§ 21. — Registered futures associations.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 7USC21]
TITLE 7--AGRICULTURE
CHAPTER 1--COMMODITY EXCHANGES
Sec. 21. Registered futures associations
(a) Registration statement
Any association of persons may be registered with the Commission as
a registered futures association pursuant to subsection (b) of this
section, under the terms and conditions hereinafter provided in this
section, by filing with the Commission for review and approval a
registration statement in such form as the Commission may prescribe,
setting forth the information, and accompanied by the documents, below
specified:
(1) Data as to its organization, membership, and rules of
procedure, and such other information as the Commission may by rules
and regulations require as necessary or appropriate in the public
interest; and
(2) Copies of its constitution, charter, or articles of
incorporation or association, with all amendments thereto, and of
its bylaws, and of any rules or instruments corresponding to the
foregoing, whatever the name, hereinafter in this section
collectively referred to as the ``rules of the association''.
(b) Standards for registration; Commission findings
An applicant association shall not be registered as a futures
association unless the Commission finds, under standards established by
the Commission, that--
(1) such association is in the public interest and that it will
be able to comply with the provisions of this section and the rules
and regulations thereunder and to carry out the purposes of this
section;
(2) the rules of the association provide that any person
registered under this chapter, registered entity, or any other
person designated pursuant to the rules of the Commission as
eligible for membership may become a member of such association,
except such as are excluded pursuant to paragraph (3) or (4) of this
subsection, or a rule of the association permitted under this
subparagraph. The rules of the association may restrict membership
in such association on such specified basis relating to the type of
business done by its members, or on such other specified and
appropriate basis, as appears to the Commission to be necessary or
appropriate in the public interest and to carryout the purpose of
this section. Rules adopted by the association may provide that the
association may, unless the Commission directs otherwise in cases in
which the Commission finds it appropriate in the public interest so
to direct, deny admission to, or refuse to continue in such
association any person if (i) such person, whether prior or
subsequent to becoming registered as such, or (ii) any person
associated within the meaning of ``associated person'' as set forth
in section 6k of this title, whether prior or subsequent to becoming
so associated, has been and is suspended or expelled from a
registered entity or has been and is barred or suspended from being
associated with all members of such registered entity, for violation
of any rule of such registered entity;
(3) the rules of the association provide that, except with the
approval or at the direction of the Commission in cases in which the
Commission finds it appropriate in the public interest so to approve
or direct, no person shall be admitted to or continued in membership
in such association, if such person--
(A) has been and is suspended or expelled from a registered
futures association or from a registered entity or has been and
is barred or suspended from being associated with all members of
such association or from being associated with all members of
such registered entity, for violation of any rule of such
association or registered entity which prohibits any act or
transaction constituting conduct inconsistent with just and
equitable principles of trade, or requires any act the omission
of which constitutes conduct inconsistent with just and
equitable principles of trade;
(B) is subject to an order of the Commission denying,
suspending, or revoking his registration pursuant to sections 9
and 15 of this title, or expelling or suspending him from
membership in a registered futures association or a registered
entity, or barring or suspending him from being associated with
a futures commission merchant;
(C) whether prior or subsequent to becoming a member, by his
conduct while associated with a member, was a cause of any
suspension, expulsion, or order of the character described in
clause (A) or (B) which is in effect with respect to such
member, and in entering such a suspension, expulsion, or order,
the Commission or any such registered entity or association
shall have jurisdiction to determine whether or not any person
was a cause thereof; or
(D) has associated with him any person who is known, or in
the exercise of reasonable care should be known, to him to be a
person who would be ineligible for admission to or continuance
in membership under clause (A), (B), or (C) of this paragraph;
(4) the rules of the association provide that, except with the
approval or at the direction of the Commission in cases in which the
Commission finds it appropriate in the public interest so to approve
or direct, no person shall become a member and no natural person
shall become a person associated with a member, unless such person
is qualified to become a member or a person associated with a member
in conformity with specified and appropriate standards with respect
to the training, experience, and such other qualifications of such
person as the association finds necessary or desirable, and in the
case of a member, the financial responsibility of such a member. For
the purpose of defining such standards and the application thereof,
such rules may--
(A) appropriately classify prospective members (taking into
account relevant matters, including type or nature of business
done) and persons proposed to be associated with members;
(B) specify that all or any portion of such standard shall
be applicable to any such class;
(C) require persons in any such class to pass examinations
prescribed in accordance with such rules;
(D) provide that persons in any such class other than
prospective members and partners, officers and supervisory
employees (which latter term may be defined by such rules and as
so defined shall include branch managers of members) of members,
may be qualified solely on the basis of compliance with
specified standards of training and such other qualifications as
the association finds appropriate;
(E) provide that applications to become a member or a person
associated with a member shall set forth such facts as the
association may prescribe as to the training, experience, and
other qualifications (including, in the case of an applicant for
