An Act to amend the Commodity Exchange Act to strengthen the regulation of futures trading, to bring all agricultural and other commodities traded on exchanges under regulation, and for other purposes.
PL 93-463 (H.R.13113), enacted 10/23/1974

88 
STAT.] 
PUBLIC LAW 93-463-OCT. 23, 1974 
1389 
Public Law 93-463 
AN ACT 
To amend the Commodity Exchange Act to strengthen the regulation of futures 
trading, to bring all agricultural and other commodities traded on exchanges 
under regulation, and for other purposes. 
October 23, 1974 
[H. R. 13113] 
Be it eihacted hy the Senate and House of Representatives 
of the 
United States of ATnerica in Congress assemhled^ That this Act may 
p^j°|^'^°xra^dij, 
be cited as the "Commodity Futures Trading Commission Act of commission A"^ 
1974'-. 
o
f 1974. 
7 u s e 4a note. 
TITLE r—COMMODITY FUTURES TRADING 
COMMISSION 
SEC. 101. (a) Section 2(a) of the Commodity Exchange Act, as 
amended (7 U.S.C. 2,4), is amended— 
(1) By inserting " (1)" after the subsection designation. 
(2) By striking the last sentence of section 2(a) and inserting in 
lieu thereof the following new sentence: "The words 'the Commission' 
shall mean the Commodity Futures Trading Commission established 
under paragraph (2) of this subsection." 
(3) By adding at the end thereof the following new paragraphs: 
"(2) There is hereby established, as an independent agency of the 
United States Government, a Commodity Futures Trading Commis-
sion. The Commission shall be composed of a Chairman and four other 
Commissioners, who shall be appointed by the President, by and with 
the advice and consent of the Senate. In nominating persons for 
appointment, the President shall seek to establish and maintain a bal-
anced Commission, including, but not limited to, persons of demon-
strated knowledge in futures trading or its regulation and persons of 
demonstrated knowledge in the production, merchandising, processing 
or distribution of one or more of the commodities or other goods and 
articles, services, rights and interests covered by this Act. Not more 
than three of the members of the Commission shall be members of the 
same political party. Each Commissioner shall hold office for a term of 
five years and until his successor is appointed and has qualified, 
except that he shall not so continue to serve beyond the expiration of 
the next session of Congress subsequent to the expiration of said 
fixed term of office, and except (A) any Commissioner appointed to 
fill a vacancy occurring prior to the expiration of the term for which 
his predecessor was appointed shall be appointed for the remainder 
of such term, and (B) the terms of office of the Commissioners first 
taking office after the enactment of this paragraph shall expire as 
designated by the President at the time of nomination, one at the 
end of one year, one at the end of two years, one at the end of three 
years, one at the end of four years, and one at the end of five years. 
"(3) A vacancy in the Commission shall not impair the right of the 
remaining Commissioners to exercise all the powers of the Commission. 
"(4) The Commission shall have a General Counsel, who shall be 
appointed by the Commission and serve at the pleasure of the Com-
mission. The General Counsel shall report directly to the Commis-
sion and serve as its legal advisor. The Commission shall appoint 
such other attorneys as may be necessary, in the opinion of the Com-
mission, to assist the General Counsel, represent the Commission in 
all disciplinary proceedings pending before it, represent the Com-
mission in courts of law whenever appropriate, assist the Depart-
ment of Justice in handling litigation concerning the Commission in 
Commodity 
Futures Trading 
Commission. 
Establishment. 
Chairman and 
Commissioners. 
7 u s e 4a. 
General Counsel. 
1390 
PUBLIC LAW 93-463-OCT. 23, 1974 
[88 STAT. 
Executive Di-
rector. 
Exercise of 
functions. 
Conflict of in-
terests. 
Liaison with 
Agriculture De-
partment. 
Transmittal of 
budget requests 
and legislative 
recommendations 
to congressional 
committees. 
courts of law, and perform such other legal duties and functions as 
the Commission may direct, 
"(5) The Commission shall have an Executive Director, who shall 
be appointed by the Commission, by and with the advice and consent 
of the Senate, and serve at the pleasure of the Commission. The Execu-
tive Director shall report directly to the Commission and perform 
such functions and duties as the Commission may prescribe. 
"(6) (A) Except as otherwise provided in this paragraph and in 
paragraphs (4) and (5) of this subsection, the executive and adminis-
trative functions of the Commission, including functions of the Com-
mission with respect to the appointment and supervision of personnel 
employed under the Commission, the distribution of business among 
such personnel and among administrative units of the Commission, 
and the use and expenditure of funds, shall be exercised solely by the 
Chairman. 
"(B) In carrying out any of his functions under the provisions of 
this paragraph, the Chairman shall be governed by general policies 
of the Commission and by such regulatory decisions, findings, and 
determinations as the Commission may by law be authorized to make. 
"(C) The appointment by the Chairman of the heads of major 
administrative units under the Commission shall be subject to the 
approval of the Commission. 
"(D) Personnel employed regularly and full time in the immedi-
ate offices of Commissioners other than the Chairman shall not be 
affected by the provisions of this paragraph. 
"(E) There are hereby reserved to the Commission its functions 
with respect to revising budget estimates and with respect to deter-
mining the distribution of appropriated funds according to major 
programs and purposes. 
"(F) The Chairman may from time to time make such provisions 
as he shall deem appropriate authorizing the performance by any 
officer, employee, or administrative unit under his jurisdiction of any 
functions of the Chairman under this paragraph. 
"(7) No Commissioner or employee of the Commission shall accept 
employment or compensation from any person, exchange, or clearing-
house subject to regulation by the Commission under this Act during 
his term of office, nor shall he participate, directly or indirectly, in 
any contract market operations or transactions of a character subject 
to regulation by the Commission. 
"(8) The Commission shall, in cooperation with the Secretary of 
Agriculture, establish a separate office within the Department of Agri-
culture to be staffed with employees of the Commission for the purpose 
of maintaining a liaison between the Commission and the Department 
of Agriculture. The Secretary shall take such steps as may be necessary 
to enable the Commission to obtain information and utilize such serv-
ices and facilities of the Department of Agriculture as may be neces-
sary in order to maintain effectively such liaison. In addition, the 
Secretary shall appoint a liaison officer, who shall be an employee of the 
Office of the Secretary, for the purpose of maintaining a liaison 
between the Department of Agriculture and the Commission. The 
Commission shall furnish such liaison officer appropriate office space 
within the offices of the Commission and shall allow such liaison 
officer to attend and observe all deliberations and proceedings of the 
Commission. 
"(9) (A) Whenever the Commission submits any budget estimate or 
request to the President or the Office of Management and Budget, it 
shall concurrently transmit copies of that estimate or request to the 
House and Senate Appropriations Committees and the House Com-
88 STAT. ] 
PUBLIC LAW 93-463-OCT. 23, 1974 
1391 
mittee on Agriculture and the Senate Committee on Agriculture and 
Forestry. 
"(B) Whenever the Commission transmits any legislative recom-
mendations, or testimony, or comments on legislation to the President 
or the Office of Management and Budget, it shall concurrently trans-
mit copies thereof to the House Committee on Agriculture and the 
Senate Committee on Agriculture and Forestry. No officer or agency of 
the United States shall have any authority to require the Commission 
to submit its legislative recommendations, or testimony, or comments 
on legislation to any officer or agency of the United States for 
approval, comments, or review, prior to the submission of such recom-
mendations, testimony, or comments to the Congress. In instances in 
which the Commission voluntarily seeks to obtain the comments or 
review of any officer or agency of the United States, the Commission 
shall include a description of such actions in its legislative recom-
mendations, testimony, or comments on legislation which it transmits 
to the Congress. 
"(10) The Commission shall have an official seal, which shall be 
^^^^• 
judicially noticed. 
"(11) The Commission is authorized to pronmlgate such rules and 1
3
^
"
)
^
^
^
^ ''"'^ ''^^"' 
regulations as it deems necessary to govern the operating procedures 
and conduct of the business of the Commission." 
(b) Section 12 of the Commodity Exchange Act, as amended (7 
U.S.C. 16), is amended by striking such section and inserting in lieu 
thereof the following: 
"SEC. 12. (a) The Commission may cooperate with Ruy Department ^i^h°o^he^*i°" 
or agency of the Government, any State, territory, district, or posses- cies. 
^^ ^^^" 
sion, or department, agency, or political subdivision thereof, or any 
person. 
"(b) The Commission shall have the authority to employ such 
investigators, special experts. Administrative Law Judges, clerks, and 
other employees as it may from time to time find necessary for the 
proper performance of its duties and as ma^ be from time to time 
appropriated for by Congress. The Commission may employ experts 
Experts and 
and consultants in accordance with section 3109 of title 5 of the '^°"^" tants. 
United States Code, and compensate such persons at rates not in excess 
of the maximum daily rate prescribed for GS-18 under section 5332 of 
title 5 of the United States Code. The Commission shall also have 
contracts. 
authority to make and enter into contracts with respect to all matters 
which in the judgment of the Commission are necessary and appropri-
ate to effectuate the purposes and provisions of this Act, including, 
but not limited to, the rental of necessary space at the seat of Govern-
ment and elsewhere. 
"(c) All of the expenses of the Commissioners, including all neces- 
Expenses. 
sary expenses for transportation incurred by them while on official 
business of the Commission, shall be allowed and paid on the presenta-
tion of itemized vouchers therefor approved by the Commission. 
"(d) There are hereby authorized to be appropriated to carry out 
Appropriation. 
the provisions of this Act such sums as may be required for the fiscal 
year ending June 30, 1975, for the fiscal year ending June 30, 1976, 
for the fiscal year ending June 30, 1977, and for the fiscal year ending 
June 30, 1978." 
SEC. 102. (a) Section 5314 of title 5 of the United States Code is 
Salaries. 
amended by adding at the end thereof the following new paragraph: 
"(60) Chairman, Commodity Futures Trading Commission." 
chairman. 
(b) Section 5315 of title 5 of the United States Code is amended by 
adding at the end thereof the following new paragraph: 
1392 
PUBLIC LAW 93-463-OCT. 23, 1974 
[88 STAT. 
Commissioners. 
General Coun-
sel. 
Executive Di-
rector. 
7 u s e 6, 6a, 
6c-6g, 6i, 7, 7a, 
8, 9, 11, 12, 12-1, 
12a, 12b, 13b, 16. 
7 u s e 7b, 8, 9, 
12a, 13a-13c. 
7 u s e 7a, 12, 
12-1, 12a. 
7 u s e 6, 6g. 
6i, 7, 7a, 12-1. 
Transfer of 
personnel, prop-
erty, etc. 
7 u s e 4a note. 
Report to Con-
gress. 
7 u s e 12-2. 
Reviews and 
audits. 
7 u s e 12-3. 
"(100) Members, Commodity Futures Trading Commission." 
(c) Section 5316 of title 5 of the United States Code is amended by 
adding at the end thereof the following new paragraphs: 
"(135) General Counsel, Commodity Futures Trading Com-
mission. 
"(136) 
Executive Director, Commodity Futures 
Trading 
Commission." 
