§ 6f. — Registration and financial requirements; risk assessment.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 7USC6f]
TITLE 7--AGRICULTURE
CHAPTER 1--COMMODITY EXCHANGES
Sec. 6f. Registration and financial requirements; risk
assessment
(a) Registration of futures commission merchants, introducing brokers,
and floor brokers and traders
(1) Any person desiring to register as a futures commission
merchant, introducing broker, floor broker, or floor trader hereunder
shall be registered upon application to the Commission. The application
shall be made in such form and manner as prescribed by the Commission,
giving such information and facts as the Commission may deem necessary
concerning the business in which the applicant is or will be engaged,
including in the case of an application of a futures commission merchant
or an introducing broker, the names and addresses of the managers of all
branch offices, and the names of such officers and partners, if a
partnership, and of such officers, directors, and stockholders, if a
corporation, as the Commission may direct. Such person, when registered
hereunder, shall likewise continue to report and furnish to the
Commission the above-mentioned information and such other information
pertaining to such person's business as the Commission may require. Each
registration shall expire on December 31 of the year for which issued or
at such other time, not less than one year from the date of issuance, as
the Commission may by rule, regulation, or order prescribe, and shall be
renewed upon application therefor unless the registration has been
suspended (and the period of such suspension has not expired) or revoked
pursuant to the provisions of this chapter.
(2) Notwithstanding paragraph (1), and except as provided in
paragraph (3), any broker or dealer that is registered with the
Securities and Exchange Commission shall be registered as a futures
commission merchant or introducing broker, as applicable, if--
(A) the broker or dealer limits its solicitation of orders,
acceptance of orders, or execution of orders, or placing of orders
on behalf of others involving any contracts of sale of any commodity
for future delivery, on or subject to the rules of any contract
market or registered derivatives transaction execution facility to
security futures products;
(B) the broker or dealer files written notice with the
Commission in such form as the Commission, by rule, may prescribe
containing such information as the Commission, by rule, may
prescribe as necessary or appropriate in the public interest or for
the protection of investors;
(C) the registration of the broker or dealer is not suspended
pursuant to an order of the Securities and Exchange Commission; and
(D) the broker or dealer is a member of a national securities
association registered pursuant to section 78o-3(a) of title 15.
The registration shall be effective contemporaneously with the
submission of notice, in written or electronic form, to the Commission.
(3) A floor broker or floor trader shall be exempt from the
registration requirements of section 6e of this title and paragraph (1)
of this subsection if--
(A) the floor broker or floor trader is a broker or dealer
registered with the Securities and Exchange Commission;
(B) the floor broker or floor trader limits its solicitation of
orders, acceptance of orders, or execution of orders, or placing of
orders on behalf of others involving any contracts of sale of any
commodity for future delivery, on or subject to the rules of any
contract market to security futures products; and
(C) the registration of the floor broker or floor trader is not
suspended pursuant to an order of the Securities and Exchange
Commission.
(4)(A) A broker or dealer that is registered as a futures commission
merchant or introducing broker pursuant to paragraph (2), or that is a
floor broker or floor trader exempt from registration pursuant to
paragraph (3), shall be exempt from the following provisions of this
chapter and the rules thereunder:
(i) Subsections (b), (d), (e), and (g) of section 6c of this
title.
(ii) Sections 6d, 6e, and 6h of this title.
(iii) Subsections (b) and (c) of this section.
(iv) Section 6j of this title.
(v) Section 6k(1) of this title.
(vi) Section 6p \1\ of this title.
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\1\ See References in Text note below.
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(vii) Section 13a-2 of this title.
(viii) Subsections (d) and (g) of section 12 of this title.
(ix) Section 20 of this title.
(B)(i) Except as provided in clause (ii) of this subparagraph, but
notwithstanding any other provision of this chapter, the Commission, by
rule, regulation, or order, may conditionally or unconditionally exempt
any broker or dealer subject to the registration requirement of
paragraph (2), or any broker or dealer exempt from registration pursuant
to paragraph (3), from any provision of this chapter or of any rule or
regulation thereunder, to the extent the exemption is necessary or
appropriate in the public interest and is consistent with the protection
of investors.