membership, financial responsibility) of the applicant and that
the association shall adopt procedures for verification of
qualifications of the applicant, which may require the applicant
to be fingerprinted and to submit, or cause to be submitted,
such fingerprints to the Attorney General for identification and
appropriate processing. Notwithstanding any other provision of
law, such an association may receive from the Attorney General
all the results of such identification and processing; and
(F) require any class of persons associated with a member to
be registered with the association in accordance with procedures
specified by such rules (and any application or document
supplemental thereto required by such rules of a person seeking
to be registered with such association shall, for the purposes
of sections 9 and 15 of this title, be deemed an application
required to be filed under this section);
(5) the rules of the association assure a fair representation of
its members in the adoption of any rule of the association or
amendment thereto, the selection of its officers and directors, and
in all other phases of the administration of its affairs;
(6) the rules of the association provide for the equitable
allocation of dues among its members, to defray reasonable expenses
of administration;
(7) the rules of the association are designed to prevent
fraudulent and manipulative acts and practices, to promote just and
equitable principles of trade, in general, to protect the public
interest, and to remove impediments to and perfect the mechanism of
free and open futures trading;
(8) the rules of the association provide that its members and
persons associated with its members shall be appropriately
disciplined, by expulsion, suspension, fine, censure, or being
suspended or barred from being associated with all members, or any
other fitting penalty, for any violation of its rules;
(9) the rules of the association provide a fair and orderly
procedure with respect to the disciplining of members and persons
associated with members and the denial of membership to any person
seeking membership therein or the barring of any person from being
associated with a member. In any proceeding to determine whether any
member or other person shall be disciplined, such rules shall
require that specific charges be brought; that such member or person
shall be notified of, and be given an opportunity to defend against,
such charges; that a record shall be kept; and that the
determination shall include--
(A) a statement setting forth any act or practice in which
such member or other person may be found to have engaged, or
which such member or other person may be found to have omitted;
(B) a statement setting forth the specific rule or rules of
the association of which any such act or practice, or omission
to act, is deemed to be in violation;
(C) a statement whether the acts or practices prohibited by
such rule or rules, or the omission of any act required thereby,
are deemed to constitute conduct inconsistent with just and
equitable principles of trade; and
(D) a statement setting forth the penalty imposed; \1\
---------------------------------------------------------------------------
\1\ So in original. The semicolon probably should be a period.
In any proceeding to determine whether a person shall be denied
membership or whether any person shall be barred from being
associated with a member, such rules shall provide that the person
shall be notified of, and be given an opportunity to be heard upon,
the specific grounds for denial or bar which are under
consideration; that a record shall be kept; and that the
determination shall set forth the specific grounds upon which the
denial or bar is based;
(10) the rules of the association provide a fair, equitable, and
expeditious procedure through arbitration or otherwise for the
settlement of customers' claims and grievances against any member or
employee thereof: Provided, That (A) the use of such procedure by a
customer shall be voluntary, (B) the term ``customer'' as used in
this paragraph shall not include another member of the association,
and (C) in the case of a claim arising from a violation in the
execution of an order on the floor of a registered entity, such
procedure shall provide, to the extent appropriate--
(i) for payment of actual damages proximately caused by such
violation. If an award of actual damages is made against a floor
broker in connection with the execution of a customer order, and
the futures commission merchant which selected the floor broker
for the execution of the customer order is held to be
responsible under section 2(a)(1) of this title for the floor
broker's violation, such futures commission merchant may be
required to satisfy such award; and
(ii) where the violation is willful and intentional, for
payment to the customer of punitive or exemplary damages, in
addition to losses proximately caused by the violation, in an
amount equal to no more than two times the amount of such
losses. If punitive or exemplary damages are awarded against a
floor broker in connection with the execution of a customer
order, and the futures commission merchant which selected the
floor broker for the execution of such order is held to be
responsible under section 2(a)(1) of this title for the floor
broker's violation, such futures commission merchant may be
required to satisfy the award of punitive or exemplary damages
if the floor broker fails to do so, except that such requirement
shall apply to the futures commission merchant only if it
willfully and intentionally selected the floor broker with the
intent to assist or facilitate the floor broker's violation; and
\2\
---------------------------------------------------------------------------
\2\ So in original. The word ``and'' probably should not appear.
(11) such association provides for meaningful representation on
the governing board of such association of a diversity of membership
interests and provides that no less than 20 percent of the regular
voting members of such board be comprised of qualified nonmembers of
or persons who are not regulated by such association.\3\
---------------------------------------------------------------------------
\3\ So in original. The period probably should be a semicolon.
---------------------------------------------------------------------------
(12)(A) \4\ such association provides on all major disciplinary
committees for a diversity of membership sufficient to ensure
fairness and to prevent special treatment or preference for any
person in the conduct of disciplinary proceedings and the assessment
of penalties.\5\
---------------------------------------------------------------------------
\4\ So in original. No subpar. (B) has been enacted.
