operating and default procedures governing the clearing and settlement systems of the [derivatives clearing organization](/usc/7/1a.md?p=15-A) available to market participants.
      - (iii) **Public disclosure—** Each [derivatives clearing organization](/usc/7/1a.md?p=15-A) shall disclose publicly and to the [Commission](/usc/7/1a.md?p=8) information concerning—
        - (I) the terms and conditions of each [contract](/usc/7/518.md?p=4), agreement, and transaction cleared and settled by the [derivatives clearing organization](/usc/7/1a.md?p=15-A);
        - (II) each clearing and other fee that the [derivatives clearing organization](/usc/7/1a.md?p=15-A) charges the [members](/usc/7/1a.md?p=34) and participants of the [derivatives clearing organization](/usc/7/1a.md?p=15-A);
        - (III) the margin-setting methodology, and the size and composition, of the financial resource package of the [derivatives clearing organization](/usc/7/1a.md?p=15-A);
        - (IV) daily settlement prices, volume, and open interest for each [contract](/usc/7/518.md?p=4) settled or cleared by the [derivatives clearing organization](/usc/7/1a.md?p=15-A); and
        - (V) any other matter relevant to participation in the settlement and clearing activities of the [derivatives clearing organization](/usc/7/1a.md?p=15-A).
    - (M) **Information-sharing—** Each [derivatives clearing organization](/usc/7/1a.md?p=15-A) shall—
      - (i) enter into, and abide by the terms of, each appropriate and applicable domestic and international information-sharing agreement; and
      - (ii) use relevant information obtained from each agreement described in [clause (i)](#c-2-M-i) in carrying out the risk management program of the [derivatives clearing organization](/usc/7/1a.md?p=15-A).
    - (N) **Antitrust considerations—** Unless necessary or appropriate to achieve the purposes of this chapter, a [derivatives clearing organization](/usc/7/1a.md?p=15-A) shall not—
      - (i) adopt any rule or take any action that results in any unreasonable restraint of trade; or
      - (ii) impose any material anticompetitive burden.
    - (O) **Governance fitness standards—**
      - (i) **Governance arrangements—** Each [derivatives clearing organization](/usc/7/1a.md?p=15-A) shall establish governance arrangements that are transparent—
        - (I) to fulfill public interest requirements; and
        - (II) to permit the consideration of the views of owners and participants.
      - (ii) **Fitness standards—** Each [derivatives clearing organization](/usc/7/1a.md?p=15-A) shall establish and enforce appropriate fitness standards for—
        - (I) directors;
        - (II) [members](/usc/7/1a.md?p=34) of any disciplinary [committee](/usc/7/2132.md?p=n);
        - (III) [members](/usc/7/1a.md?p=34) of the [derivatives clearing organization](/usc/7/1a.md?p=15-A);
        - (IV) any other individual or entity with direct access to the settlement or clearing activities of the [derivatives clearing organization](/usc/7/1a.md?p=15-A); and
        - (V) any party affiliated with any individual or entity described in this clause.
    - (P) **Conflicts of interest—** Each [derivatives clearing organization](/usc/7/1a.md?p=15-A) shall—
      - (i) establish and enforce rules to minimize conflicts of interest in the decision-making process of the [derivatives clearing organization](/usc/7/1a.md?p=15-A); and
      - (ii) establish a process for resolving conflicts of interest described in [clause (i)](#c-2-P-i).
    - (Q) **Composition of governing boards—** Each [derivatives clearing organization](/usc/7/1a.md?p=15-A) shall ensure that the composition of the governing [board](/usc/7/1a.md?p=5) or [committee](/usc/7/2132.md?p=n) of the [derivatives clearing organization](/usc/7/1a.md?p=15-A) includes market participants.
    - (R) **Legal risk—** Each [derivatives clearing organization](/usc/7/1a.md?p=15-A) shall have a well-founded, transparent, and enforceable legal framework for each aspect of the activities of the [derivatives clearing organization](/usc/7/1a.md?p=15-A).
  - (3) **Orders concerning competition—** A [derivatives clearing organization](/usc/7/1a.md?p=15-A) may request the [Commission](/usc/7/1a.md?p=8) to issue an [order](/usc/7/2902.md?p=10) 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](/usc/7/1a.md?p=15-A) shall be deemed to be registered under this section to the extent that the [derivatives clearing organization](/usc/7/1a.md?p=15-A) clears agreements, [contracts](/usc/7/518.md?p=4), or transactions for a [board of trade](/usc/7/1a.md?p=6) that has been designated by the [Commission](/usc/7/1a.md?p=8) as a [contract](/usc/7/518.md?p=4) market for such agreements, [contracts](/usc/7/518.md?p=4), or transactions before December 21, 2000.
- (e) **Appointment of trustee—**
  - (1) **In general—** If a proceeding under [section 7b of this title](/usc/7/7b.md) results in the suspension or revocation of the registration of a [derivatives clearing organization](/usc/7/1a.md?p=15-A), or if a [derivatives clearing organization](/usc/7/1a.md?p=15-A) withdraws from registration, the [Commission](/usc/7/1a.md?p=8), on notice to the [derivatives clearing organization](/usc/7/1a.md?p=15-A), may apply to the appropriate [United States](/usc/7/6402.md?p=8) district court where the [derivatives clearing organization](/usc/7/1a.md?p=15-A) is located for the appointment of a trustee.
  - (2) **Assumption of jurisdiction—** If the [Commission](/usc/7/1a.md?p=8) applies for appointment of a trustee under [paragraph (1)](#e-1)—
    - (A) the court may take exclusive jurisdiction over the [derivatives clearing organization](/usc/7/1a.md?p=15-A) and the records and assets of the [derivatives clearing organization](/usc/7/1a.md?p=15-A), wherever located; and
    - (B) if the court takes jurisdiction under [subparagraph (A)](#e-2-A), the court shall appoint the [Commission](/usc/7/1a.md?p=8), or a [person](/usc/7/1a.md?p=38) designated by the [Commission](/usc/7/1a.md?p=8), as trustee with power to take possession and continue to operate or terminate the operations of the [derivatives clearing organization](/usc/7/1a.md?p=15-A) 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](/usc/7/1a.md?p=8) shall facilitate the linking or coordination of [derivatives clearing organizations](/usc/7/1a.md?p=15-A) registered under this chapter with other regulated clearance facilities for the coordinated settlement of cleared transactions. In [order](/usc/7/2902.md?p=10) to minimize systemic risk, under no circumstances shall a [derivatives clearing organization](/usc/7/1a.md?p=15-A) be compelled to accept the counterparty credit risk of another clearing organization.
  - (2) **Coordination—** In carrying out [paragraph (1)](#f-1), the [Commission](/usc/7/1a.md?p=8) shall coordinate with the Federal banking agencies 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).
- (g) **Existing depository institutions and clearing agencies—**
  - (1) **In general—** A depository institution or clearing agency registered with the [Securities](/usc/7/1a.md?p=41) and [Exchange](/usc/7/1a.md?p=1-D) [Commission](/usc/7/1a.md?p=8) under the [Securities](/usc/7/1a.md?p=41) Exchange Act of 1934 ([15 U.S.C. 78a](/usc/15/78a.md) et seq.) that is required to be registered as a [derivatives clearing organization](/usc/7/1a.md?p=15-A) under this section is deemed to be registered under this section to the extent that, before July 21, 2010—
    - (A) the depository institution [cleared swaps](/usc/7/1a.md?p=7) as a multilateral clearing organization; or
    - (B) the clearing agency [cleared swaps](/usc/7/1a.md?p=7).
  - (2) **Conversion of depository institutions—** A depository institution to which this subsection applies may, by the vote of the shareholders owning not less than 51 percent of the voting interests of the depository institution, be converted into a [State](/usc/7/1359aa.md?p=5) [corporation](/usc/7/1502.md?p=b-5), partnership, limited liability company, or similar legal form pursuant to a plan of conversion, if the conversion is not in contravention of applicable [State](/usc/7/1359aa.md?p=5) law.
  - (3) **Sharing of information—** The [Securities](/usc/7/1a.md?p=41) and [Exchange](/usc/7/1a.md?p=1-D) [Commission](/usc/7/1a.md?p=8) shall make available to the [Commission](/usc/7/1a.md?p=8), upon request, all information determined to be relevant by the [Securities](/usc/7/1a.md?p=41) and [Exchange](/usc/7/1a.md?p=1-D) [Commission](/usc/7/1a.md?p=8) regarding a clearing agency deemed to be registered with the [Commission](/usc/7/1a.md?p=8) under [paragraph (1)](#g-1).
- (h) **Exemptions—** The [Commission](/usc/7/1a.md?p=8) may exempt, conditionally or unconditionally, a [derivatives clearing organization](/usc/7/1a.md?p=15-A) from registration under this section for the clearing of [swaps](/usc/7/1a.md?p=47-A) if the [Commission](/usc/7/1a.md?p=8) determines that the [derivatives clearing organization](/usc/7/1a.md?p=15-A) is subject to comparable, comprehensive supervision and regulation by the [Securities](/usc/7/1a.md?p=41) and [Exchange](/usc/7/1a.md?p=1-D) [Commission](/usc/7/1a.md?p=8) or the appropriate government [authorities](/usc/7/2009aa.md?p=1) in the home country of the organization. Such conditions may include, but are not limited to, requiring that the [derivatives clearing organization](/usc/7/1a.md?p=15-A) be available for inspection by the [Commission](/usc/7/1a.md?p=8) and make available all information requested by the [Commission](/usc/7/1a.md?p=8).
- (i) **Designation of chief compliance officer—**
  - (1) **In general—** Each [derivatives clearing organization](/usc/7/1a.md?p=15-A) shall designate an individual to serve as a chief compliance officer.
  - (2) **Duties—** The chief compliance officer shall—
    - (A) report directly to the [board](/usc/7/1a.md?p=5) or to the senior officer of the [derivatives clearing organization](/usc/7/1a.md?p=15-A);
    - (B) review the compliance of the [derivatives clearing organization](/usc/7/1a.md?p=15-A) with respect to the core principles described in [subsection (c)(2)](#c-2);
    - (C) in consultation with the [board](/usc/7/1a.md?p=5) of the [derivatives clearing organization](/usc/7/1a.md?p=15-A), a body performing a function similar to the [board](/usc/7/1a.md?p=5) of the [derivatives clearing organization](/usc/7/1a.md?p=15-A), or the senior officer of the [derivatives clearing organization](/usc/7/1a.md?p=15-A), resolve any conflicts of interest that may arise;
    - (D) be responsible for administering each policy and procedure that is required to be established pursuant to this section;
    - (E) ensure compliance with this chapter (including regulations) relating to agreements, [contracts](/usc/7/518.md?p=4), or transactions, including each rule prescribed by the [Commission](/usc/7/1a.md?p=8) under this section;
    - (F) establish procedures for the remediation of noncompliance issues identified by the compliance officer through any—
      - (i) compliance office review;
      - (ii) look-back;
      - (iii) internal or external audit finding;
      - (iv) self-reported error; or
      - (v) validated complaint; and
    - (G) establish and follow appropriate procedures for the handling, management response, remediation, retesting, and closing of noncompliance issues.
  - (3) **Annual reports—**
    - (A) **In general—** In accordance with rules prescribed by the [Commission](/usc/7/1a.md?p=8), the chief compliance officer shall annually prepare and sign a report that contains a description of—
      - (i) the compliance of the [derivatives clearing organization](/usc/7/1a.md?p=15-A) of the compliance officer with respect to this chapter (including regulations); and
      - (ii) each policy and procedure of the [derivatives clearing organization](/usc/7/1a.md?p=15-A) of the compliance officer (including the code of ethics and conflict of interest policies of the [derivatives clearing organization](/usc/7/1a.md?p=15-A)).
    - (B) **Requirements—** A compliance report under [subparagraph (A)](#i-3-A) shall—
      - (i) accompany each appropriate financial report of the [derivatives clearing organization](/usc/7/1a.md?p=15-A) that is required to be furnished to the [Commission](/usc/7/1a.md?p=8) pursuant to this section; and
      - (ii) include a certification that, under penalty of law, the compliance report is accurate and complete.
- (k) **[^1] Reporting requirements—**
  - (1) **Duty of derivatives clearing organizations—** Each [derivatives clearing organization](/usc/7/1a.md?p=15-A) that clears [swaps](/usc/7/1a.md?p=47-A) shall provide to the [Commission](/usc/7/1a.md?p=8) all information that is determined by the [Commission](/usc/7/1a.md?p=8) to be necessary to perform each responsibility of the [Commission](/usc/7/1a.md?p=8) under this chapter.
  - (2) **Data collection and maintenance requirements—** The [Commission](/usc/7/1a.md?p=8) shall adopt data collection and maintenance requirements for [swaps](/usc/7/1a.md?p=47-A) cleared by [derivatives clearing organizations](/usc/7/1a.md?p=15-A) that are comparable to the corresponding requirements for—
    - (A) [swaps](/usc/7/1a.md?p=47-A) data reported to [swap data repositories](/usc/7/1a.md?p=48); and
    - (B) [swaps](/usc/7/1a.md?p=47-A) traded on [swap execution facilities](/usc/7/1a.md?p=50).
  - (3) **Reports on security-based swap agreements to be shared with the Securities and Exchange Commission—**
    - (A) **In general—** A [derivatives clearing organization](/usc/7/1a.md?p=15-A) that clears [security-based swap](/usc/7/1a.md?p=42) agreements (as defined in [section 1a(47)(A)(v) of this title](/usc/7/1a.md?p=47-A-v)) shall, upon request, open to inspection and examination to the [Securities](/usc/7/1a.md?p=41) and [Exchange](/usc/7/1a.md?p=1-D) [Commission](/usc/7/1a.md?p=8) all books and records relating to such [security-based swap](/usc/7/1a.md?p=42) agreements, consistent with the confidentiality and disclosure requirements of [section 12 of this title](/usc/7/12.md).
    - (B) **Jurisdiction—** Nothing in this paragraph shall affect the exclusive jurisdiction of the [Commission](/usc/7/1a.md?p=8) to prescribe recordkeeping and reporting requirements for a [derivatives clearing organization](/usc/7/1a.md?p=15-A) that is registered with the [Commission](/usc/7/1a.md?p=8).
  - (4) **Information sharing—** Subject to [section 12 of this title](/usc/7/12.md), and upon request, the [Commission](/usc/7/1a.md?p=8) shall share information collected under [paragraph (2)](#k-2) with—
    - (A) the [Board](/usc/7/1a.md?p=5);
    - (B) the [Securities](/usc/7/1a.md?p=41) and [Exchange](/usc/7/1a.md?p=1-D) [Commission](/usc/7/1a.md?p=8);
    - (C) each appropriate [prudential regulator](/usc/7/1a.md?p=39);
    - (D) the Financial Stability Oversight [Council](/usc/7/3402.md?p=i);
    - (E) the Department of Justice; and
    - (F) any other [person](/usc/7/1a.md?p=38) that the [Commission](/usc/7/1a.md?p=8) determines to be appropriate, including—
      - (i) foreign financial supervisors (including [foreign futures authorities](/usc/7/1a.md?p=26));
      - (ii) foreign central [banks](/usc/7/27.md?p=a); and
      - (iii) foreign ministries.
  - (5) **Confidentiality agreement—** Before the [Commission](/usc/7/1a.md?p=8) may share information with any entity described in [paragraph (4)](#k-4), the [Commission](/usc/7/1a.md?p=8) shall receive a written agreement from each entity stating that the entity shall abide by the confidentiality requirements described in [section 12 of this title](/usc/7/12.md) relating to the information on [swap](/usc/7/1a.md?p=47-A) transactions that is provided.
  - (6) **Public information—** Each [derivatives clearing organization](/usc/7/1a.md?p=15-A) that clears [swaps](/usc/7/1a.md?p=47-A) shall provide to the [Commission](/usc/7/1a.md?p=8) (including any designee of the [Commission](/usc/7/1a.md?p=8)) information under [paragraph (2)](#k-2) in such form and at such frequency as is required by the [Commission](/usc/7/1a.md?p=8) to comply with the public reporting requirements contained in [section 2(a)(13) of this title](/usc/7/2.md?p=a-13).