(ii) The Commission shall, by rule or regulation, determine the
procedures under which an exemptive order under this section shall be
granted and may, in its sole discretion, decline to entertain any
application for an order of exemption under this section.
(C)(i) A broker or dealer that is registered as a futures commission
merchant or introducing broker pursuant to paragraph (2) or an
associated person thereof, or that is a floor broker or floor trader
exempt from registration pursuant to paragraph (3), shall not be
required to become a member of any futures association registered under
section 21 of this title.
(ii) No futures association registered under section 21 of this
title shall limit its members from carrying an account, accepting an
order, or transacting business with a broker or dealer that is
registered as a futures commission merchant or introducing broker
pursuant to paragraph (2) or an associated person thereof, or that is a
floor broker or floor trader exempt from registration pursuant to
paragraph (3).
(b) Financial requirements for futures commission merchants and
introducing brokers
Notwithstanding any other provisions of this chapter, no person
desiring to register as futures commission merchant or as introducing
broker shall be so registered unless he meets such minimum financial
requirements as the Commission may by regulation prescribe as necessary
to insure his meeting his obligation as a registrant, and each person so
registered shall at all times continue to meet such prescribed minimum
financial requirements: Provided, That such minimum financial
requirements will be considered met if the applicant for registration or
registrant is a member of a contract market or derivatives transaction
execution facility and conforms to minimum financial standards and
related reporting requirements set by such contract market or
derivatives transaction execution facility in its bylaws, rules,
regulations, or resolutions and approved by the Commission as adequate
to effectuate the purposes of this subsection.
(c) Risk assessment for holding company systems
(1) As used in this subsection:
(i) The term ``affiliated person'' means any person directly or
indirectly controlling, controlled by, or under common control with
a futures commission merchant, as the Commission, by rule or
regulation, may determine will effectuate the purposes of this
subsection.
(ii) The term ``Federal banking agency'' shall have the same
meaning as the term ``appropriate Federal banking agency'' in
section 1813(q) of title 12.
(2)(A) Each registered futures commission merchant shall obtain such
information and make and keep such records as the Commission, by rule or
regulation, prescribes concerning the registered futures commission
merchant's policies, procedures, or systems for monitoring and
controlling financial and operational risks to it resulting from the
activities of any of its affiliated persons, other than a natural
person.
(B) The records required under subparagraph (A) shall describe, in
the aggregate, each of the futures and other financial activities
conducted by, and the customary sources of capital and funding of, those
of its affiliated persons whose business activities are reasonably
likely to have a material impact on the financial or operational
condition of the futures commission merchant, including its adjusted net
capital, its liquidity, or its ability to conduct or finance its
operations.
(C) The Commission, by rule or regulation, may require summary
reports of such information to be filed by the futures commission
merchant with the Commission no more frequently than quarterly.
(3)(A),\2\ If, as a result of adverse market conditions or based on
reports provided to the Commission pursuant to paragraph (2) or other
available information, the Commission reasonably concludes that the
Commission has concerns regarding the financial or operational condition
of any registered futures commission merchant, the Commission may
require the futures commission merchant to make reports concerning the
futures and other financial activities of any of such person's
affiliated persons, other than a natural person, whose business
activities are reasonably likely to have a material impact on the
financial or operational condition of the futures commission merchant.
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\2\ So in original. The comma probably should not appear.
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(B) The Commission, in requiring reports pursuant to this paragraph,
shall specify the information required, the period for which it is
required, the time and date on which the information must be furnished,
and whether the information is to be furnished directly to the
Commission or to a contract market or derivatives transaction execution
facility or other self-regulatory organization with primary
responsibility for examining the registered futures commission
merchant's financial and operational condition.
(4)(A) in \3\ developing and implementing reporting requirements
pursuant to paragraph (2) with respect to affiliated persons subject to
examination by or reporting requirements of a Federal banking agency,
the Commission shall consult with and consider the views of each such
Federal banking agency. If a Federal banking agency comments in writing
on a proposed rule of the Commission under this subsection that has been
published for comment, the Commission shall respond in writing to the
written comment before adopting the proposed rule. The Commission shall,
at the request of the Federal banking agency, publish the comment and
response in the Federal Register at the time of publishing the adopted
rule.
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\3\ So in original. Probably should be capitalized.
