Chapter 1, Section 6c, Subsection (a) · 7 U.S.C. Chapter 1

Contents

(a)

(1)It shall be unlawful for any person to offer to enter into, enter into, or confirm the execution of a transaction described in paragraph (2) involving the purchase or sale of any commodity for future delivery (or any option on such a transaction or option on a commodity) or swap if the transaction is used or may be used to—

(A)hedge any transaction in interstate commerce in the commodity or the product or byproduct of the commodity;

(B)determine the price basis of any such transaction in interstate commerce in the commodity; or

(C)deliver any such commodity sold, shipped, or received in interstate commerce for the execution of the transaction.

(2)A transaction referred to in paragraph (1) is a transaction that—

(A)

(i)is, of the character of, or is commonly known to the trade as, a “wash sale” or “accommodation trade”; or

(ii)is a fictitious sale; or

(B)is used to cause any price to be reported, registered, or recorded that is not a true and bona fide price.

(3)It shall be unlawful for any employee or agent of any department or agency of the Federal Government or any Member of Congress or employee of Congress (as such terms are defined under section 2 of the STOCK Act) or any judicial officer or judicial employee (as such terms are defined, respectively, under section 2 of the STOCK Act) who, by virtue of the employment or position of the Member, officer, employee or agent, acquires information that may affect or tend to affect the price of any commodity in interstate commerce, or for future delivery, or any swap, and which information has not been disseminated by the department or agency of the Federal Government holding or creating the information or by Congress or by the judiciary in a manner which makes it generally available to the trading public, or disclosed in a criminal, civil, or administrative hearing, or in a congressional, administrative, or Government Accountability Office report, hearing, audit, or investigation, to use the information in his personal capacity and for personal gain to enter into, or offer to enter into—

(A)a contract of sale of a commodity for future delivery (or option on such a contract);

(B)an option (other than an option executed or traded on a national securities exchange registered pursuant to section 78f(a) of title 15); or

(C)a swap.

(4)

(A)It shall be unlawful for any employee or agent of any department or agency of the Federal Government or any Member of Congress or employee of Congress or any judicial officer or judicial employee who, by virtue of the employment or position of the Member, officer, employee or agent, acquires information that may affect or tend to affect the price of any commodity in interstate commerce, or for future delivery, or any swap, and which information has not been disseminated by the department or agency of the Federal Government holding or creating the information or by Congress or by the judiciary in a manner which makes it generally available to the trading public, or disclosed in a criminal, civil, or administrative hearing, or in a congressional, administrative, or Government Accountability Office report, hearing, audit, or investigation, to impart the information in his personal capacity and for personal gain with intent to assist another person, directly or indirectly, to use the information to enter into, or offer to enter into—

(i)a contract of sale of a commodity for future delivery (or option on such a contract);

(ii)an option (other than an option executed or traded on a national securities exchange registered pursuant to section 78f(a) of title 15); or

(iii)a swap.

(B)It shall be unlawful for any person who receives information imparted by any employee or agent of any department or agency of the Federal Government or any Member of Congress or employee of Congress or any judicial officer or judicial employee as described in subparagraph (A) to knowingly use such information to enter into, or offer to enter into—

(i)a contract of sale of a commodity for future delivery (or option on such a contract);

(ii)an option (other than an option executed or traded on a national securities exchange registered pursuant to section 78f(a) of title 15); or

(iii)a swap.

(C)It shall be unlawful for any person to steal, convert, or misappropriate, by any means whatsoever, information held or created by any department or agency of the Federal Government or by Congress or by the judiciary that may affect or tend to affect the price of any commodity in interstate commerce, or for future delivery, or any swap, where such person knows, or acts in reckless disregard of the fact, that such information has not been disseminated by the department or agency of the Federal Government holding or creating the information or by Congress or by the judiciary in a manner which makes it generally available to the trading public, or disclosed in a criminal, civil, or administrative hearing, or in a congressional, administrative, or Government Accountability Office report, hearing, audit, or investigation, and to use such information, or to impart such information with the intent to assist another person, directly or indirectly, to use such information to enter into, or offer to enter into—

(i)a contract of sale of a commodity for future delivery (or option on such a contract);

(ii)an option (other than an option executed or traded on a national securities exchange registered pursuant to section 78f(a) of title 15); or

(iii)a swap, provided, however, that nothing in this subparagraph shall preclude a person that has provided information concerning, or generated by, the person, its operations or activities, to any employee or agent of any department or agency of the Federal Government, to Congress, any Member of Congress, any employee of Congress, any judicial officer, or any judicial employee, voluntarily or as required by law, from using such information to enter into, or offer to enter into, a contract of sale, option, or swap described in clauses 1 (i), (ii), or (iii).

