§6j — Title 7 Agriculture | U.S. Code

Summary

The Commission must make rules that ban "dual trading" by floor brokers in security futures on contract markets and registered derivatives transaction execution facilities. The ban starts as soon as the rules are issued. The rules can allow some exceptions to keep trading fair and orderly. Examples are spread trades and fixing errors, letting a customer in writing at least once each year name a floor broker to handle their orders despite the ban, and other measures for special exchange features, emergencies, or the public interest while protecting investors and promoting efficient, innovative markets. "Dual trading" means a floor broker takes a customer order and, in the same trading session, also trades for their own account, an account they control or manage, or an account controlled by someone in their broker association. A "broker association" is two or more floor-trading members who, for example, work for the same employer, have an employer–employee link for brokerage, share trading profits or losses, or regularly share a deck of orders.

Title 7, §6j

Agriculture — Source: USLM XML via OLRC

(a)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)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)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.

Notes & Related Subsidiaries

Editorial Notes

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, § 101(a)(3), added subsec. (a). Subsec. (b). Pub. L. 102–546, § 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, § 101(a)(1), redesignated par. (2) as subsec. (c). Subsec. (d). Pub. L. 102–546, § 102(a), added subsec. (d). 1975—Pub. L. 94–16 substituted “nine months” for “six months” in pars. (1) and (2).

Statutory Notes and Related Subsidiaries

Effective Date

of 1992 Amendment Pub. L. 102–546, title I, § 102(b), Oct. 28, 1992, 106 Stat. 3594, 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.

§6j Restrictions on Dual Trading in Security Futures Products on Designated Contract Markets and Registered Derivatives Transaction Execution Facilities

Summary

Title 7, §6j

Notes & Related Subsidiaries

Editorial Notes

Amendments

Regulations

Regulations

Effective Date

Statutory Notes and Related Subsidiaries

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Citations & Metadata