CITE

    7 USC Sec. 6                                                01/05/2009

EXPCITE

    TITLE 7 - AGRICULTURE
    CHAPTER 1 - COMMODITY EXCHANGES

HEAD

    Sec. 6. Regulation of futures trading and foreign transactions

STATUTE

    (a) Restriction on futures trading
      Unless exempted by the Commission pursuant to subsection (c) of
    this section, it shall be unlawful for any person to offer to enter
    into, to enter into, to execute, to confirm the execution of, or to
    conduct any office or business anywhere in the United States, its
    territories or possessions, for the purpose of soliciting or
    accepting any order for, or otherwise dealing in, any transaction
    in, or in connection with, a contract for the purchase or sale of a
    commodity for future delivery (other than a contract which is made
    on or subject to the rules of a board of trade, exchange, or market
    located outside the United States, its territories or possessions)
    unless -
        (1) such transaction is conducted on or subject to the rules of
      a board of trade which has been designated or registered by the
      Commission as a contract market or derivatives transaction
      execution facility for such commodity;
        (2) such contract is executed or consummated by or through a
      contract market; and
        (3) such contract is evidenced by a record in writing which
      shows the date, the parties to such contract and their addresses,
      the property covered and its price, and the terms of delivery:
      Provided, That each contract market or derivatives transaction
      execution facility member shall keep such record for a period of
      three years from the date thereof, or for a longer period if the
      Commission shall so direct, which record shall at all times be
      open to the inspection of any representative of the Commission or
      the Department of Justice.
    (b) Regulation of foreign transactions by United States persons
      The Commission may adopt rules and regulations proscribing fraud
    and requiring minimum financial standards, the disclosure of risk,
    the filing of reports, the keeping of books and records, the
    safeguarding of customers' funds, and registration with the
    Commission by any person located in the United States, its
    territories or possessions, who engages in the offer or sale of any
    contract of sale of a commodity for future delivery that is made or
    to be made on or subject to the rules of a board of trade,
    exchange, or market located outside the United States, its
    territories or possessions. Such rules and regulations may impose
    different requirements for such persons depending upon the
    particular foreign board of trade, exchange, or market involved. No
    rule or regulation may be adopted by the Commission under this
    subsection that (1) requires Commission approval of any contract,
    rule, regulation, or action of any foreign board of trade,
    exchange, or market, or clearinghouse for such board of trade,
    exchange, or market, or (2) governs in any way any rule or contract
    term or action of any foreign board of trade, exchange, or market,
    or clearinghouse for such board of trade, exchange, or market.
    (c) Public interest exemptions
      (1) In order to promote responsible economic or financial
    innovation and fair competition, the Commission by rule,
    regulation, or order, after notice and opportunity for hearing, may
    (on its own initiative or on application of any person, including
    any board of trade designated or registered as a contract market or
    derivatives transaction execution facility for transactions for
    future delivery in any commodity under section 7 of this title)
    exempt any agreement, contract, or transaction (or class thereof)
    that is otherwise subject to subsection (a) of this section
    (including any person or class of persons offering, entering into,
    rendering advice or rendering other services with respect to, the
    agreement, contract, or transaction), either unconditionally or on
    stated terms or conditions or for stated periods and either
    retroactively or prospectively, or both, from any of the
    requirements of subsection (a) of this section, or from any other
    provision of this chapter (except subparagraphs (C)(ii) and (D) of
    section 2(a)(1) of this title, except that the Commission and the
    Securities and Exchange Commission may by rule, regulation, or
    order jointly exclude any agreement, contract, or transaction from
    section 2(a)(1)(D) of this title), if the Commission determines
    that the exemption would be consistent with the public interest.
      (2) The Commission shall not grant any exemption under paragraph
    (1) from any of the requirements of subsection (a) of this section
    unless the Commission determines that -
        (A) the requirement should not be applied to the agreement,