\5\ So in original. The period probably should be ``; and''.
---------------------------------------------------------------------------
(13) A \6\ major disciplinary committee hearing a disciplinary
matter shall include--
---------------------------------------------------------------------------
\6\ So in original. Probably should not be capitalized.
---------------------------------------------------------------------------
(A) qualified persons representing segments of the
association membership other than that of the subject of the
proceeding; and
(B) where appropriate to carry out the purposes of this
paragraph, qualified persons who are not members of the
association.
(c) Suspension of registration
The Commission may, after notice and opportunity for hearing,
suspend the registration of any futures association if it finds that the
rules thereof do not conform to the requirements of the Commission, and
any such suspension shall remain in effect until the Commission issues
an order determining that such rules have been modified to conform with
such requirements.
(d) Fees and charges
In addition to the fees and charges authorized by section 12a(1) of
this title, each person registered under this chapter, who is not a
member of a futures association registered pursuant to this section,
shall pay to the Commission such reasonable fees and charges as may be
necessary to defray the costs of additional regulatory duties required
to be performed by the Commission because such person is not a member of
a registered futures association. The Commission shall establish such
additional fees and charges by rules and regulations.
(e) Registered persons not members of registered associations
Any person registered under this chapter, who is not a member of a
futures association registered pursuant to this section, in addition to
the other requirements and obligations of this chapter and the
regulations thereunder shall be subject to such other rules and
regulations as the Commission may find necessary to protect the public
interest and promote just and equitable principles of trade.
(f) Denial of registration
Upon filing of an application for registration pursuant to
subsection (a) of this section, the Commission may by order grant such
registration if the requirements of this section are satisfied. If,
after appropriate notice and opportunity for hearing, it appears to the
Commission that any requirement of this section is not satisfied, the
Commission shall by order deny such registration.
(g) Withdrawal from registration; notice of withdrawal
A registered futures association may, upon such reasonable notice as
the Commission may deem necessary in the public interest, withdraw from
registration by filing with the Commission a written notice of
withdrawal in such form as the Commission may by rules and regulations
prescribe.
(h) Commission review of disciplinary actions taken by registered
futures associations
(1) If any registered futures association takes any final
disciplinary action against a member of the association or a person
associated with a member, denies admission to any person seeking
membership therein, or bars any person from being associated with a
member, the association promptly shall give notice thereof to such
member or person and file notice thereof with the Commission. The notice
shall be in such form and contain such information as the Commission, by
rule or regulation, may prescribe as necessary or appropriate to carry
out the purposes of this chapter.
(2) Any action with respect to which a registered futures
association is required by paragraph (1) to file notice shall be subject
to review by the Commission on its motion, or on application by any
person aggrieved by the action. Such application shall be filed within
30 days after the date such notice is filed with the Commission and
received by the aggrieved person, or within such longer period as the
Commission may determine.
(3)(A) Application to the Commission for review, or the institution
of review by the Commission on its own motion, shall not operate as a
stay of such action unless the Commission otherwise orders, summarily or
after notice and opportunity for hearing on the question of a stay
(which hearing may consist solely of the submission of affidavits or
presentation of oral arguments).
(B) The Commission shall establish procedures for expedited
consideration and determination of the question of a stay.
(i) Notice; hearing; findings; cancellation, reduction, or remission of
penalties; review by court of appeals
(1) In a proceeding to review a final disciplinary action taken by a
registered futures association against a member thereof or a person
associated with a member, after appropriate notice and opportunity for a
hearing (which hearing may consist solely of consideration of the record
before the association and opportunity for the presentation of
supporting reasons to affirm, modify, or set aside the sanction imposed
by the association)--
(A) if the Commission finds that--
(i) the member or person associated with a member has
engaged in the acts or practices, or has omitted the acts, that
the association has found the member or person to have engaged
in or omitted;
(ii) the acts or practices, or omissions to act, are in
violation of the rules of the association specified in the
determination of the association; and
(iii) such rules are, and were applied in a manner,
consistent with the purposes of this chapter,
the Commission, by order, shall so declare and, as appropriate,
affirm the sanction imposed by the association, modify the sanction
in accordance with paragraph (2), or remand the case to the
association for further proceedings; or
(B) if the Commission does not make any such finding, the
Commission, by order, shall set aside the sanction imposed by the
association and, if appropriate, remand the case to the association
for further proceedings.
(2) If, after a proceeding under paragraph (1), the Commission finds
that any penalty imposed on a member or person associated with a member
is excessive or oppressive, having due regard for the public interest,
the Commission, by order, shall cancel, reduce, or require the remission
of the penalty.