# §7a–2. Common provisions applicable to registered entities

- (a) **Acceptable business practices under core principles—**
  - (1) **In general—** Consistent with the purposes of this chapter, the [Commission](/usc/7/1a.md?p=8) may issue interpretations, or approve interpretations submitted to the [Commission](/usc/7/1a.md?p=8), of sections [7(d)](/usc/7/7.md?p=d) and [7a–1(c)(2)](/usc/7/7a–1.md?p=c-2) of this title, to describe what would constitute an acceptable business practice under such sections.
  - (2) **Effect of interpretation—** An interpretation issued under [paragraph (1)](#a-1) may provide the exclusive means for complying with each section described in [paragraph (1)](#a-1).
- (b) **Delegation of functions under core principles—**
  - (1) **In general—** A [contract](/usc/7/518.md?p=4) market, derivatives transaction execution facility, or [electronic trading facility](/usc/7/1a.md?p=16) with respect to a [significant price discovery contract](/usc/7/1a.md?p=46) may comply with any applicable core principle through delegation of any relevant function to a registered futures association or a [registered entity](/usc/7/1a.md?p=40) that is not an [electronic trading facility](/usc/7/1a.md?p=16).
  - (2) **Responsibility—** A [contract](/usc/7/518.md?p=4) market, derivatives transaction execution facility, or [electronic trading facility](/usc/7/1a.md?p=16) that delegates a function under [paragraph (1)](#b-1) shall remain responsible for carrying out the function.
  - (3) **Noncompliance—** If a [contract](/usc/7/518.md?p=4) market, derivatives transaction execution facility, or [electronic trading facility](/usc/7/1a.md?p=16) that delegates a function under [paragraph (1)](#b-1) becomes aware that a delegated function is not being performed as required under this chapter, the [contract](/usc/7/518.md?p=4) market, derivatives transaction execution facility, or [electronic trading facility](/usc/7/1a.md?p=16) shall promptly take steps to address the noncompliance.
- (c) **New contracts, new rules, and rule amendments—**
  - (1) **In general—** A [registered entity](/usc/7/1a.md?p=40) may elect to list for trading or accept for clearing any new [contract](/usc/7/518.md?p=4), or other instrument, or may elect to approve and implement any new rule or rule amendment, by providing to the [Commission](/usc/7/1a.md?p=8) (and the Secretary of the Treasury, in the case of a [contract of sale](/usc/7/1a.md?p=13) of a government [security](/usc/7/1a.md?p=41) 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)) or a rule or rule amendment specifically related to such a [contract](/usc/7/518.md?p=4)) a written certification that the new [contract](/usc/7/518.md?p=4) or instrument or clearing of the new [contract](/usc/7/518.md?p=4) or instrument, new rule, or rule amendment complies with this chapter (including regulations under this chapter).
  - (2) **Rule review—** The new rule or rule amendment described in [paragraph (1)](#c-1) shall become effective, pursuant to the certification of the [registered entity](/usc/7/1a.md?p=40) and notice of such certification to its [members](/usc/7/1a.md?p=34) (in a manner to be determined by the [Commission](/usc/7/1a.md?p=8)), on the date that is 10 business days after the date on which the [Commission](/usc/7/1a.md?p=8) receives the certification (or such shorter period as determined by the [Commission](/usc/7/1a.md?p=8) by rule or regulation) unless the [Commission](/usc/7/1a.md?p=8) notifies the [registered entity](/usc/7/1a.md?p=40) within such time that it is staying the certification because there exist novel or complex issues that require additional time to analyze, an inadequate explanation by the submitting [registered entity](/usc/7/1a.md?p=40), or a potential inconsistency with this chapter (including regulations under this chapter).
  - (3) **Stay of certification for rules—**
    - (A) A notification by the [Commission](/usc/7/1a.md?p=8) pursuant to [paragraph (2)](#c-2) shall stay the certification of the new rule or rule amendment for up to an additional 90 days from the date of the notification.
    - (B) A rule or rule amendment subject to a stay pursuant to [subparagraph (A)](#c-3-A) shall become effective, pursuant to the certification of the [registered entity](/usc/7/1a.md?p=40), at the expiration of the period described in [subparagraph (A)](#c-3-A) unless the [Commission](/usc/7/1a.md?p=8)—
      - (i) withdraws the stay prior to that time; or
      - (ii) notifies the [registered entity](/usc/7/1a.md?p=40) during such period that it objects to the proposed certification on the grounds that it is inconsistent with this chapter (including regulations under this chapter).
    - (C) The [Commission](/usc/7/1a.md?p=8) shall provide a not less than 30-day public comment period, within the 90-day period in which the stay is in effect as described in [subparagraph (A)](#c-3-A), whenever the [Commission](/usc/7/1a.md?p=8) reviews a rule or rule amendment pursuant to a notification by the [Commission](/usc/7/1a.md?p=8) under this paragraph.
  - (4) **Prior approval—**
    - (A) **In general—** A [registered entity](/usc/7/1a.md?p=40) may request that the [Commission](/usc/7/1a.md?p=8) grant prior approval to any new [contract](/usc/7/518.md?p=4) or other instrument, new rule, or rule amendment.
    - (B) **Prior approval required—** Notwithstanding any other provision of this section, a designated [contract](/usc/7/518.md?p=4) market shall submit to the [Commission](/usc/7/1a.md?p=8) for prior approval each rule amendment that materially changes the terms and conditions, as determined by the [Commission](/usc/7/1a.md?p=8), in any [contract of sale](/usc/7/1a.md?p=13) for [future delivery](/usc/7/1a.md?p=27) of a [commodity](/usc/7/1a.md?p=9) specifically enumerated in [section 1a(10)](/usc/7/1a.md?p=10)[^1] of this title (or any [option](/usc/7/1a.md?p=36) thereon) traded through its facilities if the rule amendment applies to [contracts](/usc/7/518.md?p=4) and delivery months which have already been listed for trading and have open interest.
    - (C) **Deadline—** If prior approval is requested under [subparagraph (A)](#c-4-A), the [Commission](/usc/7/1a.md?p=8) shall take final action on the request not later than 90 days after submission of the request, unless the [person](/usc/7/1a.md?p=38) submitting the request agrees to an [extension](/usc/7/5801.md?p=b-5) of the time limitation established under this subparagraph.
  - (5) **Approval—**
    - (A) **Rules—** The [Commission](/usc/7/1a.md?p=8) shall approve a new rule, or rule amendment, of a [registered entity](/usc/7/1a.md?p=40) unless the [Commission](/usc/7/1a.md?p=8) finds that the new rule, or rule amendment, is inconsistent with this chapter (including regulations).
    - (B) **Contracts and instruments—** The [Commission](/usc/7/1a.md?p=8) shall approve a new [contract](/usc/7/518.md?p=4) or other instrument unless the [Commission](/usc/7/1a.md?p=8) finds that the new [contract](/usc/7/518.md?p=4) or other instrument would violate this chapter (including regulations).
    - (C) **Special rule for review and approval of event contracts and swaps contracts—**
      - (i) **Event contracts—** In connection with the listing of agreements, [contracts](/usc/7/518.md?p=4), transactions, or [swaps](/usc/7/1a.md?p=47-A) in [excluded commodities](/usc/7/1a.md?p=19) that are based upon the occurrence, extent of an occurrence, or contingency (other than a change in the price, rate, value, or levels of a [commodity](/usc/7/1a.md?p=9) described in [section 1a(2)(i)](/usc/7/1a.md)[^2] of this title), by a designated [contract](/usc/7/518.md?p=4) market or [swap execution facility](/usc/7/1a.md?p=50), the [Commission](/usc/7/1a.md?p=8) may determine that such agreements, [contracts](/usc/7/518.md?p=4), or transactions are contrary to the public interest if the agreements, [contracts](/usc/7/518.md?p=4), or transactions involve—
        - (I) activity that is unlawful under any Federal or [State](/usc/7/1359aa.md?p=5) law;
        - (II) terrorism;
        - (III) assassination;
        - (IV) war;
        - (V) gaming; or
        - (VI) other similar activity determined by the [Commission](/usc/7/1a.md?p=8), by rule or regulation, to be contrary to the public interest.
      - (ii) **Prohibition—** No agreement, [contract](/usc/7/518.md?p=4), or transaction determined by the [Commission](/usc/7/1a.md?p=8) to be contrary to the public interest under [clause (i)](#c-5-C-i) may be listed or made available for clearing or trading on or through a [registered entity](/usc/7/1a.md?p=40).
      - (iii) **Swaps contracts—**
        - (I) **In general—** In connection with the listing of a [swap](/usc/7/1a.md?p=47-A) for clearing by a [derivatives clearing organization](/usc/7/1a.md?p=15-A), the [Commission](/usc/7/1a.md?p=8) shall determine, upon request or on its own motion, the initial eligibility, or the continuing qualification, of a [derivatives clearing organization](/usc/7/1a.md?p=15-A) to clear such a [swap](/usc/7/1a.md?p=47-A) under those criteria, conditions, or rules that the [Commission](/usc/7/1a.md?p=8), in its discretion, determines.
        - (II) **Requirements—** Any such criteria, conditions, or rules shall consider—
          - (aa) the financial integrity of the [derivatives clearing organization](/usc/7/1a.md?p=15-A); and
          - (bb) any other factors which the [Commission](/usc/7/1a.md?p=8) determines may be appropriate.
      - (iv) **Deadline—** The [Commission](/usc/7/1a.md?p=8) shall take final action under clauses [(i)](#c-5-C-i) and [(ii)](#c-5-C-ii) in not later than 90 days from the commencement of its review unless the party seeking to [offer](/usc/7/1a.md?p=36) the [contract](/usc/7/518.md?p=4) or [swap](/usc/7/1a.md?p=47-A) agrees to an [extension](/usc/7/5801.md?p=b-5) of this time limitation.
- (d) **Repealed. Pub. L. 111–203, title VII, § 745(c), July 21, 2010, 124 Stat. 1737—**
- (e) **Reservation of emergency authority—** Nothing in this section shall limit or in any way affect the emergency powers of the [Commission](/usc/7/1a.md?p=8) provided in [section 12a(9) of this title](/usc/7/12a.md?p=9).
- (f) **Rules to avoid duplicative regulation of dual registrants—** Consistent with this chapter, each designated [contract](/usc/7/518.md?p=4) 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](/usc/7/1a.md?p=28-A) registered with the [Commission](/usc/7/1a.md?p=8) pursuant to [section 6f(a) of this title](/usc/7/6f.md?p=a) (except [paragraph (2)](#f-2) thereof), that is also registered with the [Securities](/usc/7/1a.md?p=41) and [Exchange](/usc/7/1a.md?p=1-D) [Commission](/usc/7/1a.md?p=8) pursuant to [section 78o(b)](/usc/15/78o.md?p=b) of title 15 (except paragraph (11) thereof) with respect to the application of—
  - (1) rules of such designated [contract](/usc/7/518.md?p=4) market or registered derivatives transaction execution facility of the type specified in [section 6d(e) of this title](/usc/7/6d.md?p=e) involving [security futures products](/usc/7/1a.md?p=45); and
  - (2) similar rules of national [securities](/usc/7/1a.md?p=41) associations registered pursuant to [section 78o–3(a)](/usc/15/78o–3.md?p=a) of title 15 and national [securities](/usc/7/1a.md?p=41) [exchanges](/usc/7/1a.md?p=1-D) registered pursuant to [section 78f(g) of title 15](/usc/15/78f.md?p=g) involving [security futures products](/usc/7/1a.md?p=45).

# [§7a–3. Repealed. Pub. L. 111–203, title VII, § 734(a), July 21, 2010, 124 Stat. 1718 — repealed]



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


The failure of a [registered entity](/usc/7/1a.md?p=40) to comply with any provision of this chapter, or any regulation or [order](/usc/7/2902.md?p=10) of the [Commission](/usc/7/1a.md?p=8) under this chapter, shall be cause for the suspension of the [registered entity](/usc/7/1a.md?p=40) for a period not to exceed 180 days, or revocation of designation as a [registered entity](/usc/7/1a.md?p=40), in accordance with the procedures and subject to the judicial review provided in [section 8(b) of this title](/usc/7/8.md?p=b).