(5)It shall be unlawful for any person to engage in any trading, practice, or conduct on or subject to the rules of a registered entity that—

(A)violates bids or offers;

(B)demonstrates intentional or reckless disregard for the orderly execution of transactions during the closing period; or

(C)is, is of the character of, or is commonly known to the trade as, “spoofing” (bidding or offering with the intent to cancel the bid or offer before execution).

(6)The Commission may make and promulgate such rules and regulations as, in the judgment of the Commission, are reasonably necessary to prohibit the trading practices described in paragraph (5) and any other trading practice that is disruptive of fair and equitable trading.

(7)It shall be unlawful for any person to enter into a swap knowing, or acting in reckless disregard of the fact, that its counterparty will use the swap as part of a device, scheme, or artifice to defraud any third party.

United States Government work; public domain under 17 U.S.C. § 105.

Defined terms · 67

Show every defined 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.
alternative trading system
means an organization, association, or group of persons that—
associated person of a security-based swap dealer or major security-based swap participant
has the meaning given the term in section 3(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)).
associated person of a swap dealer or major swap participant
means a person who is associated with a swap dealer or major swap participant as a partner, officer, employee, or agent (or any person occupying a similar status or performing similar functions), in any capacity that involves—
bank
means—
Board
means the Board of Governors of the Federal Reserve System.
board of trade
means any organized exchange or other trading facility.
cleared swap
means any swap that is, directly or indirectly, submitted to and cleared by a derivatives clearing organization registered with the Commission.
Commission
means the Commodity Futures Trading Commission established under section 2(a)(2) of this title.
commodity
means wheat, cotton, rice, corn, oats, barley, rye, flaxseed, grain sorghums, mill feeds, butter, eggs, Solanum tuberosum (Irish potatoes), wool, wool tops, fats and oils (including lard, tallow, cottonseed oil, peanut oil, soybean oil, and all other fats and oils), cottonseed meal, cottonseed, peanuts, soybeans, soybean meal, livestock, livestock products, and frozen concentrated orange juice, and all other goods and articles, except onions (as provided by section 13–1 of this title) and motion picture box office receipts (or any index, measure, value, or data related to such receipts), and all services, rights, and interests (except motion picture box office receipts, or any index, measure, value or data related to such receipts) in which contracts for future delivery are presently or in the future dealt in.
commodity pool
means any investment trust, syndicate, or similar form of enterprise operated for the purpose of trading in commodity interests, including any—
commodity pool operator
means any person—
commodity trading advisor
means any person who—
compliance date
means the later of—
contract of sale
includes sales, agreements of sale, and agreements to sell.
cooperative association of producers
means any cooperative association, corporate, or otherwise, not less than 75 percent in good faith owned or controlled, directly or indirectly, by producers of agricultural products and otherwise complying with sections 291 and 292 of this title, including any organization acting for a group of such associations and owned or controlled by such associations, except that business done for or with the United States, or any agency thereof, shall not be considered either member or nonmember business in determining the compliance of any such association with this chapter.
cotton futures contract
means any contract of sale of cotton for future delivery made at, on, or in any exchange, board of trade, or similar institution or place of business which has been designated a “contract market” by the Commodity Futures Trading Commission pursuant to the Commodity Exchange Act [7 U.S.C. 1 et seq.] and the term “contract of sale” as so used shall be held to include sales, agreements of sale, and agreements to sell, except that—
covered judicial or administrative action
means any judicial or administrative action brought by the Commission under this chapter that results in monetary sanctions exceeding $1,000,000.
derivatives clearing organization
means a clearinghouse, clearing association, clearing corporation, or similar entity, facility, system, or organization that, with respect to an agreement, contract, or transaction—
direct access
refers to an explicit grant of authority by a foreign board of trade to an identified member or other participant located in the United States to enter trades directly into the trade matching system of the foreign board of trade.
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—
electronic trading facility
means a trading facility that—
eligible commercial entity
means, with respect to an agreement, contract or transaction in a commodity—
eligible contract participant
means—
excluded commodity
means—
exempt commodity
means a commodity that is not an excluded commodity or an agricultural commodity.
Federal regulatory agency
means—
financial entity
means—
financial institution
means—
floor broker
means any person—
floor trader
means any person—
foreign exchange forward
means a transaction that solely involves the exchange of 2 different currencies on a specific future date at a fixed rate agreed upon on the inception of the contract covering the exchange.
foreign exchange swap
