1.36 Record of securities and property re- ceived from customers and option cus- 1.37 Customer's or option customer's name, address, and occupation recorded; record of guarantor or controller of ac- 1.38 Execution of transactions. 1.39 Simultaneous buying and selling 1.40 Crop, market information letters, re- 1.41 Contract market rules; submission of rules to the Commission; exemption of 1.41a Delegation of authority to the Direc- tors of the Division of Trading and Mar- kets and the Division of Economic Anal- ysis to process certain contract market 1.41b Delegation of authority to the Direc- tor of the Division of Trading and Mar- kets and the Director of the Division of 1.42 Delivery notice; filing of copy. Information required concerning warehouses, depositories, and other 1.44 Records and reports of warehouses, depositories, and other similar entities; 1.45 Delivery of commodities conforming 1.46 Application and closing out of off-set- ting long and short positions. 1.47 Requirements for classification of pur- chases or sales of contracts for future delivery as bona fide hedging under sales or purchases for future delivery as bona fide hedging of unsold anticipated production or unfilled anticipated re- quirements under § 1.3(z)(2) (i)(B) or (ii) 1.50 Demonstration of continued compli- ance with the requirements for contract 1.51 Contract market program for enforce- 1.52 Self-regulatory organization adoption and surveillance of minimum financial 1.53 Enforcement of contract market bylaws, rules, regulations and resolu- 1.54 Contract market rules submitted to and approved or not disapproved by the 1.55 Distribution of "Risk Disclosure State- Sec. 1.56 Prohibition of guarantees against loss. 1.57 Operations and activities of introducing brokers. 1.58 Gross collection of exchange-set margins. 1.60 Pending legal proceedings. 1.61 Speculative position limits. 1.62 Contract market requirement for floor broker registration. 1.70 Notification of state enforcement actions brought under the Commodity Exchange Act. APPENDIX A-[RESERVED] APPENDIX B-FEES FOR CONTRACT MARKET RULE ENFORCEMENT REVIEWS AND FINANCIAL REVIEWS AUTHORITY: 7 U.S.C. 2, 4, 4a, 6, 6a, 6b, 6c, 6d, 6e, 6f, 6g, 6h, 6i, 6j, 6k, 61, 6m, 6n, 60, 7, 7a, 9, 12, 12a, 12c, 13a, 13a-1, 13a-2, 16, 19, 21, 23, and 24; 5 U.S.C. 552 and 552b. SOURCE: 41 FR 3194, Jan. 21, 1976, unless otherwise noted. DEFINITIONS § 1.1 Words in singular and plural form. Words used in the singular form in the rules and regulations in this part shall be deemed to import the plural, and vice versa, as the case may require. § 1.2 Liability of principal for act of agent. The act, omission, or failure of any official, agent, or other person acting for any individual, association, partnership, corporation, or trust, within the scope of his employment or office, shall be deemed the act, omission, or failure of such individual, association, partnership, corporation, or trust as well as of such official, agent, or other person. § 1.3 Definitions. The following terms, as used in the Commodity Exchange Act, or in the rules and regulations in this chapter, shall have the meanings hereby assigned to them, unless the context otherwise requires: (a) Board of Trade. This term means any exchange or association, whether incorporated or unincorporated, of persons who shall be engaged in the business of buying or selling any commodity or receiving the same for sale on consignment. (b) Business day. This term means any day other than a Sunday or holiday. In all notices required by the act or by the rules and regulations in this chapter to be given in terms of business days the rule for computing time shall be to exclude the day on which notice is given and include the day on which shall take place the act of which notice is given. (c) Clearing member. This term means any person who is a member of, or enjoys the privilege of clearing trades in his own name through, the clearing organization of a contract market. (d) Clearing organization. This term means the person or organization which acts as a medium for clearing transactions in commodities for future delivery or commodity option transactions, or for effecting settlements of contracts for future delivery or commodity option transactions, for and between members of any contract market. (e) Commodity. This term means and includes wheat, cotton, rice, corn, oats, barley, rye, flaxseed, grain sorghums, millfeeds, butter, eggs, Irish potatoes, wool, wool tops, fats and oils (including lard, tallow, cottonseed oil, peanut oil, soybean oil, and all other fats and oils), cottonseed meal, cottonseed, peanuts, soybeans, soybean meal, livestock, livestock products, and frozen concentrated orange juice, and all other goods and articles, except onions as provided in Pub. L. 85-839, and all services, rights and interests in which contracts for future delivery are presently or in the future dealt in. (Sec. 2(a)(1), 88 Stat. 1395; 7 U.S.C. 2(1)) (f) Commodity Exchange Act; the Act. These terms mean the Commodity Exchange Act, as amended, 7 U.S.C. 1 et seq. (g) [Reserved] (h) Contract market. This term means a board of trade designated by the Commission as a contract market under the Commodity Exchange Act or in accordance with the provisions of Part 33 of this chapter. (i) Contract of sale. This term includes sales, purchases, agreements of sale or purchase and agreements to sell or purchase. (j) Controlled account. An account shall be deemed to be controlled by a person if such person by power of attorney or otherwise actually directs trading for such account. (k) Customer; commodity customer. These terms have the same meaning and refer to a customer trading in any commodity named in the definition of commodity herein: Provided, however, An owner or holder of a proprietary account as defined