§ 6a. — Excessive speculation.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 7USC6a]
TITLE 7--AGRICULTURE
CHAPTER 1--COMMODITY EXCHANGES
Sec. 6a. Excessive speculation
(a) Burden on interstate commerce; trading or position limits
Excessive speculation in any commodity under contracts of sale of
such commodity for future delivery made on or subject to the rules of
contract markets or derivatives transaction execution facilities causing
sudden or unreasonable fluctuations or unwarranted changes in the price
of such commodity, is an undue and unnecessary burden on interstate
commerce in such commodity. For the purpose of diminishing, eliminating,
or preventing such burden, the Commission shall, from time to time,
after due notice and opportunity for hearing, by rule, regulation, or
order, proclaim and fix such limits on the amounts of trading which may
be done or positions which may be held by any person under contracts of
sale of such commodity for future delivery on or subject to the rules of
any contract market or derivatives transaction execution facility as the
Commission finds are necessary to diminish, eliminate, or prevent such
burden. In determining whether any person has exceeded such limits, the
positions held and trading done by any persons directly or indirectly
controlled by such person shall be included with the positions held and
trading done by such person; and further, such limits upon positions and
trading shall apply to positions held by, and trading done by, two or
more persons acting pursuant to an expressed or implied agreement or
understanding, the same as if the positions were held by, or the trading
were done by, a single person. Nothing in this section shall be
construed to prohibit the Commission from fixing different trading or
position limits for different commodities, markets, futures, or delivery
months, or for different number of days remaining until the last day of
trading in a contract, or different trading limits for buying and
selling operations, or different limits for the purposes of paragraphs
(1) and (2) of subsection (b) of this section, or from exempting
transactions normally known to the trade as ``spreads'' or ``straddles''
or ``arbitrage'' or from fixing limits applying to such transactions or
positions different from limits fixed for other transactions or
positions. The word ``arbitrage'' in domestic markets shall be defined
to mean the same as ``spread'' or ``straddle''. The Commission is
authorized to define the term ``international arbitrage''.
(b) Prohibition on trading or positions in excess of limits fixed by
Commission
The Commission shall, in such rule, regulation, or order, fix a
reasonable time (not to exceed ten days) after the promulgation of the
rule, regulation, or order; after which, and until such rule,
regulation, or order is suspended, modified, or revoked, it shall be
unlawful for any person--
(1) directly or indirectly to buy or sell, or agree to buy or
sell, under contracts of sale of such commodity for future delivery
on or subject to the rules of the contract market or markets, or
derivatives transaction execution facility or facilities, to which
the rule, regulation, or order applies, any amount of such commodity
during any one business day in excess of any trading limit fixed for
one business day by the Commission in such rule, regulation, or
order for or with respect to such commodity; or
(2) directly or indirectly to hold or control a net long or a
net short position in any commodity for future delivery on or
subject to the rules of any contract market or derivatives
transaction execution facility in excess of any position limit fixed
by the Commission for or with respect to such commodity: Provided,
That such position limit shall not apply to a position acquired in
good faith prior to the effective date of such rule, regulation, or
order.
(c) Applicability to bona fide hedging transactions or positions
No rule, regulation, or order issued under subsection (a) of this
section shall apply to transactions or positions which are shown to be
bona fide hedging transactions or positions as such terms shall be
defined by the Commission by rule, regulation, or order consistent with
the purposes of this chapter. Such terms may be defined to permit
producers, purchasers, sellers, middlemen, and users of a commodity or a
product derived therefrom to hedge their legitimate anticipated business
needs for that period of time into the future for which an appropriate
futures contract is open and available on an exchange. To determine the
adequacy of this chapter and the powers of the Commission acting
thereunder to prevent unwarranted price pressures by large hedgers, the
Commission shall monitor and analyze the trading activities of the
largest hedgers, as determined by the Commission, operating in the
cattle, hog, or pork belly markets and shall report its findings and
recommendations to the Senate Committee on Agriculture, Nutrition, and
Forestry and the House Committee on Agriculture in its annual reports
for at least two years following January 11, 1983.