(3) In a proceeding to review the denial of membership in a
registered futures association or the barring of any person from being
associated with a member, after appropriate notice and opportunity for a
hearing (which hearing may consist solely of consideration of the record
before the association and opportunity for the presentation of
supporting reasons to affirm, modify, or set aside the action of the
association)--
(A) if the Commission finds that--
(i) the specific grounds on which the denial or bar is based
exist in fact;
(ii) the denial or bar is in accordance with the rules of
the association; and
(iii) such rules are, and were applied in a manner,
consistent with the purposes of this chapter,
the Commission, by order, shall so declare and, as appropriate,
affirm or modify the action of the association, or remand the case
to the association for further proceedings; or
(B) if the Commission does not make any such finding, the
Commission, by order, shall set aside the action of the association
and require the association to admit the applicant to membership or
permit the person to be associated with a member, or, as
appropriate, remand the case to the association for further
proceedings.
(4) Any person aggrieved by a final order of the Commission entered
under this subsection may file a petition for review with a United
States court of appeals in the same manner as provided in sections 9 and
15 of this title.
(j) Changes or additions to association rules
Every registered futures association shall file with the Commission
in accordance with such rules and regulations as the Commission may
prescribe as necessary or appropriate in the public interest, copies of
any changes in or additions to the rules of the association, and such
other information and documents as the Commission may require to keep
current or to supplement the registration statement and documents filed
pursuant to subsection (a) of this section. A registered futures
association shall submit to the Commission any change in or addition to
its rules and may make such rules effective ten days after receipt of
such submission by the Commission unless, within the ten-day period, the
registered futures association requests review and approval thereof by
the Commission or the Commission notifies such registered futures
association in writing of its determination to review such rules for
approval. The Commission shall approve such rules if such rules are
determined by the Commission to be consistent with the requirements of
this section and not otherwise in violation of this chapter or the
regulations issued pursuant to this chapter, and the Commission shall
disapprove, after appropriate notice and opportunity for hearing, any
such rule which the Commission determines at any time to be inconsistent
with the requirements of this section or in violation of this chapter or
the regulations issued pursuant to this chapter. If the Commission does
not approve or institute disapproval proceedings with respect to any
rule within one hundred and eighty days after receipt or within such
longer period of time as the registered futures association may agree
to, or if the Commission does not conclude a disapproval proceeding with
respect to any rule within one year after receipt or within such longer
period as the registered futures association may agree to, such rule may
be made effective by the registered futures association until such time
as the Commission disapproves such rule in accordance with this
subsection.
(k) Abrogation of association rules; requests to associations by
Commission to alter or supplement rules
(1) The Commission is authorized by order to abrogate any rule of a
registered futures association, if after appropriate notice and
opportunity for hearing, it appears to the Commission that such
abrogation is necessary or appropriate to assure fair dealing by the
members of such association, to assure a fair representation of its
members in the administration of its affairs or effectuate the purposes
of this section.
(2) The Commission may in writing request any registered futures
association to adopt any specified alteration or supplement to its rules
with respect to any of the matters hereinafter enumerated. If such
association fails to adopt such alteration or supplement within a
reasonable time, the Commission is authorized by order to alter or
supplement the rules of such association in the manner theretofore
requested, or with such modifications of such alteration or supplement
as it deems necessary if, after appropriate notice and opportunity for
hearing, it appears to the Commission that such alteration or supplement
is necessary or appropriate in the public interest or to effectuate the
purposes of this section, with respect to--
(A) the basis for, and procedure in connection with, the denial
of membership or the barring from being associated with a member or
the disciplining of members or persons associated with members, or
the qualifications required for members or natural persons
associated with members or any class thereof;
(B) the method for adoption of any change in or addition to the
rules of the association;
(C) the method of choosing officers and directors.
(l) Suspension and revocation of registration; expulsion of members;
removal of association officers or directors
The Commission is authorized, if such action appears to it to be
necessary or appropriate in the public interest or to carry out the
purposes of this section--
(1) after appropriate notice and opportunity for hearing, by
order to suspend for a period not exceeding twelve months or to
revoke the registration of a registered futures association, if the
Commission finds that such association has violated any provisions
of this chapter or any rule or regulation thereunder, or has failed
to enforce compliance with its own rules, or has engaged in any
other activity tending to defeat the purposes of this chapter;
(2) after appropriate notice and opportunity for hearing, by
order to suspend for a period not exceeding twelve months or to
expel from a registered futures association any member thereof, or
to suspend for a period not exceeding twelve months or to bar any
person from being associated with a member thereof, if the
Commission finds that such member or person--
(A) has violated any provision of this chapter or any rule
or regulation thereunder, or has effected any transaction for
any other person who, he had reason to believe, was violating
with respect to such transaction any provision of this chapter
or any rule or regulation thereunder; or
(B) has willfully violated any provision of this chapter, or
of any rule, regulation, or order thereunder, or has effected
any transaction for any other person who, he had reason to
believe, was willfully violating with respect to such
transaction any provision of this chapter or rule, regulation,
or order; and
(3) after appropriate notice and opportunity for hearing, by
order to remove from office any officer or director of a registered
futures association who, the Commission finds, has willfully failed
to enforce the rules of the association, or has willfully abused his
authority.