      contract, or transaction for which the exemption is sought and
      that the exemption would be consistent with the public interest
      and the purposes of this chapter; and
        (B) the agreement, contract, or transaction -
          (i) will be entered into solely between appropriate persons;
        and
          (ii) will not have a material adverse effect on the ability
        of the Commission or any contract market or derivatives
        transaction execution facility to discharge its regulatory or
        self-regulatory duties under this chapter.
      (3) For purposes of this subsection, the term "appropriate
    person" shall be limited to the following persons or classes
    thereof:
        (A) A bank or trust company (acting in an individual or
      fiduciary capacity).
        (B) A savings association.
        (C) An insurance company.
        (D) An investment company subject to regulation under the
      Investment Company Act of 1940 (15 U.S.C. 80a-1 et seq.).
        (E) A commodity pool formed or operated by a person subject to
      regulation under this chapter.
        (F) A corporation, partnership, proprietorship, organization,
      trust, or other business entity with a net worth exceeding
      $1,000,000 or total assets exceeding $5,000,000, or the
      obligations of which under the agreement, contract or transaction
      are guaranteed or otherwise supported by a letter of credit or
      keepwell, support, or other agreement by any such entity or by an
      entity referred to in subparagraph (A), (B), (C), (H), (I), or
      (K) of this paragraph.
        (G) An employee benefit plan with assets exceeding $1,000,000,
      or whose investment decisions are made by a bank, trust company,
      insurance company, investment adviser registered under the
      Investment Advisers Act of 1940 [15 U.S.C. 80b-1 et seq.], or a
      commodity trading advisor subject to regulation under this
      chapter.
        (H) Any governmental entity (including the United States, any
      state,(!1) or any foreign government) or political subdivision
      thereof, or any multinational or supranational entity or any
      instrumentality, agency, or department of any of the foregoing.
        (I) A broker-dealer subject to regulation under the Securities
      Exchange Act of 1934 (15 U.S.C. 78a et seq.) acting on its own
      behalf or on behalf of another appropriate person.
        (J) A futures commission merchant, floor broker, or floor
      trader subject to regulation under this chapter acting on its own
      behalf or on behalf of another appropriate person.
        (K) Such other persons that the Commission determines to be
      appropriate in light of their financial or other qualifications,
      or the applicability of appropriate regulatory protections.
      (4) During the pendency of an application for an order granting
    an exemption under paragraph (1), the Commission may limit the
    public availability of any information received from the applicant
    if the applicant submits a written request to limit disclosure
    contemporaneous with the application, and the Commission determines
    that -
        (A) the information sought to be restricted constitutes a trade
      secret; or
        (B) public disclosure of the information would result in
      material competitive harm to the applicant.
      (5) The Commission may -
        (A) promptly following October 28, 1992, or upon application by
      any person, exercise the exemptive authority granted under
      paragraph (1) with respect to classes of hybrid instruments that
      are predominantly securities or depository instruments, to the
      extent that such instruments may be regarded as subject to the
      provisions of this chapter; or
        (B) promptly following October 28, 1992, or upon application by
      any person, exercise the exemptive authority granted under
      paragraph (1) effective as of October 23, 1974, with respect to
      classes of swap agreements (as defined in section 101 of title
      11) that are not part of a fungible class of agreements that are
      standardized as to their material economic terms, to the extent
      that such agreements may be regarded as subject to the provisions
      of this chapter.
    Any exemption pursuant to this paragraph shall be subject to such
    terms and conditions as the Commission shall determine to be
    appropriate pursuant to paragraph (1).
    (d) Effect of exemption on investigative authority of Commission
      The granting of an exemption under this section shall not affect
    the authority of the Commission under any other provision of this
    chapter to conduct investigations in order to determine compliance
    with the requirements or conditions of such exemption or to take
    enforcement action for any violation of any provision of this
    chapter or any rule, regulation or order thereunder caused by the
    failure to comply with or satisfy such conditions or requirements.

