[Title 17 CFR 155]
[Code of Federal Regulations (annual edition) - April 1, 2003 Edition]
[Title 17 - COMMODITY AND SECURITIES EXCHANGES]
[Chapter I - COMMODITY FUTURES TRADING COMMISSION]
[Part 155 - TRADING STANDARDS]
[From the U.S. Government Printing Office]
17COMMODITY AND SECURITIES EXCHANGES12003-04-012003-04-01falseTRADING STANDARDS155PART 155COMMODITY AND SECURITIES EXCHANGESCOMMODITY FUTURES TRADING COMMISSION
PART 155--TRADING STANDARDS--Table of Contents
Sec.
155.1 Definitions.
155.2 Trading standards for floor brokers.
155.3 Trading standards for futures commission merchants.
155.4 Trading standards for introducing brokers.
155.5 [Reserved]
155.6 Trading standards for the transaction of business on registered
derivatives transaction execution facilities.
155.10 Exemptions.
Authority: 7 U.S.C. 6b, 6c, 6g, 6j and 12a, unless otherwise noted.
Sec. 155.1 Definitions.
For purposes of this part, the term affiliated person of a futures
commission merchant or of an introducing broker means any general
partner, officer, director, owner of more than ten percent of the equity
interest, associated person or employee of the futures commission
merchant or of the introducing broker, and any relative or spouse of any
of the foregoing persons, or any relative of such spouse, who shares the
same home as any of the foregoing persons.
(Approved by the Office of Management and Budget under control numbers
3038-0007 and 3038-0022)
[46 FR 63036, Dec. 30, 1981, and 48 FR 35304, Aug. 3, 1983]
Sec. 155.2 Trading standards for floor brokers.
Each contract market shall adopt and submit to the Commission for
approval pursuant to section 5a(a)(12)(A) of the Act and Sec. 1.41 of
this chapter, a set of rules which shall, at a minimum, with respect to
each member of the contract market acting as a floor broker:
(a) Prohibit such member from purchasing any commodity for future
delivery, purchasing any call option, or selling any put option, for his
own account or for any account in which he has an interest, while
holding an order of another person for the (1) purchase of any future,
(2) purchase of any call option, or (3) sale of any put option, in the
same commodity which is executable at the market price or at the price
at which such purchase or sale can be made for the member's own account
or any account in which he has an interest.
(b) Prohibit such member from selling any commodity for future
delivery, selling any call option, or purchasing any put option, for his
own account or for any account in which he has an interest, while
holding an order of another person for the (1) sale of any future, (2)
sale of any call option, or (3) purchase of any put option, in the same
commodity which is executable at the market price or at the price at
which such sale or purchase can be made for the member's own account or
any account in which he has an interest.
(c) Prohibit such member from executing any transaction for any
account of another person for which buying and/or selling orders can be
placed or originated, or for which transactions can be executed, by such
member without the prior specific consent of the account owner,
regardless of whether the general authorization for such orders
[[Page 548]]
or transactions is pursuant to a written agreement, except that orders
for such an account may be placed with another member for execution.
(d) Prohibit such member from disclosing at any time that he is
holding an order of another person or from divulging any order revealed
to him by reason of his relationship to such other person, except
pursuant to paragraph (c) of this section or at the request of an
authorized representative of the Commission or the contract market.
(e) Prohibit such member from taking, directly or indirectly, the
other side of any order of another person revealed to him by reason of
his relationship to such other person, except with such other person's
prior consent and in conformity with contract market rules approved by
the Commission.
(f) Prohibit such member from making any purchase or sale which has
been directly or indirectly prearranged.
(g) Prohibit such member from allocating trades among accounts
except in accordance with rules of the contract market which have been
approved by the Commission.
(h) Prohibit such member from withholding or withdrawing from the
market any order or part of an order of another person for the
convenience of another member.
(i) Require that every execution of a transaction on the floor by
such member be confirmed promptly with the opposite floor broker or
floor trader; such confirmation shall identify price or premium,
quantity, future or commodity option and respective clearing members. In
the event a contract market cannot require prompt identification of
respective clearing members without seriously disrupting the functions
of its marketplace, the contract market may petition the Commission for
exemption from this requirement. Such petition shall include:
(1) An explanation of why the contract market cannot require the
prompt identification of respective clearing members without seriously
disrupting the functions of its marketplace, and
(2) A proposed contract market rule which will insure that the
opposite sides of every trade executed on the contract market can be
effectively matched and will be accepted by a clearing member for
clearance or will be otherwise sufficiently guaranteed.