SEC. 103. The Commodity Exchange Act, as amended, is amended— 
(a) By striking the word "Secretary" and the words "Secretary of 
Agriculture" wherever such words appear therein (except where the 
words "Secretary of Agriculture" first appear in section 5(a) (7 
U.S.C. 7) or where said words would be stricken by subsection (b), 
(c), or (d^ of this section) and by inserting in lieu thereof the word 
"Commission". 
(b) By striking the words "the Secretary of Agriculture or" wher-
ever they appear in the phrase "the Secretary of Agriculture or the 
Commission". 
(c) By striking the words "the Secretary of Agriculture, who shall 
thereupon notify the other members of" from section 6(a) thereof 
(7U.S.C.8)._ 
(d) By striking "the Secretary of Agriculture (or any person desig-
nated by him)," from section 6(b) thereof (7 U.S.C. 15). 
(e) By striking the word "he", "his", or "He" wherever such word 
is used therein to refer to the Secretary of Agriculture, and by insert-
ing in lieu thereof the word "it", "its", or "It", respectively. 
(f) By striking the words "United States Department of Agricul-
ture" and "Department of Agriculture" wherever they appear therein 
and by inserting in lieu thereof the word "Commission". 
(g) By inserting in section 5(a) (7 U.S.C. 7) after the words "Sec-
retary of Agriculture" where the same first appear therein the words 
"or the Commission". 
SEC. 104. All of the personnel of the Commodity Exchange Author-
ity, property, records, and unexpended balance of appropriations, 
allocations, and other funds employed, used, held, available, or to be 
made available in connection with administration of the Commodity 
Exchange Act shall be transferred to the Commodity Futures Trading 
Commission upon the effective date of this Act. 
SEC. 105. Section 8 of the Commodity Exchange Act, as amended 
(7 U.S.C. 12, 12-1), is amended by adding at the end thereof the 
following new paragraphs: 
"The Commission shall submit to the Congress a written report 
Avithin one hundred and twenty days after the end of each fiscal year 
detailing the operations of the Commission during such fiscal year. 
The Commission shall include in such report such information, data, 
and recommendations for further legislation as it may deem advisable 
with respect to the administration of this Act and its powers and 
functions under this Act. 
"The Comptroller General of the United States shall conduct 
reviews and audits of the Commission and make reports thereon. For 
the purpose of conducting such reviews and audits the Comptroller 
General shall be furnished such information regarding the powers, 
duties, organizations, transactions, operations, and activities of the 
Commission as he may require and he and his duly authorized rep-
resentatives shall, for the purpose of securing such information, have 
access to and the right to examine any books, documents, papers, or 
records of the Commission except that in his reports the Comptroller 
General shall not include data and information which would sepa-
rately disclose the business transactions of any person and trade secrets 
88 STAT. ] 
PUBLIC LAW 93-463-OCT. 23, 1974 
1393 
or names of customers, although such data shall be provided upon 
request by any committee of either House of Congress acting within 
the scope of its jurisdiction." 
SEC. 106. The Commodity Exchange Act, as amended, is amended 
by adding at the end thereof the following new section: 
"SEC. 14. (a) Any person complaining of any violation of any pro-
vision of this Act or any rule, regulation, or order thereunder by any 
person registered under section 4d, 4e, 4k, or 4m of this Act may, at 
any time within two years after the cause of action accrues, apply to 
the Commission by petition, which shall briefly state the facts, where-
upon, if, in the opinion of the Commission, the facts therein contained 
warrant such action, a copy of the complaint thus made shall be 
forwarded by the Commission to the respondent, who shall be called 
upon to satisfy the complaint, or to answer it in writing, within a 
reasonable time to be prescribed by the Commission. 
" (b) If there appear to be, in the opinion of the Commission, any 
reasonable grounds for investigating any complaint made under this 
section, the Commission shall investigate such complaint and may, if 
in its opinion the facts warrant such action, have said complaint served 
by registered mail or by certified mail or otherwise on the respondent 
and afford such person an opportunity for a hearing thereon before 
an Administrative Law Judge designated by the Commission in any 
place in which the said person is engaged in business: Provided^ That 
in complaints wherein the amount claimed as damages does not exceed 
the sum of $2,500, a hearing need not be held and proof in support of 
the complaint and in support of the respondent's answer may he, sup-
plied in the form of depositions or A^erified statements of fact. 
"(c) After opportunity for hearing on complaints where the dam-
ages claimed exceed the sum of $2,500 has been provided or waived 
and on complaints where damages claimed do not exceed the sum 
of $2,500 not requiring hearing as provided herein, the Commission 
shall determine whether or not the respondent has violated any pro-
vision of this Act or any rule, regulation, or order thereunder. 
"(d) In case a complaint is made by a nonresident of the United 
States, the complainant shall be required, before any formal action 
is taken on his complaint, to furnish a bond in double the amount of 
the claim conditioned upon the payment of costs, including a reason-
able attorney's fee for the respondent if the respondent shall prevail, 
and any reparation award that may be issued by the Commission 
against the complainant on any counterclaim by respondent: Pro-
vided^ That the Commission shall have authority to waive the furnish-
ing of a bond by a complainant who is a resident of a country which 
permits the filing of a complaint by a resident of the United States 
without the furnishing of a bond. 
"(e) If after a hearing on a complaint made by any person under 
subsection (a) of this section, or without hearing as provided in sub-
sections (b) and (c) of this section, or upon failure of the party com-
plained against to answer a complaint duly served within the time 
prescribed, or to appear at a hearing after being duly notified, the 
Commission determines that the respondent has violated any pro-
vision of this Act, or any rule, regulation, or order thereunder, the 
Commission shall, unless the offender has already made reparation 
to the person complaining, determine the amount of damage, if any, 
to which such person is entitled as a result of such violation and shall 
make an order directing the offender to pay to such person complain-
ing such amount on or before the date fixed in the order. If, after 
the respondent has filed his answer to the complaint, it appears therein 
that the respondent has admitted liability for a portion of the amount 
claimed in the complaint as damages, the Commission under such 
Complaints. 
7 u s e 6d, 6e. 
Post, 
pp. 1397, 
1398. 
Investigation 
and hearing. 
Nonresidents 
of U.S., bonds. 
Reparation. 
1394 
PUBLIC LAW 93-463-OCT. 23, 1974 
[88 STAT. 
rules and regulations as it shall prescribe, unless the respondent has 
already made reparation to the person complaining, may issue an 
order directing the respondent to pay to the complainant the undis-
puted amount on or before the date fixed in the order, leaving the 
respondent's liability for the disputed amount for subsequent deter-
mination. The remaming disputed amount shall be determined in the 
same manner and under the same procedure as it would have been deter-
mined if no order had been issued by the Commission with respect 
to the undisputed sum. 
Enforcement o
f 
"^f) jf ^ny persou agaiust whom an award has been made does not 
reparation awar . ^^^ ^^^ reparation award within the time specified in the Commission's 
order, the complainant, or any person for whose benefit such order was 
made, within three years of the date of the order, may file a certified 
copy of the order of the Commission, in the district court of the 
United States for the district in which he resides or in which is located 
the principal place of business of the respondent, for enforcement of 
such reparation award by appropriate orders. The orders, writs, and 
processes of such district court may in such case run, be served, and be 
returnable anywhere in the United States. The petitioner shall not be 
liable for costs in the district court, nor for costs at any subsequent state 
of the proceedings, unless they accrue upon his appeal. If the petitioner 
finally prevails, he shall be allowed a reasonable attorney's fee, to be 
taxed and collected as a part of the costs of the suit. Subject to the right 
of appeal under subsection (g) of this section, an order of the Com-
mission awarding reparations shall be final and conclusive. 
^PP^^'^- 
"(g) Any order of the Commission entered hereunder shall be 
reviewable on petition of any party aggrieved thereby, by the 
United States Court of Appeals for any circuit in which a hearing was 
held, or if no hearing was held, any circuit in which the appellee is 
located, under the procedure provided in paragraph (b) of section 6 of 
this Act. Such appeal shall not be effective unless within 30 days from 
and after the date of the reparation order the appellant also files with 
the clerk of the court a bond in double the amount of the reparation 
awarded against the appellant conditioned upon the payment of the 
judgment entered by the court, plus interest and costs, including a rea-
sonable attorney's fee for the appellee, if the appellee shall prevail. 
Such bond shall be in the form of cash, negotiable securities having a 
market value at least equivalent to the amount of bond prescribed, or 
the undertaking of a surety company on the approved list of sureties 
issued by the Treasury Department of the United States. The appellee 
shall not be liable for costs in said court. If the appellee prevails, he 
shall be allowed a reasonable attorney's fee to be taxed and collected as 
a part of his costs. 
^^"^^*y- 
" (h) Unless the registrant against whom a reparation order has been 
issued shows to the satisfaction of the Commission within fifteen days 
from the expiration of the period allowed for compliance with such 
order that he has either taken an appeal as herein authorized or has 
made payment in full as required by such order, he shall be prohibited 
from trading on all contract markets and his registration shall be sus-
pended automatically at the expiration of such fifteen-day period until 
he shows to the satisfaction of the Commission that he has paid the 
amount therein specified with interest thereon to date of payment: 
Provided, That if on appeal the appellee prevails or if the appeal is 
dismissed the automatic prohibition against trading and suspension of 
registration shall become effective at the expiration of thirty days 
from the date of judgment on the appeal, but if the judgment is stayed 
by a court of competent jurisdiction the suspension shall become effec-
tive ten days after the expiration of such stay, unless prior thereto the 
judgment of the court has been satisfied. 
STAT. ] 
PUBLIC LAW 93-463-OCT. 23, 1974 
1395 
"(i) The provisions of this section shall not become effective until 
one year after the date of its enactment: Provided^ That claims which 
arise within nine months immediately prior to the effective date of this 
section may be heard by the Commission after such one year period." 
SEC. 107. The Commodity Exchange Act, as amended, is amended 
by adding at the end thereof the following new section: 
"SEC. 15. The Commission shall take into consideration the public 
interest to be protected by the antitrust laws and endeavor to take 
the least anticompetitive means of achieving the objectives of this Act, 
as well as the policies and purposes of this Act, in issuing any order 
or adopting any Commission rule or regulation, or in requiring or 
approving any bylaw, rule, or regulation of a contract market or regis-
tered futures association established pursuant to section 17 of this 
Act." 
Effective date. 
Post, 
p. 1406. 
TITLE II—REGULATION OF TRADING AND EXCHANGE 
ACTIVITIES 
SEC. 201. Section 2(a) of the Commodity Exchange Act, as amended 
(7 U.S.C. 2,4), is amended— 
(a) By striking after the word "eggs," the word "onions,". 
