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CHAPTER COMMODITY FUTURES TRADING
Part 0 1 2 10 11 12 13 14
4 33 34 56 59 81
15 16 17 18 19 20 21
foreign brokers, and members of contract markets
82 85 87 88 89 92 93
94 94 95 100 101 115 123 130 136 141 143
30 32 100 140 145 146 147 150 155 180
PART 1- GENERAL REGULATIONS UNDER THE COMMODITY EXCHANGE ACT
DEFINITIONS Sec. 1.1 Words in singular and plural form. 1.2 Llabuity of principal for act of agent. 1.3 Definitions.
REGISTRATION 1.7 Registration required of futures com
mission merchants. 1.8 Registration required of floor brokers. 1.9 Registration as one type of person not
included in registration es any
other type of person. 1.10 Application for registration and i
nancial reports. 1.10[Reserved] 1.10b Applications for registration of asso
ciated persons. 1.100 Applications for registration of com
modity trading advisors. 1.100 Applications for registration of com
modity pool operators. 1.11 Registration fees; form of remittance. 1.13 Deposit of registration fee; fee not
subject to refund after registration. 1.14 Deficiencies, inaccuracies, and
changes, to be reported. 1.15 Changes requiring new registration. 1.17 Minimum inancial requirements. 1.18 Records for and relating to financial
reporting and monthly computa
tion. PROHIBITEM TRADING IN COMMODITY OPTIONS 1.19 Prohibited trading in "puts" and
"calls" in commodities. CUSTOMERS' MONEY, SECURITIES, AND PROPERTY 1.20 Customers' money, securities, and
property to be segregated and sep
arately accounted for. 1.21 Oare of money and equities accruing
to customer. 1.22 Uso of money, securities, or property
of customer restricted. 1.23 Interest of futures commission mer
chant in segregated funds, additions
and withdrawals. 1.24 Segregated funds; exclusions there
from. 1.25 Investment of customers' funds. 1.26 Deposit of obligations purchased with
customers' funds. 1.27 Record of investments. 1.28 Appraisal of obligations purchased
with customers' funds. 1.29 Incroment or interest rosulting from
investment of customers' funds. 1.30 Loans by futures commission mer
chants; treatment of proceods.
RECORD KEEPING 1.31 Books and records; koeping and in
Sec. 1.32 Segregated account; dally computa.
tion and record. 1.83 Monthly statement for customer and
record of customer's position in each
future. 1.33& Controlled accounts. 1.34 Monthly record, “point balance". 1.38 Records of cash commodity and fu
tures transactions. 1.36 Record of securities and property re
ceived from customers. 1.87 Customer's name, address, and oc
cupation recorded; record of guar
antor or controller of account. 1.88 Execution of transactions. 1.39 Simultaneous buying and selling or
ders of different principals; execution of, for and botwoon principals.
MISCELLANEOUS 1.40 Crop, market information lottors, ro
ports; copios required. 1.41 Contract market rules, submission of
rules to Commission, exemption of temporary emergency rules and certain operational and Administrative
rules, emergencies. 1.41& Delegation of authority to the Execu
tive Director and the Director of the Division of Trading and Mar
kets. 1.42 Delivery notice; Aling of copy. 1.43 Information required concerning
warehouses, depositories, and other
similar entities. 1.44 Records and reports of warohouses,
depositories, and other simallar on
tities; Visitation of promisos. 1.45 Delivery of commodities conforming
to United States standards. 1.48 Application and closing out of off
setting long and short positions. 1.48 Hodging anticipated requiromonts for
processing or manufacturing or livestock and poultry production under $ 1.3(z) (4) of the regulations under
the Act. 1.80 Filing of information by contract
markets. 1.51 Contract Market Program for Enforce
ment. 1.53 Enforcement of contract market by
laws, rules, regulations and resolu
tions. 1.54 Contract market rules submitted to
and approved or not disapproved by
the Secretary of Agriculture. 1.60 Pending legal proceedings.