in paragraph (y) of this section shall not be deemed to be a customer within the meaning of section 4d of the Act, the regulations that implement sections 4d and 4f of the Act and § 1.35, and such an owner or holder of such a proprietary account shall otherwise be deemed to be a customer within the meaning of the Act and §§ 1.37 and 1.46 and all other sections of these rules, regulations and orders which do not implement sections 4d and 4f. (1) Delivery month. This term means the month of delivery specified in a contract of sale of any commodity for future delivery. (m) [Reserved] (n) Floor broker. This term means any person who, in or surrounding any pit, ring, post or other place provided by a contract market for the meeting of persons similarly engaged, shall purchase or sell for any other person any commodity for future delivery on or subject to the rules of any contract market and shall include any person required to register as a floor broker under the Act by virtue of Part 33 of this chapter. (0) Future delivery. This term does not include any sale of a cash commodity for deferred shipment or delivery. (p) Futures commission merchant. This term means: (1) Individuals, associations, partnerships, corporations, and trusts engaged in soliciting or in accepting orders for the purchase or sale of any commodity for future delivery on or subject to the rules of any contract market and that, in or in connection with such solicitation or acceptance of orders, accepts any money, securities, or property (or extends credit in lieu thereof) to margin, guarantee or secure any trades or contracts that result or may result therefrom; and (2) Shall include any person required to register as a futures commission merchant under the Act by virtue of Part 32 or Part 33 of this chapter. (q) Member of a contract market. This term means and includes individuals, associations, partnerships, corporations, and trusts owning or holding membership in, or admitted to membership representation on, a contract market or given members' trading privileges thereon. (r) Net equity. This term means the credit balance which would be obtained by combining the commodity margin balance of any person with the net profit or loss, if any, accruing on the open trades or contracts or commodity option transactions of such person. (s) Net deficit. This term means the debit balance which would be obtained by combining the commodity margin balance of any person with the net profit or loss, if any, accruing on the open trades or contracts or commodity option transactions of such person. (t) Open contracts. This term means contracts of purchase or sale of any commodity made by or for any person on or subject to the rules of a board of trade for future delivery during a specified month or delivery period which have not been fulfilled by delivery nor offset by other contracts of sale or purchase in the same commodity and delivery month. (u) Person. This term includes individuals, associations, partnerships, corporations, and trusts. (v) [Reserved] (w) Secretary of Agriculture. This term means the Secretary of Agriculture or any person to whom authority has heretofore lawfully been delegated or to whom authority may hereafter lawfully be delegated to act in his stead. (x) Floor trader. This term means a member of a contract market who, on the floor of such contract market, executes a futures trade or a commodity option transaction for his own account or an account controlled by him, or has such a futures trade or commodity option transaction made for him. (y) Proprietary account. This term means a commodity futures or commodity option trading account carried on the books and records of an individual, a partnership, corporation or other type association (1) for one of the following persons, or (2) of which ten percent or more is owned by one of the following persons, or an aggregate of ten percent or more of which is owned by more than one of the following persons: (i) Such individual himself, or such partnership, corporation or association itself; (ii) In the case of a partnership, a general partner in such partnership; (iii) In the case of a limited partnership, a limited or special partner in such partnership whose duties include: (A) The management of the partnership business or any part thereof, (B) The handling of the trades or customer funds of customers or option customers of such partnership, (C) The keeping of records pertaining to the trades or customer funds of customers or option customers of such partnership, or (D) The signing or co-signing of checks or drafts on behalf of such partnership; (iv) In the case of a corporation or association, an officer, director or owner of ten percent or more of the capital stock, of such organization; (v) An employee of such individual, partnership, corporation or association whose duties include: (A) The management of the business of such individual, partnership, corporation or association or any part thereof, (B) The handling of the trades or customer funds of customers or option customers of such individual, partnership, corporation or association, (C) The keeping of records pertaining to the trades or customer funds of customers or option customers of such individual, partnership, corporation or association, or (D) The signing or co-signing of checks or drafts on behalf of such individual, partnership, corporation or association; (vi) A spouse or minor dependent living in the same household of any of the foregoing persons; (vii) A business affiliate that directly or indirectly controls such individual, partnership, corporation or association. (viii) A business affiliate that, directly or indirectly is controlled by or is under common control with, such individual, partnership, corporation or association. Provided, however, That an account