(b) By striking the period at the end of the third sentence of the 
section and substituting therefor the following: ", and all other goods 
and articles, except onions as provided in Public Law 85-839, and all 
services, rights, and interests in which contracts for future delivery 
are presently or in the future dealt in: Provided^ That the Commis-
sion shall have exclusive jurisdiction with respect to accounts, agree-
ments (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 contracts of sale of a commodity for future 
delivery, traded or executed on a contract market designated pursuant 
to section 5 of this Act or any other board of trade, exchange, or mar-
ket, and transactions subject to regulation by the Commission pursuant 
to section 217 of the Commodity Futures Trading Commission Act of 
1974: And provided further^ That, except as hereinabove provided, 
nothing contained in this section shall (i) supersede or limit the juris-
diction at any time conferred on the Securities and Exchange Commis-
sion 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 accordance with such laws. Nothing in this sec-
tion shall supersede or limit the jurisdiction conferred on courts of 
the United States or any State. Nothing in this Act shall be deemed 
to govern or in any way be applicable to transactions in foreign 
currency, security warrants, security rights, resales of installment 
loan contracts, repurchase options, government securities, or mort-
gages and mortgage purchase commitments, unless such transactions 
involve the sale thereof for future delivery conducted on a board of 
trade." 
SEC. 202. Section 2(a) of the Commodity Exchange Act, as amended 
(7 U.S.C. 2, 4), is amended by adding at the end of paragraph (1) 
the following new sentences: "The term 'commodity trading advisor' 
shall mean any person who, for compensation or profit, engages in 
the business of advising others, either directly or through publica-
tions or writings, as to the value of commodities or as to the advis-
ability of trading in any commodity for future delivery on or 
subject to the rules of any contract market, or who for compensation 
7 u s e 13-1. 
Jurisdiction of 
Commission. 
7 use 7. 
Post, 
p. 1405. 
SEe and other 
authorities. 
Courts. 
Nonapplic abil-
ity. 
"Commodity 
trading advisor. 
1396 
PUBLIC LAW 93-463-OCT. 23, 1974 
[88 STAT. 
"Commodity 
pool operator.' 
Trades and ex-
ecutions by floor 
brokers. 
7 use 6j. 
Notice and 
hearing. 
Trades by 
futures commis-
sion merchants. 
Notice and 
hearing. 
or profit, and as part of a regular business, issues or promulgates 
analyses or reports concerning commodities; but does not include 
(i) any bank or trust company, (ii) any newspaper reporter, news-
paper columnist, newspaper editor, lawyer, accountant, or teacher, 
(iii) any floor broker or futures commission merchant, (iv) the pub-
lisher of any bona fide newspaper, news magazine, or business or 
financial publication of general and regular circulation including 
their employees, (v) any contract market, and (vi) such other persons 
not within the intent of this definition as the Commission may specify 
by rule, regulation, or order: Provided^ That the furnishing of such 
services by the foregoing persons is solely incidental to the conduct of 
their business or profession. The term 'commodity pool operator' shall 
mean any person engaged in a business which is of the nature of an 
investment trust, syndicate, or similar form of enterprise, and who, 
in connection therewith, solicits, accepts, or receives from others, 
funds, securities, or property, either directly or through capital con-
tributions, the sale of stock or other forms of securities, or otherwise, 
for the purpose of trading in any commodity for future delivery on 
or subject to the rules of any contract market, but does not include 
such persons not within the intent of this definition as the Commis-
sion may specify by rule or regulation or by order." 
SEC. 203. The Commodity Exchange Act, as amended, is amended 
by inserting after section 4i (7 U.S.C. 6i), the following new section: 
"SEC. 4j. (1) The Commission shall within six months after the 
effective date of the Commodity Futures Trading Commission Act of 
1974, and subsequently when it determines that changes are required, 
make a determination, after notice and opportunity for hearing, 
whether or not a floor bioker may trade for his own account or any 
account in which such broker has trading discretion, and also execute 
a customer's order for futui'e delivery and, if the Commission deter-
mines that such trades and such executions shall be permitted, the 
Commission shall further determine the terms, conditions, and circum-
stances under which such trades and such executions shall be con-
ducted : Provided^ That any such determination shall, at a minimum, 
take into account the effect upon the liquidity of trading of each 
market: And provided further^ That nothing herein shall be con-
strued to prohibit the Commission from making separate determina-
tions for different contract markets when such are warranted in the 
judgment of the Commission, or to prohibit contract markets from 
setting terms and conditions more restrictive than those set by the 
Commission. 
" (2) The Commission shall within six months after the effective date 
of the Commodity Futures Trading Commission Act of 1974, and sub-
sequently when it determines that changes are required, make a deter-
mination, after notice and opportunity for hearing, whether or not a 
futures commission merchant may trade for its own account or any 
proprietary account, as defined by the Commission, and if the Com-
mission determines that such trades shall be permitted, the Commission 
shall further determine the terms, conditions, and circumstances under 
which such trades shall be conducted: Provided^ That any such deter-
mination, at a minimum, shall take into account the effect upon the 
liquidity of trading of each market: And provided fvHher^ That noth-
ing herein shall be construed to prohibit the Commission from making 
separate determinations for different contract markets when such are 
warranted in the judgment of the Commission, or to prohibit contract 
markets from setting terms and conditions more restrictive than those 
set by the Commission." 
SEC. 204. (a) The Commodity Exchange Act, as amended, is 
amended by adding the following new section : 
88 STAT. ] 
PUBLIC LAW 93-463-OCT. 23, 1974 
1397 
"SEC. 4k. (1) It shall be unlawful for any person to be associated , Associates o
f 
. , 
1. r 
^ 
• 
• 
^ 
, 
•,^ 
j_ 
_
c 
J- , 
futures commis-
with any futures commission merchant or with any agent ot a futures sion merchants. 
commission merchant as a partner, officer, or employee (or any person 
Registrauon. 
occupying a similar status or performing similar functions), in any 
capacity which involves (i) the solicitation or acceptance of customers' 
orders (other than in a clerical capacity) or (ii) the supervision of any 
person or persons so engaged, unless such person shall have registered, 
under this Act, with the Commission and such registration shall not 
have expired nor been suspended (and the period of suspension has not 
expired) or revoked, and it shall be unlawful for any futures commis-
sion merchant or any agent of a futures commission merchant to per-
mit such a person to become or remain associated with him in any such 
capacity if such futures commission merchant or agent knew or should 
have known that such person was not so registered or that such regis-
tration had expired, been suspended (and the period of suspension has 
not expired) or revoked: Provided, That any individual who is regis-
tered as a floor broker or futures commission merchant (and such reg-
istration is not suspended or revoked) need not also register under 
these provisions. 
"(2) Any such person desiring to be registered shall make applica- 
Application. 
tion to the Commission in the form and manner prescribed by the 
Commission, giving such information and facts as the Commission 
may deem necessary concerning the applicant. Such person, when 
registered hereunder, shall likewise continue to report and furnish to 
the Commission such information as the Commission may require. 
Such registration shall expire two years after the effective date thereof, 
and shall be renewed upon application therefor unless the registration 
has been suspended (and the period of such suspension has not 
expired) or revoked after notice and hearing as prescribed in section 
6(b) of this Act: Provided, That upon initial registration, the effec-
tive period of such registration shall be set by the Commission, not to 
exceed two years from the effective date thereof and not to be less than 
one year from the effective date thereof." 
(b) Section 6(b) of the Commodity Exchange Act, as amended (7 
U.S.C. 9), is amended by inserting after the words "futures commis-
sion merchant" each time those words appear, the following: "or any 
person associated therewith as described in section 4k of this Act,". 
(c) Section 8a (1) of the Commodity Exchange Act, as amended 
(7 U.S.C. 12a(l)), is amended by inserting after the words "futures 
commission merchants" the following: "and persons associated there-
with as described in section 4k of this Act,". 
SEC. 205. (a) The Commodity Exchange Act, as amended, is in^°advi°slVs^Ind''' 
amended by adding the following new sections: 
c^mmodurpoo" 
"SEC. 41. It is hereb}^ found that the activities of commodity trading operators. 
advisors and commodity pool operators are affected with a national 
^ "^^ ^ " 
public interest in that, among other things— 
"(1) their advice, counsel, publications, writings, analyses, and 
reports are furnished and distributed, and their contracts, solici-
tations, subscriptions, agreements, and other arrangements with 
clients take place and are negotiated and performed by the use of 
the mails and other means and instrumentalities of interstate 
commerce; 
"(2) their advice, counsel, publications, writings, analyses, and 
reports customarily relate to and their operations are directed 
toward and cause the purchase and sale of commodities for future 
delivery on or subject to the rules of contract markets; and 
" (3) the foregoing transactions occur in such volume as to affect 
substantially transactions on contract markets. 
1398 
PUBLIC LAW 93-463-OCT. 23, 1974 
[88 STAT. 
Use of mails 
and interstate 
commerce. 
7 u s e 6m. 
Registration. 
7 u s e 6n. 
Recordkeeping 
and reports. 
"SEC. 4m. It shall be unlawful for any commodity trading advisor 
or commodity pool operator, unless registered under this Act, to make 
use of the mails or any means or instrumentality of interstate com-
merce in connection with his business as such commodity trading 
advisor or commodity pool operator: Provided^ That the provisions of 
this section shall not apply to any commodity trading advisor who, 
during the course of the preceding twelve months, has not furnished 
commodity trading advice to more than fifteen persons and who does 
not hold himself out generally to the public as a commodity trading 
advisor. 
"SEC. 4n. (1) Any commodity trading advisor or commodity pool 
operator, or any person who contemplates becoming a commodity 
trading advisor or commodity pool operator, may register under this 
Act by filing an application with the Commission. Such application 
shall contain such information, in such form and detail, as the Com-
mission may, by rules and regulations, prescribe as necessary or appro-
priate in the public interest, including the following: 
"(A) the name and form of organization, including capital 
structure, under which the applicant engages or intends to engage 
in business; the name of the State under the laws of which he is 
organized; the location of his principal business office and branch 
offices, if any; the names and addresses of all partners, officers, 
directors, and persons performing similar functions or, if the 
applicant be an individual, of such individual; and the number of 
employees; 
"(B) the education, the business affiliations for the past ten 
years, and the present business affiliations of the applicant and of 
his partners, officers, directors, and persons performing similar 
functions and of any controlling person thereof; 
"(C) the nature of the business of the applicant, including the 
manner of giving advice and rendering of analyses or reports; 
"(D) the nature and scope of the authority of the applicant 
with respect to clients' funds and accounts; 
"(E) the basis upon which the applicant is or will be com-
pensated; and 
"(F) such other information as the Commission may require 
to determine whether the applicant is qualified for registration. 
"(2) Except as hereinafter provided, such registration shall become 
effective thirty days after the receipt of such application by the Com-
mission, or within such shorter period of time as the Commission may 
determine. 
"(3) All registrations under this section shall expire on the 30th 
day of June of each year, and shall be renewed upon application there-
for subject to the same requirements as in the case of an original appli-
cation. 
"(4) (A) Every commodity trading advisor and commodity pool 
operator registered under this Act shall maintain books and records 
and file such reports in such form and manner as may be prescribed 
by the Commission. All such books and records shall be kept for a 
period of at least three years, or longer if the Commission so directs, 
and shall be open to inspection by any representative of the Com-
mission or the Department of Justice. Upon the request of the Com-
mission, a registered commodity trading advisor or commodity pool 
operator shall furnish the name and address of each client, sub-
scriber, or participant, and submit samples or copies of all reports, 
letters, circulars, memorandums, publications, writings, or other litera-
ture or advice distributed to clients, subscribers, or participants, or 
prospective clients, subscribers, or participants. 
