§ 23. — Standardized contracts for certain commodities.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 7USC23]
TITLE 7--AGRICULTURE
CHAPTER 1--COMMODITY EXCHANGES
Sec. 23. Standardized contracts for certain commodities
(a) Margin accounts or contracts and leverage accounts or contracts
prohibited except as authorized
Except as authorized under subsection (b) of this section, no person
shall offer to enter into, enter into, or confirm the execution of, any
transaction for the delivery of any commodity under a standardized
contract commonly known to the trade as a margin account, margin
contract, leverage account, or leverage contract, or under any contract,
account, arrangement, scheme, or device that the Commission determines
serves the same function or functions as such a standardized contract,
or is marketed or managed in substantially the same manner as such a
standardized contract.
(b) Permission to enter into contracts for delivery of silver or gold
bullion, bulk silver or gold coins, or platinum; rules and
regulations
(1) Subject to paragraph (2), no person shall offer to enter into,
enter into, or confirm the execution of, any transaction for the
delivery of silver bullion, gold bullion, bulk silver coins, bulk gold
coins, or platinum under a standardized contract described in subsection
(a) of this section, contrary to the terms of any rule, regulation, or
order that the Commission shall prescribe, which may include terms
designed to ensure the financial solvency of the transaction or prevent
manipulation or fraud. Such rule, regulation, or order may be made only
after notice and opportunity for hearing. The Commission may set
different terms and conditions for transactions involving different
commodities.
(2) No person may engage in any activity described in paragraph (1)
who is not permitted to engage in such activity, by the rules,
regulations, and orders of the Commission in effect on November 10,
1986, until the Commission permits such person to engage in such
activity in accordance with regulations issued in accordance with
subsection (c)(2) of this section.
(c) Survey of persons interested in engaging in transactions of silver
and gold, etc.; assistance of futures association; regulations
(1)(A) Not later than 2 years after November 10, 1986, the
Commission shall--
(i) with the assistance of a futures association registered
under this chapter, conduct a survey concerning the persons
interested in engaging in the business of offering to enter into,
entering into, or confirming the execution of, the transactions
described in subsection (b)(1) of this section; and
(ii) transmit a report of the results of the survey to the
Committee on Agriculture of the House of Representatives and the
Committee on Agriculture, Nutrition, and Forestry of the Senate.
(B) Notwithstanding any other provision of law, for purposes of
completing such report the Commission may direct, by rule, regulation,
or order, a futures association registered under this chapter to render
such assistance as the Commission shall specify.
(C) Such report shall include the findings and any recommendations
of the Commission concerning--
(i) whether such transactions serve an economic purpose;
(ii) the most efficient manner, consistent with the public
interest, to permit additional persons to engage in the business of
offering to enter into, entering into, and confirming the execution
of such transactions; and
(iii) the appropriate regulatory scheme to govern such
transactions to ensure the financial solvency of such transactions
and to prevent manipulation or fraud.
(2) The report shall also include Commission regulations governing
such transactions. The regulations shall provide for permitting
additional persons to engage in such transactions. The regulations shall
become effective on the expiration of 90 calendar days on which either
House of Congress is in session after the date of the transmittal of the
report to Congress. The regulations--
(A) may authorize or require, notwithstanding any other
provision of law, a futures association registered under this
chapter to perform such responsibilities in connection with such
transactions as the Commission may specify; and
(B) may require that permission for additional persons to engage
in such business be given on a gradual basis, so as not to place an
undue burden on the resources of the Commission.
(d) Savings provision
This section shall not affect any rights or obligations arising out
of any transaction subject to this section, as in effect before November
10, 1986, that was entered into, or the execution of which was
confirmed, before November 10, 1986.
(Sept. 21, 1922, ch. 369, Sec. 19, as added Pub. L. 95-405, Sec. 23,
Sept. 30, 1978, 92 Stat. 876; amended Pub. L. 97-444, title II,
Sec. 234, Jan. 11, 1983, 96 Stat. 2322; Pub. L. 99-641, title I,
Sec. 109, Nov. 10, 1986, 100 Stat. 3560.)
Prior Provisions
Provisions similar to those appearing in subsec. (b) were formerly
contained in section 15a of this title.
Amendments
1986--Subsec. (a). Pub. L. 99-641 amended subsec. (a) generally.
Prior to amendment, subsec. (a) read as follows: ``No person shall offer
to enter into, enter into, or confirm the execution of, any transaction
for the delivery of any commodity specifically set forth in section 2 of
this title prior to October 23, 1974, under a standardized contract
commonly known to the trade as a margin account, margin contract,
leverage account, or leverage contract, or under any contract, account,
arrangement, scheme, or device that the Commission determines serves the
same function or functions as such a standardized contract, or is
marketed or managed in substantially the same manner as such a
standardized contract.''
Subsec. (b). Pub. L. 99-641 amended subsec. (b) generally. Prior to
amendment, subsec. (b) read as follows: ``No person shall offer to enter
into, enter into, or confirm the execution of any transaction for the
delivery of silver bullion, gold bullion, or bulk silver coins or bulk
gold coins, under a standardized contract described in subsection (a) of
this section, contrary to any rule, regulation, or order of the
Commission designed to ensure the financial solvency of the transaction
or prevent manipulation or fraud: Provided, That such rule, regulation,
or order may be made only after notice and opportunity for hearing.''
Subsec. (c). Pub. L. 99-641 amended subsec. (c) generally. Prior to
amendment, subsec. (c) read as follows: ``The Commission shall regulate
any transactions under a standardized contract described in subsection
(a) of this section involving commodities described in subsection (b) of
this section or any other commodities (except those commodities
described in subsection (a) of this section) under such terms and
conditions as the Commission shall prescribe by rule, regulation, or
order made only after notice and opportunity for a hearing. The
Commission may set different terms and conditions for such transactions
involving different commodities. Notwithstanding any other provision of
this section, the Commission may prohibit any transaction for the
delivery of any commodity under a standardized contract described in
subsection (a) of this section that is not permitted by the rules,
regulations and orders of the Commission in effect on December 9, 1982,
if the Commission determines that any such transactions would be
contrary to the public interest.''
Subsec. (d). Pub. L. 99-641, in amending section generally, added
subsec. (d).
1983--Subsec. (c). Pub. L. 97-444, Sec. 234(1), substituted ``shall
regulate'' for ``may prohibit or regulate'' and authorized Commission
prohibition of transactions for delivery of commodities under a
standardized contract that was not permitted by the rules, regulations
and orders of the Commission in effect on Dec. 9, 1982, where
transactions are determined to be contrary to the public interest.
Subsec. (d). Pub. L. 97-444, Sec. 234(2), struck out subsec. (d)
which provided for regulation of transactions in accordance with
applicable provisions of this chapter where Commission determined the
transactions under subsecs. (b) and (c) of this section were contracts
for future delivery within the meaning of this chapter.
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
Section effective Oct. 1, 1978, see section 28 of Pub. L. 95-405,
set out as an Effective Date of 1978 Amendment note under section 2 of
this title.
Section Referred to in Other Sections
This section is referred to in sections 1a, 2, 12a, 13, 16, 25 of
this title; title 11 section 761.