The Commission may, in its discretion and upon such terms and conditions
as it deems appropriate, grant such petition for exemption upon finding
that the functions of the contract market may be seriously disrupted by
requiring the prompt identification of respective clearing members and
that the contract market appears to have adequately insured that every
trade executed thereon can be effectively matched and will be accepted
by a clearing member for clearance or will be otherwise sufficiently
guaranteed.
(Approved by the Office of Management and Budget under control numbers
3038-0007 and 3038-0022)
(Secs. 2(a)(1), 4c(a)-(d), 4d, 4f, 4g, 4k, 4m, 4n, 8a, 15 and 17,
Commodity Exchange Act (7 U.S.C. 2, 4, 6c(a)-(d), 6f, 6g, 6k, 6m, 6n,
12a, 19 and 21; 5 U.S.C. 552 and 552b))
[41 FR 56142, Dec. 23, 1976, as amended at 46 FR 54534, Nov. 3, 1981; 46
FR 63036, Dec. 30, 1981; 47 FR 57020, Dec. 22, 1982; 59 FR 5528, Feb. 7,
1994]
Sec. 155.3 Trading standards for futures commission merchants.
(a) Each futures commission merchant shall, at a minimum, establish
and enforce internal rules, procedures and controls to:
(1) Insure, to the extent possible, that each order received from a
customer or from an option customer which is executable at or near the
market price is transmitted to the floor of the appropriate contract
market before any order in any future or in any commodity option in the
same commodity for any proprietary account, any other account in whch an
affiliated person has an interest, or any account for which an
affiliated person may originate orders without the prior specific
consent of the account owner, if the affiliated person has gained
knowledge of the customer's or option customer's order prior to the
transmission to the floor of the appropriate contract market of the
order for a proprietary account, an account in which the affiliated
person has an interest, or an account in which the affiliated person may
originate orders without the prior
[[Page 549]]
specific consent of the account owner; and
(2) Prevent affiliated persons from placing orders, directly or
indirectly, with another futures commission merchant in a manner
designed to circumvent the provisions of paragraph (a)(1) of this
section.
(b) No futures commission merchant or any of its affiliated persons
shall:
(1) Disclose that an order of another person is being held by the
futures commission merchant or any of its affiliated persons, unless
such disclosure is necessary to the effective execution of such order or
is made at the request of an authorized representative of the
Commission, the contract market on which such order is to be executed,
or a futures association registered with the Commission pursuant to
section 17 of the Act; or
(2) Knowingly take, directly or indirectly, the other side of any
order of another person revealed to the futures commission merchant or
any of its affiliated persons by reason of their relationship to such
other person, except with such other person's prior consent and in
conformity with contract market rules approved by or certified to the
Commission.
(c) No futures commission merchant shall knowingly handle the
account of any affiliated person of another futures commission merchant
or of an introducing broker unless the futures commission merchant:
(1) Receives written authorization from a person designated by such
other futures commission merchant or introducing broker with
responsibility for the surveillance over such account pursuant to
paragraph (a)(2) of this section or Sec. 155.4 (a)(2), respectively;
(2) Prepares immediately upon receipt of an order for such account a
written record of such order, including the account identification and
order number, and records thereon, by time-stamp or other timing device,
the date and time, to the nearest minute, the order is received; and
(3) Transmits on a regular basis to such other futures commission
merchant or introducing broker copies of all statements for such account
and of all written records prepared upon the receipt of orders for such
account pursuant to paragraph (c)(2) of this section.
(d) No affiliated person of a futures commission merchant shall have
an account, directly or indirectly, with another futures commission
merchant unless:
(1) Such affiliated person receives written authorization to
maintain such an account from a person designated by the futures
commission merchant with which such person is affiliated with
responsibility for the surveillance over such account pursuant to
paragraph (a)(2) of this section; and
(2) Copies of all statements for such account and of all written
records prepared by such other futures commission merchant upon receipt
of orders for such account pursuant to paragraph (c)(2) of this section
are transmitted on a regular basis to the future commission merchant
with which such person is affiliated.
