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7 U.S.C. § 6d — Dealing by unregistered futures commission merchants or introducing brokers prohibited; duties in handling customer receipts; conflict-of-interest systems and procedures; Chief Compliance Officer; rules to avoid duplicative regulations; swap requirements; portfolio margining accounts
Federal law — U.S. Code and appendices · legal_authorities
**(a) Futures commission merchant registration requirements; duties of merchants in handling customer receipts** It shall be unlawful for any person to be a futures commission merchant unless—
(1) such person shall have registered, under this chapter, with the Commission as such futures commission merchant and such registration shall not have expired nor been suspended nor revoked; and
(2) such person shall, whether a member or nonmember of a contract market or derivatives transaction execution facility, treat and deal with all money, securities, and property received by such person to margin, guarantee, or secure the trades or contracts of any customer of such person, or accruing to such customer as the result of such trades or contracts, as belonging to such customer. Such money, securities, and property shall be separately accounted for and shall not be commingled with the funds of such commission merchant or be used to margin or guarantee the trades or contracts, or to secure or extend the credit, of any customer or person other than the one for whom the same are held: Provided, however, That such money, securities, and property of the customers of such futures commission merchant may, for convenience, be commingled and deposited in the same account or accounts with any bank or trust company or with the clearing house organization of such contract market or derivatives transaction execution facility, and that such share thereof as in the normal course of business shall be necessary to margin, guarantee, secure, transfer, adjust, or settle the contracts or trades of such customers, or resulting market positions, with the clearinghouse organization of such contract market or derivatives transaction execution facility or with any member of such contract market or der
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Source location: Title 7, Chapter 1, § 6d; chapter-001-commodity-exchanges.md
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**(a) Futures commission merchant registration requirements; duties of merchants in handling customer receipts** It shall be unlawful for any person to be a futures commission merchant unless—
(1) such person shall have registered, under this chapter, with the Commission as such futures commission merchant and such registration shall not have expired nor been suspended nor revoked; and
(2) such person shall, whether a member or nonmember of a contract market or derivatives transaction execution facility, treat and deal with all money, securities, and property received by such person to margin, guarantee, or secure the trades or contracts of any customer of such person, or accruing to such customer as the result of such trades or contracts, as belonging to such customer. Such money, securities, and property shall be separately accounted for and shall not be commingled with the funds of such commission merchant or be used to margin or guarantee the trades or contracts, or to secure or extend the credit, of any customer or person other than the one for whom the same are held: Provided, however, That such money, securities, and property of the customers of such futures commission merchant may, for convenience, be commingled and deposited in the same account or accounts with any bank or trust company or with the clearing house organization of such contract market or derivatives transaction execution facility, and that such share thereof as in the normal course of business shall be necessary to margin, guarantee, secure, transfer, adjust, or settle the contracts or trades of such customers, or resulting market positions, with the clearinghouse organization of such contract market or derivatives transaction execution facility or with any member of such contract market or derivatives transaction execution facility, may be withdrawn and applied to such purposes, including the payment of commissions, brokerage, interest, taxes, storage, and other charges, lawfully accruing in connection with such contracts and trades: Provided further, That in accordance with such terms and conditions as the Commission may prescribe by rule, regulation, or order, such money, securities, and property of the customers of such futures commission merchant may be commingled and deposited as provided in this section with any other money, securities, and property received by such futures commission merchant and required by the Commission to be separately accounted for and treated and dealt with as belonging to the customers of such futures commission merchant: Provided further, That such money may be invested in obligations of the United States, in general obligations of any State or of any political subdivision thereof, and in obligations fully guaranteed as to principal and interest by the United States, such investments to be made in accordance with such rules and regulations and subject to such conditions as the Commission may prescribe.
**(b) Duties of clearing agencies, depositories, and others in handling customer receipts** It shall be unlawful for any person, including but not limited to any clearing agency of a contract market or derivatives transaction execution facility and any depository, that has received any money, securities, or property for deposit in a separate account as provided in paragraph (2) of this section,11 So in original. Probably means subsection (a)(2) of this section. to hold, dispose of, or use any such money, securities, or property as belonging to the depositing futures commission merchant or any person other than the customers of such futures commission merchant.