(m) Rules requiring membership in associations
Notwithstanding any other provision of law, the Commission may
approve rules of futures associations that, directly or indirectly,
require persons eligible for membership in such associations to become
members of at least one such association, upon a determination by the
Commission that such rules are necessary or appropriate to achieve the
purposes and objectives of this chapter.
(n) Reports to Congress
The Commission shall include in its annual reports to Congress
information concerning any futures associations registered pursuant to
this section and the effectiveness of such associations in regulating
the practices of the members.
(o) Delegation to futures associations of registrative functions;
discretionary review by Commission; judicial appeal
(1) The Commission may require any futures association registered
pursuant to this section to perform any portion of the registration
functions under this chapter with respect to each member of the
association other than a registered entity and with respect to each
associated person of such member, in accordance with rules,
notwithstanding any other provision of law, adopted by such futures
association and submitted to the Commission pursuant to subsection (j)
of this section, and subject to the provisions of this chapter
applicable to registrations granted by the Commission.
(2) In performing any Commission registration function authorized by
the Commission under section 12a(10) of this title, this section, or any
other applicable provisions of this chapter, a futures association may
issue orders (A) to refuse to register any person, (B) to register
conditionally any person, (C) to suspend the registration of any person,
(D) to place restrictions on the registration of any person, or (E) to
revoke the registration of any person. If such an order is the final
decision of the futures association, any person against whom the order
has been issued may petition the Commission to review the decision. The
Commission may on its own initiative or upon petition decline review or
grant review and affirm, set aside, or modify such an order of the
futures association; and the findings of the futures association as to
the facts, if supported by the weight of the evidence, shall be
conclusive. Unless the Commission grants review under this section of an
order concerning registration issued by a futures association, the order
of the futures association shall be considered to be an order issued by
the Commission.
(3) Nothing in this section shall affect the Commission's authority
to review the granting of a registration application by a registered
futures association that is performing any Commission registration
function authorized by the Commission under section 12a(10) of this
title, this section, or any other applicable provision of this chapter.
(4) If a person against whom a futures association has issued a
registration order under this subsection petitions the Commission to
review that order and the Commission declines to take review, such
person may file a petition for review with a United States court of
appeals, in accordance with sections 9 and 15 of this title.
(p) Establishment of rules for futures associations; approval by
Commission
Notwithstanding any other provision of this section, each futures
association registered under this section on January 11, 1983, shall
adopt and submit for Commission approval not later than ninety days
after such date, and each futures association that applies for
registration after such date shall adopt and include with its
application for registration, rules of the association that require the
association to--
(1) establish training standards and proficiency testing for
persons involved in the solicitation of transactions subject to the
provisions of this chapter, supervisors of such persons, and all
persons for which it has registration responsibilities, and a
program to audit and enforce compliance with such standards;
(2) establish minimum capital, segregation, and other financial
requirements applicable to its members for which such requirements
are imposed by the Commission and implement a program to audit and
enforce compliance with such requirements, except that such
requirements may not be less stringent than those imposed on such
firms by this chapter or by Commission regulation;
(3) establish minimum standards governing the sales practices of
its members and persons associated therewith for transactions
subject to the provisions of this chapter; and
(4) establish special supervisory guidelines to protect the
public interest relating to the solicitation by telephone of new
futures or options accounts and make such guidelines applicable to
those members determined to require such guidelines in accordance
with standards established by the Commission consistent with this
chapter. Such guidelines may include a requirement that, with
respect to a customer with no previous futures or commodity options
trading experience, the member may not enter an order for the
account of such customer for a period of three days following
opening of the account and receipt of a signed acknowledgment by the
customer of receipt of a risk disclosure statement.
(q) \7\ Major disciplinary rule violations
---------------------------------------------------------------------------
\7\ Two subsecs. (q) have been enacted.
---------------------------------------------------------------------------
(1) The Commission shall issue regulations requiring each registered
futures association to establish and make available to the public a
schedule of major violations of any rule within the disciplinary
jurisdiction of such registered futures association.
(2) The regulations issued by the Commission pursuant to this
subsection shall prohibit, for a period of time to be determined by the
Commission, any member of a registered futures association who is found
to have committed any major violation from service on the governing
board of any registered futures association or registered entity, or on
any disciplinary committee thereof.
(q) \7\ Program for implementation of rules
Each futures association registered under this section shall develop
a comprehensive program that fully implements the rules approved by the
Commission under this section as soon as practicable but not later than
September 30, 1985, in the case of any futures association registered on
January 11, 1983, and not later than two and one-half years after the
date of registration in the case of any other futures association
registered under this section.