88 STAT. ] 
PUBLIC LAW 93-463-OCT. 23, 1974 
1399 
Disclosure. 
Statements of 
account. 
"(B) Unless otherwise authorized by the Commission by rule or 
regulation, all commodity trading advisors and commodity pool 
operators shall make a full and complete disclosure to their subscribers, 
clients, or participants of all futures market positions taken or held 
by the individual principals of their organization. 
"(5) Every commodity pool operator shall regularly furnish state-
ments of account to each participant in his operations. Such statements 
shall be in such form and manner as may be prescribed by the Com-
mission and shall include complete information as to the current status 
of all trading accounts in which such participant has an interest. 
"(6) The Commission is authorized, without hearing, to deny regis- 
Denial o
f regis-
tration to any person as a commodity trading advisor or commodity "^^''°"-
pool operator if such person is subject to an outstanding order under 
this Act denying to such person trading privileges on any contract 
market, or suspending or revoking the registration of such person as 
a commodity trading advisor, commodity pool operator, futures com-
mission merchant, or floor broker, or suspending or expelling such 
person from membership on any contract market. 
"(7) The Commission after hearing may by order deny registration, 
revoke or suspend the registration of any commodity trading advisor 
or commodity pool operator if the Commission finds that such denial, 
revocation, or suspension is in the public interest and that— 
"(A) the operations of such person disrupt or tend to disrupt 
orderly marketing conditions, or cause or tend to cause sudden or 
unreasonable fluctuations or unwarranted changes in the prices of 
commodities; 
"(B) such commodity trading advisor or commodity pool oper-
ator, or any partner, officer, director, person performing similar 
function or controlling person thereof— 
"(i) has within ten years of the issuance of such order 
been convicted of any felony or misdemeanor involving the 
purchase or sale of any commodity or security, or arising 
out of any conduct or practice of such commodity trading 
advisor or commodity pool operator or affiliated person as a 
commodity trading advisor or commodity pool operator; or 
"(ii) at the time of the issuance of such order, is perma-
nently or temporarily enjoined by order, judgment or decree 
of any court of competent jurisdiction from acting as a com-
modity trading advisor, commodity pool operator, futures 
commission merchant, or floor broker, or as an affiliated per-
son or employee of any of the foregoing, or from engaging 
in or continuing any conduct or practice in connection with 
any such activity or in connection with the purchase or sale 
of commodities or securities; or 
"(C) any partner, officer, or director of such commodity trading 
advisor or commodity pool operator, or any person performing 
a similar function or any controlling person thereof is subject 
to an outstanding order of the Commission denying trading privi-
leges on any contract market to such person, or suspending or 
revoking the registration of such person as a commodity trading 
advisor, commodity pool operator, futures commission merchant, 
or floor broker, or suspending or expelling such person from 
membership on any contract market. 
"SEC. 4O. (1) It shall be unlawful for any commodity ti-ading advisor 
^ use 6°. 
or commodity pool operator registered under this Act, by use of the 
mails or any means or instrumentality of interstate commerce, directly 
or indirectly— 
" (A) to employ any device, scheme, or artifice to defraud any 
client or participant or prospective client or participant; or 
1400 
PUBLIC LAW 93-463-OCT. 23, 1974 
[88 
STAT. 
Standards and 
examinations. 
7 u s e 6P. 
Post, 
p. 1406. 
Contract mar-
kets. 
"(B) to engage in any transaction, practice, or course of busi-
ness which operates as a fraud or deceit upon any client or par-
ticipant or prospective client or participant. 
"(2) It shall be unlawful for any commodity trading advisor or 
commodity pool operator registered under this Act to represent or 
imply in any manner whatsoever that he has been sponsored, recom-
mended, or approved, or that his abilities or qualifications have in 
any respect been passed upon by the United States or any agency or 
oflS.cer thereof: Provided, That this section shall not be construed to 
prohibit a statement that a person is registered under this Act as a 
commodity trading advisor or commodity pool operator, if such state-
ment is true in fact and if the effect of such registration is not mis-
represented." 
(b) Section 6(b) of the Commodity Exchange Act, as amended 
(7 U.S.C. 9), is amended by inserting immediately before the words 
"or as floor broker" each time those words appear, the following: 
"commodity trading advisor, commodity pool operator,". 
(c) Section 8a (1) of the Commodity Exchange Act, as amended 
(7 U.S.C. 12a(1)), is amended by inserting immediately before the 
words "and floor brokers" the following: "commodity trading advi-
sors, commodity pool operators.". 
SEC. 206, The Commodity Exchange Act, as amended, is amended 
by adding the following new section: 
"SEC. 4p. The Commission may specify by rules and regulations 
appropriate standards with respect to training, experience, and such 
other qualifications as the Commission finds necessary or desirable to 
insure the fitness of futures commission merchants, floor brokers, and 
those persons associated with futures commission merchants or floor 
brokers. In connection therewith, the Commission may prescribe by 
rules and regulations the adoption of written proficiency examinations 
to be given to applicants for registration as futures commission mer-
chants, floor brokers, and those persons associated with futures com-
mission merchants or floor brokers, and the establishment of reasonable 
fees to be charged to such applicants to cover the administration of 
such examinations. The Commission may further prescribe by rules 
and regulations that, in lieu of examinations administered by the 
Commission, futures associations registered under section 17 of this 
Act or contract markets may adopt written proficiency examinations 
to be given to applicants for registration as futures commission mer-
chants, floor brokers, and those persons associated with futures com-
mission merchants or floor brokers, and charge reasonable fees to such 
applicants to cover the administration of such examinations. Notwith-
standing any other provision of this section, the Commission may 
specify by rules and regulations such terms and conditions as it deems 
appropriate to protect the public interest wherein exception to any 
written proficiency examination shall be made with respect to individ-
uals who have demonstrated, through training and experience, the 
degree of proficiency and skill necessary to protect the interests of the 
customers of futures commission merchants and floor brokers." 
SEC. 207. Section 5 of the Commodity Exchange Act, as amended 
(7 U.S.C. 7), is amended by adding after subsection (f) thereof the 
following new subsection: 
"(g) When such board of trade demonstrates that transactions for 
future delivery in the commodity for which designation as a contract 
market is sought will not be contrary to the public interest." 
SEC. 208. Section 5a of the Commodity Exchange Act, as amended 
(7 U.S.C. 7a), is amended— 
88 
STAT.] 
PUBLIC LAW 93-463-OCT. 23. 1974 
1401 
(a) By inserting after the word "purposes" in subsection (7) the 
following: ": And provided further, That this subsection shall ap{)ly 
only to futures contracts for those commodities which may be deliv-
ered from a warehouse subject to the United States Warehouse Act". 
(b) By striking out "and" at the end of subsection (8). 
(c) By striking out the period at the end of subsection (9) and in-
serting in lieu thereof a semicolon. 
(d) By adding at the end of subsection (9) thereof the following 
new subsection: 
"(10) permit the delivery of any commodity, on contracts of 
sale thereof for future delivery, of such grade or grades, at such 
point or points and at such quality and locational price differen-
tials as will tend to prevent or diminish price manipulation, mar-
ket congestion, or the abnormal movement of such commodity in 
interstate commerce. If the Commission after investigation finds 
that the rules and regulations adopted by a contract market per-
mitting delivery of any commodity on contracts of sale thereof 
for future delivery, do not accomplish the objectives of this sub-
section, then the Commission shall notify the contract market of 
its finding and afford the contract market an opportunity to make 
appropriate changes in such rules and regulations. If the contract 
market within seventy-five days of such notification fails to make 
the changes which in the opinion of the Commission are necessary 
to accomplish the objectives of this subsection, then the Commis-
sion after granting the contract market an opportunity to be 
heard, may change or supplement such rules and regulations of 
the contract market to achieve the above objectives: Provided, 
That any order issued under this paragraph shall not apply to 
contracts of sale for future delivery in any months in which con-
tracts are currently outstanding and open : And jrrovided 
further, 
That no requirement for an additional delivery point or points 
shall be promulgated following hearings until the contract mar-
ket affected has had notice and opportunity to file exceptions to 
the proposed order determining the location and number of such 
delivery point or points;". 
SEC. 209. Section 5a of the Commodity Exchange Act, as amended 
(7 U.S.C. 7a), is amended by adding a new subsection (11) as 
follows: 
"(11) provide a fair and equitable procedure through arbitra-
tion or otherwise for the settlement of customers' claims and 
grievances against any member or employee thereof: 
Provided, 
That (i) the use of such procedure by a customer shall be volun-
tary, (ii) the procedure shall not be applicable to any claim in 
excess of $15,000, (iii) the procedure shall not result in any com-
pulsory payment except as agreed upon between the parties, and 
(iv) the term 'customer' as used in this subsection shall not include 
a futures commission merchant or a floor broker; and". 
SEC. 210. Section 5a of the Commodity Exchange Act, as amended 
(7 U.S.C. 7a), is amended by inserting the following new subsection 
(12) as follows: 
"(12) except as otherwise provided in this subsection, submit 
to the Commission for its approval all bylaws, rules, regulations, 
and resolutions made or issued by such contract market, or by 
the governing board thereof or any committee thereof which 
relate to terms and conditions in contracts of sale to be executed on 
or subject to the rules of such contract market or relate to other 
trading requirements except those relating to the setting of 
levels of margin. The Commission shall approve, within thirty 
days of their receipt unless the Commission notifies the contract 
7 use 241. 
Delivery points. 
Customers' 
claims, arbitra-
tion. 
Commission ap-
proval of bylaws, 
rules, regulations, 
and resolutions. 
1402 
PUBLIC LAW 93-463-OCT. 23, 1974 
[88 STAT. 
market of its inability to make such determination within such 
period of time, such bylaws, rules, regulations, and resolutions 
upon a determination that such bylaws, rules, regulations, and 
resolutions are not in violation of the provisions of this Act or 
the regulations of the Commission and thereafter the Commis-
sion shall disapprove, after appropriate notice and opportunity 
for hearing, any bylaw, rule, regulation, or resolution which the 
Commission finds at any time is in violation of the provisions of 
this Act or the regulations of the Commission. The Commission 
shall specify the terms and conditions under which a contract 
market may, in an emergency, as defined by the Commission, 
adopt a temporary rule dealing with trading requirements with-
out prior Commission approval. In the event of such an emer-
gency, as defined by the Commission, requiring immediate action, 
the contract market by a two-thirds vote of its governing board 
may place into immediate effect without prior Commission 
approval a temporary rule dealing with such emergency if it noti-
fies the Commission of such action with a complete explanation of 
the emergency involved. The Commission may adopt a regulation 
exempting enumerated types of contract market operational and 
administrative rules from the requirement that they be submitted 
to the Commission for its approval." 