(d) Persons subject to regulation; applicability to transactions made by
or on behalf of United States
This section shall apply to a person that is registered as a futures
commission merchant, an introducing broker, or a floor broker under
authority of this chapter only to the extent that transactions made by
such person are made on behalf of or for the account or benefit of such
person. This section shall not apply to transactions made by, or on
behalf of, or at the direction of, the United States, or a duly
authorized agency thereof.
(e) Rulemaking power and penalties for violation
Nothing in this section shall prohibit or impair the adoption by any
contract market, derivatives transaction execution facility, or by any
other board of trade licensed, designated, or registered by the
Commission of any bylaw, rule, regulation, or resolution fixing limits
on the amount of trading which may be done or positions which may be
held by any person under contracts of sale of any commodity for future
delivery traded on or subject to the rules of such contract market or
derivatives transaction execution facility, or under options on such
contracts or commodities traded on or subject to the rules of such
contract market, derivatives transaction execution facility, or such
board of trade: Provided, That if the Commission shall have fixed limits
under this section for any contract or under section 6c of this title
for any commodity option, then the limits fixed by the bylaws, rules,
regulations, and resolutions adopted by such contract market,
derivatives transaction execution facility, or such board of trade shall
not be higher than the limits fixed by the Commission. It shall be a
violation of this chapter for any person to violate any bylaw, rule,
regulation, or resolution of any contract market, derivatives
transaction execution facility, or other board of trade licensed,
designated, or registered by the Commission fixing limits on the amount
of trading which may be done or positions which may be held by any
person under contracts of sale of any commodity for future delivery or
under options on such contracts or commodities, if such bylaw, rule,
regulation, or resolution has been approved by the Commission: Provided,
That the provisions of section 13(c) \1\ of this title shall apply only
to those who knowingly violate such limits.
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\1\ See References in Text note below.
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(Sept. 21, 1922, ch. 369, Sec. 4a, as added June 15, 1936, ch. 545,
Sec. 5, 49 Stat. 1492; amended July 24, 1956, ch. 690, Sec. 1, 70 Stat.
630; Pub. L. 90-258, Secs. 2-4, Feb. 19, 1968, 82 Stat. 26, 27; Pub. L.
93-463, title IV, Secs. 403, 404, Oct. 23, 1974, 88 Stat. 1413; Pub. L.
94-16, Sec. 4, Apr. 16, 1975, 89 Stat. 78; Pub. L. 97-444, title II,
Sec. 205, Jan. 11, 1983, 96 Stat. 2299; Pub. L. 102-546, title IV,
Sec. 402(1)(A), (2), Oct. 28, 1992, 106 Stat. 3624; Pub. L. 106-554,
Sec. 1(a)(5) [title I, Sec. 123(a)(4)], Dec. 21, 2000, 114 Stat. 2763,
2763A-407.)
References in Text
Section 13(c) of this title, referred to in subsec. (e), was struck
out and subsec. (d) of section 13 was redesignated (c) by Pub. L. 102-
546, title II, Sec. 212(a)(1)(A), (B), Oct. 28, 1992, 106 Stat. 3608.
Amendments
2000--Subsec. (a). Pub. L. 106-554, Sec. 1(a)(5) [title I,
Sec. 123(a)(4)(A)], inserted ``or derivatives transaction execution
facilities'' after ``contract markets'' in first sentence and ``or
derivatives transaction execution facility'' after ``contract market''
in second sentence.
Subsec. (b)(1). Pub. L. 106-554, Sec. 1(a)(5) [title I,
Sec. 123(a)(4)(B)(i)], inserted ``, or derivatives transaction execution
facility or facilities,'' after ``markets''.