# §7b–1. Designation of securities exchanges and associations as contract markets

- (a) Any [board of trade](/usc/7/1a.md?p=6) that is registered with the [Securities](/usc/7/1a.md?p=41) and [Exchange](/usc/7/1a.md?p=1-D) [Commission](/usc/7/1a.md?p=8) as a national [securities](/usc/7/1a.md?p=41) [exchange](/usc/7/1a.md?p=1-D), is a national [securities](/usc/7/1a.md?p=41) association registered pursuant to [section 78o–3(a)](/usc/15/78o–3.md?p=a) of title 15, or is an [alternative trading system](/usc/7/1a.md?p=1) shall be a designated [contract](/usc/7/518.md?p=4) market in [security futures products](/usc/7/1a.md?p=45) if—
  - (1) such national [securities](/usc/7/1a.md?p=41) [exchange](/usc/7/1a.md?p=1-D), national [securities](/usc/7/1a.md?p=41) association, or [alternative trading system](/usc/7/1a.md?p=1) lists or trades no other [contracts](/usc/7/518.md?p=4) of sale for [future delivery](/usc/7/1a.md?p=27), except for [security futures products](/usc/7/1a.md?p=45);
  - (2) such national [securities](/usc/7/1a.md?p=41) [exchange](/usc/7/1a.md?p=1-D), national [securities](/usc/7/1a.md?p=41) association, or [alternative trading system](/usc/7/1a.md?p=1) files written notice with the [Commission](/usc/7/1a.md?p=8) in such form as the [Commission](/usc/7/1a.md?p=8), by rule, may prescribe containing such information as the [Commission](/usc/7/1a.md?p=8), 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](/usc/7/1a.md?p=41) [exchange](/usc/7/1a.md?p=1-D), national [securities](/usc/7/1a.md?p=41) association, or [alternative trading system](/usc/7/1a.md?p=1) is not suspended pursuant to an [order](/usc/7/2902.md?p=10) by the [Securities](/usc/7/1a.md?p=41) and [Exchange](/usc/7/1a.md?p=1-D) [Commission](/usc/7/1a.md?p=8).

  Such designation shall be effective contemporaneously with the submission of notice, in written or electronic form, to the [Commission](/usc/7/1a.md?p=8).

- (b)
  - (1) A national [securities](/usc/7/1a.md?p=41) [exchange](/usc/7/1a.md?p=1-D), national [securities](/usc/7/1a.md?p=41) association, or [alternative trading system](/usc/7/1a.md?p=1) that is designated as a [contract](/usc/7/518.md?p=4) 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](/usc/7/6c.md).
    - (B) [Section 6j of this title](/usc/7/6j.md).
    - (C) [Section 7 of this title](/usc/7/7.md).
    - (D) [Section 7a–2 of this title](/usc/7/7a–2.md).
    - (E) [Section 10a of this title](/usc/7/10a.md).
    - (F) [Section 12(d) of this title](/usc/7/12.md?p=d).
    - (G) [Section 13(f)](/usc/7/13.md)[^1] of this title.
    - (H) [Section 20 of this title](/usc/7/20.md).
  - (2) An [alternative trading system](/usc/7/1a.md?p=1) that is a designated [contract](/usc/7/518.md?p=4) market under this section shall be required to be a [member](/usc/7/1a.md?p=34) of a futures association registered under [section 21 of this title](/usc/7/21.md) and shall be exempt from any provision of this chapter that would require such [alternative trading system](/usc/7/1a.md?p=1) to—
    - (A) set rules governing the conduct of subscribers other than the conduct of such subscribers’ trading on such [alternative trading system](/usc/7/1a.md?p=1); or
    - (B) discipline subscribers other than by exclusion from trading.
  - (3) To the extent that an [alternative trading system](/usc/7/1a.md?p=1) 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](/usc/7/21.md) of which the [alternative trading system](/usc/7/1a.md?p=1) is a [member](/usc/7/1a.md?p=34) shall set rules governing the conduct of subscribers to the [alternative trading system](/usc/7/1a.md?p=1) and discipline the subscribers.
  - (4)
    - (A) Except as provided in [subparagraph (B)](#b-4-B), but notwithstanding any other provision of this chapter, the [Commission](/usc/7/1a.md?p=8), by rule, regulation, or [order](/usc/7/2902.md?p=10), may conditionally or unconditionally exempt any designated [contract](/usc/7/518.md?p=4) market in [security futures](/usc/7/1a.md?p=44) 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](/usc/7/1a.md?p=8) shall, by rule or regulation, determine the procedures under which an exemptive [order](/usc/7/2902.md?p=10) under this section is granted and may, in its sole discretion, decline to entertain any application for an [order](/usc/7/2902.md?p=10) of exemption under this section.
    - (C) An [alternative trading system](/usc/7/1a.md?p=1) shall not be deemed to be an [exchange](/usc/7/1a.md?p=1-D) for any purpose as a result of the designation of such [alternative trading system](/usc/7/1a.md?p=1) as a [contract](/usc/7/518.md?p=4) market under this section.

# §7b–2. Privacy

- (a) **Treatment as financial institutions—** Notwithstanding [section 509(3)(B)](/usc/7/509.md) of the Gramm-Leach-Bliley Act [[15 U.S.C. 6809(3)(B)](/usc/15/6809.md?p=3-B)], any [futures commission merchant](/usc/7/1a.md?p=28-A), [commodity trading advisor](/usc/7/1a.md?p=12-B), [commodity pool operator](/usc/7/1a.md?p=11-A), or [introducing broker](/usc/7/1a.md?p=31-A) that is subject to the jurisdiction of the [Commission](/usc/7/1a.md?p=8) under this chapter with respect to any financial activity shall be treated as a [financial institution](/usc/7/1a.md?p=21) for purposes of title V of such Act [[15 U.S.C. 6801](/usc/15/6801.md) 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](/usc/15/6801.md) et seq.], the [Commission](/usc/7/1a.md?p=8) shall be treated as a Federal functional regulator within the meaning of [section 509(2)](/usc/7/509.md) of such Act [[15 U.S.C. 6809(2)](/usc/15/6809.md?p=2)] and shall prescribe regulations under such title within 6 months after December 21, 2000.