(r) Rules to avoid duplicative regulation of dual registrants
Consistent with this chapter, each futures association registered
under this section shall issue such rules as are necessary to avoid
duplicative or conflicting rules applicable to any futures commission
merchant registered with the Commission pursuant to section 6f(a) of
this title (except paragraph (2) thereof), that is also registered with
the Securities and Exchange Commission pursuant to section 78o(b) of
title 15 (except paragraph (11) thereof), with respect to the
application of--
(1) rules of such futures association of the type specified in
section 6d(3) of this title involving security futures products; and
(2) similar rules of national securities associations registered
pursuant to section 78o-3(a) of title 15 involving security futures
products.
(Sept. 21, 1922, ch. 369, Sec. 17, as added Pub. L. 93-463, title III,
Sec. 301, Oct. 23, 1974, 88 Stat. 1406; amended Pub. L. 95-405, Sec. 22,
Sept. 30, 1978, 92 Stat. 876; Pub. L. 97-444, title II, Secs. 217(b),
233, Jan. 11, 1983, 96 Stat. 2307, 2320; Pub. L. 99-641, title I,
Secs. 107, 108, 110(6), (7), Nov. 10, 1986, 100 Stat. 3558, 3559, 3561;
Pub. L. 102-546, title II, Secs. 204(a), 206(b), 209(b)(8), 222(c), 228,
title IV, Sec. 402(12), Oct. 28, 1992, 106 Stat. 3600, 3602, 3607, 3616,
3619, 3625; Pub. L. 106-554, Sec. 1(a)(5) [title I, Sec. 123(a)(24),
title II, Sec. 251(g)], Dec. 21, 2000, 114 Stat. 2763, 2763A-410, 2763A-
444.)
Amendments
2000--Subsecs. (b)(2), (3), (10), (o)(1), (q)(2). Pub. L. 106-554,
Sec. 1(a)(5) [title I, Sec. 123(a)(24)], substituted ``registered
entity'' for ``contract market'' wherever appearing.
Subsec. (r). Pub. L. 106-554, Sec. 1(a)(5) [title II, Sec. 251(g)],
added subsec. (r).
1992--Subsec. (a)(1), (2). Pub. L. 102-546, Sec. 402(12)(A),
realigned margins.
Subsec. (b)(3). Pub. L. 102-546, Secs. 206(b)(1)(A), (B),
209(b)(8)(A)(i), struck out ``or'' at end of subpar. (A), in subpar. (B)
made technical amendment to reference to sections 9 and 15 of this title
to reflect change in reference to corresponding section of original act
and struck out ``or'' at end, and in subpar. (D) substituted a semicolon
for period at end.
Subsec. (b)(4). Pub. L. 102-546, Secs. 206(b)(1)(B), (C),
209(b)(8)(A)(ii), substituted a semicolon for period at end of subpars.
(A) to (D), in subpar. (E) substituted ``; and'' for period at end, and
in subpar. (F) made technical amendment to reference to sections 9 and
15 of this title to reflect change in reference to corresponding section
of original act and substituted a semicolon for period at end.
Subsec. (b)(5) to (9). Pub. L. 102-546, Sec. 206(b)(1)(B), (C),
substituted a semicolon for period at end of pars. (5) to (9) and
subpars. (A), (B), and (D) of par. (9) and in par. (9)(C) substituted
``; and'' for period at end.
Subsec. (b)(10). Pub. L. 102-546, Secs. 206(b)(1)(C), 222(c),
substituted ``(A)'' for ``(i)'' and ``voluntary, (B)'' for ``voluntary
and (ii)'', inserted ``, and'' and subpar. (C) after ``association'',
and substituted ``; and'' for period at end.
Subsec. (b)(11) to (13). Pub. L. 102-546, Sec. 206(b)(1)(D), added
pars. (11) to (13).
Subsec. (i)(4). Pub. L. 102-546, Sec. 228, which directed that
``(other than a registered futures association).'' be struck out, was
executed by striking ``(other than a registered futures association)''
after ``Any person'' to reflect the probable intent of Congress.
Pub. L. 102-546, Sec. 209(b)(8)(B), made technical amendment to
reference to sections 9 and 15 of this title to reflect change in
reference to corresponding section of original act.
Subsec. (l)(2)(B). Pub. L. 102-546, Sec. 402(12)(B), made technical
amendment to reference to this chapter appearing after ``violated any
provision of'' to reflect change in reference to corresponding provision
of original act and substituted ``; and'' for period at end.
Subsec. (o)(4). Pub. L. 102-546, Sec. 209(b)(8)(C), made technical
amendment to reference to sections 9 and 15 of this title to reflect
change in reference to corresponding section of original act.
Subsec. (p)(4). Pub. L. 102-546, Sec. 204(a), added par. (4).