Subsec. (b)(2). Pub. L. 106-554, Sec. 1(a)(5) [title I,
Sec. 123(a)(4)(B)(ii)], inserted ``or derivatives transaction execution
facility'' after ``contract market''.
Subsec. (e). Pub. L. 106-554, Sec. 1(a)(5) [title I,
Sec. 123(a)(4)(C)], substituted ``contract market, derivatives
transaction execution facility, or'' for ``contract market or'' wherever
appearing, ``licensed, designated, or registered'' for ``licensed or
designated'' in two places, and ``contract market or derivatives
transaction execution facility, or'' for ``contract market, or''.
1992--Subsec. (a). Pub. L. 102-546, Sec. 402(1)(A), (2)(A), (C),
redesignated par. (1) as subsec. (a), substituted ``Commission'' for
``commission'' wherever appearing except in last sentence, and
substituted ``paragraphs (1) and (2) of subsection (b) of this section''
for ``subparagraphs (A) and (B) of paragraph (2)''.
Subsec. (b). Pub. L. 102-546, Sec. 402(1)(A), (2)(C), (D),
redesignated par. (2) as subsec. (b) and subpars. (A) and (B) as pars.
(1) and (2), respectively, and substituted ``Commission'' for
``commission'' wherever appearing.
Subsec. (c). Pub. L. 102-546, Sec. 402(2)(B), (C), redesignated par.
(3) as subsec. (c) and substituted ``subsection (a)'' for ``paragraph
(1)''.
Subsecs. (d), (e). Pub. L. 102-546, Sec. 402(2)(C), redesignated
pars. (4) and (5) as subsecs. (d) and (e), respectively.
1983--Par. (1). Pub. L. 97-444, Sec. 205(1), (2), substituted ``by
rule, regulation, or order, proclaim'' for ``by order, proclaim'' and
inserted ``or for different number of days remaining until the last day
of trading in a contract,'' after ``delivery months''.
Par. (2). Pub. L. 97-444, Sec. 205(1), (3), substituted ``after the
promulgation of the rule, regulation, or order'' for ``after the order's
promulgation'' in provisions before subpar. (A) and substituted ``rule,
regulation, or order'' for ``order'' in provisions before subpar. (A)
and in subpars. (A) and (B).
Par. (3). Pub. L. 97-444, Sec. 205(4), substituted ``No rule,
regulation, or order issued under paragraph (1) of this section shall
apply to transactions or positions which are shown to be bona fide
hedging transactions or positions as such terms shall be defined by the
Commission by rule, regulation, or order consistent with the purposes of
this chapter'' for ``No order issued under paragraph (1) of this section
shall apply to transactions or positions which are shown to be bona fide
hedging transactions or positions as such terms shall be defined by the
Commission within one hundred and eighty days after the effective date
of the Commodity Futures Trading Commission Act of 1974 by order
consistent with the purposes of this chapter'' and inserted ``Such terms
may be defined to permit producers, purchasers, sellers, middlemen, and
users of a commodity or a product derived therefrom to hedge their
legitimate anticipated business needs for that period of time into the
future for which an appropriate futures contract is open and available
on an exchange. To determine the adequacy of this chapter and the powers
of the Commission acting thereunder to prevent unwarranted price
pressures by large hedgers, the Commission shall monitor and analyze the
trading activities of the largest hedgers, as determined by the
Commission, operating in the cattle, hog, or pork belly markets and
shall report its findings and recommendations to the Senate Committee on
Agriculture, Nutrition, and Forestry and the House Committee on
Agriculture in its annual reports for at least two years following
January 11, 1983.''
Par. (4). Pub. L. 97-444, Sec. 205(5), substituted ``a futures
commission merchant, an introducing broker, or a floor broker'' for ``a
futures commission merchant or as floor broker''.
Par. (5). Pub. L. 97-444, Sec. 205(6), added par. (5).
1975--Par. (3). Pub. L. 94-16 substituted ``one hundred and eighty
days'' for ``ninety days''.