# §7b–3. Swap execution facilities

- (a) **Registration—**
  - (1) **In general—** No [person](/usc/7/1a.md?p=38) may operate a facility for the trading or processing of [swaps](/usc/7/1a.md?p=47-A) unless the facility is registered as a [swap execution facility](/usc/7/1a.md?p=50) or as a designated [contract](/usc/7/518.md?p=4) market under this section.
  - (2) **Dual registration—** Any [person](/usc/7/1a.md?p=38) that is registered as a [swap execution facility](/usc/7/1a.md?p=50) under this section shall register with the [Commission](/usc/7/1a.md?p=8) regardless of whether the [person](/usc/7/1a.md?p=38) also is registered with the [Securities](/usc/7/1a.md?p=41) and [Exchange](/usc/7/1a.md?p=1-D) [Commission](/usc/7/1a.md?p=8) as a [swap execution facility](/usc/7/1a.md?p=50).
- (b) **Trading and trade processing—**
  - (1) **In general—** Except as specified in [paragraph (2)](#b-2), a [swap execution facility](/usc/7/1a.md?p=50) that is registered under [subsection (a)](#a) may—
    - (A) make available for trading any [swap](/usc/7/1a.md?p=47-A); and
    - (B) facilitate trade processing of any [swap](/usc/7/1a.md?p=47-A).
  - (2) **Agricultural swaps—** A [swap execution facility](/usc/7/1a.md?p=50) may not list for trading or confirm the execution of any [swap](/usc/7/1a.md?p=47-A) in an [agricultural commodity](/usc/7/5602.md?p=1) (as defined by the [Commission](/usc/7/1a.md?p=8)) except pursuant to a rule or regulation of the [Commission](/usc/7/1a.md?p=8) allowing the [swap](/usc/7/1a.md?p=47-A) under such terms and conditions as the [Commission](/usc/7/1a.md?p=8) shall prescribe.
- (c) **Identification of facility used to trade swaps by contract markets—** A [board of trade](/usc/7/1a.md?p=6) that operates a [contract](/usc/7/518.md?p=4) market shall, to the extent that the [board of trade](/usc/7/1a.md?p=6) also operates a [swap execution facility](/usc/7/1a.md?p=50) and uses the same electronic trade execution system for listing and executing trades of [swaps](/usc/7/1a.md?p=47-A) on or through the [contract](/usc/7/518.md?p=4) market and the [swap execution facility](/usc/7/1a.md?p=50), identify whether the electronic trading of such [swaps](/usc/7/1a.md?p=47-A) is taking place on or through the [contract](/usc/7/518.md?p=4) market or the [swap execution facility](/usc/7/1a.md?p=50).
- (d) **Rule-writing—**
  - (1) The [Securities](/usc/7/1a.md?p=41) and [Exchange](/usc/7/1a.md?p=1-D) [Commission](/usc/7/1a.md?p=8) and [Commodity](/usc/7/1a.md?p=9) Futures Trading [Commission](/usc/7/1a.md?p=8) may promulgate rules defining the universe of [swaps](/usc/7/1a.md?p=47-A) that can be executed on a [swap execution facility](/usc/7/1a.md?p=50). These rules shall take into account the price and nonprice requirements of the counterparties to a [swap](/usc/7/1a.md?p=47-A) and the goal of this section as set forth in [subsection (e)](#e).
  - (2) For all [swaps](/usc/7/1a.md?p=47-A) that are not required to be executed through a [swap execution facility](/usc/7/1a.md?p=50) as defined in [paragraph (1)](#d-1), such trades may be executed through any other available means of [interstate commerce](/usc/7/1a.md?p=30).
  - (3) The [Securities](/usc/7/1a.md?p=41) and [Exchange](/usc/7/1a.md?p=1-D) [Commission](/usc/7/1a.md?p=8) and [Commodity](/usc/7/1a.md?p=9) Futures Trading [Commission](/usc/7/1a.md?p=8) shall update these rules as necessary to account for technological and other innovation.
- (e) **Rule of construction—** The goal of this section is to promote the trading of [swaps](/usc/7/1a.md?p=47-A) on [swap execution facilities](/usc/7/1a.md?p=50) and to promote pre-trade price transparency in the [swaps](/usc/7/1a.md?p=47-A) market.
- (f) **Core principles for swap execution facilities—**
  - (1) **Compliance with core principles—**
    - (A) **In general—** To be registered, and maintain registration, as a [swap execution facility](/usc/7/1a.md?p=50), the [swap execution facility](/usc/7/1a.md?p=50) shall comply with—
      - (i) the core principles described in this subsection; and
      - (ii) any requirement that the [Commission](/usc/7/1a.md?p=8) may impose by rule or regulation pursuant to [section 12a(5) of this title](/usc/7/12a.md?p=5).
    - (B) **Reasonable discretion of swap execution facility—** Unless otherwise determined by the [Commission](/usc/7/1a.md?p=8) by rule or regulation, a [swap execution facility](/usc/7/1a.md?p=50) described in [subparagraph (A)](#f-1-A) shall have reasonable discretion in establishing the manner in which the [swap execution facility](/usc/7/1a.md?p=50) complies with the core principles described in this subsection.
  - (2) **Compliance with rules—** A [swap execution facility](/usc/7/1a.md?p=50) shall—
    - (A) establish and enforce compliance with any rule of the [swap execution facility](/usc/7/1a.md?p=50), including—
      - (i) the terms and conditions of the [swaps](/usc/7/1a.md?p=47-A) traded or processed on or through the [swap execution facility](/usc/7/1a.md?p=50); and
      - (ii) any limitation on access to the [swap execution facility](/usc/7/1a.md?p=50);
    - (B) establish and enforce trading, trade processing, and participation rules that will deter abuses and have the capacity to detect, investigate, and enforce those rules, including means—
      - (i) to provide market participants with impartial access to the market; and
      - (ii) to capture information that may be used in establishing whether rule violations have occurred;
    - (C) establish rules governing the operation of the facility, including rules specifying trading procedures to be used in entering and executing [orders](/usc/7/2902.md?p=10) traded or posted on the facility, including block trades; and
    - (D) provide by its rules that when a [swap dealer](/usc/7/1a.md?p=49-A) or [major swap participant](/usc/7/1a.md?p=33-A) enters into or facilitates a [swap](/usc/7/1a.md?p=47-A) that is subject to the mandatory clearing requirement of [section 2(h) of this title](/usc/7/2.md?p=h), the [swap dealer](/usc/7/1a.md?p=49-A) or [major swap participant](/usc/7/1a.md?p=33-A) shall be responsible for compliance with the mandatory trading requirement under [section 2(h)(8) of this title](/usc/7/2.md?p=h-8).
  - (3) **Swaps not readily susceptible to manipulation—** The [swap execution facility](/usc/7/1a.md?p=50) shall permit trading only in [swaps](/usc/7/1a.md?p=47-A) that are not readily susceptible to manipulation.
  - (4) **Monitoring of trading and trade processing—** The [swap execution facility](/usc/7/1a.md?p=50) shall—
    - (A) establish and enforce rules or terms and conditions defining, or specifications detailing—
      - (i) trading procedures to be used in entering and executing [orders](/usc/7/2902.md?p=10) traded on or through the facilities of the [swap execution facility](/usc/7/1a.md?p=50); and
      - (ii) procedures for trade processing of [swaps](/usc/7/1a.md?p=47-A) on or through the facilities of the [swap execution facility](/usc/7/1a.md?p=50); and
    - (B) monitor trading in [swaps](/usc/7/1a.md?p=47-A) to prevent manipulation, price distortion, and disruptions of the delivery or cash settlement process through surveillance, compliance, and disciplinary practices and procedures, including methods for conducting real-time monitoring of trading and comprehensive and accurate trade reconstructions.
  - (5) **Ability to obtain information—** The [swap execution facility](/usc/7/1a.md?p=50) shall—
    - (A) establish and enforce rules that will allow the facility to obtain any necessary information to perform any of the functions described in this section;
    - (B) provide the information to the [Commission](/usc/7/1a.md?p=8) on request; and
    - (C) have the capacity to carry out such international information-sharing agreements as the [Commission](/usc/7/1a.md?p=8) may require.
  - (6) **Position limits or accountability—**
    - (A) **In general—** To reduce the potential threat of market manipulation or congestion, especially during trading in the delivery month, a [swap execution facility](/usc/7/1a.md?p=50) that is a [trading facility](/usc/7/1a.md?p=51-A) shall adopt for each of the [contracts](/usc/7/518.md?p=4) of the facility, as is necessary and appropriate, position limitations or position accountability for speculators.
    - (B) **Position limits—** For any [contract](/usc/7/518.md?p=4) that is subject to a position limitation established by the [Commission](/usc/7/1a.md?p=8) pursuant to [section 6a(a) of this title](/usc/7/6a.md?p=a), the [swap execution facility](/usc/7/1a.md?p=50) shall—
      - (i) set its position limitation at a level no higher than the [Commission](/usc/7/1a.md?p=8) limitation; and