**(c) Conflicts of interest** The Commission shall require that futures commission merchants and introducing brokers implement conflict-of-interest systems and procedures that—
(1) establish structural and institutional safeguards to ensure that the activities of any person within the firm relating to research or analysis of the price or market for any commodity are separated by appropriate informational partitions within the firm from the review, pressure, or oversight of persons whose involvement in trading or clearing activities might potentially bias the judgment or supervision of the persons; and
(2) address such other issues as the Commission determines to be appropriate.
**(d) Designation of Chief Compliance Officer** Each futures commission merchant shall designate an individual to serve as its Chief Compliance Officer and perform such duties and responsibilities as shall be set forth in regulations to be adopted by the Commission or rules to be adopted by a futures association registered under [section 21 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title7-section21&num=0&edition=prelim).
**(e) Rules to avoid duplicative regulation of dual registrants** Consistent with this chapter, the Commission, in consultation with the Securities and Exchange Commission, shall issue such rules, regulations, or orders as are necessary to avoid duplicative or conflicting regulations applicable to any futures commission merchant registered with the Commission pursuant to [section 6f(a) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title7-section6f/a&num=0&edition=prelim) (except paragraph (2) thereof), that is also registered with the Securities and Exchange Commission pursuant to section 78o(b) of title 15 (except paragraph (11) thereof), involving the application of—
(1) section 78h, section 78o(c)(3), and [section 78q of title 15](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title15-section78q&num=0&edition=prelim) and the rules and regulations thereunder related to the treatment of customer funds, securities, or property, maintenance of books and records, financial reporting or other financial responsibility rules (as defined in [section 78c(a)(40) of title 15](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title15-section78c/a/40&num=0&edition=prelim)), involving security futures products; and
(2) similar provisions of this chapter and the rules and regulations thereunder involving security futures products.
**(f) Swaps**
(1) **Registration requirement** — It shall be unlawful for any person to accept any money, securities, or property (or to extend any credit in lieu of money, securities, or property) from, for, or on behalf of a swaps customer to margin, guarantee, or secure a swap cleared by or through a derivatives clearing organization (including money, securities, or property accruing to the customer as the result of such a swap), unless the person shall have registered under this chapter with the Commission as a futures commission merchant, and the registration shall not have expired nor been suspended nor revoked.
(2) **Cleared swaps**
(A) *Segregation required* — A futures commission merchant shall treat and deal with all money, securities, and property of any swaps customer received to margin, guarantee, or secure a swap cleared by or though a derivatives clearing organization (including money, securities, or property accruing to the swaps customer as the result of such a swap) as belonging to the swaps customer.
(B) *Commingling prohibited* — Money, securities, and property of a swaps customer described in subparagraph (A) shall be separately accounted for and shall not be commingled with the funds of the futures commission merchant or be used to margin, secure, or guarantee any trades or contracts of any swaps customer or person other than the person for whom the same are held.
(3) **Exceptions**
(A) *Use of funds*
(i) *In general* — Notwithstanding paragraph (2), money, securities, and property of swap customers of a futures commission merchant described in paragraph (2) may, for convenience, be commingled and deposited in the same account or accounts with any bank or trust company or with a derivatives clearing organization.
(ii) *Withdrawal* — Notwithstanding paragraph (2), such share of the money, securities, and property described in clause (i) as in the normal course of business shall be necessary to margin, guarantee, secure, transfer, adjust, or settle a cleared swap with a derivatives clearing organization, or with any member of the derivatives clearing organization, may be withdrawn and applied to such purposes, including the payment of commissions, brokerage, interest, taxes, storage, and other charges, lawfully accruing in connection with the cleared swap.
(B) *Commission action* — Notwithstanding paragraph (2), in accordance with such terms and conditions as the Commission may prescribe by rule, regulation, or order, any money, securities, or property of the swaps customers of a futures commission merchant described in paragraph (2) may be commingled and deposited in customer accounts with any other money, securities, or property received by the futures commission merchant and required by the Commission to be separately accounted for and treated and dealt with as belonging to the swaps customer of the futures commission merchant.