SOURCE

    (Sept. 21, 1922, ch. 369, Sec. 4, 42 Stat. 999; June 15, 1936, ch.
    545, Secs. 2, 4, 49 Stat. 1491, 1492; Pub. L. 93-463, title I, Sec.
    103(a), (f), Oct. 23, 1974, 88 Stat. 1392; Pub. L. 97-444, title
    II, Sec. 204, Jan. 11, 1983, 96 Stat. 2299; Pub. L. 102-546, title
    V, Sec. 502(a), Oct. 28, 1992, 106 Stat. 3629; Pub. L. 106-554,
    Sec. 1(a)(5) [title I, Sec. 123(a)(3)], Dec. 21, 2000, 114 Stat.
    2763, 2763A-406.)

REFERENCES IN TEXT

      The Investment Company Act of 1940, referred to in subsec.
    (c)(3)(D), is title I of act Aug. 22, 1940, ch. 686, 54 Stat. 789,
    as amended, which is classified generally to subchapter I (Sec. 80a-
    1 et seq.) of chapter 2D of Title 15, Commerce and Trade. For
    complete classification of this Act to the Code, see section 80a-51
    of Title 15 and Tables.
      The Investment Advisers Act of 1940, referred to in subsec.
    (c)(3)(G), is title II of act Aug. 22, 1940, ch. 686, 54 Stat. 847,
    as amended, which is classified generally to subchapter II (Sec.
    80b-1 et seq.) of chapter 2D of Title 15. For complete
    classification of this Act to the Code, see section 80b-20 of Title
    15 and Tables.
      The Securities Exchange Act of 1934, referred to in subsec.
    (c)(3)(I), is act June 6, 1934, ch. 404, 48 Stat. 881, as amended,
    which is classified principally to chapter 2B (Sec. 78a et seq.) of
    Title 15. For complete classification of this Act to the Code, see
    section 78a of Title 15 and Tables.

AMENDMENTS

      2000 - Subsec. (a)(1). Pub. L. 106-554, Sec. 1(a)(5) [title I,
    Sec. 123(a)(3)(A)(i)], substituted "designated or registered by the
    Commission as a contract market or derivatives transaction
    execution facility for" for "designated by the Commission as a
    'contract market' for".
      Subsec. (a)(2). Pub. L. 106-554, Sec. 1(a)(5) [title I, Sec.
    123(a)(3)(A)(ii)], struck out "member of such" after "by or through
    a".
      Subsec. (a)(3). Pub. L. 106-554, Sec. 1(a)(5) [title I, Sec.
    123(a)(3)(A)(iii)], inserted "or derivatives transaction execution
    facility" after "contract market".
      Subsec. (c)(1). Pub. L. 106-554, Sec. 1(a)(5) [title I, Sec.
    123(a)(3)(B)(i)], substituted "designated or registered as a
    contract market or derivatives transaction execution facility" for
    "designated as a contract market" and "subparagraphs (C)(ii) and
    (D) of section 2(a)(1) of this title, except that the Commission
    and the Securities and Exchange Commission may by rule, regulation,
    or order jointly exclude any agreement, contract, or transaction
    from section 2(a)(1)(D) of this title" for "section 2a of this
    title".
      Subsec. (c)(2)(B)(ii). Pub. L. 106-554, Sec. 1(a)(5) [title I,
    Sec. 123(a)(3)(B)(ii)], inserted "or derivatives transaction
    execution facility" after "contract market".
      1992 - Subsec. (a). Pub. L. 102-546, Sec. 502(a)(1), substituted
    "Unless exempted by the Commission pursuant to subsection (c) of
    this section, it shall be unlawful" for "It shall be unlawful".
      Subsecs. (c), (d). Pub. L. 102-546, Sec. 502(a)(2), added
    subsecs. (c) and (d).
      1983 - Pub. L. 97-444 amended section generally, combining into
    subsec. (a) existing provisions of this section together with
    provisions formerly contained in section 6h(1) of this title,
    relating to the conduct of offices or places of business anywhere
    in the United States or its territories that are used for dealing
    in commodities for future delivery unless such dealings are
    executed or consummated by or through a member of a contract
    market, and adding subsec. (b).
      1974 - Pub. L. 93-463 substituted "Commission" for "Secretary of
    Agriculture" and "United States Department of Agriculture".
      1936 - Act June 15, 1936, Sec. 2, substituted "commodity" for
    "grain" wherever appearing.
      Act June 15, 1936, Sec. 4, struck out par. (a) and combined par.
    (b) with first par.
                     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
      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 1936 AMENDMENT
      Amendment by act June 15, 1936, effective 90 days after June 15,
    1936, see section 13 of that act, set out as a note under section 1
    of this title.

FOOTNOTE

    (!1) So in original. Probably should be capitalized.