      - (ii) monitor positions established on or through the [swap execution facility](/usc/7/1a.md?p=50) for compliance with the limit set by the [Commission](/usc/7/1a.md?p=8) and the limit, if any, set by the [swap execution facility](/usc/7/1a.md?p=50).
  - (7) **Financial integrity of transactions—** The [swap execution facility](/usc/7/1a.md?p=50) shall establish and enforce rules and procedures for ensuring the financial integrity of [swaps](/usc/7/1a.md?p=47-A) entered on or through the facilities of the [swap execution facility](/usc/7/1a.md?p=50), including the clearance and settlement of the [swaps](/usc/7/1a.md?p=47-A) pursuant to [section 2(h)(1) of this title](/usc/7/2.md?p=h-1).
  - (8) **Emergency authority—** The [swap execution facility](/usc/7/1a.md?p=50) shall adopt rules to provide for the exercise of emergency [authority](/usc/7/2009aa.md?p=1), in consultation or cooperation with the [Commission](/usc/7/1a.md?p=8), as is necessary and appropriate, including the [authority](/usc/7/2009aa.md?p=1) to liquidate or transfer open positions in any [swap](/usc/7/1a.md?p=47-A) or to suspend or curtail trading in a [swap](/usc/7/1a.md?p=47-A).
  - (9) **Timely publication of trading information—**
    - (A) **In general—** The [swap execution facility](/usc/7/1a.md?p=50) shall make public timely information on price, trading volume, and other trading data on [swaps](/usc/7/1a.md?p=47-A) to the extent prescribed by the [Commission](/usc/7/1a.md?p=8).
    - (B) **Capacity of swap execution facility—** The [swap execution facility](/usc/7/1a.md?p=50) shall be required to have the capacity to electronically capture and transmit trade information with respect to transactions executed on the facility.
  - (10) **Recordkeeping and reporting—**
    - (A) **In general—** A [swap execution facility](/usc/7/1a.md?p=50) shall—
      - (i) maintain records of all activities relating to the business of the facility, including a complete audit trail, in a form and manner acceptable to the [Commission](/usc/7/1a.md?p=8) for a period of 5 years;
      - (ii) report to the [Commission](/usc/7/1a.md?p=8), in a form and manner acceptable to the [Commission](/usc/7/1a.md?p=8), such information as the [Commission](/usc/7/1a.md?p=8) determines to be necessary or appropriate for the [Commission](/usc/7/1a.md?p=8) to perform the duties of the [Commission](/usc/7/1a.md?p=8) under this chapter; and
      - (iii) shall keep any such records relating to [swaps](/usc/7/1a.md?p=47-A) defined in [section 1a(47)(A)(v) of this title](/usc/7/1a.md?p=47-A-v) open to inspection and examination by the [Securities](/usc/7/1a.md?p=41) and [Exchange](/usc/7/1a.md?p=1-D) [Commission](/usc/7/1a.md?p=8).”[^1]
    - (B) **Requirements—** The [Commission](/usc/7/1a.md?p=8) shall adopt data collection and reporting requirements for [swap execution facilities](/usc/7/1a.md?p=50) that are comparable to corresponding requirements for [derivatives clearing organizations](/usc/7/1a.md?p=15-A) and [swap data repositories](/usc/7/1a.md?p=48).
  - (11) **Antitrust considerations—** Unless necessary or appropriate to achieve the purposes of this chapter, the [swap execution facility](/usc/7/1a.md?p=50) shall not—
    - (A) adopt any rules or taking[^2] any actions that result in any unreasonable restraint of trade; or
    - (B) impose any material anticompetitive burden on trading or clearing.
  - (12) **Conflicts of interest—** The [swap execution facility](/usc/7/1a.md?p=50) shall—
    - (A) establish and enforce rules to minimize conflicts of interest in its decision-making process; and
    - (B) establish a process for resolving the conflicts of interest.
  - (13) **Financial resources—**
    - (A) **In general—** The [swap execution facility](/usc/7/1a.md?p=50) shall have adequate financial, operational, and managerial resources to discharge each responsibility of the [swap execution facility](/usc/7/1a.md?p=50).
    - (B) **Determination of resource adequacy—** The financial resources of a [swap execution facility](/usc/7/1a.md?p=50) shall be considered to be adequate if the value of the financial resources exceeds the total amount that would enable the [swap execution facility](/usc/7/1a.md?p=50) to cover the operating costs of the [swap execution facility](/usc/7/1a.md?p=50) for a 1-year period, as calculated on a rolling basis.
  - (14) **System safeguards—** The [swap execution facility](/usc/7/1a.md?p=50) shall—
    - (A) establish and maintain a program of risk analysis and oversight to identify and minimize sources of operational risk, through the development of appropriate controls and procedures, and automated systems, that—
      - (i) are reliable and secure; and
      - (ii) have adequate scalable capacity;
    - (B) establish and maintain emergency procedures, backup facilities, and a plan for disaster recovery that allow for—
      - (i) the timely recovery and resumption of operations; and
      - (ii) the fulfillment of the responsibilities and obligations of the [swap execution facility](/usc/7/1a.md?p=50); and
    - (C) periodically conduct tests to verify that the backup resources of the [swap execution facility](/usc/7/1a.md?p=50) are sufficient to ensure continued—
      - (i) [order](/usc/7/2902.md?p=10) processing and trade matching;
      - (ii) price reporting;
      - (iii) market surveillance and
      - (iv) maintenance of a comprehensive and accurate audit trail.
  - (15) **Designation of chief compliance officer—**
    - (A) **In general—** Each [swap execution facility](/usc/7/1a.md?p=50) shall designate an individual to serve as a chief compliance officer.
    - (B) **Duties—** The chief compliance officer shall—
      - (i) report directly to the [board](/usc/7/1a.md?p=5) or to the senior officer of the facility;
      - (ii) review compliance with the core principles in this subsection;
      - (iii) in consultation with the [board](/usc/7/1a.md?p=5) of the facility, a body performing a function similar to that of a [board](/usc/7/1a.md?p=5), or the senior officer of the facility, resolve any conflicts of interest that may arise;
      - (iv) be responsible for establishing and administering the policies and procedures required to be established pursuant to this section;
      - (v) ensure compliance with this chapter and the rules and regulations issued under this chapter, including rules prescribed by the [Commission](/usc/7/1a.md?p=8) pursuant to this section; and
      - (vi) establish procedures for the remediation of noncompliance issues found during compliance office reviews, look backs, internal or external audit findings, self-reported errors, or through validated complaints.
    - (C) **Requirements for procedures—** In establishing procedures under [subparagraph (B)(vi)](#f-15-B-vi), the chief compliance officer shall design the procedures to establish the handling, management response, remediation, retesting, and closing of noncompliance issues.
    - (D) **Annual reports—**
      - (i) **In general—** In accordance with rules prescribed by the [Commission](/usc/7/1a.md?p=8), the chief compliance officer shall annually prepare and sign a report that contains a description of—
        - (I) the compliance of the [swap execution facility](/usc/7/1a.md?p=50) with this chapter; and
        - (II) the policies and procedures, including the code of ethics and conflict of interest policies, of the [swap execution facility](/usc/7/1a.md?p=50).
      - (ii) **Requirements—** The chief compliance officer shall—
        - (I) submit each report described in [clause (i)](#f-15-D-i) with the appropriate financial report of the [swap execution facility](/usc/7/1a.md?p=50) that is required to be submitted to the [Commission](/usc/7/1a.md?p=8) pursuant to this section; and
        - (II) include in the report a certification that, under penalty of law, the report is accurate and complete.
- (g) **Exemptions—** The [Commission](/usc/7/1a.md?p=8) may exempt, conditionally or unconditionally, a [swap execution facility](/usc/7/1a.md?p=50) from registration under this section if the [Commission](/usc/7/1a.md?p=8) finds that the facility is subject to comparable, comprehensive supervision and regulation on a consolidated basis by the [Securities](/usc/7/1a.md?p=41) and [Exchange](/usc/7/1a.md?p=1-D) [Commission](/usc/7/1a.md?p=8), a [prudential regulator](/usc/7/1a.md?p=39), or the appropriate governmental [authorities](/usc/7/2009aa.md?p=1) in the home country of the facility.
- (h) **Rules—** The [Commission](/usc/7/1a.md?p=8) shall prescribe rules governing the regulation of alternative [swap execution facilities](/usc/7/1a.md?p=50) under this section.