Court action. 
gj,(._ 211. Thc Commodlty Exchange Act, as amended, is amended 
by inserting the following new section immediately after section 6b 
(7 U.S.C. 13a) : 
7 use i3a-i. 
"SEC. 6C. Whenever it shall appear to the Commission that any 
contract market or other person has engaged, is engaging, or is about 
to engage in any act or practice constituting a violation of any pro-
vision of this Act or any rule, regulation, or order thereunder, or is 
restraining trading in any commodity for future delivery, the Com-
mission may bring an action in the proper district court of the United 
States or the proper United States court of any territory or other 
place subject to the jurisdiction of the United States, to enjoin such 
act or practice, or to enforce compliance with this Act, or any rule, 
regulation or order thereunder, and said courts shall have jurisdiction 
to entertain such actions: Provided^ That no restraining order or 
injunction for violation of the provisions of this Act shall be issued 
ex parte by said court. Upon a proper showing, a permanent or tem-
porary injunction or restraining order shall be granted without bond. 
I Jpon application of the Commission, the district courts of the United 
States and the United States courts of any territory or other place 
subject to the jurisdiction of the United States shall also have juris-
diction to issue writs of mandamus, or orders affording like relief, 
commanding any person to comply with the provisions of this Act 
or any rule, regulation, or order of the Commission thereunder, includ-
ing the requirement that such person take such action as is necessary 
to remove the danger of violation of this Act or any such rule, regula-
tion, or order: Provided^ That no such writ of mandamus, or order 
affording like relief, shall be issued ex parte. Any action under this 
section may be brought in the district wherein the defendant is found 
or is an inhabitant or transacts business or in the district where the 
act or practice occurred, is occurring, or is about to occur, and process 
in such cases may be served in any district in which the defendant is 
an inhabitant or wherever the defendant may be found. In lieu of 
bringing actions itself pursuant to this section, the Commission may 
request the Attorney General to bring the action. Where the Commis-
sion elects to bring the action, it shall inform the Attorney General of 
such suit and advise him of subsequent developments." 
88 STAT. ] 
PUBLIC LAW 93-463-OCT. 23, 1974 
1403 
SEC. 212. (a) Section 6 of the Commodity Exchange Act, as 
Penalties. 
amended (7 U.S.C. 8, 9, 13b, 15), is amended— 
(1) By substituting a comma for the period at the end of the 
fourth sentence in paragraph (b) and adding thereafter the fol-
lowing : "and may assess such person a civil penalty of not more 
than $100,000 for each such violation." 
(2) By adding in the sixth sentence in paragraph (b), a comma 
after the word "petition" and inserting thereafter and before 
the word "praying" the following phrase: "within fifteen days 
after the notice of such order is given to the offending pei'son.". 
(3) By adding after paragraph (c) thereof the following new 
paragraph: 
"(d) In determining the amount of the money penalty assessed 
7 use 9a. 
under paragraph (b) of this section, the Commission shall consider, in 
the case of a person whose primary business involves the use of the 
commodity futures market—the appropriateness of such penalty to 
the size of the business of the person charged, the extent of such per-
son's ability to continue in business, and the gravity of the violation; 
and in the case of a person whose primary business does not involve 
the use of the commodity futures market—the appropriateness of such 
penalty to the net worth of the person charged, and the gravity of the 
violation. If the offending person upon whom such penalty is imposed, 
after the lapse of the period allowed for appeal or after the affirmance 
of such penalty, shall fail to pay such penalty the Commission shall 
refer the matter to the Attorney General who shall recover such 
penalty by action in the appropriate United States district court." 
(b) Section 6b of the Commodity Exchange Act, as amended (7 
U.S.C. 13a), is amended to read as follows: 
"SEC. 6b. If any contract market is not enforcing or has not enforced 
its rules of government made a condition of its designation as set 
forth in section 5 of this Act, or if any contract market, or any direc-
tor, officer, agent, or employee of any contract market otherwise is 
violating or has violated any of the provisions of this Act or any of 
the rules, regulations, or orders of the Commission thereunder, the 
Commission may, upon notice and hearing and subject to appeal as in 
other cases provided for in paragraph (a) of section 6 of this Act, 
make and enter an order directing that such contract market, director, 
officer, agent, or employee shall cease and desist from such violation, 
and assess a civil penalty of not more than $100,000 for each such vio-
lation. If such contract market, director, officer, agent, or employee, 
after the entry of such a cease and desist order and the lapse of the 
period allowed for appeal of such order or after the affirmance of such 
order, shall fail or refuse to obey or comply with such order, such con-
tract market, director, officer, agent, or employee shall be guilty of a 
misdemeanor and, upon conviction thereof, shall be fined not more 
than $100,000 or imprisoned for not less than six months nor more 
than one year, or both. Each day during which such failure or refusal 
to obey such cease and desist order continues shall be deemed a separate 
offense. If the offending contract market or other person upon whom 
such penalty is imposed, after the lapse of the period allowed for 
appeal or after the affirmance of such penalty, shall fail to pay such 
penalty, the Commission shall refer the matter to the Attorney General 
who shall recover such penalty by action in the appropriate United 
States district court. In determining the amount of the money penalty 
assessed under this section, the Commission shall consider the appro-
priateness of such penalty to the net worth of the offending person 
and the gravity of the offense, and in the case of a contract market 
shall further consider whether the amount of the penalty will mate-
Notice and 
hearing. 
1404 
PUBLIC LAW 93-463-OCT. 23, 1974 
[88 STAT. 
rially impair the contract market's ability to carry on its operations 
and duties." 
(c) Section 6(c) of the Commodity Exchange Act, as amended (7 
U.S.C. 13b), is amended by deleting the words "not less than $500 nor 
more than $10,000" and substituting therefor the words "not more 
than $100,000". 
(d) Section 9 of the Commodity Exchange Act, as amended (7 
U.S.C. 13), is amended as follows: 
(1) Subsection (a) is amended by striking "$10,000" and sub-
stituting therefor "$100,000". 
(2) Subsection (b) is amended by striking "$10,000" and sub-
stituting therefor "$100,000". 
(3) Subsection (c) is amended by striking "$10,000" and sub-
stituting therefor "$100,000". 
rufJl^of comract 
^EC. 213. Scctiou 8a of the Commodity Exchange Act, as amended 
market. 
(7 U.S.C. 12a), is amcudcd by striking subsection (7) and inserting 
in lieu thereof the following new subsection: 
"(7) to alter or supplement the rules of a contract market inso-
far as necessary or appropriate by rule or regulation or by order, 
if after making the appropriate request in writing to a contract 
market that such contract market effect on its own behalf specified 
changes in its rules and practices, and after appropriate notice 
and opportunity for hearing, the Commission determines that 
such contract market has not made the changes so required, and 
that such changes are necessary or appropriate for the protec-
tion of persons producing, handling, processing, or consuming 
any commodity traded for future delivery on such contract mar-
ket, or the product or byproduct thereof, or for the protection of 
traders or to insure fair dealing in commodities traded for future 
delivery on such contract market. Such rules, regulations, or 
orders may specify changes with respect to such matters as: 
"(A) terms or conditions in contracts of sale to be executed 
on or subject to the rules of such contract market; 
"(B) the form or manner of execution of purchases and 
sales for future delivery; 
"(C) other trading requirements, excepting the setting of 
levels of margin; 
"(D) safeguards with respect to the financial responsibil-
ity of members; 
"(E) the manner, method, and place of soliciting business, 
including the content of such solicitations; and 
"(F) the form and manner of handling, recording, and 
accounting for customers' orders, transactions, and accounts; 
Rules for 
er- 
^ " ^ " • 
sons not memb"^rs 
SEC. 214. Ssction 8a of the Commodity Exchange Act, as amended 
o
f a contract mar- (7 U.S.C. 12a), is amended by adding the following new subsection 
""''• 
( 8 ) : 
"(8) to make and promulgate such rules and regulations with 
respect to those persons registered under this Act, who are not 
members of a contract market, as in the judgment of the Commis-
sion are reasonably necessary to protect the public interest and 
promote just and equitable principles of trade, including but not 
limited to the manner, method, and place of soliciting business, 
including the content of such solicitation; and". 
Emergencies. 
g ^ 215. Sectiou 8a of the Commodity Exchange Act, as amended 
(7 U.S.C. 12a), is amended by adding the following new subsection 
(9): 
88 STAT. ] 
PUBLIC LAW 93-463-OCT. 23, 1974 
1405 
"(9) to direct the contract market whenever it has reason to 
believe that an emergency exists, to take such action as, in the 
Commission's judgment, is necessary to maintain or restore 
orderly trading in, or liquidation of, any futures contract. The 
term 'emergency' as used herein shall mean, in addition to threat- 
"Emergency." 
ened or actual market manipulations and corners, any act of the 
United States or a foreign government affecting a commodity or 
any other major market disturbance which prevents the market 
from accurately reflecting the forces of supply and demand for 
such commodity: Provided, That nothing herein shall be deemed 
to limit the meaning or interpretation given by a contract market 
to the terms 'market emergency', 'emergency', or equivalent lan-
guage in its own bylaws, rules, regulations, or resolutions." 
SEC. 216. The Commodity Exchange Act, as amended, is amended ac^^on!^^'"^''' 
by inserting the following new section immediately after section 8b 
(7U.S.C.12b): 
"SEC. 8C. (1) (A) Any exchange or the Commission if the exchange 
^ ^^^ ^^c. 
fails to act, may suspend, expel, or otherwise discipline any person who 
is a member of that exchange, or deny any person access to the 
exchange. Any such action shall be taken solely in accordance with the 
rules of that exchange. 
"(B) Any suspension, expulsion, disciplinary, or access denial 
Notice. 
procedure established by an exchange rule shall provide for written 
notice to the Commission and to the person who is suspended, expelled, 
or disciplined, or denied access, within thirty days, which includes 
the reasons for the exchange action in the form and manner the Com-
mission prescribes. Otherwise the notice and reasons shall be kept 
confidential. 
"(2) The Commission may, in its discretion and in accordance with 
such standards and procedures as it deems appropriate, review any 
decision by an exchange whereby a person is suspended, expelled, 
otherwise disciplined, or denied access to the exchange. In addition, 
the Commission may, in its discretion and upon application of any 
person who is adversely affected by any other exchange action, review 
such action. 
"(3) The Commission may affirm, modify, set aside, or remand any 
exchange decision it reviews pursuant to subsection (2), after a deter-
mination on the record whether the action of the exchange was in 
accordance with the policies of this Act. Subject to judicial review, any 
order of the Commission entered pursuant to subsection (2) shall 
govern the exchange in its further treatment of the matter. 
"(4) The Commission, in its discretion, may order a stay of any 
action taken pursuant to subsection (1) pending review thereof." 
SEC. 217. (a) No person shall offer to enter into, enter into, or confirm jractYfor ouTand 
the execution of any transaction for the delivery of silver bullion, gold silver. 
bullion, or bulk silver coins or bulk gold coins, pursuant to a standard- 
^ ^^^ ^^a. 
ized contract commonly known to the trade as a margin account, 
margin contract, leverage account, or leverage contract contrary to 
any rule, regulation, or order of the Commodity Futures Trading Com-
mission designed to insure the financial solvency of the transaction or 
prevent manipulation or fraud: Provided, That such rule, regulation, 
or order may be made only after notice and opportunity for hearing. 
