I 
113TH CONGRESS 
1ST SESSION H. R. 2292 
To provide for greater regulation of high frequency trading of commodities 
futures and options and greater protection for derivatives traders and 
trading facilities, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
JUNE 6, 2013 
Mr. MARKEY introduced the following bill; which was referred to the 
Committee on Agriculture 
A BILL 
To provide for greater regulation of high frequency trading 
of commodities futures and options and greater protec-
tion for derivatives traders and trading facilities, and 
for other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Protection from Rogue 
Oil Traders Engaging in Computerized Trading Act’’ or 
the ‘‘PROTECT Act’’. 
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SEC. 2. REQUIREMENTS APPLICABLE TO HIGH FREQUENCY 
TRADERS OF COMMODITY FUTURES AND OP-
TIONS. 
(a) IN GENERAL.—The Commodity Exchange Act (7 
U.S.C. 1 et seq.) is amended by inserting after section 
4t the following: 
‘‘SEC. 4u. REQUIREMENTS APPLICABLE TO HIGH FRE-
QUENCY TRADERS. 
‘‘(a) REGISTRATION.—It shall be unlawful for any 
person to engage in an activity that the Commission has 
defined in regulations as high frequency trading, unless 
the person has registered with the Commission (in such 
form, in such manner, and providing such information as 
the Commission shall prescribe) as a high frequency trad-
er, and the registration has not expired or been suspended 
or revoked. 
‘‘(b) OTHER REQUIREMENTS.—A registered high fre-
quency trader shall— 
‘‘(1) test all computer programs and algorithms 
used by the trader in any high frequency trading ac-
tivity and determine whether the programs and algo-
rithms are functioning properly, in such manner and 
with such frequency as the Commission shall pre-
scribe in regulations; 
‘‘(2) establish and document high frequency 
trading system safeguards reasonably designed to 
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ensure the proper function of all programs and algo-
rithms used by the high frequency trader including 
conditions and parameters relating to the automatic 
termination, pausing, or cancellation of the trader’s 
messaging or trading activity, maximum message 
and trade execution rates and order sizes, intra-day 
risk position limits, and market and trade moni-
toring systems that are appropriate for ensuring 
compliance with the system safeguards, including 
systems designed to monitor market volatility and 
the trader’s risk position on an intra-day basis; 
‘‘(3) shall not simultaneously purchase and sell 
through the same or different accounts the same 
commodity contract, agreement, or transaction, un-
less the simultaneous purchases and sales are of a 
de minimis quantity and are reported to the Com-
mission periodically, in a form and manner to be de-
termined by the Commission; 
‘‘(4) submit to the Commission semiannual re-
ports on the high frequency trading activities of the 
trader during the period covered by the report, in 
such form, in such manner, and containing such in-
formation as the Commission may require, signed by 
the chief executive officer (or equivalent officer) of 
the trader; and 
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‘‘(5) conform with such business conduct stand-
ards as may be prescribed by the Commission by 
rule or regulation that relate to— 
‘‘(A) fraud, manipulation, and other abu-
sive or disruptive practices, and other practices 
that may affect market integrity involving high 
frequency traders (including high frequency 
trades that are offered but not entered into); 
and 
‘‘(B) such other matters as the Commis-
sion may determine are appropriate in the pub-
lic interest or otherwise in furtherance of the 
purposes of this Act, including information nec-
essary to develop a classification scheme and 
public reports relating to high frequency traders 
and trading activity and sub-categories there-
to.’’. 
(b) DEADLINE FOR ISSUANCE OF RULES DEFINING 
HIGH FREQUENCY TRADING.—Within 9 months after the 
date of the enactment of this Act, the Commodity Futures 
Trading Commission shall prescribe final regulations de-
fining the activities that shall be considered to be high 
frequency trading for purposes of section 4u of the Com-
modities Exchange Act. 
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SEC. 3. FINE FOR HIGH FREQUENCY TRADING VIOLATION 
REQUIRED TO BE BASED ON THE DURATION 
OF THE VIOLATION. 
Section 9 of the Commodity Exchange Act (7 U.S.C. 
13) is amended by adding at the end the following: 
‘‘(f) FINE FOR HIGH FREQUENCY TRADING VIOLA-
TION REQUIRED TO BE BASED ON THE DURATION OF 
THE VIOLATION.—The amount of a fine imposed under 
this Act with respect to a violation of a high frequency 
trading regulation shall be determined on the basis of the 
number of seconds, including fractions of seconds, during 
which the violation continued.’’. 
SEC. 4. CIVIL PENALTIES UNDER THE COMMODITY EX-
CHANGE ACT. 
