§27d — Title 7 Agriculture | U.S. Code

Summary

The CFTC must not apply the Commodity Exchange Act to a hybrid instrument unless it makes a rule showing three things: the change is needed and proper for the public good, it fits with the Commodity Exchange Act and its goals, and the instrument is not mainly a banking product under the predominance test in section 27c(b). Before starting that rulemaking under sections 27 to 27f, the CFTC must consult with and try to get the agreement of the Board of Governors of the Federal Reserve System about what the instrument is and whether regulation under the Commodity Exchange Act or banking laws is appropriate. The Federal Reserve Board can ask the U.S. Court of Appeals for the District of Columbia Circuit to set aside the CFTC’s rule or decision by filing a written petition within 60 days after the rule is published. The court must move the case quickly. The court clerk sends the petition to the CFTC, which must then file the rule and related papers. When the petition is filed the court has jurisdiction, and it becomes the only court to decide once those materials are filed. The court will decide whether the product is mostly a banking product and whether applying the Commodity Exchange Act is appropriate, without giving special weight to either agency. The Board’s filing automatically pauses the rule until the court’s final decision, including any appeals. Any harmed party may also seek judicial review under section 6(c) of the Commodity Exchange Act.

Title 7, §27d

Agriculture — Source: USLM XML via OLRC

(a)No provision of the Commodity Exchange Act [7 U.S.C. 1 et seq.] shall apply to, and the Commodity Futures Trading Commission shall not regulate, a hybrid instrument, unless the Commission determines, by or under a rule issued in accordance with this section, that—

(1)the action is necessary and appropriate in the public interest;

(2)the action is consistent with the Commodity Exchange Act [7 U.S.C. 1 et seq.] and the purposes of the Commodity Exchange Act; and

(3)the hybrid instrument is not predominantly a banking product under the predominance test set forth in section 27c(b) of this title.

(b)Before commencing a rulemaking or making a determination pursuant to a rule issued under sections 27 to 27f of this title, the Commodity Futures Trading Commission shall consult with and seek the concurrence of the Board of Governors of the Federal Reserve System concerning—

(1)the nature of the hybrid instrument; and

(2)the history, purpose, extent, and appropriateness of the regulation of the hybrid instrument under the Commodity Exchange Act [7 U.S.C. 1 et seq.] and under appropriate banking laws.

(c)(1)The Board of Governors of the Federal Reserve System may obtain review of any rule or determination referred to in subsection (a) in the United States Court of Appeals for the District of Columbia Circuit by filing in the court, not later than 60 days after the date of publication of the rule or determination, a written petition requesting that the rule or determination be set aside. Any proceeding to challenge any such rule or determination shall be expedited by the court.

(2)A copy of a petition described in paragraph (1) shall be transmitted as soon as possible by the Clerk of the court to an officer or employee of the Commodity Futures Trading Commission designated for that purpose. Upon receipt of the petition, the Commission shall file with the court the rule or determination under review and any documents referred to therein, and any other relevant materials prescribed by the court.

(3)On the date of the filing of a petition under paragraph (1), the court shall have jurisdiction, which shall become exclusive on the filing of the materials set forth in paragraph (2), to affirm and enforce or to set aside the rule or determination at issue.

(4)The court shall determine to affirm and enforce or set aside a rule or determination of the Commodity Futures Trading Commission under this section, based on the determination of the court as to whether—

(A)the subject product is predominantly a banking product; and

(B)making the provision or provisions of the Commodity Exchange Act [7 U.S.C. 1 et seq.] at issue applicable to the subject instrument is appropriate in light of the history, purpose, and extent of regulation under such Act, sections 27 to 27f of this title, and under the appropriate banking laws, giving deference neither to the views of the Commodity Futures Trading Commission nor the Board of Governors of the Federal Reserve System.

(5)The filing of a petition by the Board pursuant to paragraph (1) shall operate as a judicial stay, until the date on which the determination of the court is final (including any appeal of the determination).

(6)Any aggrieved party may seek judicial review pursuant to section 6(c) of the Commodity Exchange Act [7 U.S.C. 9] of a determination or rulemaking by the Commodity Futures Trading Commission under this section.

Notes & Related Subsidiaries

Editorial Notes

References in Text

The Commodity Exchange Act, referred to in subsecs. (a), (b)(2), and (c)(4)(B), is act Sept. 21, 1922, ch. 369, 42 Stat. 998, which is classified generally to this chapter. For complete classification of this Act to the Code, see section 1 of this title and Tables. Codification Section was enacted as part of the Legal Certainty for Bank Products Act of 2000, and also as part of the Commodity Futures Modernization Act of 2000, and not as part of the Commodity Exchange Act which comprises this chapter.

§27d Administration of the Predominance Test

Summary

Title 7, §27d

Notes & Related Subsidiaries

Editorial Notes

References in Text

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