If the Commission determines that any such transaction is a contract 
for future delivery within the meaning of the Commodity Exchange 
Act, as amended, such transaction shall be regulated in accordance 
with the provisions of such Act. 
(b) The provisions of section 9(c) of the Commodity Exchange 
Penalty. 
Act, as amended, shall be applicable with respect to persons who 
^ "^^ ^^' 
violate the provisions of this section. 
1406 
PUBLIC LAW 93-463-OCT. 23, 1974 
[88 STAT. 
TITLE III—ENABLING AUTHOKITY FOR CREATION OF 
NATIONAL FUTURES ASSOCIATIONS 
SEC. 301. The Commodity Exchange Act, as amended, is amended 
by adding the following new section: 
7 use 21. 
"SEC. 17. (a) Any association of persons may be registered with 
the Commission as a registered futures association pursuant to sub-
section (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 pro-
cedure, 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 reterred to as the 
'rules of the association'. 
"(b) 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 reg-
istered under this Act, contract market, or any other person desig-
nated 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 {'6) or (4) of this 
subsection, or a rule of the association permitted under this para-
graph. The rules of the association may restrict membership in 
such association on such specified basis relating to the type of 
business done by its members, or on such other specified and 
appropriate basis, as appears to the Commission to be necessary or 
appropriate in the public interest and to carry out the purpose of 
this section. Rules adopted by the association may provide that 
the association may, unless the Commission directs otherwise in 
cases in which the Commission finds it appropriate in the public 
interest so to direct, deny admission to, or refuse to continue in 
such association any person if (i) such person, whether prior or 
subsequent to becoming registered as such, or (ii) any person 
associated with in the meaning of 'associated person' as set forth 
in section 4k of this Act, whether prior or subsequent to becoming 
so associated, has been and is suspended or expelled from a con-
tract market or has been and is barred or suspended from being 
associated with all members of such contract market, for violation 
of any rule of such contract market; 
"(3) the rules of the association provide that, except with the 
approval or at the direction of the Commission in cases in which 
the Commission finds it appropriate in the public interest so to 
approve or direct, no person shall be admitted to or continued in 
membership in such association, if such person— 
"(A) has been and is suspended or expelled from a reg-
istered futures association or from a contract market or has 
Ante, 
p. 1397. 
88 STAT. ] 
PUBLIC LAW 93-463-OCT. 23, 1974 
1407 
been and is barred or suspended from being associated with 
all members of such association or from being associated with 
all members of such contract market, for violation of any rule 
of such association or contract market which prohibits any 
act or transaction constituting conduct inconsistent with just 
and equitable principles of trade, or requires any act the 
omission of which constitutes conduct inconsistent with just 
and equitable principles of trade; or 
"(B) is subject to an order of the Commission denying, 
suspending, or revoking his registration pursuant to section 
6(b) of this Act (7 U.S.C. 9), or expelling or suspending him 
from membership in a registered futures association or a con-
tract market, or barring or suspending him from being asso-
ciated with a futures commission merchant; or 
"(C) whether prior or subsequent to becoming a member, 
by his conduct while associated with a member, was a cause 
of any suspension, expulsion, or order of the character 
described in clause (A) or (B) which is in effect with respect 
to such member, and in entering such a suspension, expulsion, 
or order, the Commission or any such contract market or 
association shall have jurisdiction to determine whether or 
not any person was a cause thereof; or 
"(D) has associated with him any person who is known, 
or in the exercise of reasonable care should be known, to him 
to be a person who would be ineligible for admission to or 
continuance in membership under clause (A), ( B ) , o r ( C ) 
of this paragraph. 
"(4) the rules of the association provide that, except with the 
approval or at the direction of the Commission in cases in which 
the Commission finds it appropriate in the public interest so to 
approve or direct, no person shall become a member and no nat-
ural person shall become a person associated with a member, unless 
such person is qualified to become a member or a person associated 
with a member in conformity with specified and appropriate 
standards with respect to the training, experience, and such other 
qualifications of such person as the association finds necessary or 
desirable, and in the case of a member, the financial responsibility 
of such a member. For the purpose of defining such standards and 
the application thereof, such rules may— 
"(A) appropriately classify prospective members (taking 
into account relevant matters, including type or nature of 
business done) and persons proposed to be associated with 
members. 
"(B) specify that all or any portion of such standard shall 
be applicable to any such class. 
"(C) require persons in any such class to pass examina-
tions prescribed in accordance with such rules. 
"(D) provide that persons in any such class other than 
prospective members and partners, officers and supervisory 
employees (which latter term may be defined by such rules 
and as so defined shall include branch managers of members) 
of members, may be qualified solely on the basis of compliance 
with specified standards of training and such other qualifica-
tions as the association finds appropriate. 
"(E) provide that applications to become a member or 
a person associated with a member shall set forth such facts 
as the association may prescribe as to the training, experience, 
and other qualifications (including, in the case of an appli-
cant for membership, financial responsibility) of the appli-
1408 
PUBLIC LAW 93-463-OCT. 23, 1974 
[88 STAT. 
cant and that the association shall adopt procedures for 
verification of qualifications of the applicant. 
"(F) require any class of persons associated with a mem-
ber to be registered with the association in accordance with 
procedures specified by such rules (and any application or 
document supplemental thereto required by such rules of a 
person seeking to be registered with such association shall, 
for the purposes of subsection (b) of section 6 of the Act, be 
deemed an application required to be filed under this section). 
"(5) the rules of the association assure a fair representation of 
its members in the adoption of any rule of the association or 
amendment thereto, the selection of its officers and directors, and 
in all other phases of the administration of its affairs. 
"(6) the rules of the association provide for the equitable allo-
cation of dues among its members, to defray reasonable expenses 
of administration. 
"(7) the rules of the association are designed to prevent fraud-
ulent and manipulative acts and practices, to promote just and 
equitable principles of trade, in general, to protect the public 
interest, and to remove impediments to and perfect the mechanism 
of free and open futures trading. 
"(8) the rules of the association provide that its members and 
persons associated with its members shall be appropriately dis-
ciplined, by expulsion, suspension, fine, censure, or being sus-
pended or barred from being associated with all members, or any 
other fitting penalty, for any violation of its rules. 
"(9) the rules of the association provide a fair and orderly 
procedure with respect to the disciplining of members and per-
sons associated with members and the denial of membership to 
any person seeking membership therein or the barring of any 
person from being associated with a member. In any proceeding 
to determine whether any member or other person shall be disci-
plined, such rules shall require that specific charges be brought; 
that such member or person shall be notified of, and be given an 
opportunity to defend against, such charges; that a record shall 
be kept; and that the determination shall include— 
" (A) a statement setting forth any act or practice in which 
such member or other person may be found to have engaged, 
or which such member or other person may be found to have 
omitted. 
"(B) a statement setting forth the specific rule or rules of 
the association of which any such act or practice, or omission 
to act, is deemed to be in violation. 
"(C) a statement whether the acts or practices prohibited 
by such rule or rules, or the omisssion of any act required 
thereby, are deemed to constitute conduct inconsistent with 
just and equitable principles of trade. 
an^°rtco'rd^^""^' 
''(^) 
^ Statement setting forth the penalty imposed. 
In any proceeding to determine whether a person shall be denied 
membership or whether any person shall be barred from being 
associated with a member, such rules shall provide that the person 
shall be notified of, and be given an opportunity to be heard upon, 
the specific grounds for denial or bar which are under considera-
tion ; that a record shall be kept; and that the determination shall 
set forth the specific grounds upon which the denial or bar is 
based. 
"(10) the rules of the association provide for a fair and 
equitable procedure through arbitration or otherwise for the set-
tlement of a customer's claims and grievances against any member 
Notice and 
hearing. 
88 STAT. ] 
PUBLIC LAW 93-463-OCT. 23, 1974 
1409 
or employee thereof: Provided, That (i) the use of such procedure 
by a customer shall be voluntary, (ii) the procedure shall not be 
applicable to any claim in excess of $5,000, (iii) the procedure 
shall not result in any compulsory payment except as agreed upon 
between the parties, and (iv) the term 'customer' as used in this 
subsection shall not include a futures commission merchant or a 
floor broker. 
"(c) The Commission may, after notice and opportunity for hear-
ing, suspend the registration of any futures association if it finds that 
the rules thereof do not conform to the rec[uirements of the Commis-
sion, and any such suspension shall remain in effect until the Com-
mission issues an order determining that such rules have been modified 
to conform with such requirements. 
"(d) In addition to the fees and charges authorized by section 8a 
(4) of this Act, each person registered under this Act, who is not a 
7 use 12a. 
member of a futures association registered pursuant to this section, 
shall pay to the Commission such reasonable fees and charges as may 
be necessary to defray the costs of additional regulatory duties 
required to be performed by the Commission because such person is not 
a member of a registered futures association. The Commission shall 
establish such additional fees and charges by rules and regulations. 
"(e) Any person registered under this Act, who is not a member of 
a futures association registered pursuant to this section, in addition 
to the other requirements and obligations of this Act and the regula-
tions thereunder shall be subject to such other rules and regulations as 
the Commission may find necessary to protect the public interest and 
promote just and equitable principles of trade. 
"(f) Upon filing of an application for registration pursuant to sub-
section (a), the Commission may by order grant such registration if 
the requirements of this section are satisfied. If, after appropriate 
notice and opportunity for hearing, it appears to the Commission that 
any requirement of this section is not satisfied, the Commission shall 
by order deny such registration. 
"(g) A registered futures association may, upon such reasonable 
notice as the Commission may deem necessary in the public interest, 
withdraw from registration by filing with the Commission a written 
notice of withdrawal in such form as the Commission may by rules and 
regulations prescribe. 
"(h) If any registered futures association takes any disciplinary 
action against any member thereof or any person associated with such 
a member or denies admission to any person seeking membership 
therein, or bars any person from being associated with a member, 
such action shall be subject to review by the Commission, on its own 
motion, or upon application by any person aggrieved thereby filed 
within thirty days after such action has been taken or within such 
longer period as the Commission may determine. Application to the 
Commission for review, or the institution of review by the Commission 
on its own motion, shall operate as a stay of such action until an order 
is issued upon such review pursuant to subsection (k) of this section 
unless the Commission otherwise orders, after notice and opportunity 
Notice and 
for hearing on the question of a stay (which hearing may consist solely 
^^""^• 
of affidavits and oral arguments). 
"(i) (1) In a proceeding to review disciplinary action taken by a 
registered futures association against a member thereof or a person 
associated with a member, if the Commission, after appropriate notice 
Notice and 
and opportunity for hearing, upon consideration of the record before ^^^""^• 
the association and such other evidence as it may deem relevant— 
1410 
PUBLIC LAW 93-463-OCT. 23, 1974 
[88 STAT. 