(a) AUTHORITY
OF
THE
COMMODITY
FUTURES 
TRADING COMMISSION TO DEFINE MEANING OF ‘‘EACH 
VIOLATION’’.—Section 9 of the Commodity Exchange Act 
(7 U.S.C. 13), as amended by section 3 of this Act, is 
amended by adding at the end the following: 
‘‘(g) AUTHORITY TO DEFINE SCOPE
OF VIOLA-
TION.—The Commission may define the scope of any vio-
lation for purposes of determining the number of viola-
tions involved in any case arising under this Act.’’. 
(b) ENFORCEMENT POWERS OF THE COMMISSION.— 
Section 6 of such Act is amended— 
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(1) in paragraph (10) of subsection (c) (7 
U.S.C. 9), by striking subparagraph (C) and insert-
ing the following: 
‘‘(C) assess such person— 
‘‘(i) a civil penalty of not more than 
an amount equal to the greater of— 
‘‘(I) $1,000,000, in the case of a 
person who is an individual, for each 
violation; 
‘‘(II) $10,000,000, in the case of 
any person other than an individual, 
for each violation; 
‘‘(III) triple the monetary gain to 
the person and all other persons act-
ing in concert with the person, for 
each such violation; or 
‘‘(IV) triple the total amount of 
losses to persons proximately caused 
by each such violation; or 
‘‘(ii) a civil penalty of triple the max-
imum amount otherwise available under 
clause (i) if the person, within 5 years pre-
ceding the violation, has been— 
‘‘(I) 
found 
in 
a 
proceeding 
brought by the Commission, or by 
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agreement of settlement to which the 
Commission is a party, to have reck-
lessly or willfully violated any provi-
sion of this Act or of the rules, regu-
lations, or orders of the Commission 
thereunder; or 
‘‘(II) convicted of any criminal 
offense that involves a violation of this 
Act or of the rules, regulations, or or-
ders of the Commission thereunder; 
and’’; 
(2) in subsection (d) (7 U.S.C. 13b)— 
(A) by inserting ‘‘(1)’’ after ‘‘(d)’’; 
(B) by striking ‘‘$140,000 or triple the 
monetary gain to such person,’’ and inserting 
‘‘(A) $1,000,000, in the case of a person who 
is an individual, for each violation, (B) 
$10,000,000, in the case of any person other 
than an individual, for each violation, (C) triple 
the monetary gain to the person and all other 
persons acting in concert with the person, for 
each such violation, or (D) triple the total 
amount of losses to persons proximately caused 
by each such violation,’’; and 
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(C) by striking the period and inserting ‘‘; 
and’’; and 
(D) by adding after and below the end the 
following: 
‘‘(2)(A) A person shall be held liable for a civil 
penalty in triple the amount otherwise available for 
a violation under this subsection if the person, with-
in 5 years preceding such violation, has been— 
‘‘(i) found in a proceeding brought by the 
Commission, or by agreement of settlement to 
which the Commission is a party, to have reck-
lessly or willfully violated any provision of this 
Act or the rules, regulations, or orders of the 
Commission thereunder; or 
‘‘(ii) convicted of any criminal offense that 
involves violation of this Act or the rules, regu-
lations, or orders of the Commission there-
under.’’. 
(c) NONENFORCEMENT OF RULES OF GOVERNMENT 
OR OTHER VIOLATIONS.—Section 6b of such Act (7 
U.S.C. 13a) is amended in the 1st sentence— 
(1) by striking ‘‘$500,000 for each such viola-
tion, or, in any case of manipulation or attempted 
manipulation in violation of section 6(c), 6(d), or 
9(a)(2), a civil penalty of not more than $1,000,000 
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for each such violation’’ and inserting ‘‘(A) 
$1,000,000, in the case of a person who is an indi-
vidual, for each violation, (B) $10,000,000, in the 
case of any person other than an individual, for each 
violation, (C) triple the monetary gain to the person 
and all other persons acting in concert with the per-
son, for each such violation, or (D) triple the total 
amount of losses to persons proximately caused by 
each such violation, and such civil penalty shall be 
assessed for each violation on which a failure to en-
force or other violation occurs or has occurred; pro-
vided that a registered entity, director, officer, 
agent, or employee shall be assessed a civil penalty 
of triple the amount otherwise available if the per-
son, within 5 years of such violation, has been found 
in a proceeding brought by the Commission, or by 
agreement of settlement to which the Commission is 
a party, to have recklessly or willfully violated any 
provision of this Act or the rules, regulations, or or-
ders of the Commission thereunder, or convicted of 
any criminal offense that involves a violation of this 
Act or the rules, regulations, or orders of the Com-
mission thereunder’’. 
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