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(B)(i) Except as provided in clause (ii), a registered futures
commission merchant shall be considered to have compiled \4\ with a
recordkeeping or reporting requirement adopted pursuant to paragraph (2)
concerning an affiliated person that is subject to examination by, or
reporting requirements of, a Federal banking agency if the futures
commission merchant utilizes for the recordkeeping or reporting
requirement copies of reports filed by the affiliated person with the
Federal banking agency pursuant to section 161 of title 12, section 9 of
the Federal Reserve Act (12 U.S.C. 321 et seq.), section 1817(a) of
title 12, section 1467a(b) of title 12, or section 1844 of title 12.
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\4\ So in original. Probably should be ``complied''.
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(ii) The Commission may, by rule adopted pursuant to paragraph (2),
require any futures commission merchant filing the reports with the
Commission to obtain, maintain, or report supplemental information if
the Commission makes an explicit finding that the supplemental
information is necessary to inform the Commission regarding potential
risks to the futures commission merchant. Prior to requiring any such
supplemental information, the Commission shall first request the Federal
banking agency to expand its reporting requirements to include the
information.
(5) Prior to making a request pursuant to paragraph (3) for
information with respect to an affiliated person that is subject to
examination by or reporting requirements of a Federal banking agency,
the Commission shall--
(A) notify the agency of the information required with respect
to the affiliated person; and
(B) consult with the agency to determine whether the information
required is available from the agency and for other purposes, unless
the Commission determines that any delay resulting from the
consultation would be inconsistent with ensuring the financial and
operational condition of the futures commission merchant or the
stability or integrity of the futures markets.
(6) Nothing in this subsection shall be construed to permit the
Commission to require any futures commission merchant to obtain,
maintain, or furnish any examination report of any Federal banking
agency or any supervisory recommendations or analysis contained in the
report.
(7) No information provided to or obtained by the Commission from
any Federal banking agency pursuant to a request under paragraph (5)
regarding any affiliated person that is subject to examination by or
reporting requirements of a Federal banking agency may be disclosed to
any other person (other than as provided in section 12 of this title or
section 12a(6) of this title), without the prior written approval of the
Federal banking agency.
(8) The Commission shall notify a Federal banking agency of any
concerns of the Commission regarding significant financial or
operational risks resulting from the activities of any futures
commission merchant to any affiliated person thereof that is subject to
examination by or reporting requirements of the Federal banking agency.
(9) The Commission, by rule, regulation, or order, may exempt any
person or class of persons under such terms and conditions and for such
periods as the Commission shall provide in the rule, regulation, or
order, from this subsection and the rules and regulations issued under
this subsection. In granting the exemption, the Commission shall
consider, among other factors--
(A) whether information of the type required under this
subsection is available from a supervisory agency (as defined in
section 3401(7) of title 12), a State insurance commission or
similar State agency, the Securities and Exchange Commission, or a
similar foreign regulator;
(B) the primary business of any affiliated person;
(C) the nature and extent of domestic or foreign regulation of
the affiliated person's activities;
(D) the nature and extent of the registered futures commission
merchant's commodity futures and options activities; and
(E) with respect to the registered futures commission merchant
and its affiliated persons, on a consolidated basis, the amount and
proportion of assets devoted to, and revenues derived from
activities in the United States futures markets.
(10) Information required to be provided pursuant to this subsection
shall be subject to section 12 of this title. Except as specifically
provided in section 12 of this title and notwithstanding any other
provision of law, the Commission shall not be compelled to disclose any
information required to be reported under this subsection, or any
information supplied to the Commission by any domestic or foreign
regulatory agency that relates to the financial or operational condition
of any affiliated person of a registered futures commission merchant.
(11) Nothing in paragraphs (1) through (10) shall be construed to
supersede or to limit in any way the authority or powers of the
Commission pursuant to any other provision of this chapter or
regulations issued under this chapter.
(Sept. 21, 1922, ch. 369, Sec. 4f, as added June 15, 1936, ch. 545,
Sec. 5, 49 Stat. 1495; amended Pub. L. 90-258, Sec. 7, Feb. 19, 1968, 82
Stat. 28; Pub. L. 93-463, title I, Sec. 103(a), Oct. 23, 1974, 88 Stat.