Subsec. (q). Pub. L. 102-546, Sec. 206(b)(2), added subsec. (q)
relating to major disciplinary rules violations.
1986--Subsec. (b)(2). Pub. L. 99-641, Sec. 110(6), substituted
``within'' for ``with in'' before ``the meaning''.
Subsec. (h). Pub. L. 99-641, Sec. 107, amended subsec. (h)
generally. Prior to amendment, subsec. (h) read as follows: ``If any
registered futures association takes any disciplinary action against any
member thereof or any person associated with such a member or denies
admission to any person seeking membership therein, or bars any person
from being associated with a member, such action shall be subject to
review by the Commission, on its own motion, or upon application by any
person aggrieved thereby filed within thirty days after such action has
been taken or within such longer period as the Commission may determine.
Application to the Commission for review, or the institution of review
by the Commission on its own motion, shall operate as a stay of such
action until an order is issued upon such review pursuant to subsection
(i) of this section unless the Commission otherwise orders, after notice
and opportunity for hearing on the question of a stay (which hearing may
consist solely of affidavits and oral arguments).''
Subsec. (i). Pub. L. 99-641, Sec. 107, amended subsec. (i)
generally. Prior to amendment, subsec. (i) read as follows:
``(1) In a proceeding to review disciplinary action taken by a
registered futures association against a member thereof or a person
associated with a member, if the Commission, after appropriate notice
and opportunity for hearing, upon consideration of the record before the
association and such other evidence as it may deem relevant--
``(A) finds that such member or person has engaged in such acts
or practices, or has omitted such act, as the association has found
him to have engaged in or omitted, and
``(B) determines that such acts or practices, or omission to
act, are in violation of such rules of the association as have been
designated in the determination of the association, the Commission
shall by order dismiss the proceeding, unless it appears to the
Commission that such action should be modified in accordance with
paragraph (2) of this subsection. The Commission shall likewise
determine whether the acts or practices prohibited, or the omission
of any act required, by any such rule constitute conduct
inconsistent with just and equitable principles of trade, and shall
so declare. If it appears to the Commission that the evidence does
not warrant the finding required in clause (A), or if the Commission
determines that such acts or practices as are found to have been
engaged in are not prohibited by the designated rule or rules of the
association, or that such act as is found to have been omitted is
not required by such designated rule or rules, the Commission shall
by order set aside the action of the association.
``(2) If, after appropriate notice and opportunity for hearing, the
Commission finds that any penalty imposed upon a member or person
associated with a member is excessive or oppressive, having due regard
to the public interest, the Commission shall by order cancel, reduce, or
require the remission of such penalty.
``(3) In any proceeding to review the denial of membership in a
registered futures association or the barring of any person from being
associated with a member, if the Commission, after appropriate notice
and hearing, and upon consideration of the record before the association
and such other evidence as it may deem relevant, determines that the
specific grounds on which such denial or bar is based exist in fact and
are valid under this section, the Commission shall by order dismiss the
proceeding; otherwise, the Commission shall by order set aside the
action of the association and require it to admit the applicant to
membership therein, or to permit such person to be associated with a
member.''
Subsec. (j). Pub. L. 99-641, Sec. 108, struck out sentence which
read as follows: ``The Commission shall approve such rules within thirty
days of their receipt if Commission approval is requested under this
subsection or within thirty days after the Commission determines to
review for approval any other rules unless the Commission notifies the
registered futures association of its inability to complete such
approval or review within such period of time.''
Subsec. (k)(1). Pub. L. 99-641, Sec. 110(7), substituted ``section''
for ``title''.
1983--Subsec. (b)(4)(E). Pub. L. 97-444, Sec. 233(1), inserted ``,
which may require the applicant to be fingerprinted and to submit, or
cause to be submitted, such fingerprints to the Attorney General for
identification and appropriate processing. Notwithstanding any other
provision of law, such an association may receive from the Attorney
General all the results of such identification and processing'' after
``adopt procedures for verification of qualifications of the
applicant''.
Subsec. (b)(10). Pub. L. 97-444, Sec. 217(b), required association
rules to provide for ``expeditious'' procedure, redesignated cl. (iv) as
(ii) and substituted `` `customer' as used in this paragraph shall not
include another member of the association'' for `` `customer' as used in
this subsection shall not include a futures commission merchant or a
floor broker'', and struck out clauses ``(ii) the procedure shall not be
applicable to any claim in excess of $15,000, (iii) the procedure shall
not result in any compulsory payment except as agreed upon between the
parties,''.
Subsec. (d). Pub. L. 97-444, Sec. 233(2), substituted ``section
12a(1) of this title'' for ``section 12a(4) of this title''.
Subsec. (h). Pub. L. 97-444, Sec. 233(3), substituted ``subsection
(i) of this section'' for ``subsection (k) of this section''.