means a transaction that solely involves—
foreign futures authority
means any foreign government, or any department, agency, governmental body, or regulatory organization empowered by a foreign government to administer or enforce a law, rule, or regulation as it relates to a futures or options matter, or any department or agency of a political subdivision of a foreign government empowered to administer or enforce a law, rule, or regulation as it relates to a futures or options matter.
Fund
means the Commodity Futures Trading Commission Customer Protection Fund established under subsection (g).
futures commission merchant
means an individual, association, partnership, corporation, or trust—
hybrid instrument
means a security having one or more payments indexed to the value, level, or rate of, or providing for the delivery of, one or more commodities.
interstate commerce
means commerce—
introducing broker
means any person (except an individual who elects to be and is registered as an associated person of a futures commission merchant)—
major security-based swap participant
has the meaning given the term in section 3(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)).
major swap participant
means any person who is not a swap dealer, and—
member
means, with respect to a registered entity or derivatives transaction execution facility, an individual, association, partnership, corporation, or trust— A participant in an alternative trading system that is designated as a contract market pursuant to section 7b–1 of this title is deemed a member of the contract market for purposes of transactions in security futures products through the contract market.
narrow-based security index
means an index—
option
means an agreement, contract, or transaction that is of the character of, or is commonly known to the trade as, an “option”, “privilege”, “indemnity”, “bid”, “offer”, “put”, “call”, “advance guaranty”, or “decline guaranty”.
organized exchange
means a trading facility that—
original information
means information that—
person
includes an individual, trust, estate, partnership, association, company, or corporation.
prudential regulator
means—
qualified investor
means eligible contract participant (as defined in section 1a of this title, as in effect on December 21, 2000).
real-time public reporting
means to report data relating to a swap transaction, including price and volume, as soon as technologically practicable after the time at which the swap transaction has been executed.
registered entity
means—
Secretary
means the Secretary of the Treasury.
security
means a security as defined in section 2(a)(1) of the Securities Act of 1933 (15 U.S.C. 77b(a)(1)) or section 3(a)(10) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(10)).
security future
means a contract of sale for future delivery of a single security or of a narrow-based security index, including any interest therein or based on the value thereof, except an exempted security under section 3(a)(12) of the Securities Exchange Act of 1934 [15 U.S.C. 78c(a)(12)] as in effect on January 11, 1983 (other than any municipal security as defined in section 3(a)(29) of the Securities Exchange Act of 1934 [15 U.S.C. 78c(a)(29)] as in effect on January 11, 1983).
security futures product
means a security future or any put, call, straddle, option, or privilege on any security future.
security-based swap
includes any agreement, contract, or transaction that is as described in section 3(a)(68)(A) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(68)(A)) and also is based on the value of 1 or more interest or other rates, currencies, commodities, instruments of indebtedness, indices, quantitative measures, other financial or economic interest or property of any kind (other than a single security or a narrow-based security index), or the occurrence, non-occurrence, or the extent of the occurrence of an event or contingency associated with a potential financial, economic, or commercial consequence (other than an event described in subparagraph (A)(iii)).
security-based swap dealer
has the meaning given the term in section 3(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)).
significant price discovery contract
means an agreement, contract, or transaction subject to section 2(h)(5) of this title.
special entity
means—
standards
means the official cotton standards of the United States established by the Secretary pursuant to the United States Cotton Standards Act, as amended [7 U.S.C. 51 et seq.].
State
includes Territory, the District of Columbia, possession of the United States, and foreign nation.
swap
means any agreement, contract, or transaction—
swap data repository
means any person that collects and maintains information or records with respect to transactions or positions in, or the terms and conditions of, swaps entered into by third parties for the purpose of providing a centralized recordkeeping facility for swaps.
swap dealer
means any person who—
swap execution facility
means a trading system or platform in which multiple participants have the ability to execute or trade swaps by accepting bids and offers made by multiple participants in the facility or system, through any means of interstate commerce, including any trading facility, that—
trading facility
means a person or group of persons that constitutes, maintains, or provides a physical or electronic facility or system in which multiple participants have the ability to execute or trade agreements, contracts, or transactions—
whistleblower
means any individual, or 2 or more individuals acting jointly, who provides information relating to a violation of this chapter to the Commission, in a manner established by rule or regulation by the Commission.