1974--Par. (1). Pub. L. 93-463, Sec. 403, inserted ``or `arbitrage'
'' after ``or `straddles' '', inserted definition of ``arbitrage'', and
authorized Commission to define ``international arbitrage''.
Par. (3). Pub. L. 93-463, Sec. 404, directed Commission to define
``bona fide hedging transactions or positions'' within 90 days after the
effective date of the Commodity Futures Trading Commission Act of 1974
and struck out provisions which enumerated the factors to be taken into
account in determining whether a hedging transaction or position was a
bona fide transaction or position.
1968--Par. (1). Pub. L. 90-258, Sec. 2, substituted in second
sentence ``amounts of trading'' for ``amount of trading'', inserted
``which may be done or positions which may be held by any person''
before ``under contracts of sale'', and struck out ``which may be done''
after ``rules of any contract market'', inserted third sentence
providing for inclusion of controlled positions and trading in
determining whether prescribed position or trading limits have been
exceeded and for application of such position and trading limits to
activities of two or more persons acting pursuant to agreement or
understanding as if the activities of a single person, and included in
fourth, formerly third, sentence references to position limits and to
positions, substituted ``normally'' for ``commonly'', and struck out
``trading'' from ``from fixing trading limits'' and ``from trading
limits''.
Par. (2)(B). Pub. L. 90-258, Sec. 3, substituted prohibition against
holding of net long or net short positions in excess of any position
limit fixed by the Commission for former prohibition of purchases or
sales which result in net long or net short positions in excess of
trading limits fixed by the Commission and provided that the position
limit shall not apply to a position acquired in good faith prior to the
effective date of the order.
Par. (3). Pub. L. 90-258, Sec. 4, included references to positions,
made hedging applicable to short and long positions, substituted
``contract market'' for ``board of trade'', and required the activities
to be those of the same person to constitute hedging.
1956--Par. (3)(C). Act July 24, 1956, added subpar. (C).
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 1974 Amendment
Section 404 of Pub. L. 93-463 provided that the amendment of par.
(3) which struck out provisions that enumerated the factors to be taken
into account in determining whether a hedging transaction or position
was a bona fide transaction or position, was effective immediately upon
the enactment of Pub. L. 93-463, which was approved Oct. 23, 1974.
Amendment by Pub. L. 93-463 of par. (1) and that part of par. (3)
directing the Commission to define ``bona fide hedging transactions or
positions'' effective so as to allow implementation of all changes
effected by this amendment to be carried out after Oct. 23, 1974, and
before as well as after the 180th day thereafter, see section 418 of
Pub. L. 93-463, set out as a note under section 2 of this title.
Effective Date of 1968 Amendment
Amendment by Pub. L. 90-258 effective 120 days after Feb. 19, 1968,
see section 28 of Pub. L. 90-258, set out as a note under section 2 of
this title.
Effective Date of 1956 Amendment
Section 2 of act July 24, 1956, provided that: ``This Act [amending
this section] shall take effect sixty days after the date of its
enactment [July 24, 1956].''
Effective Date
For effective date of section, see section 13 of act June 15, 1936,
set out as an Effective Date of 1936 Amendment note under section 1 of
this title.
Regulations Defining Bona Fide Hedging Transactions and Positions
Section 404 of Pub. L. 93-463 provided in part: ``That
notwithstanding any other provision of law, the Secretary of
Agriculture, immediately upon the enactment of the Commodity Futures
Trading Commission Act of 1974 [which was approved on Oct. 23, 1974], is
authorized and directed to promulgate regulations defining bona fide
hedging transactions and positions: And provided further, That until the
Secretary issues such regulations defining bona fide hedging
transactions and positions and such regulations are in full force and
effect, such terms shall continue to be defined as set forth in the
Commodity Exchange Act [par. (3) of this section] prior to its amendment
by the Commodity Futures Trading Commission Act of 1974 [Pub. L. 93-
463].''