AUTHORITY: Sec. 8a, 49 Stat. 1500, AS amended, 88 Stat. 1392; 7 U.S.C. 12a, unless otherwise noted.
SOURCE: 41 FR 8194, Jan. 21, 1976, unless otherwise noted.
lard, tallow, cottonseed oil, peanut oil, 8 1.1 Words in singular and plural
soybean oll, and all other fats and oils), form.
cottonseed meal, cottonseed, peanuts,
soybeans, soybean meal, livestock, liveWords used in the singular form in
stock products, and frozen concentrated the rules and regulations in this part
orange juice, and all other goods and shall be deemed to import the plural, and
articles, except onions as provided in vice versa, as the case may require. Pub. L. 85-839, and all services, rights § 1.2 Liability of principal for act of
and interests in which contracts for agent.
future delivery are presently or in the
future dealt in. The act, omission, or failure of any
(Sec. 2(a) (1), 88 Stat. 1396; 7 0.8.c. 2(1)) official, agent, or other person acting for any individual, association, partnership, (f) Commodity Exchange Act; the Act. corporation, or trust, within the scope These terms mean the Commodity Exof his employment or office, shall be change Act, as amended, 7 U.S.C. 1 et deemed the act, omission, or failure of seq. such individual, association, partnership, (g) (Reserved] corporation, or trust as well as of such (h) Contract Market. This term means official, agent, or other person.
a board of trade designated by the Com(Sec. 2, 42 Stat. 998; 7 U.S.C 4)
mission as a contract market under the
Commodity Exchange Act. 8 1.3 Definitions.
(1) Contract of sale. This term inThe following terms, as used in the cludes sales, purchases, agreements of Commodity Exchange Act, or in the rules sale or purchase and agreements to sell and regulations in this chapter, shall or purchase. have the meanings hereby assigned to (j) Controlled account. An account them, unless the context otherwise re- shall be deemed to be controlled by a quires:
person if such person by power of at(a) Board of Trade. This term means torney or otherwise actually directs tradany exchange or association, whether in- ing for such account. corporated or unincorporated, of persons (k) Customer; commodity customer. who shall be engaged in the business of These terms have the same meaning and buying or selling any commodity or re- refer to a customer trading in any comceiving the same for sale on consignment. modity named in the definition of com
(b) Business day. This term means any modity herein: Provided, however, An day other than a Sunday or holiday. In owner or holder of a proprietary acall notices required by the act or by the count as defined in paragraph (y) of rules and regulations in this chapter to this section shall not be deemed to be a be given in terms of business days the customer within the meaning of section rule for computing time shall be to ex- 4d of the Act, the regulations that impleclude the day on which notice is given ment sections 4d and 4f of the Act and and include the day on which shall take $ 1.35, and such an owner or holder of place the act of which notice is given. such a proprietary account shall other
(c) Clearing member. This term means wise be deemed to be a customer within any person who is a member of, or enjoys the meaning of the Act and $$ 1.37 and the privilege of clearing trades in his 1.46 and all other sections of these rules, own name through, the clearing organi- regulations and orders which do not imzation of a contract market.
plement sections 4d and 4f. (d) Clearing organization. This term (1) Delivery month. This term means means the person or organization which the month of delivery specified in a conacts as a medium for clearing transac- tract of sale of any commodity for tions in commodities for future delivery, future delivery. or for effecting settlements of contracts (m) [Reserved] for future delivery, for and between (n) Floor broker. This term means members of any board of trade.
any person who, in or surrounding any (e) Commodity. This term means and pit, ring, post, or other place provided includes wheat, cotton, rice, corn, oats, by a contract market for the meeting barley, rye, flaxseed, grain sorghums, of persons similarly engaged, shall purmillfeeds, butter, eggs, Irish potatoes, chase or sell for any other person any wool, wool tops, fats and oils (including commodity for future delivery on
subject to the rules of any contract market.
(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 of this chapter.
(g) 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 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 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.
(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. A member of a contract market who, on the exchange floor, executes a future trade for his own account or an account controlled by him, or has such a trade made for him.