(4) **Permitted investments** — Money described in paragraph (2) may be invested in obligations of the United States, in general obligations of any State or of any political subdivision of a State, and in obligations fully guaranteed as to principal and interest by the United States, or in any other investment that the Commission may by rule or regulation prescribe, and such investments shall be made in accordance with such rules and regulations and subject to such conditions as the Commission may prescribe.
(5) **Commodity contract** — A swap cleared by or through a derivatives clearing organization shall be considered to be a commodity contract as such term is defined in [section 761 of title 11](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title11-section761&num=0&edition=prelim), with regard to all money, securities, and property of any swaps customer received by a futures commission merchant or a derivatives clearing organization to margin, guarantee, or secure the swap (including money, securities, or property accruing to the customer as the result of the swap).
(6) **Prohibition** — It shall be unlawful for any person, including any derivatives clearing organization and any depository institution, that has received any money, securities, or property for deposit in a separate account or accounts as provided in paragraph (2) to hold, dispose of, or use any such money, securities, or property as belonging to the depositing futures commission merchant or any person other than the swaps customer of the futures commission merchant.
**(g) Introducing broker registration requirements** It shall be unlawful for any person to be an introducing broker unless such person shall have registered under this chapter with the Commission as an introducing broker and such registration shall not have expired nor been suspended nor revoked.
**(h) Contracts held in portfolio margining accounts** Notwithstanding subsection (a)(2) or the rules and regulations thereunder, and pursuant to an exemption granted by the Commission under [section 6(c) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title7-section6/c&num=0&edition=prelim) or pursuant to a rule or regulation, a futures commission merchant that is registered pursuant to [section 6f(a)(1) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title7-section6f/a/1&num=0&edition=prelim) and also registered as a broker or dealer pursuant to section 78(o)(b)(1) of title 15 may, pursuant to a portfolio margining program approved by the Securities and Exchange Commission pursuant to [section 78s(b) of title 15](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title15-section78s/b&num=0&edition=prelim), hold in a portfolio margining account carried as a securities account subject to section 78(o)(c)(3) of title 15 and the rules and regulations thereunder, a contract for the purchase or sale of a commodity for future delivery or an option on such a contract, and any money, securities or other property received from a customer to margin, guarantee or secure such a contract, or accruing to a customer as the result of such a contract. The Commission shall consult with the Securities and Exchange Commission to adopt rules to ensure that such transactions and accounts are subject to comparable requirements to the extent practical for similar products.
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Federal law — U.S. Code and appendices · legal_authorities
This chapter may be cited as the “Commodity Exchange Act.”
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Federal law — U.S. Code and appendices · legal_authorities
**(a) Registration statement** Any association of persons may be registered with the Commission as a registered futures association pursuant to subsection (b) of this section, under the terms and conditions hereinafter provided in this section, by filing with the Commission for review and approval a registration statement in such form as the Commission may prescribe, setting forth the information, and accompanied by the documents, below specified:
(1) Data as to its organization, membership, and rules of procedure, and such other information as the Commission may by rules and regulations require as necessary or appropriate in the public interest; and
(2) Copies of its constitution, charter, or articles of incorporation or association, with all amendments thereto, and of its bylaws, and of any rules or instruments corresponding to the foregoing, whatever the name, hereinafter in this section collectively referred to as the “rules of the association”.