# §8. Application for designation as contract market or derivatives transaction execution facility; time; suspension or revocation of designation; hearing; review by court of appeals

- (a) Any [person](/usc/7/1a.md?p=38) desiring to be designated or registered as a [contract](/usc/7/518.md?p=4) market or derivatives transaction execution facility shall make application to the [Commission](/usc/7/1a.md?p=8) 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[^1] requirements of this chapter. The [Commission](/usc/7/1a.md?p=8) shall approve or deny an application for designation or registration as a [contract](/usc/7/518.md?p=4) market or derivatives transaction execution facility within 180 days of the filing of the application. If the [Commission](/usc/7/1a.md?p=8) notifies the [person](/usc/7/1a.md?p=38) 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](/usc/7/1a.md?p=8) 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](/usc/7/1a.md?p=8) denies an application, it shall specify the grounds for the denial. In the event of a refusal to designate or register as a [contract](/usc/7/518.md?p=4) market or derivatives transaction execution facility any [person](/usc/7/1a.md?p=38) that has made application therefor, the [person](/usc/7/1a.md?p=38) shall be afforded an opportunity for a hearing on the record before the [Commission](/usc/7/1a.md?p=8), 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)](#b) of this section.
- (b) The [Commission](/usc/7/1a.md?p=8) is authorized to suspend for a period not to exceed 6 months or to revoke the designation or registration of any [contract](/usc/7/518.md?p=4) market or derivatives transaction execution facility on a showing that the [contract](/usc/7/518.md?p=4) 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](/usc/7/7..7a–1.md) of this title or [section 7b–1 of this title](/usc/7/7b–1.md), or that the [contract](/usc/7/518.md?p=4) market or derivatives transaction execution facility or [electronic trading facility](/usc/7/1a.md?p=16), 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](/usc/7/2902.md?p=10) of the [Commission](/usc/7/1a.md?p=8) thereunder. Such suspension or revocation shall only be made after a notice to the officers of the [contract](/usc/7/518.md?p=4) market or derivatives transaction execution facility or [electronic trading facility](/usc/7/1a.md?p=16) 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](/usc/7/1a.md?p=8) such [person](/usc/7/1a.md?p=38) 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](/usc/7/2902.md?p=10) of the [Commission](/usc/7/1a.md?p=8) 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](/usc/7/1a.md?p=38) 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](/usc/7/1a.md?p=8) and file in the court the record in such proceedings, as provided in [section 2112 of title 28](/usc/28/2112.md). The testimony and evidence taken or submitted before the [Commission](/usc/7/1a.md?p=8), 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](/usc/7/2902.md?p=10) of the [Commission](/usc/7/1a.md?p=8) or may direct it to modify its [order](/usc/7/2902.md?p=10). No such [order](/usc/7/2902.md?p=10) of the [Commission](/usc/7/1a.md?p=8) shall be modified or set aside by the court of appeals unless it is shown by the [person](/usc/7/1a.md?p=38) that the [order](/usc/7/2902.md?p=10) is unsupported by the weight of the evidence or was issued without due notice and a reasonable opportunity having been afforded to such [person](/usc/7/1a.md?p=38) for a hearing, or infringes the Constitution of the [United States](/usc/7/6402.md?p=8), or is beyond the jurisdiction of the [Commission](/usc/7/1a.md?p=8).