"(A) finds that such member or person has engaged in such 
acts or practices, or has omitted such act, as the association has 
found him to have engaged in or omitted, and 
"(B) determines that such acts or practices, or omission to act, 
are in violation of such rules of the association as have been desig-
nated in the determination of the association, the Commission 
shall by order dismiss the proceeding, unless it appears to the 
Commission that such action should be modified in accordance 
with paragraph (2) of this subsection. The Commission shall like-
wise determine whether the acts or practices prohibited, or the 
omission of any act required, by any such rule constitute conduct 
inconsistent with just and equitable principles of trade, and shall 
so declare. If it appears to the Commission that the evidence does 
not warrant the finding required in clause (A), or if the Com-
mission determines that such acts or practices as are found to have 
been engaged in are not prohibited by the designated rule or rules 
of the association, or that such act as is found to have been omitted 
is not required by such designated rule or rules, the Commission 
shall by order set aside the action of the association. 
he^r/ng^ ^"^ 
"(2) If? after appropriate notice and opportunity for hearing, the 
Commission finds that any penalty imposed upon a member or person 
associated with a member is excessive or oppressive, having due regard 
to the public interest, the Commission shall by order cancel, reduce, 
or require the remission of such penalty. 
"(3) In any proceeding to review the denial of membership in a 
registered futures association or the barring of any person from being 
associated with a member, if the Commission, after appropriate notice 
and hearing, and upon consideration of the record before the associa-
tion and such other evidence as it may deem relevant, determines that 
the specific grounds on which such denial or bar is based exist in fact 
and are valid under this section, the Commission shall by order dismiss 
the proceeding; otherwise, the Commission shall by order set aside the 
action of the association and require it to admit the applicant to 
membership therein, or to permit such person to be associated with 
a member. 
"(j) Every registered futures association shall file with the Com-
mission in accordance with such rules and regulations as the Commis-
sion may prescribe as necessary or appropriate in the public interest, 
copies of any changes in or additions to the rules of the association, 
and such other information and documents as the Commission may 
require to keep current or to supplement the registration statement 
and documents filed pursuant to subsection (a) of this section. Any 
change in or addition to the rules of a registered futures association 
shall be submitted to the Commission for approval and shall take 
effect upon the thirtieth day after such approval by the Commission, 
or upon such earlier date as the Commission may determine, unless the 
Commission shall enter an order disapproving such change or addi-
tion ; and the Commission shall enter such an order unless such change 
or addition appears to the Commission to be consistent with the 
requirements of this section and the provisions of this Act. 
"(k) (1) The Commission is authorized by order to abrogate any 
rule of a registered futures association, if after appropriate notice and 
opportunity for hearing, it appears to the Commission that such abro-
gation is necessary or appropriate to assure fair dealing by the mem-
bers of such association, to assure a fair representation of its members 
in the administration of its affairs or effectuate the purposes of this 
title. 
Notice and 
hearing. 
hearing. 
Notice and 
hearing. 
88 STAT. ] 
PUBLIC LAW 93-463-OCT. 23, 1974 
1411 
" (2) The Commission may in writing request any registered futures 
association to adopt any specified alteration or supplement to its rules 
with respect to any of the matters hereinafter enumerated. If such 
association fails to adopt such alteration or supplement within a 
reasonable time, the Commission is authorized by order to alter or 
supplement the rules of such association in the manner theretofore 
req^uested, or with such modifications of such alteration or supplement 
as it deems necessary if, after appropriate notice and opportunity for ^j^°'j" ^"'^ 
hearing, it appears to the Commission that such alteration or supple-
ment is necessary or appropriate in the public interest or to effectuate 
the purposes of this section, with respect to— 
" (A) the basis for, and procedure in connection with, the denial 
of membership or the barring from being associated with a mem-
ber or the disciplining of members or persons associated with 
members, or the qualifications required for members or natural 
persons associated with members or any class thereof; 
"(B) the method for adoption of any change in or addition to 
the rules of the association; 
"(C) the method of choosing officers and directors. 
" (1) The Commission is authorized, if such action appears to it to be 
necessary or appropriate in the public interest or to carry out the pur-
poses of this section— 
"(1) after appropriate notice and opportunity for hearing, by 
order to suspend for a period not exceeding twelve months or to 
revoke the registration of a registered futures association, if the 
Commission finds that such association has violated any provisions 
of this title or any rule or regulation thereunder, or has failed to 
enforce compliance with its own rules, or has engaged in any other 
activity tending to defeat the purposes of this Act; 
"(2) after appropriate notice and opportunity for hearing, by 
order to suspend for a period not exceeding twelve months or to 
expel from a registered futures association any member thereof, 
or to suspend for a period not exceeding twelve months or to bar 
any person from being associated with a member thereof, if the 
Commission finds that such member or person— 
" (A) has violated any provision of this title or any rule or 
regulation thereunder, or has effected any transaction for any 
other person who, he had reason to believe, was violating with 
respect to such transaction any provision of this title or any 
rule or regulation thereunder; or 
"(B) has willfully violated any provision of the Commod-
ity Exchange Act, as amended, or of any rule, regulation, or 
7 use i. 
order thereunder, or has effected any transaction for any 
other person who, he had reason to believe, was willfully vio-
lating with respect to such transaction any provision of such 
Act or rule, regulation, or order. 
"(3) after appropriate notice and opportunity for hearing, by 
order to remove from office any officer or director of a registered 
futures association who, the Commission finds, has willfully failed 
to enforce the rules of the association, or has willfully abused his 
authority. 
" (m) The Commission shall include in its annual reports to Congress 
information concerning any futures associations registered pursuant 
to this section and the effectiveness of such associations in regulating 
the practices of the members," 
Notice and 
hearing. 
Notice and 
hearing. 
Reports to 
Congress. 
1412 
PUBLIC LAW 93-463-OCT. 23, 1974 
[88 STAT. 
TITLE IV—MISCELLANEOUS PROVISIONS 
or^empToyeeT" 
^EC. 401. Sectloii 9 of the Commodity Exchange Act, as amended 
prohibition on 
(7 U.S.C. 13), Is amended by adding the following new subsections: 
usTo^f^'i'nfoma- 
"(^) ^^ ^^^^^ ^^ ^ fclony punishable by a fine of not more than 
tion. 
$10,000 or imprisonment for not more than five years, or both, together 
with the costs of prosecution, for any Commissioner of the Commis-
sion or any employee or agent thereof, to participate, directly or in-
directly, in any transaction in commodity futures or any transaction 
of the character of or which is commonly known to the trade as an 
'option', 'privilege', 'indemnity', 'bid', 'offer', 'put', 'call', 'advance 
guaranty', or 'decline guaranty', or for any such person to participate, 
directly or indirectly, in any investment transaction in an actual com-
modity: Provided^ That such prohibition against any investment 
transaction in an actual commodity shall not apply to a transaction 
in which such person buys an agricultural commodity or livestock for 
use in his own farming or ranching operations or sells an agricultural 
commodity which he has produced in connection with his own farming 
or ranching operations nor to any transaction in which he sells live-
stock which he has owned at least three months. With respect to such 
excepted transactions, the Commission shall require any Commissioner 
of the Commission or any employee or agent thereof who participates 
in any such transaction to notify the Commission thereof in accordance 
with such regulations as the Commission shall prescribe and the Com-
mission shall make such information available to the public. 
"(e) It shall be a felony punishable by a fine of not more than 
$10,000 or imprisonment for not more than five years, or both, together 
with the costs of prosecution—(1) for any Commissioner of the Com-
mission or any employee or agent thereof who, by virtue of his employ-
ment or position, acquires information which may affect or tend to 
affect the price of any commodity futures or commodity and which 
information has not been made public to impart such information 
with intent to assist another person, directly or indirectly, to partici-
pate in any transaction in commodity futures, any transaction in an 
actual commodity, or in any transaction of the character of or which 
is commonly known to the trade as an 'option', 'privilege', 'indemnity', 
'bid', 'offer', 'put', 'call', 'advance guaranty', or 'decline guaranty'; and 
(2) for any person to acquire such information from any Commissioner 
of the Commission or any employee or agent thereof and to use such 
information in any transaction in commodity futures, any transaction 
in an actual commodity, or in any transaction of the character of or 
which is commonly known to the trade as an 'option', 'privilege', 
'indemnity', 'bid', 'offer', 'put', 'call', 'advance guaranty', or 'decline 
guaranty'." 
SEC. 402. Section 4c of the Commodity Exchange Act, as amended 
(7 U.S.C. 6c), is amended— 
(a) By inserting "(a) "after "SEC. 4c.". 
(b) By striking paragraph (B) in its entirety and inserting in lieu 
thereof the following: 
^ ^^^ ^ 
"(B) if such transaction involves any commodity specifically 
set forth in section 2(a) of this Act, prior to the enactment of the 
Commodity Futures Trading Commission Act of 1974, and if 
such transaction 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', or". 
(c) By adding at the end thereof the following new subsection: 
"(b) No person shall offer to enter into, enter into, or confirm the 
execution of, any transaction subject to the provisions of subsection 
(a) of this section involving any commodity regulated under this Act, 
88 STAT.] 
PUBLIC LAW 93-463-OCT. 23, 1974 
1413 
but not specifically set forth in section 2(a) of this Act, prior to the 
enactment of the Commodity Futures Trading Commission Act of 
1974, 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', contrary to any rule, regulation, 
or order of the Commission prohibiting any such transaction or allow-
ing any such transaction under such terms and conditions as the Com-
mission shall prescribe within one year after the effective date of the 
Commodity Futures Trading Commission Act of 1974 unless the Com-
mission determines and notifies the Senate Committee on Agriculture 
and Forestry and the House Committee on Agriculture that it is 
unable to prescribe such terms and conditions within such period of 
time: Provided^ That any such order, rule, or regulation may be made 
only after notice and opportunity for hearing: And provided 
further^ 
That the Commission may set different terms and conditions for 
different markets." 
(d) By striking the last sentence of subsection (a) as designated by 
this section. 
SEC. 403. Section 4a(l) of the Commodity Exchange Act, as 
amended (7 U.S.C. 6a), is amended by inserting, following the word 
"straddles" in the last sentence of such paragraph the words "or 
'arbitrage'" and by adding the following new sentences at the end 
of such paragraph: "The word 'arbitrage' in domestic markets shall 
be defined to mean the same as a 'spread' or 'straddle'. The Commis-
sion is authorized to define the term 'international arbitrage'." 
SEC. 404. Section 4a (3) of the Commodity Exchange Act, as 
amended (7 U.S.C. 6a), is amended by deleting the period at the end 
of the first sentence and adding "as such terms shall be defined by 
the Commission within ninety days after the effective date of the 
Commodity Futures Trading Commission Act of 1974 by order con-
sistent with the purposes of this Act."; and by deleting, effective 
immediately on enactment of this Act, the remainder of paragraph 
(3) : Provided^ That notwithstanding any other provision of law, the 
Secretary of Agriculture, immediately upon the enactment of the 
Commodity Futures Trading Commission Act of 1974, is authorized 
and directed to promulgate regulations defining bona fide hedging 
transactions and positions: And provided further^ That until the Sec-
retary issues such regulations defining bona fide hedging transactions 
and positions and such regulations are in full force and effect, such 
terms shall continue to be defined as set forth in the Commodity 
Exchange Act prior to its amendment by the Commodity Futures 
Trading Commission Act of 1974. 
