§ 6j. — Restrictions on dual trading in security futures products on designated contract markets and registered derivatives transaction execution facilities.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 7USC6j]
TITLE 7--AGRICULTURE
CHAPTER 1--COMMODITY EXCHANGES
Sec. 6j. Restrictions on dual trading in security futures
products on designated contract markets and registered
derivatives transaction execution facilities
(a) Issuance of regulations
The Commission shall issue regulations to prohibit the privilege of
dual trading in security futures products on each contract market and
registered derivatives transaction execution facility. The regulations
issued by the Commission under this section--
(1) shall provide that the prohibition of dual trading
thereunder shall take effect upon issuance of the regulations; and
(2) shall provide exceptions, as the Commission determines
appropriate, to ensure fairness and orderly trading in security
futures product markets, including--
(A) exceptions for spread transactions and the correction of
trading errors;
(B) allowance for a customer to designate in writing not
less than once annually a named floor broker to execute orders
for such customer, notwithstanding the regulations to prohibit
the privilege of dual trading required under this section; and
(C) other measures reasonably designed to accommodate unique
or special characteristics of individual boards of trade or
contract markets, to address emergency or unusual market
conditions, or otherwise to further the public interest
consistent with the promotion of market efficiency, innovation,
and expansion of investment opportunities, the protection of
investors, and with the purposes of this section.
(b) ``Dual trading'' defined
As used in this section, the term ``dual trading'' means the
execution of customer orders by a floor broker during the same trading
session in which the floor broker executes any trade in the same
contract market or registered derivatives transaction execution facility
for--
(1) the account of such floor broker;
(2) an account for which such floor broker has trading
discretion; or
(3) an account controlled by a person with whom such floor
broker has a relationship through membership in a broker
association.
(c) ``Broker association'' defined
As used in this section, the term ``broker association'' shall
include two or more contract market members or registered derivatives
transaction execution facility members with floor trading privileges of
whom at least one is acting as a floor broker, who--
(1) engage in floor brokerage activity on behalf of the same
employer,
(2) have an employer and employee relationship which relates to
floor brokerage activity,
(3) share profits and losses associated with their brokerage or
trading activity, or
(4) regularly share a deck of orders.
(Sept. 21, 1922, ch. 369, Sec. 4j, as added Pub. L. 93-463, title II,
Sec. 203, Oct. 23, 1974, 88 Stat. 1396; amended Pub. L. 94-16, Sec. 2,
Apr. 16, 1975, 89 Stat. 77; Pub. L. 102-546, title I, Secs. 101, 102(a),
Oct. 28, 1992, 106 Stat. 3591, 3594; Pub. L. 106-554, Sec. 1(a)(5)
[title II, Sec. 251(c)], Dec. 21, 2000, 114 Stat. 2763, 2763A-442.)
Amendments
2000--Pub. L. 106-554 amended section generally. Prior to amendment,
section required Commission to issue regulations to prohibit the
privilege of dual trading on contract markets, allowed for certain
exemptions, required Commission to make determinations relating to
trading by floor brokers and futures commission merchants, and
restricted trading among members of broker associations.
1992--Subsec. (a). Pub. L. 102-546, Sec. 101(a)(3), added subsec.
(a).
Subsec. (b). Pub. L. 102-546, Sec. 101(a)(1), (2), redesignated par.
(1) as subsec. (b) and substituted ``If, in addition to the regulations
issued pursuant to subsection (a) of this section, the Commission has
reason to believe that dual trading-related or facilitated abuses are
not being or cannot be effectively addressed by subsection (a) of this
section, the Commission shall'' for ``The Commission shall within nine
months after the effective date of the Commodity Futures Trading
Commission Act of 1974, and subsequently when it determines that changes
are required,''.
Subsec. (c). Pub. L. 102-546, Sec. 101(a)(1), redesignated par. (2)
as subsec. (c).
Subsec. (d). Pub. L. 102-546, Sec. 102(a), added subsec. (d).
1975--Pub. L. 94-16 substituted ``nine months'' for ``six months''
in pars. (1) and (2).
Effective Date of 1992 Amendment
Section 102(b) of Pub. L. 102-546 provided that: ``The amendment
made by subsection (a) [amending this section] shall become effective
two hundred and seventy days after the date of enactment of this Act
[Oct. 28, 1992].''
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.
Section Referred to in Other Sections
This section is referred to in sections 2, 6f, 6k, 7b-1 of this
title; title 15 section 78f.