(y) Proprietary account. This term shall mean a commodity futures 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) which is partially or jointly owned by one of the following persons:
(1) Such individual himself, or such partnership, corporation or association itself;
(1) In the case of a partnership, a general partner in such partnership;
(11) 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 trades and/or funds of customers of such partnership,
(C) The keeping of records pertaining to trades and/or funds of 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 trades and/or funds of customers of such individual, partnership, corporation or association.
(C) The keeping of records pertaining to trades and/or funds of 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;
(vb) 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.
(vii) 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 (1) Such person's unfilled anticipated owned by any shareholder or member of requirements for processing or manufaca cooperative association of producers, turing; within the meaning of sections 5(e) and (1) The bushel value equivalent of 6(a) of the Act, which association is corn reflecting such person's unfilled registered as a futures commission mer- anticipated requirements for seed corn chant and carries such account on its or sweet corn processing; records, shall be deemed to be a cus- (ul) The wheat equivalent of such tomer's account and not a proprietary person's unfilled anticipated requireaccount of such association, unless the ments of flour for baking; shareholder or member is an officer, di- (IV) The corn equivalent of such perrector or manager of the association. son's unfilled anticipated requirements
(z) Bona fide hedging transactions or of dry corn milling products for use in positions. These shall mean sales of, or further processing or manufacturing; short positions in, any commodity for (v) Such person's unfilled anticipated future delivery on or subject to the rules feeding requirements of corn, wheat, of any contract market made or held by oats, barley, flaxseed, grain sorghum, any persons to the extent that such sales rye, or soybean meal for the feeding of or short positions are offset in quantity Livestock or poultry or both; during a by the ownership or fixed-price purchase specified operating period not in excess of the same cash commodity by the same of one year. Transactions and positions person or, conversely, purchases of, or shall not be classified as hedging unless long positions in, any commodity for their bona fide purpose is to offset price future delivery on or subject to the rules risks incidental to commercial cash or of any contract market made or beld spot operations, and such positions are by any person to the extent that such established and liquidated in an orderly purchases or long positions are offset by manner and in accordance with sound fixed-price sales of the same cash com- commercial practices in conformity with modity by the same person. In addition, such regulations as may be prescribed there shall be included in the amount of pursuant to the Act, as amended. any commodity which may be hedged (aa) Associated person. This term by any person
means any person who (as provided in (1) With respect to agricultural com- section 4k of the Act) is associated with modities the amount of such commodity
any futures commission merchant or such person is raising, or in good faith
with any agent of a futures commission intends or expects to raise, within the
merchant as a partner, oficer, or emnext twelve months (eighteen months
ployee (or any person occupying a simi
lar status or performing similar funcfor cane sugar) on land which such per
tions), in any capacity which involves son owns or leases;
(1) the solicitation or acceptance of (2) Any amount of such commodity
customers' orders (other than in a clerthe sale of which for future delivery
ical capacity) or (2) the supervision of would be a reasonable hedge against any any person or persons so engaged. product or by-product of such commodity (bb) Commodity trading advisor. This owned or purchased at a fixed-price by term means any person who, for compensuch person or the purchase of which sation or profit, engages in the business for future delivery would be a rea- of advising others, either directly or sonable hedge against the fixed-price through publications or writings, as to sale of any product or by-product of the value of commodities or as to the such commodity by such person;
advisability of trading in any commodity (3) If such commodity is a product or
for future delivery on or subject to the by-product of another commodity, an
rules of any contract market, or who for amount of such product or by-product
compensation or profit, and as part of a
regular business, issues or promulgates the sale of which for future delivery
analyses or reports concerning commodiwould be a reasonable hedge against the
ties; but does not include (1) any bank ownership or fixed-price purchase by or trust company, (2) any newspaper resuch person of such other commodity of
porter, newspaper columnist, newspaper which it is a product or by-product; editor, lawyer, accountant, or teacher,
(4) An amount of such commodity the (3) any floor broker or futures commispurchase of which for future delivery sion merchant, (4) the publisher of any shall not exceed:
bona fide newspaper, news magazine, or