Subsec. (j). Pub. L. 97-444, Sec. 233(4), substituted ``A registered
futures association shall submit to the Commission any change in or
addition to its rules and may make such rules effective ten days after
receipt of such submission by the Commission unless, within the ten-day
period, the registered futures association requests review and approval
thereof by the Commission or the Commission notifies such registered
futures association in writing of its determination to review such rules
for approval. The Commission shall approve such rules within thirty days
of their receipt if Commission approval is requested under this
subsection or within thirty days after the Commission determines to
review for approval any other rules unless the Commission notifies the
registered futures association of its inability to complete such
approval or review within such period of time. The Commission shall
approve such rules if such rules are determined by the Commission to be
consistent with the requirements of this section and not otherwise in
violation of this chapter or the regulations issued pursuant to this
chapter, and the Commission shall disapprove, after appropriate notice
and opportunity for hearing, any such rule which the Commission
determines at any time to be inconsistent with the requirements of this
section or in violation of this chapter or the regulations issued
pursuant to this chapter. If the Commission does not approve or
institute disapproval proceedings with respect to any rule within one
hundred and eighty days after receipt or within such longer period of
time as the registered futures association may agree to, or if the
Commission does not conclude a disapproval proceeding with respect to
any rule within one year after receipt or within such longer period as
the registered futures association may agree to, such rule may be made
effective by the registered futures association until such time as the
Commission disapproves such rule in accordance with this subsection''
for ``Any change in or addition to the rules of a registered futures
association shall be submitted to the Commission for approval and shall
take effect upon the thirtieth day after such approval by the
Commission, or upon such earlier date as the Commission may determine,
unless the Commission shall enter an order disapproving such change or
addition; and the Commission shall enter such an order unless such
change or addition appears to the Commission to be consistent with the
requirements of this section and the provisions of this chapter''.
Subsecs. (o) to (q). Pub. L. 97-444, Sec. 233(5), added subsecs.
(o), (p), and (q).
1978--Subsec. (b)(3)(B). Pub. L. 95-405, Sec. 22(1), struck out ``(7
U.S.C. 9)'' after ``sections 9 and 15 of this title''.
Subsec. (b)(10). Pub. L. 95-405, Sec. 22(2), substituted ``$15,000''
for ``$5,000''.
Subsec. (l)(1), (2)(A). Pub. L. 95-405, Sec. 22(3), substituted
``chapter'' for ``section'' wherever appearing.
Subsecs. (m), (n). Pub. L. 95-405, Sec. 22(4), added subsec. (m) and
redesignated former subsec. (m) as (n).
Effective Date of 1983 Amendment
Amendment by Pub. L. 97-444 effective Jan. 11, 1983, see section 239
of Pub. L. 97-444, set out as a note under section 2 of this title.
Effective Date of 1978 Amendment
Amendment by Pub. L. 95-405 effective Oct. 1, 1978, see section 28
of Pub. L. 95-405, set out as a note under section 2 of this title.
Effective Date
For effective date of section, see section 418 of Pub. L. 93-463,
set out as an Effective Date of 1974 Amendment note under section 2 of
this title.
Implementation
Section 204(b) of Pub. L. 102-546 provided that: ``The guidelines
required under section 17(p)(4) of the Commodity Exchange Act [7 U.S.C.
21(p)(4)] (as added by subsection (a) of this section) shall be
submitted by a futures association registered with the Commodity Futures
Trading Commission on the date of enactment of this Act [Oct. 28, 1992]
to the Commission for the approval of the Commission not later than one
hundred and eighty days after the date of enactment of this Act.''
Study on Computerized Futures Trading
Pub. L. 102-546, title II, Sec. 220(b), (c), Oct. 28, 1992, 106
Stat. 3614, provided that:
``(b) Study.--The Commodity Futures Trading Commission shall conduct
a study to assess--
``(1) the progress made under initiatives to conduct trading in
futures and options subject to the jurisdiction of the Commission
under the Commodity Exchange Act [7 U.S.C. 1 et seq.] through
systems of computers or by other electronic means; and
``(2) whether the experience with such systems of trading
indicates that they may be useful or effective to enhance access to
the futures and options markets by potential market participants,
improve the ability of the Commission to audit the activities of the
futures and options markets, reduce the opportunity for trading
abuses, and otherwise be in the public interest or raise other
related issues.
``(c) Report.--Not later than two years after the date of enactment
of this Act [Oct. 28, 1992], the Commission shall submit to the
Committee on Agriculture of the House of Representatives and the
Committee on Agriculture, Nutrition, and Forestry of the Senate a report
containing the results of the study conducted under subsection (a),
together with any appropriate recommendations.''
Section Referred to in Other Sections
This section is referred to in sections 6f, 6p, 7b-1, 12a, 16a, 19,
25 of this title; title 15 sections 78c, 78f, 78o-3.