SEC. 405. Section 4b of the Commodity Exchange Act, as amended 
(7 U.S.C. 6b), is amended— 
(a) By deleting the word 'cotton" where it appears in the last full 
paragraph of such section, and inserting in lieu thereof the words 
"a commodity". 
(b) By striking the period at the end of such section and adding 
the following: " : And provided further^ That such transactions shall 
be made in accordance with such rules and regulations as the Com-
mission may promulgate regarding the manner of the execution of 
such transactions." 
SEC. 406. Section 5a(6) of the Commodity Exchange Act, as 
amended (7 U.S.C. 7a), is amended by deleting the semicolon at the 
end of said subsection and inserting in lieu thereof the following: 
"and adopted by the Commission;". 
SEC. 407. Section 5a(8) of the Commodity Exchange Act, as 
amended (7 U.S.C. 7a), is amended— 
7 u s e 2. 
Notification of 
congressional 
committees. 
'Arbitrage. 
Hedging trans-
actions. 
Regulations. 
7 u s e 1. 
Simultaneous 
buying and selling 
orders. 
eonformity to 
U.S. standards. 
38-194 O - 76 - 7 pt. 2 
1414 
PUBLIC LAW 93-463-OCT. 23, 1974 
[88 STAT. 
Administrative 
Law Judge. 
Violations. 
Ante, 
pp. 1397-
1399. 
Position classi-
fication. 
Transfer of op-
erations and pro-
ceedings. 
7 u s e 4a note. 
7 u s e 4a note. 
Separability. 
7 u s e 4a note. 
Market reports. 
7 use 20. 
(a) By deleting the words "not been disapproved by the Secretary 
of Agriculture pursuant to paragraph (7) of section 8a" and inserting 
in lieu thereof the words "been approved by the Commission pursuant 
to paragraph (12) of section 5a". 
(b) By deleting the word "so", and inserting the words "by the 
Commission" immediately before the semicolon at the end of such 
subsection. 
SEC. 408. Section 6(b) of the Commodity Exchange Act, as amended 
(7 U.S.C. 9), is amended— 
(a) By striking in the second sentence "a referee" and inserting 
in lieu thereof "an Administrative Law Judge". 
(b) By striking the word "referee" each other place it appears 
and inserting in lieu thereof "Administrative Law Judge". 
SEC. 409. Section 9(c) of the Commodity Exchange Act, as amended 
(7 U.S.C. 13), is amended by inserting after "section 4i" the following: 
"section 4k, section 4m, section 4o,". 
SEC. 410. Section 5108(c) of title 5 of the United States Code is 
amended by adding after paragraph (11) thereof the following new 
paragraph: 
"(12) The Commodity Futures Trading Commission, subject to the 
standards and procedures prescribed by this chapter, may place an 
additional twenty positions in (iS-16, GS-17, and GS-18 for purposes 
of carrying out its functions." 
SEC. 411. All operations of the Commodity Exchange Commission 
and of the Secretary of Agriculture under the Commodity Exchange 
Act, including all pending administrative proceedings, shall be trans-
ferred to the Commodity Futures Trading Commission as of the 
effective date of this Act and continue to completion. All rules, regula-
tions, and orders heretofore issued by the Commodity Exchange Com-
mission and by the Secretary of Agriculture under the Commodity 
Exchange Act to the extent not inconsistent with the provisions of this 
Act shall continue in full force and effect unless and until terminated, 
modified, 
or 
suspended 
by the Commodity 
Futures 
Trading 
Commission. 
SEC. 412. Pending proceedings under existing law shall not be 
abated by reason of any provision of this Act but shall be disposed of 
pursuant to the applicable provisions of the Commodity Exchange 
Act, as amended, in effect prior to the effective date of this Act. 
SEC. 418. If any provision of this Act or the application thereof to 
any person or circumstances is held invalid, the validity of the remain-
der of the Act and the application of such provision to other persons 
or circumstances shall not be affected thereby. 
SEC. 414. The Commodity Exchange Act, as amended, is amended 
by adding the following new section at the end thereof: 
"SEC. 16. (a) The Commission may conduct regular investigations 
of the markets for goods, articles, services, rights, and interests which 
are the subject of futures contracts, and furnish reports of the findings 
of these investigations to the public on a regular basis. These market 
reports shall, where appropriate, include information on the supply, 
demand, prices, and other conditions in the United States and other 
countries with respect to such goods, articles, services, rights, interests, 
and information respecting the futures markets. 
"(b) The Commission shall cooperate with the Department of Agri-
culture and any other Department or Federal agency which makes 
market investigations to avoid unnecessary duplication of informa-
tion-gathering activities. 
"(c) The Department of Agriculture and any other Department or 
Federal agency which has market information sought by the Commis-
! 
88 STAT. ] 
PUBLIC LAW 93-463-OCT. 23, 1974 
1415 
sion shall furnish it to the Commission upon the request of any author-
ized employee of the Commission. The Commission shall abide by any 
rules of confidentiality applying to such information. 
"(d) The Commission shall not disclose in such reports data and 
information which would separately disclose the business transactions 
of any person and trade secrets or names of customers except as pro-
vided in section 8 of this Act." 
7 use 12, 12-1. 
SEC. 415. Section 4g of the Commodity Exchange Act, as amended, 
oaiiy trading 
is amended by inserting "(1)" after the section designation and by '^^7°usc eg. 
adding the following new subsections: 
"(2) Every clearinghouse and contract market shall maintain daily 
trading records. The daily trading records shall include such informa-
tion as the Commission shall prescribe by rule. 
"(3) Brokers and futures commission merchants shall maintain 
daily trading records for each customer in such manner and form as 
to be identifiable with the trades referred to in subsection (2). 
"(4) Daily trading records shall be maintained in a form suitable 
to the Commission for such period as may be required by the Com-
mission. Reports shall be made from the records maintained at such 
times and at such places and in such form as the Commission may 
prescribe by rule, order, or regulation in order to protect the public 
interest and the interest of persons trading in commodity futures. 
"(5) Before the beginning of trading each day, the exchange shall, 
insofar as is practicable and under terms and conditions specified by 
the Commission, make public the volume of trading on each type of 
contract for the previous day and such other information as the Com-
mission deems necessary in the public interest and prescribes Dy rule, 
order, or regulation. 
"(6) Nothing contained in this section shall be construed to prohibit 
the Commission from making separate determinations for different 
clearinghouses, contract markets, and exchanges when such determi-
nations are warranted in the judgment of the Commission." 
SEC. 416. The Commodity Exchange Act, as amended, is amended . Research and 
by adding at the end thereof the following new section: 
g
"
a
m
™
^ ^°" ^'^°' 
"SEC. 18. (a) The Commission shall establish and maintain, as part 
7 use 22. 
of its ongoing operations, research and information programs to (1) 
determine the feasibility of trading by computer, and the expanded 
use of modern information system technology, electronic data process-
ing, and modern communication systems by commodity exchanges, 
boards of trade, and by the Commission itself for purposes of improv-
ing, strengthening, 
facilitating, or regulating 
futures 
trading 
operations; (2) assist in the development of educational and other 
informational materials regarding futures trading for dissemination 
and use among producers, market users, and the general public; and 
(3) carry out the general purposes of this Act. 
" (b) The Commission shall include in its annual reports to Congress 
Reports to eon-
plans and findings with respect to implementing this section." 
gress. 
SEC. 417. The Commodity Futures Trading Commission shall sub- 
insurance legis-
mit to the Congress, not later than June 30,1976, a report respecting the ^^7'^se 4a note. 
need for legislation insuring owners of commodity futures accounts 
and persons handling or clearing trades in such accounts against loss 
by reason of the insolvency or financial failure of a futures commis-
sion merchant carrying such accounts. The report shall contain the 
recommendations of the Commission concerning the form and nature 
of any such legislation. 
SEC. 418. (a) Except as otherwise provided specifically in this Act, 
Effective date, 
the effective date of this Act shall be the 180th day after enactment. 
^ ^^^ ^ "°*^-
The Commission referred to in section 101 is hereby established effec-
tive immediately on enactment of this Act. Sections 102 and 410 shall 
1416 
PUBLIC LAW 93-464-OCT. 24, 1974 
[88 STAT. 
bo effective immediately on enactment of this Act. Activities necessary 
to implement the changes effected by this Act may be carried out after 
the date of enactment and before as well as after the 180th day there-
after. Activities to be carried out after the date of enactment and before 
the 180th day thereafter may include, but are not limited to the follow-
ing : designation of boards of trade as contract markets, registration 
of futures commission merchants, floor brokers, and other persons 
required to be registered under the Act, approval or modification of 
bylaws, rules, regulations, and resolutions of contract markets, and 
issuance of regulations, effective on or after the 180th day after 
enactment; appointment and compensation of the members of the Com-
mission ; hiring and compensation of staff; and conducting of investi-
gations and hearings. Nothing in this Act shall limit the authority of 
the Secretary of Agriculture or the Commodity Exchange Commission 
under the Commodity Exchange Act, as amended, prior to the 180th 
day after enactment of this Act. 
(b) Funds appropriated for the administration of the Commodity 
Exchange Act, as amended, may be used to implement this Act 
immediately after the date of enactment of this Act. 
Approved October 23, 1974. 
Public Law 93-464 
October 24, 1974 
[H. R.16857] 
Tobacco. 
Acreage allot-
ments or quotas, 
N.C., lease and 
transfer. 
7 u s e 1314b. 
AN ACT 
To provide for emergency allotment lease and transfer of tobacco allotments 
or quotas for 1974 in certain disaster areas in North Carolina. 
Be it enacted hy the Senate and House of Representatives 
of the 
United States of America in Congress assembled^ That section 316 
of the Agricultural Adjustment Act of 1938, as amended, is amended 
by adding at the end thereof the following new subsection (h): 
"(h) Notwithstanding any provision of this section, when as a result 
of drought, flood, damage due to excessive rain, hail, wind, tornado, 
or other natural disaster, the Secretary determines (1) that one of the 
counties hereinafter listed has suffered a loss of 10 per centum or more 
in the number of acres of tobacco planted, and (2) that a lease of such 
tobacco allotment or quota will not impair the effective operation of 
the tobacco marketing quota or price support program, he may permit 
the owner and operator of any farm within Craven, Carteret and 
Jones Counties, North Carolina, which has suffered a loss of 10 per 
centum or more in the number of acres of tobacco planted of such 
crop to lease all or any part of such allotment or quota to any other 
owners or operators in the same county, or nearby counties within 
the same State, for use in such counties for the year 1974 on a farm 
or farms having a current tobacco allotment or quota of the same 
kind. In the case of a lease and transfer to an owner or operator in 
another county pursuant to this subsection, the lease and transfer shall 
not be effective until a copy of the lease is filed with and determined 
by the county committee of the county to which the transfer is made 
to be in compliance with the provisions of this subsection.". 
Approved October 24, 1974.