# §9. Prohibition regarding manipulation and false information

- (1) **Prohibition against manipulation—** It shall be unlawful for any [person](/usc/7/1a.md?p=38), directly or indirectly, to use or employ, or attempt to use or employ, in connection with any [swap](/usc/7/1a.md?p=47-A), or a [contract of sale](/usc/7/1a.md?p=13) of any [commodity](/usc/7/1a.md?p=9) in [interstate commerce](/usc/7/1a.md?p=30), or for [future delivery](/usc/7/1a.md?p=27) on or subject to the rules of any [registered entity](/usc/7/1a.md?p=40), any manipulative or deceptive device or contrivance, in contravention of such rules and regulations as the [Commission](/usc/7/1a.md?p=8) shall promulgate by not later than 1 year after July 21, 2010, provided no rule or regulation promulgated by the [Commission](/usc/7/1a.md?p=8) shall require any [person](/usc/7/1a.md?p=38) to disclose to another [person](/usc/7/1a.md?p=38) nonpublic information that may be material to the market price, rate, or level of the [commodity](/usc/7/1a.md?p=9) transaction, except as necessary to make any statement made to the other [person](/usc/7/1a.md?p=38) in or in connection with the transaction not misleading in any material respect.
  - (A) **Special provision for manipulation by false reporting—** Unlawful manipulation for purposes of this paragraph shall include, but not be limited to, delivering, or causing to be delivered for transmission through the mails or [interstate commerce](/usc/7/1a.md?p=30), by any means of communication whatsoever, a false or misleading or inaccurate report concerning crop or market information or conditions that affect or tend to affect the price of any [commodity](/usc/7/1a.md?p=9) in [interstate commerce](/usc/7/1a.md?p=30), knowing, or acting in reckless disregard of the fact that such report is false, misleading or inaccurate.
  - (B) **Effect on other law—** Nothing in this paragraph shall affect, or be construed to affect, the applicability of [section 13(a)(2) of this title](/usc/7/13.md?p=a-2).
  - (C) **Good faith mistakes—** Mistakenly transmitting, in good faith, false or misleading or inaccurate information to a price reporting service would not be sufficient to violate [paragraph (1)(A)](#1-A).
- (2) **Prohibition regarding false information—** It shall be unlawful for any [person](/usc/7/1a.md?p=38) to make any false or misleading statement of a material fact to the [Commission](/usc/7/1a.md?p=8), including in any registration application or any report filed with the [Commission](/usc/7/1a.md?p=8) under this chapter, or any other information relating to a [swap](/usc/7/1a.md?p=47-A), or a [contract of sale](/usc/7/1a.md?p=13) of a [commodity](/usc/7/1a.md?p=9), in [interstate commerce](/usc/7/1a.md?p=30), or for [future delivery](/usc/7/1a.md?p=27) on or subject to the rules of any [registered entity](/usc/7/1a.md?p=40), or to omit to [state](/usc/7/1359aa.md?p=5) in any such statement any material fact that is necessary to make any statement of a material fact made not misleading in any material respect, if the [person](/usc/7/1a.md?p=38) knew, or reasonably should have known, the statement to be false or misleading.
- (3) **Other manipulation—** In addition to the prohibition in [paragraph (1)](#1), it shall be unlawful for any [person](/usc/7/1a.md?p=38), directly or indirectly, to manipulate or attempt to manipulate the price of any [swap](/usc/7/1a.md?p=47-A), or of any [commodity](/usc/7/1a.md?p=9) in [interstate commerce](/usc/7/1a.md?p=30), or for [future delivery](/usc/7/1a.md?p=27) on or subject to the rules of any [registered entity](/usc/7/1a.md?p=40).
- (4) **Enforcement—**
  - (A) **Authority of Commission—** If the [Commission](/usc/7/1a.md?p=8) has reason to believe that any [person](/usc/7/1a.md?p=38) (other than a [registered entity](/usc/7/1a.md?p=40)) is violating or has violated this section, or any other provision of this chapter (including any rule, regulation, or [order](/usc/7/2902.md?p=10) of the [Commission](/usc/7/1a.md?p=8) promulgated in accordance with this section or any other provision of this chapter), the [Commission](/usc/7/1a.md?p=8) may serve upon the [person](/usc/7/1a.md?p=38) a complaint.
  - (B) **Contents of complaint—** A complaint under [subparagraph (A)](#4-A) shall—
    - (i) contain a description of the charges against the [person](/usc/7/1a.md?p=38) that is the subject of the complaint; and
    - (ii) have attached or contain a notice of hearing that specifies the date and location of the hearing regarding the complaint.
  - (C) **Hearing—** A hearing described in [subparagraph (B)(ii)](#4-B-ii)—
    - (i) shall be held not later than 3 days after service of the complaint described in [subparagraph (A)](#4-A);
    - (ii) shall require the [person](/usc/7/1a.md?p=38) to show cause regarding why—
      - (I) an [order](/usc/7/2902.md?p=10) should not be made—
        - (aa) to prohibit the [person](/usc/7/1a.md?p=38) from trading on, or subject to the rules of, any [registered entity](/usc/7/1a.md?p=40); and
        - (bb) to direct all [registered entities](/usc/7/1a.md?p=40) to refuse all [privileges](/usc/7/1a.md?p=36) to the [person](/usc/7/1a.md?p=38) until further notice of the [Commission](/usc/7/1a.md?p=8); and
      - (II) the registration of the [person](/usc/7/1a.md?p=38), if registered with the [Commission](/usc/7/1a.md?p=8) in any capacity, should not be suspended or revoked; and
    - (iii) may be held before—
      - (I) the [Commission](/usc/7/1a.md?p=8); or
      - (II) an administrative law judge designated by the [Commission](/usc/7/1a.md?p=8), under which the administrative law judge shall ensure that all evidence is recorded in written form and submitted to the [Commission](/usc/7/1a.md?p=8).
- (5) **Subpoena—** 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](/usc/7/16.md?p=f), any [member](/usc/7/1a.md?p=34) of the [Commission](/usc/7/1a.md?p=8) or any Administrative Law Judge or other officer designated by the [Commission](/usc/7/1a.md?p=8) (except as provided in [paragraph (7)](#7)) 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](/usc/7/1a.md?p=8) deems relevant or material to the inquiry.
- (6) **Witnesses—** The attendance of witnesses and the production of any such records may be required from any place in the [United States](/usc/7/6402.md?p=8), any [State](/usc/7/1359aa.md?p=5), or any foreign country or jurisdiction at any designated place of hearing.
- (7) **Service—** A subpoena issued under this section[^1] may be served upon any [person](/usc/7/1a.md?p=38) who is not to be found within the territorial jurisdiction of any court of the [United States](/usc/7/6402.md?p=8) 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](/usc/7/1a.md?p=38) who is not to be found within the territorial jurisdiction of any court of the [United States](/usc/7/6402.md?p=8) may be issued only on the prior approval of the [Commission](/usc/7/1a.md?p=8).
- (8) **Refusal to obey—** In case of contumacy by, or refusal to obey a subpoena issued to, any [person](/usc/7/1a.md?p=38), the [Commission](/usc/7/1a.md?p=8) may invoke the aid of any court of the [United States](/usc/7/6402.md?p=8) within the jurisdiction in which the investigation or proceeding is conducted, or where such [person](/usc/7/1a.md?p=38) 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](/usc/7/2902.md?p=10) requiring such [person](/usc/7/1a.md?p=38) to appear before the [Commission](/usc/7/1a.md?p=8) or [member](/usc/7/1a.md?p=34) or Administrative Law Judge or other officer designated by the [Commission](/usc/7/1a.md?p=8), there to produce records, if so ordered, or to give testimony touching the matter under investigation or in question.
- (9) **Failure to obey—** Any failure to obey such [order](/usc/7/2902.md?p=10) 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](/usc/7/1a.md?p=38) is an inhabitant or transacts business or wherever such [person](/usc/7/1a.md?p=38) may be found.
- (10) **Evidence—** On the receipt of evidence under [paragraph (4)(C)(iii)](#4-C-iii), the [Commission](/usc/7/1a.md?p=8) may—
  - (A) prohibit the [person](/usc/7/1a.md?p=38) that is the subject of the hearing from trading on, or subject to the rules of, any [registered entity](/usc/7/1a.md?p=40) and require all [registered entities](/usc/7/1a.md?p=40) to refuse the [person](/usc/7/1a.md?p=38) all [privileges](/usc/7/1a.md?p=36) on the [registered entities](/usc/7/1a.md?p=40) for such period as the [Commission](/usc/7/1a.md?p=8) may require in the [order](/usc/7/2902.md?p=10);
  - (B) if the [person](/usc/7/1a.md?p=38) is registered with the [Commission](/usc/7/1a.md?p=8) in any capacity, suspend, for a period not to exceed 180 days, or revoke, the registration of the [person](/usc/7/1a.md?p=38);
  - (C) assess such [person](/usc/7/1a.md?p=38)—
    - (i) a civil penalty of not more than an amount equal to the greater of—
      - (I) $140,000; or
      - (II) triple the monetary gain to such [person](/usc/7/1a.md?p=38) for each such violation; or
    - (ii) in any case of manipulation or attempted manipulation in violation of this section or [section 13(a)(2) of this title](/usc/7/13.md?p=a-2), a civil penalty of not more than an amount equal to the greater of—
      - (I) $1,000,000; or
      - (II) triple the monetary gain to the [person](/usc/7/1a.md?p=38) for each such violation; and
  - (D) require restitution to customers of damages proximately caused by violations of the [person](/usc/7/1a.md?p=38).
- (11) **Orders—**
  - (A) **Notice—** The [Commission](/usc/7/1a.md?p=8) shall provide to a [person](/usc/7/1a.md?p=38) described in [paragraph (10)](#10) and the appropriate governing [board](/usc/7/1a.md?p=5) of the [registered entity](/usc/7/1a.md?p=40) notice of the [order](/usc/7/2902.md?p=10) described in [paragraph (10)](#10) by—
    - (i) registered mail;
    - (ii) certified mail; or
    - (iii) personal delivery.
  - (B) **Review—**
    - (i) **In general—** A [person](/usc/7/1a.md?p=38) described in [paragraph (10)](#10) may obtain a review of the [order](/usc/7/2902.md?p=10) or such other equitable relief as determined to be appropriate by a court described in [clause (ii)](#11-B-ii).
    - (ii) **Petition—** To obtain a review or other relief under [clause (i)](#11-B-i), a [person](/usc/7/1a.md?p=38) may, not later than 15 days after notice is given to the [person](/usc/7/1a.md?p=38) under [clause (i)](#11-B-i), file a written petition to set aside the [order](/usc/7/2902.md?p=10) with the [United States](/usc/7/6402.md?p=8) Court of Appeals—
      - (I) for the circuit in which the petitioner carries out the business of the petitioner; or
      - (II) in the case of an [order](/usc/7/2902.md?p=10) denying registration, the circuit in which the principal place of business of the petitioner is located, as listed on the application for registration of the petitioner.
  - (C) **Procedure—**
    - (i) **Duty of clerk of appropriate court—** The clerk of the appropriate court under [subparagraph (B)(ii)](#11-B-ii) shall transmit to the [Commission](/usc/7/1a.md?p=8) a copy of a petition filed under [subparagraph (B)(ii)](#11-B-ii).
    - (ii) **Duty of Commission—** In accordance with [section 2112 of title 28](/usc/28/2112.md), the [Commission](/usc/7/1a.md?p=8) shall file in the appropriate court described in [subparagraph (B)(ii)](#11-B-ii) the record theretofore made.
    - (iii) **Jurisdiction of appropriate court—** Upon the filing of a petition under [subparagraph (B)(ii)](#11-B-ii), the appropriate court described in [subparagraph (B)(ii)](#11-B-ii) may affirm, set aside, or modify the [order](/usc/7/2902.md?p=10) of the [Commission](/usc/7/1a.md?p=8).

# §9a. Assessment of money penalties

- (1) In determining the amount of the money penalty assessed under [section 9 of this title](/usc/7/9.md), the [Commission](/usc/7/1a.md?p=8) shall consider the appropriateness of such penalty to the gravity of the violation.
- (2) Unless the [person](/usc/7/1a.md?p=38) against whom a money penalty is assessed under [section 9 of this title](/usc/7/9.md) shows to the satisfaction of the [Commission](/usc/7/1a.md?p=8) within fifteen days from the expiration of the period allowed for payment of such penalty that either an appeal as authorized by [section 9 of this title](/usc/7/9.md) 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](/usc/7/1a.md?p=38) shows to the satisfaction of the [Commission](/usc/7/1a.md?p=8) that payment of such amount with interest thereon to date of payment has been made—
  - (A) such [person](/usc/7/1a.md?p=38) shall be prohibited automatically from the [privileges](/usc/7/1a.md?p=36) of all [registered entities](/usc/7/1a.md?p=40); and
  - (B) if such [person](/usc/7/1a.md?p=38) is registered with the [Commission](/usc/7/1a.md?p=8), such registration shall be suspended automatically.
- (3) If a [person](/usc/7/1a.md?p=38) against whom a money penalty is assessed under [section 9 of this title](/usc/7/9.md) takes an appeal and if the [Commission](/usc/7/1a.md?p=8) prevails or the appeal is dismissed, unless such [person](/usc/7/1a.md?p=38) shows to the satisfaction of the [Commission](/usc/7/1a.md?p=8) 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](/usc/7/1a.md?p=38) shall be prohibited automatically from the [privileges](/usc/7/1a.md?p=36) of all [registered entities](/usc/7/1a.md?p=40); and
  - (B) if such [person](/usc/7/1a.md?p=38) is registered with the [Commission](/usc/7/1a.md?p=8), such registration shall be suspended automatically.