(Approved by the Office of Management and Budget under control numbers
3038-0007 and 3038-0022)
(Secs. 2(a)(1), 4c(a)-(d), 4d, 4f, 4g, 4k, 4m, 4n, 8a, 15 and 17,
Commodity Exchange Act (7 U.S.C. 2, 4, 6c(a)-(d), 6f, 6g, 6k, 6m, 6n,
12a, 19 and 21; 5 U.S.C. 552 and 552b))
[41 FR 56142, Dec. 23, 1976, as amended at 44 FR 71821, Dec. 12, 1979;
46 FR 54535, Nov. 3, 1981; 46 FR 63036, Dec. 30, 1981; 47 FR 57020, Dec.
22, 1982; 48 FR 35304, Aug. 3, 1983; 66 FR 53523, Oct. 23, 2001]
Sec. 155.4 Trading standards for introducing brokers.
(a) Each introducing broker shall, at a minimum, establish and
enforce internal rules, procedures and controls to:
(1) Insure, to the extent possible, that each order received from a
customer or from an option customer which is executable at or near the
market price is transmitted to the futures commission merchant carrying
the account of the customer or option customer before any order in any
future or in any commodity option in the same commodity for any
proprietary account, any other account in which an affiliated person has
an interest, or any account for which an affiliated person may originate
orders without the prior specific consent of the account owner, if the
affiliated person has gained
[[Page 550]]
knowledge of the customer's or option customer's order prior to the
transmission to the floor of the appropriate contract market of the
order for a proprietary account, an account in which the affiliated
person has an interest, or an account in which the affiliated person may
originate orders without the prior specific consent of the account
owner; and
(2) Prevent affiliated persons from placing orders, directly or
indirectly, with any futures commission merchant in a manner designed to
circumvent the provisions of paragraph (a)(1) of this section.
(b) No introducing broker or any of its affiliated persons shall:
(1) Disclose that an order of another person is being held by the
introducing broker or any of its affiliated persons, unless such
disclosure is necessary to the effective execution of such order or is
made at the request of an authorized representative of the Commission,
the contract market on which such order is to be executed, or a futures
association registered with the Commission pursuant to section 17 of the
Act; or
(2) Knowingly take, directly or indirectly, the other side of any
order of another person revealed to the introducing broker or any of its
affiliated persons by reason of their relationship to such other person,
except with such other person's prior consent and in conformity with
contract market rules approved by or certified to the Commission.
(c) No affiliated person of an introducing broker shall have an
account, directly or indirectly, with any futures commission merchant
unless:
(1) Such affiliated person receives written authorization to
maintain such an account from a person designated by the introducing
broker with which such person is affiliated with responsibility for the
surveillance over such account pursuant to paragraph (a)(2) of this
section; and
(2) Copies of all statements for such account and of all written
records prepared by such futures commission merchant upon receipt of
orders for such account pursuant to Sec. 155.3(c)(2) are transmitted on
a regular basis to the introducing broker with which such person is
affiliated.
[48 FR 35304, Aug. 3, 1983, as amended at 66 FR 53523, Oct. 23, 2001]
Sec. 155.5 [Reserved]
Sec. 155.6 Trading standards for the transaction of business on registered derivatives transaction execution facilities.
(a) A futures commission merchant, or affiliated person thereof,
transacting business on behalf of a customer who does not qualify as an
``institutional customer'' as defined in Sec. 1.3(g) of this chapter on
a registered derivatives transaction execution facility shall comply
with the provisions of Sec. 155.3.
(b) No futures commission merchant, introducing broker or affiliated
person thereof shall misuse knowledge of any institutional customer's
order for execution on a registered derivatives transaction execution
facility.
[66 FR 53523, Oct. 23, 2001]
Sec. 155.10 Exemptions.
Except as otherwise provided in this part, the Commission may, in
its discretion and upon such terms and conditions as it deems
appropriate, exempt any contract market or other person from any of the
provisions of this part.
(Approved by the Office of Management and Budget under control numbers
3038-0007 and 3038-0022)
[41 FR 56142, Dec. 23, 1976, as amended at 46 FR 63036, Dec. 30, 1981]