**(b) Standards for registration; Commission findings** An applicant association shall not be registered as a futures association unless the Commission finds, under standards established by the Commission, that—
(1) such association is in the public interest and that it will be able to comply with the provisions of this section and the rules and regulations thereunder and to carry out the purposes of this section;
(2) the rules of the association provide that any person registered under this chapter, registered entity, or any other person designated pursuant to the rules of the Commission as eligible for membership may become a member of such association, except such as are excluded pursuant to paragraph (3) or (4) of this subsection, or a rule of the association permitted under this subparagraph. The rules of the assoc
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Federal law — U.S. Code and appendices · legal_authorities
As used in this chapter:
(1) **Alternative trading system** — The term “alternative trading system” means an organization, association, or group of persons that—
(A) is registered as a broker or dealer pursuant to section 15(b) of the Securities Exchange Act of 1934 [[15 U.S.C. 78](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title15-section78&num=0&edition=prelim)o(b)] (except paragraph (11) thereof);
(B) performs the functions commonly performed by an exchange (as defined in section 3(a)(1) of the Securities Exchange Act of 1934 [[15 U.S.C. 78c(a)(1)](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title15-section78c/a/1&num=0&edition=prelim)]);
(C) does not—
(i) set rules governing the conduct of subscribers other than the conduct of such subscribers’ trading on the alternative trading system; or
(ii) discipline subscribers other than by exclusion from trading; and
(D) is exempt from the definition of the term “exchange” under such section 3(a)(1) [[15 U.S.C. 78c(a)(1)](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title15-section78c/a/1&num=0&edition=prelim)] by rule or regulation of the Securities and Exchange Commission on terms that require compliance with regulations of its trading functions.
(2) **Appropriate Federal banking agency** — The term “appropriate Federal banking agency”—
(A) has the meaning given the term in [section 1813 of title 12](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section1813&num=0&edition=prelim);
(B) means the Board in the case of a noninsured State bank; and
(C) is the Farm Credit Administration for farm credit system institutions.
(3) **Associated person of a security-based swap dealer or major security-based swap participant** — T
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Federal law — U.S. Code and appendices · legal_authorities
**(a) Jurisdiction of Commission; Commodity Futures Trading Commission**
(1) **Jurisdiction of Commission**
(A) *In general* — The Commission shall have exclusive jurisdiction, except to the extent otherwise provided in the Wall Street Transparency and Accountability Act of 2010 (including an amendment made by that Act) and subparagraphs (C), (D), and (I) of this paragraph and subsections (c) and (f), with respect to accounts, agreements (including any transaction which 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”), and transactions involving swaps or contracts of sale of a commodity for future delivery (including significant price discovery contracts), traded or executed on a contract market designated pursuant to [section 7 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title7-section7&num=0&edition=prelim) or a swap execution facility pursuant to [section 7b–3 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title7-section7b-3&num=0&edition=prelim) or any other board of trade, exchange, or market, and transactions subject to regulation by the Commission pursuant to [section 23 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title7-section23&num=0&edition=prelim). Except as hereinabove provided, nothing contained in this section shall (I) supersede or limit the jurisdiction at any time conferred on the Securities and Exchange Commission or other regulatory authorities under the laws of the United States or of any State, or (II) restrict the Securities and Exchange Commission and such other authorities from carrying out their duties and responsibilities in
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Federal law — U.S. Code and appendices · legal_authorities
**(a) Rules and regulations**
(1) Every national securities exchange, member thereof, broker or dealer who transacts a business in securities through the medium of any such member, registered securities association, registered broker or dealer, registered municipal securities dealer municipal advisor,,11 So in original. registered securities information processor, registered transfer agent, nationally recognized statistical rating organization, and registered clearing agency and the Municipal Securities Rulemaking Board shall make and keep for prescribed periods such records, furnish such copies thereof, and make and disseminate such reports as the Commission, by rule, prescribes as necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of this chapter. Any report that a nationally recognized statistical rating organization is required by Commission rules under this paragraph to make and disseminate to the Commission shall be deemed furnished to the Commission.
(2) Every registered clearing agency shall also make and keep for prescribed periods such records, furnish such copies thereof, and make and disseminate such reports, as the appropriate regulatory agency for such clearing agency, by rule, prescribes as necessary or appropriate for the safeguarding of securities and funds in the custody or control of such clearing agency or for which it is responsible.
(3) Every registered transfer agent shall also make and keep for prescribed periods such records, furnish such copies thereof, and make such reports as the appropriate regulatory agency for such transfer agent, by rule, prescribes as necessary or appropriate in furtherance of the purposes of [section 78q–1 of this title](https://uscode.house.