  If the [person](/usc/7/1a.md?p=38) 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](/usc/7/1a.md?p=8) may refer the matter to the Attorney General who shall recover such penalty by action in the appropriate [United States](/usc/7/6402.md?p=8) district court.

- (4) Any designated clearing organization that knowingly or recklessly evades or participates in or facilitates an evasion of the requirements of [section 2(h) of this title](/usc/7/2.md?p=h) shall be liable for a civil money penalty in twice the amount otherwise available for a violation of [section 2(h) of this title](/usc/7/2.md?p=h).
- (5) Any [swap dealer](/usc/7/1a.md?p=49-A) or [major swap participant](/usc/7/1a.md?p=33-A) that knowingly or recklessly evades or participates in or facilitates an evasion of the requirements of [section 2(h) of this title](/usc/7/2.md?p=h) shall be liable for a civil money penalty in twice the amount otherwise available for a violation of [section 2(h) of this title](/usc/7/2.md?p=h).

# §9b. Rules prohibiting deceptive and other abusive telemarketing acts or practices

- (1) Except as provided in [paragraph (2)](#2), not later than six months after the effective date of rules promulgated by the Federal Trade [Commission](/usc/7/1a.md?p=8) under [section 6102(a) of title 15](/usc/15/6102.md?p=a), the [Commission](/usc/7/1a.md?p=8) 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](/usc/7/1a.md?p=38) registered or exempt from registration under this chapter in connection with such [person](/usc/7/1a.md?p=38)’s business as a [futures commission merchant](/usc/7/1a.md?p=28-A), [introducing broker](/usc/7/1a.md?p=31-A), [commodity trading advisor](/usc/7/1a.md?p=12-B), [commodity pool operator](/usc/7/1a.md?p=11-A), leverage transaction merchant, [floor broker](/usc/7/1a.md?p=22-A), or [floor trader](/usc/7/1a.md?p=23-A), or a [person](/usc/7/1a.md?p=38) associated with any such [person](/usc/7/1a.md?p=38).
- (2) The [Commission](/usc/7/1a.md?p=8) is not required to promulgate rules under [paragraph (1)](#1) if it determines that—
  - (A) rules adopted by the [Commission](/usc/7/1a.md?p=8) under this chapter provide protection from deceptive and abusive telemarketing by [persons](/usc/7/1a.md?p=38) described under [paragraph (1)](#1) substantially similar to that provided by rules promulgated by the Federal Trade [Commission](/usc/7/1a.md?p=8) under [section 6102(a) of title 15](/usc/15/6102.md?p=a); or
  - (B) such a rule promulgated by the [Commission](/usc/7/1a.md?p=8) is not necessary or appropriate in the public interest, or for the protection of customers in the futures and [options](/usc/7/1a.md?p=36) markets, or would be inconsistent with the maintenance of fair and orderly markets.

  If the [Commission](/usc/7/1a.md?p=8) determines that an exception described in subparagraph [(A)](#2-A) or [(B)](#2-B) applies, the [Commission](/usc/7/1a.md?p=8) shall publish in the Federal Register its determination with the reasons for it.


# §9c. Notice of investigations and enforcement actions


The [Commission](/usc/7/1a.md?p=8) shall provide the [Securities](/usc/7/1a.md?p=41) and [Exchange](/usc/7/1a.md?p=1-D) [Commission](/usc/7/1a.md?p=8) with notice of the commencement of any proceeding and a copy of any [order](/usc/7/2902.md?p=10) entered by the [Commission](/usc/7/1a.md?p=8) pursuant to section [9](/usc/7/9.md) and [13b](/usc/7/13b.md) of this title against any [futures commission merchant](/usc/7/1a.md?p=28-A) or [introducing broker](/usc/7/1a.md?p=31-A) registered pursuant to [section 6f(a)(2) of this title](/usc/7/6f.md?p=a-2), any [floor broker](/usc/7/1a.md?p=22-A) or [floor trader](/usc/7/1a.md?p=23-A) exempt from registration pursuant to [section 6f(a)(3) of this title](/usc/7/6f.md?p=a-3), any associated [person](/usc/7/1a.md?p=38) exempt from registration pursuant to [section 6k(6) of this title](/usc/7/6k.md?p=6), or any [board of trade](/usc/7/1a.md?p=6) designated as a [contract](/usc/7/518.md?p=4) market pursuant to [section 7b–1 of this title](/usc/7/7b–1.md).


# [§10. Repealed. June 25, 1948, ch. 646, § 39, 62 Stat. 992, eff. Sept. 1, 1948 — repealed]



# §10a. Cooperative associations and corporations, exclusion from board of trade; rules of board inapplicable to payment of compensation by association

- (a) No [board of trade](/usc/7/1a.md?p=6) which has been designated or registered as a [contract](/usc/7/518.md?p=4) market or a derivatives transaction execution facility exclude[^1] from membership in, and all [privileges](/usc/7/1a.md?p=36) on, such [board of trade](/usc/7/1a.md?p=6), any association or [corporation](/usc/7/1502.md?p=b-5) engaged in cash [commodity](/usc/7/1a.md?p=9) business having adequate financial responsibility which is organized under the cooperative laws of any [State](/usc/7/1359aa.md?p=5), or which has been recognized as a [cooperative association of producers](/usc/7/1a.md?p=14) by the [United States](/usc/7/6402.md?p=8) Government or by any agency thereof, if such association or [corporation](/usc/7/1502.md?p=b-5) complies and agrees to comply with such terms and conditions as are or may be imposed lawfully upon other [members](/usc/7/1a.md?p=34) of such [board](/usc/7/1a.md?p=5), and as are or may be imposed lawfully upon a [cooperative association of producers](/usc/7/1a.md?p=14) engaged in cash [commodity](/usc/7/1a.md?p=9) business, unless such [board of trade](/usc/7/1a.md?p=6) is authorized by the [commission](/usc/7/1a.md?p=8) to exclude such association or [corporation](/usc/7/1502.md?p=b-5) from membership and [privileges](/usc/7/1a.md?p=36) after hearing held upon at least three days’ notice subsequent to the filing of complaint by the [board of trade](/usc/7/1a.md?p=6): Provided, however, That if any such association or [corporation](/usc/7/1502.md?p=b-5) shall fail to meet its obligations with any established clearing house or clearing agency of any [contract](/usc/7/518.md?p=4) market, such association or [corporation](/usc/7/1502.md?p=b-5) shall be ipso facto debarred from further trading on such [contract](/usc/7/518.md?p=4) market, except such trading as may be necessary to close open trades and to discharge existing [contracts](/usc/7/518.md?p=4) in accordance with the rules of such [contract](/usc/7/518.md?p=4) market applicable in such cases. Such [commission](/usc/7/1a.md?p=8) may prescribe that such association or [corporation](/usc/7/1502.md?p=b-5) shall have and retain membership and [privileges](/usc/7/1a.md?p=36), with or without imposing conditions, or it may permit such [board of trade](/usc/7/1a.md?p=6) immediately to bar such association or [corporation](/usc/7/1502.md?p=b-5) from membership and [privileges](/usc/7/1a.md?p=36). Any [order](/usc/7/2902.md?p=10) of said [commission](/usc/7/1a.md?p=8) entered hereunder shall be reviewable by the court of appeals for the circuit in which such association or [corporation](/usc/7/1502.md?p=b-5), or such [board of trade](/usc/7/1a.md?p=6), has its principal place of business, on written petition either of such association or [corporation](/usc/7/1502.md?p=b-5), or of such [board of trade](/usc/7/1a.md?p=6), under the procedure provided in [section 8(b) of this title](/usc/7/8.md?p=b), but such [order](/usc/7/2902.md?p=10) shall not be stayed by the court pending review.
- (b) No rule of any [board of trade](/usc/7/1a.md?p=6) designated or registered as a [contract](/usc/7/518.md?p=4) market or a derivatives transaction execution facility shall forbid or be construed to forbid the payment of compensation on a [commodity](/usc/7/1a.md?p=9)-unit basis, or otherwise, by any federated cooperative association to its regional [member](/usc/7/1a.md?p=34)-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](/usc/7/1a.md?p=34) or nonmembers) of such cooperative association, or of its regional or local [member](/usc/7/1a.md?p=34)-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.

# §11. Vacation on request of designation or registration as “registered entity”; redesignation or reregistration


Any [person](/usc/7/1a.md?p=38) that has been designated or registered a [registered entity](/usc/7/1a.md?p=40) 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](/usc/7/1a.md?p=8) requesting that its designation or registration as a [registered entity](/usc/7/1a.md?p=40) 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](/usc/7/1a.md?p=8) shall forthwith [order](/usc/7/2902.md?p=10) the vacation of the designation or registration of the [registered entity](/usc/7/1a.md?p=40), effective upon the day named in the notice, and shall forthwith send a copy of the notice and its [order](/usc/7/2902.md?p=10) to all other [registered entities](/usc/7/1a.md?p=40). From and after the date upon which the vacation became effective the said [person](/usc/7/1a.md?p=38) can thereafter be designated or registered again a [registered entity](/usc/7/1a.md?p=40) by making application to the [Commission](/usc/7/1a.md?p=8) in the manner in this chapter provided for an original application.