owned by any shareholder or member of a cooperative association of producers, within the meaning of Sections 5(e) and 6a of the Act, which association is registered as a futures commission merchant and carries such account on its records, shall be deemed to be an account of a customer or option customer and not a proprietary account of such association, unless the shareholder or member is an officer, director or manager of the association. (z) Bona fide hedging transactions and positions—(1) General definition. Bona fide hedging transactions and positions shall mean transactions or positions in a contract for future delivery on any contract market, where such transactions or positions normally represent a substitute for transactions to be made or positions to be taken at a later time in a physical marketing channel, and where they are economically appropriate to the reduction of risks in the conduct and management of a commercial enterprise, and where they arise from: (i) The potential change in the value of assets which a person owns, produces, manufactures, processes, or merchandises or anticipates owning, producing, manufacturing, processing, or merchandising, (ii) The potential change in the value of liabilities which a person owns or anticipates incurring, or (iii) The potential change in the value of services which a person provides, purchases or anticipates providing or purchasing. Notwithstanding the foregoing, no transactions or positions shall be classified as bona fide hedging for purposes of section 4a of the Act unless their purpose is to offset price risks incidental to commercial cash or spot operations and such positions are established and liquidated in an orderly manner in accordance with sound commercial practices and unless the provisions of paragraphs (z) (2) and (3) of this section and §§ 1.47 and 1.48 of the regulations have been satisfied. (2) Enumerated hedging transactions. The definitions of bona fide hedging transactions and positions in paragraph (z)(1) of this section includes, but is not limited to, the following specific transactions and positions: (i) Sales of any commodity for future delivery on a contract market which do not exceed in quantity: (A) Ownership or fixed-price purchase of the same cash commodity by the same person; and (B) Twelve months' unsold anticipated production of the same commodity by the same person provided that no such position is maintained in any future during the five last trading days of that future. (ii) Purchases of any commodity for future delivery on a contract market which do not exceed in quantity. (A) The fixed-price sale of the same cash commodity by the same person. (B) The quantity equivalent of fixedprice sales of the cash products and by-products of such commodity by the same person; and (C) Twelve months' unfilled anticipated requirements of the same cash commodity for processing, manufacturing, or feeding by the same person, provided that such transactions and positions in the five last trading days of any one future do not exceed the person's unfilled anticipated requirements of the same cash commodity for that month and for the next succeeding month. (iii) Sales and purchases for future delivery described in paragraphs (z)(2)(i) and (z)(2)(ii) of this section may also be offset other than by the same quantity of the same cash commodity, provided that the fluctuations in value of the position for future delivery are substantially related to the fluctuations in value of the actual or anticipated cash position, and provided that the positions in any one future shall not be maintained during the five last trading days of that future. (3) Non-enumerated cases. Upon specific request made in accordance with § 1.47 of the regulations, the Commission may recognize transactions and positions other than those enumerated in paragraph (z)(2) of this section as bona fide hedging in such amount and under such terms and conditions as it may specify in accordance with the provisions of § 1.47. Such transactions and positions may include, but are not limited to, purchases or sales for future delivery on any contract market by an agent who does not own or who has not contracted to sell or purchase the offsetting cash commodity at a fixed price, provided that the person is responsible for the merchandising of the cash position which is being offset. (aa) Associated person. This term means any natural person who is associated in any of the following capacities with: (1) A futures commission merchant as a partner, officer, or employee (or any natural person occupying a similar status or performing similar functions), in any capacity which involves (i) the solicitation or acceptance of customers' or option customers' orders (other than in a clerical capacity) or (ii) the supervision of any person or persons so engaged; (2) An introducing broker as a partner, officer, employee, or agent (or any natural person occupying a similar status or performing similar functions), in any capacity which involves (i) the solicitation or acceptance of customers' or option customers' orders (other than in a clerical capacity) or (ii) the supervision of any person or persons so engaged; (3) A commodity pool operator as a partner, officer, employee, consultant, or agent (or any natural person occupying a similar status or performing similar functions), in any capacity which involves (i) the solicitation of funds, securities, or property for a participation in a commodity pool or (ii) the supervision of any person or persons so engaged; or (4) A commodity trading advisor as a partner, officer, employee, consultant, or agent (or any natural person occupying a similar status or performing similar functions), in any capacity which involves: (i) The solicitation of a client's or prospective client's discre |