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Federal law — U.S. Code and appendices · legal_authorities
In this subchapter—
(1) “Act” means Commodity Exchange Act;
(2) “clearing organization” means a derivatives clearing organization registered under the Act;
(3) “Commission” means Commodity Futures Trading Commission;
(4) “commodity contract” means—
(A) with respect to a futures commission merchant, contract for the purchase or sale of a commodity for future delivery on, or subject to the rules of, a contract market or board of trade;
(B) with respect to a foreign futures commission merchant, foreign future;
(C) with respect to a leverage transaction merchant, leverage transaction;
(D) with respect to a clearing organization, contract for the purchase or sale of a commodity for future delivery on, or subject to the rules of, a contract market or board of trade that is cleared by such clearing organization, or commodity option traded on, or subject to the rules of, a contract market or board of trade that is cleared by such clearing organization;
(E) with respect to a commodity options dealer, commodity option;
(F)
(i) any other contract, option, agreement, or transaction that is similar to a contract, option, agreement, or transaction referred to in this paragraph; and
(ii) with respect to a futures commission merchant or a clearing organization, any other contract, option, agreement, or transaction, in each case, that is cleared by a clearing organization;
(G) any combination of the agreements or transactions referred to in this paragraph;
(H) any option to enter into an agreement or transaction referred to in this paragraph;
(I) a master agreement that provides for an agreement or transaction referred to in subparagraph (A), (B), (C), (D), (E), (F), (G), or (H), together with all supplements to such master agreement, without reg
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Federal law — U.S. Code and appendices · legal_authorities
**(a) Registration of all persons utilizing exchange facilities to effect transactions; exemptions**
(1) It shall be unlawful for any broker or dealer which is either a person other than a natural person or a natural person not associated with a broker or dealer which is a person other than a natural person (other than such a broker or dealer whose business is exclusively intrastate and who does not make use of any facility of a national securities exchange) to make use of the mails or any means or instrumentality of interstate commerce to effect any transactions in, or to induce or attempt to induce the purchase or sale of, any security (other than an exempted security or commercial paper, bankers’ acceptances, or commercial bills) unless such broker or dealer is registered in accordance with subsection (b) of this section.
(2) The Commission, by rule or order, as it deems consistent with the public interest and the protection of investors, may conditionally or unconditionally exempt from paragraph (1) of this subsection any broker or dealer or class of brokers or dealers specified in such rule or order.
**(b) Manner of registration of brokers and dealers**
(1) A broker or dealer may be registered by filing with the Commission an application for registration in such form and containing such information and documents concerning such broker or dealer and any persons associated with such broker or dealer as the Commission, by rule, may prescribe as necessary or appropriate in the public interest or for the protection of investors. Within forty-five days of the date of the filing of such application (or within such longer period as to which the applicant consents), the Commission shall—
(A) by order grant registration, or
(B) institute proceedings to determine wh
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Federal law — U.S. Code and appendices · legal_authorities
Page 59
TITLE 7—AGRICULTURE
§ 6d
1 So in original. Probably means subsection (a)(2) of this sec-
tion.
Statutory Notes and Related Subsidiaries
EFFECTIVE DATE OF 2010 AMENDMENT
Amendment by Pub. L. 111–203 effective on the later
of 360 days after July 21, 2010, or, to the extent a provi-
sion of subtitle A (§§ 711–754) of title VII of Pub. L.
111–203 requires a rulemaking, not less than 60 days
after publication of the final rule or regulation imple-
menting such provision of subtitle A, see section 754 of
Pub. L. 111–203, set out as a note under section 1a of
this title.
EFFECTIVE DATE OF 1992 AMENDMENT
Pub. L. 102–546, title II, § 203(b), Oct. 28, 1992, 106 Stat.
3600, provided that: ‘‘The Commission shall adopt the
rules required by the amendment made under sub-
section (a) [amending this section] within two hundred
and seventy days after the date of enactment of this
Act [Oct. 28, 1992].’’
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 1978 AMENDMENT
Amendment by Pub. L. 95–405 effective Oct. 1, 1978,
see section 28 of Pub. L. 95–405, 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
For effective date of section, see section 13 of act
June 15, 1936, set out as an Effective Date of 1936
Amendment note under section 1 of this title.
§ 6d. Dealing by unregistered futures commission
merchants or introducing brokers prohib-
ited; duties in handling customer receipts;
conflict-of-interest systems and procedures;
Chief Co
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