1392; Pub. L. 95-405, Sec. 5, Sept. 30, 1978, 92 Stat. 869; Pub. L. 97-
444, title II, Sec. 208, Jan. 11, 1983, 96 Stat. 2302; Pub. L. 102-546,
title II, Secs. 207(b)(1), 229, Oct. 28, 1992, 106 Stat. 3604, 3619;
Pub. L. 106-554, Sec. 1(a)(5) [title I, Sec. 123(a)(6), title II,
Sec. 252(b), (c)], Dec. 21, 2000, 114 Stat. 2763, 2763A-407, 2763A-447.)
References in Text
Section 6p of this title, referred to in subsec. (a)(4)(A)(vi), was
in the original ``Section 4p'' which was translated as meaning the
section 4p of the Commodity Exchange Act which is classified to section
6p of this title, rather than to the section 4p of that Act which is
classified to section 6o-1 of this title, to reflect the probable intent
of Congress.
Section 9 of the Federal Reserve Act, referred to in subsec.
(c)(4)(B)(i), is section 9 of act Dec. 23, 1913, ch. 6, 38 Stat. 251, as
amended, which is classified generally to subchapter VIII (Sec. 321 et
seq.) of chapter 3 of Title 12, Banks and Banking.
Amendments
2000--Subsec. (a). Pub. L. 106-554, Sec. 1(a)(5) [title II,
Sec. 252(b)], designated existing provisions as par. (1) and added pars.
(2) and (3).
Subsec. (a)(4). Pub. L. 106-554, Sec. 1(a)(5) [title II,
Sec. 252(c)], added par. (4).
Subsecs. (b), (c)(3)(B). Pub. L. 106-554, Sec. 1(a)(5) [title I,
Sec. 123(a)(6)], inserted ``or derivatives transaction execution
facility'' after ``contract market'' wherever appearing.
1992--Subsec. (a). Pub. L. 102-546, Secs. 207(b)(1), 229(1),
redesignated par. (1) as subsec. (a) and substituted ``floor broker, or
floor trader'' for ``or floor broker''.
Subsec. (b). Pub. L. 102-546, Sec. 229(1), (2), redesignated par.
(2) as subsec. (b) and substituted ``this subsection'' for ``this
paragraph (2)''.
Subsec. (c). Pub. L. 102-546, Sec. 229(3), added subsec. (c).
1983--Par. (1). Pub. L. 97-444, Sec. 208(1), made grammatical
changes, made registration provisions applicable to introducing brokers,
and substituted ``revoked pursuant to the provisions of this chapter''
for ``revoked after notice and hearing as prescribed in this chapter''.
Par. (2). Pub. L. 97-444, Sec. 208(2), made financial requirements
applicable to introducing brokers.
1978--Par. (1). Pub. L. 95-405 substituted ``Each registration shall
expire on December 31 of the year for which issued or at such other
time, not less than one year from the date of issuance, as the
Commission may by rule, regulation, or order prescribe'' for ``All
registrations shall expire on the 31st day of December of the year for
which issued''.
1974--Pub. L. 93-463 substituted ``Commission'' for ``Secretary of
Agriculture''.
1968--Par. (1). Pub. L. 90-258, Sec. 7(a), substituted ``this
chapter'' for ``section 6g of this title''.
Par. (2). Pub. L. 90-258, Sec. 7(b), substituted provisions that
prescribed financial requirements for registration as futures commission
merchant be met and continued at all times and that such requirements
will be considered met by membership in a contract market and compliance
with its minimum financial standards and related reporting requirements
for former provisions for display of futures commission merchants'
registration certificates.
Effective Date of 1992 Amendment
Amendment by section 207(b)(1) of Pub. L. 102-546 effective 180 days
after Oct. 28, 1992, with Commodity Futures Trading Commission to issue
any regulations necessary to implement such amendment no later than 180
days after Oct. 28, 1992, see section 207(c) of Pub. L. 102-546, set out
as a note under section 6e of this title.
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 of 1974 Amendment
For effective date of amendment by Pub. L. 93-463, 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
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.
Section Referred to in Other Sections
This section is referred to in sections 2, 6d, 6k, 7a-2, 9c, 12,
13a-1, 21 of this title; title 15 sections 78f, 78o, 78o-3.
